The "Sweet Spot" Strategy is the Key to Breakthroughs

Brands are assets—this is the incisive insight from Professor David Aaker, whose extensive brand-related research has garnered support from many business leaders in Japan. Professor Aaker, who also deeply understands the strengths and weaknesses of Japanese companies, emphasizes the importance of understanding the "customer sweet spot"—key to building and strengthening brands—and how to establish relationships as vital partners for consumers. How should Japanese companies rebuild their brands in a global economy where emerging nations are rising? We present Professor Aaker's proposals in three parts. The interviewer is Reiko Ogata from Dentsu Inc. Marketing Solutions.

"Siloization" is hindering Japanese companies' brand building

Ogata: Professor Aaker is one of the few researchers who has visited Japan regularly since the 1980s, observing the situation closely. You also served as an advisor to Dentsu Inc. for ten years, deepening your connections with Japanese business leaders. Based on these experiences, how do you see Japan's branding and marketing landscape having changed over the past 30 years?

Aaker: To put it simply, I believe both branding and marketing have advanced considerably. Their competitiveness relative to Western countries has also improved. However, it's also true that several factors are hindering the further evolution of Japanese companies. One of these is what I call the problem of " siloization." Japanese companies organize departments by product, country, or function, right? Unfortunately, these departments often compete with each other or operate in isolation. From a branding and marketing perspective, this is a major flaw. To implement an effective branding strategy, you need to break down these "silos" and foster collaboration. If you're pursuing clarity in brand image, coordination across silos becomes even more critical. Silo mentality is a significant problem that holds back brand strategy.

Ogata: Why does siloed thinking occur?

Arker: For instance, in companies where executives come from technical or manufacturing backgrounds, there's often a tendency to misunderstand marketing and branding. Additionally, there's a tendency to assume consumers make "rational decisions." They believe consumers want to know product specifications and features, and that providing detailed product information will lead to the right decision. Because of this assumption, even talented individuals struggle to deepen their understanding of marketing.

Another issue hindering Japanese companies' evolution is their reluctance to boldly utilize women and younger employees. If the entire decision-making upper management consists solely of men who must also be of a certain age, then only 30-40% of the talent within the company is being utilized. If a certain number of excellent branding and marketing professionals are needed, but you cannot access the talents of a large segment of the population, the probability of truly talented individuals reaching the top becomes low, doesn't it?

Ogata: You're absolutely right. You emphasized that " brands are assets " from the late 80s through the 90s. Japanese business leaders embraced this perspective as a breakthrough new way of thinking. Why do you think that was?

Aaker: Understanding that brands have capital value means everything must change. Management must take responsibility for marketing, and the very concept of what marketing is transforms. Marketing must become more strategic, involved in fundamental decisions about investing in product markets and in the core value proposition. The methods for evaluating and measuring marketing also change. You need to measure not just short-term financial effects, but also brand image, brand credibility and visibility, and customer base loyalty.

Leveraging digital marketing to appeal to consumers' interests

Ogata: I understand Professor Aaker has gained significant support in South Korea and was involved in the government's initiative to build the national brand. What do such countries seek from Professor Aaker?

Arker: I believe they want to strengthen the "nation" brand to support the success of their representative corporate brands. After all, if a country's image improves, its companies are more likely to succeed. To them, I've always said: look at the role models. The best example is Singapore. They are very dynamically trying to strengthen their brand, launching something new and interesting every year.

The brand of South Korea is driven by large corporations like Samsung, Hyundai, and LG, which invest enormous sums in marketing every year. If even a small portion of that were directed toward national branding , the state could create synergies by collaborating with these major companies.

If Japan is to pursue nation branding, it must seize every opportunity, including partnering with major corporations. For instance, if it successfully bids for a major international event, it should boldly leverage that opportunity. Similarly, international conferences like the "World Marketing Summit" led by Professor Philip Kotler should be fully utilized. Simply hosting such a conference means 80% of the groundwork is already laid. With just a little effort and investment, 100% effectiveness should be achievable.

Ogata: It seems there's a difference in momentum compared to South Korea, which is making a nationwide effort to build its brand.

Arker: Today's Korean companies are breaking free from the image of producing low-quality, inexpensive goods. They are building trust and developing their brands to the point where they can launch premium products. This is precisely what Japanese companies achieved throughout the 1960s and 1970s. Meanwhile, Japanese companies now face new challenges in a mature market. How to maintain and revitalize established brands. How to generate new energy. Isn't this a point that troubles many Japanese corporate executives?

Ogata: Indeed, many of our clients are also grappling with the challenge of maturity. The key issue is how to communicate contemporary relevance and freshness to consumers. Digital marketing is becoming increasingly important as a means to achieve this. How do you view this?

Arker: Certainly, not only Korean companies but also emerging Asian nations are investing heavily in digital marketing. However, simply trying to persuade consumers by communicating the features of your products or services won't win the day. Instead, you must focus on what consumers are genuinely interested in. I call this the "customer sweet spot." Companies targeting consumers' sweet spots strive to develop programs connected to consumers' activities rather than just spotlighting their products. They aim to build brands that position themselves as partners actively engaged in consumers' lives.

Digital plays a deep role here. Think about why people participate in social media, and it becomes clear. People want to feel like knowledgeable experts. They want to use that knowledge to help others.

Ogata: That might be precisely where Japanese companies struggle with what to do in the digital realm. Japanese companies have traditionally been good at public relations and advertising about product quality, but they may find it difficult to look beyond their product category and identify consumers' sweet spots.

Arker: Engineers and those from manufacturing backgrounds often mistakenly assume consumers are rational. They believe people seek information and will make sound decisions if given proper, fact-based information. But that's not always the case.

Ogata: How to pinpoint consumers' sweet spots. I believe this is a crucial perspective for Japan and Japanese companies to achieve a breakthrough in their current situation.

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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 Arker.

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