Tampax Inc., under the guidance of its general agent, Chuo Bussan, also sells its products through existing wholesale channels and is now the leading brand, with a 30% market share. It demonstrated, moreover, that foreign firms are by no means at the mercy of established channels. To prevent the sale of its products at cut-rate prices, Tampax allows only a 5% margin. But because of customer loyalty, assured through mass advertising and promotion, Tampax can exercise as much influence over its distribution channels as any major Japanese manufacturer.
Some foreign firms have found that the best entry into the market is provided by the distribution networks of Japanese manufacturers, who may or may not use traditional channels. Pez, the Viennese maker of peppermints packaged imaginatively to appeal to young people, gained a meaningful position in the Japanese market through Morinaga & Co., a leading confectionery company. Sony Corp. distributes Whirlpool appliances and Dutch-made Bruynzeel kitchen cabinets through its domestic trading company.
The problem confronting foreign firms doing business in Japan is clearly not the unavailability of proper distribution channels. In general, the difficulties are of a more subtle kind and derive largely from the foreign company's approach to the market. Assuming that a foreign company has "something special" about its products and services that makes them competitive in quality and/ or price, it will succeed in the long run only if it makes a serious marketing effort. If this appears an excessively obvious statement, it should be noted that many agents or executives of foreign companies in Japan are frustrated simply because the home office refuses to take seriously the differences observed in the Japanese market.
A most striking difference is price strategy. This aspect of marketing has generated considerable debate. Allegations of dumping practices are perhaps to be explained by divergence in pricing.
Western corporations guided by profit optimization set their price according to production costs, profit estimation, product definition and distribution strategy. The following equation prevails: P + C = SP, where P stands for profits, C for costs, and SP for sales price. P and C are largely determined within the company. It could be argued that to a large extent these firms decide price on the basis of internal parameters.
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