A long-standing axiom holds that cultural differences oblige the international marketeer to alter his marketing mix. Japan presents a very different environment, and a standard marketing framework cannot be transposed directly from Europe or the United States.
It is often stated that the Japanese distribution system conspires, intentionally or not, to discriminate against imported products. Apparent upon most elementary examination, however, is that a number of U.S. and European firms hold major positions in a wide variety of products. This offers sufficient evidence that the distribution system in Japan, whatever its peculiarities, can be made to serve importers as well as it does local manufacturers. It is worth noting, for example, that this same distribution system has been used quite effectively to introduce Southeast Asian manufactured products in direct competition with some domestic industries that would often be protected in other industrial countries.
Far from being a rigid structure that leaves the foreign firm no room for manoeuvre or innovation, as some critics claim, the Japanese distribution system is essentially dynamic. In general, the foreign exporter or investor finds that his options in Japan are not dissimilar from those in other industrial countries. The problem is to identify and understand these options.
Ing. C. Olivetti & c. SpA is a case in point. Over the past two decades, presidents of Olivetti Japan, equipped with a working ability in the Japanese language, have developed a network designed to fit the company's special needs. Portable typewriters, once sold through the traditional office machinery wholesale channels, were switched to a direct-to-the-retailer sales organization. Olivetti thus established a comfortable 40% share of the portable typewriter market against strong competition.
Direct sale to the retailer is also one of the main features in the success of Estee Lauder Cosmetics Ltd.'s penetration of the men's cosmetics market. The company takes charge of product distribution from arrival in its Yokohama warehouse to selling at its own retail counters strategically located on the men's floor of major department stores. In doing so, it cuts distribution costs far below those of its major competitors. As a result, Estee Lauder was able to establish a share of over 40% of the total men's cosmetics business in department stores throughout Japan.
SOURCE: This is a condensation of a study written by Gunter A. Pauli at Sophia University's Institute of Comparative Culture in Tokyo. Copyright 1983 by Sophia University. This condensation appeared in International Management, September 1985, 121-123. Reprinted by special permission from International Management. Copyright © 1985. McGraw-Hili Publications Company. All rights reserved.
Taking a somewhat different route, Nihon Philips Corp. and Melitta-Werke Bentz & Sohn both introduced coffee-makers into the Japanese market, calling on coffee-bean wholesalers and retailers rather than on appliance channels largely controlled by Japanese makers. Practically speaking, the competition has been limited to the two European manufacturers. Although some Japanese appliance makers have since introduced electric coffee-makers, neither retailers nor customers appear to have taken them seriously.
If such innovation in distribution is possible in Japan, it does not mean, however, that existing channels are either closed or useless to foreign exporters. Nestle S.A. has captured and held approximately 75% of the instant coffee market while using the traditional wholesale network. Lipton's has become a household word in Japan, synonymous with black tea, marketing its product through a joint venture with Mitsui & Co. and To shoku , a major tea wholesaler. Similarly, Johnson & Johnson consolidated its position as a leading supplier of health-care products by working through the complicated traditional distribution system.
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