What Japanese Companies Need Now: A Major Shift Toward Marketing Focus

From postwar reconstruction through the era of rapid economic growth when Japanese companies dominated the world, to the deflationary economy struggling after the bubble burst – Professor Philip Kotler, a global authority on modern marketing, has observed the entire trajectory of Japanese business. What is still lacking in Japanese companies today? And what strengths should be leveraged for future revitalization? In an era demanding new marketing that aims for shared ideals and co-creation with consumers, we present the content of an exclusive interview where he passionately discussed the guiding principles Japan should embrace, divided into four parts.
The interviewer is Koichi Yamamoto of Dentsu Inc. Marketing Solutions.

 

Can we truly say, "Our company is a marketing company"?

 

Yamamoto: Professor Kotler states that " management is marketing itself." I believe this is a crucial point. Marketing is evolving beyond being merely a single function within a company. It is becoming something that connects the functions of various departments and tackles the management challenges of the entire company.

Kotler: Exactly. Looking back at marketing's history, many people have viewed it as merely promotion. For instance, when wanting to make the public aware of a new product, companies run ads or deploy salespeople. But that's only part of marketing. In recent years, marketing has come to be thought of as the 4P strategy: Product, Price, Place (Distribution), and Promotion. Yet, even now, it's still common to see cases where the three Ps other than Promotion remain unintegrated.

In truth, even these four Ps alone are insufficient. Before addressing the 4Ps, we must consider issues at an earlier stage: which consumer segments to target, how to satisfy their needs, and how to make sales strategy decisions to effectively appeal to those segments.

Marketing connects customers and companies. Recognizing this point should make it clear that we must focus not just on products, but on consumers. This forces a shift in mindset: away from "Let's make a good product and sell it to everyone," toward "For whom did we create this product? How much do we truly know about them?"

This shift gave birth to the concepts of differentiation and innovation. It involves offering products and services with unique characteristics that set them apart, and further, creating exciting value that captures people's hearts through innovation. Differentiation and innovation are crucial, key elements in marketing.

In fact, some companies have taken this point to its logical conclusion, declaring outright, "Our company is fundamentally a marketing company." P&G, recognizing that customers are everything to the company, states that every function within the organization—production, finance, IT, and all other departments—should strive to deliver the highest value to customers.

What can we appeal to emotionally, not just rationally?

Yamamoto: When speaking with marketing professionals at Japanese companies, I often hear them lament that marketing is given low priority internally. Engineering is top, followed by manufacturing, with marketing somewhere further down the ladder. How can we transform companies with this culture into marketing-focused organizations?

Kotler: Japanese companies hold the belief that the product is paramount. Indeed, many produce the highest quality products in their respective fields. This approach earned Japanese companies global respect in the late 1980s. However, other Asian nations subsequently began catching up, also achieving perfection in their products. I feel Japanese companies failed to sufficiently gather and utilize information about these changes in the competitive environment. To maintain Japan's advantage, they should have closely observed what was happening in Korea, Thailand, and other countries, and taken action much sooner in response to the changing competitive landscape.

So, returning to your earlier question, I agree completely that marketing is unfairly undervalued within Japanese companies. You could even use this as the headline for this interview article: "Kotler Speaks: Marketing Has Been Undervalued in Japan. Engineers Are Crowned Kings, While Marketing Staff Are Left in the Corner Running Ads."

Of course, this reality must change. To do so, one key step is finding exceptional marketing talent. We need to identify individuals whose ability to capture people's hearts and turn heads to spark interest in products is obvious to everyone.

Look at Korean companies. Just observe how they sell mobile phones, televisions, kitchen appliances, and more—it's immediately obvious they place tremendous emphasis on marketing. They don't just spend huge sums on promotions; they make significant investments based on clear decisions about what products to create for consumers. Because this function is far more important than promotion. Rather than just striving to make products with superior features and quality, it's crucial to create excellent products that are affordable and desirable to consumers.

When only the technical aspects are emphasized, there's an inevitable urge to create the perfect product. This leads to the mistaken belief that the market is full of people who crave perfect products, people who won't hesitate to spend money for the absolute best. However, today's market is flooded with various competing products, all of which offer reasonably good performance. Given this, we must consider how to make our products stand out to customers and what we should do to build relationships with them. At that point, what becomes crucial for Japanese manufacturers is not just what appeals to the rational side, but what can appeal to the emotional side.

 

First, it is essential for top management themselves to change their mindset.

 

Yamamoto: There are companies, not just overseas but among major Japanese brands, where the CEO has demonstrated exceptional skill as a marketer. How important is a marketing-focused mindset for someone in a role like CEO or board member?

Kotler: How much emphasis a company places on marketing largely depends on the CEO's stance. However, many Japanese CEOs come from technical, finance, or legal backgrounds, with very few having worked in marketing. Consequently, they often have a narrow view of what marketing can achieve. It's like, "We need advertising. Send it to marketing." Therefore, to transform marketing, changing the mindset of top management is the first necessary step.

Furthermore, having a strong CMO (Chief Marketing Officer) is indispensable. While CMOs are often seen as solely responsible for managing marketing, they should dedicate only half their time to that. The other half should be dedicated to collaborating with departments like product, technology, and finance. This is to ensure other departments understand that marketing is the division responsible for future growth. Explain that the marketing department possesses the data—the so-called big data—needed to identify emerging trends and segments. Guide the company to quickly pinpoint budding opportunities that could become major chances for the business and to establish the internal structure necessary to seize them.

However, changing the mindset of other board members isn't something that happens overnight. A common pitfall in many companies is that when a CEO, inspired by new ideas, attempts a transformation, they demand results too hastily. If the CMO doesn't deliver immediate results, they get replaced. But that just leads to a constant turnover of CMOs, and ultimately, no real change occurs.

Yamamoto: That's a point Japanese executives should keep in mind.

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◎The World Marketing Summit (WMS) Japan 2014 (WMS Japan Council Representative: Kozo Takaoka) was held in Tokyo on September 24 and 25. This summit, spearheaded by Professor Kotler, known as the "Father of Modern Marketing," brought together leading marketing experts from around the world, including Professor Aaker.

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Related Article: "World Marketing Summit Japan 2014" Held for the First Time in Tokyo with a Total of 2,500 Attendees[2014.09.29]