Poor marketing, inflexible product design keep U.S. firms from succeeding Why it won't sell in Japan

January 09, 1994|By Thomas Easton | Thomas Easton,Tokyo Bureau of The Sun

TOKYO — There are street corners in Tokyo that don't have traffic signals, but along the most winding, desolate road, there is likely to be at least one vending machine.

The machines were introduced in the mid-1960s by Kansas City, Mo.-based Vendo Co., and for a few years the company had 100 percent of an explosive market. But by 1980, it had been driven out of Japan by domestic competitors that annually introduced smaller, cheaper and better machines.

"First we were aggressive, but then not aggressive," said former Vendo executive Tokuhisa Hashimoto. "Then nothing."

Starting from the simple bottle-dumping models then common in the U.S., Japanese companies created vending machines that, for instance, grind coffee beans, deposit them in a fresh paper filter, brew the drink, and serve it hot or cold. The machines eventually became another product to export, and Vendo itself was acquired by a Japanese competitor.

The Vendo story has been repeated in other businesses, too. From cars to washing machines to computer games, American companies such as Vendo have been bloodied by paying insufficient attention to a Japanese market that is vast but brutally competitive.

In response to such drubbings,the Clinton administration has made reducing America's huge current account deficit with Japan the foremost trade objective of 1994. U.S. negotiators have talked tough to the Japanese during the day, while delivering anonymous, scathing comments to the media by night.

That may manipulate public opinion and annoy Japanese bureaucrats, but it misses a crucial problem. Although some Japanese markets do have real barriers, others have been lost because of the mistakes of U.S. companies.

Simply put, the companies don't make products that Japanese consumers want.

Consider the auto industry.

"Unfair" conditions in the "closed" Japanese auto market have been a major preoccupation of the U.S. trade negotiators. For years, the Japanese have retorted that U.S. models have the steering wheel on the wrong side and are too large for Japanese roads.

So, in this pivotal year of trade negotiations, what has the U.S. auto industry cooked up for Japan?

At the Tokyo Motor Show this winter, GM's flagship offering was a large, expensive -- approximately $70,000, amid a horrendous recession -- Cadillac. With the steering wheel on the wrong side.

The reason? As one GM executive admitted at the show, "it was available." GM's Saturn cars, which, because of their size and quality, might sell well despite their left-hand drive, were kept at home.

Other members of the Big Three managed just a bit better -- Ford and Chrysler each introduced a single right-hand-drive car.

George Fields, dean of market researchers here, once considered writing a book on all the inept efforts of U.S. companies, but his (U.S.) publisher said that no one likes to read about failure. That could explain why U.S. firms have such a hard time getting it right.

The greatest problems, Mr. Fields said, are experienced by companies that have done well in other Asian markets but don't take time to understand the differences in Japan.

Clorox, for example, made a major push to sell room deodorizers, yet the Japanese accept scent only in the bathroom and kitchen, he said. Western companies also made unsuccessful moves to market soap additives for the bath -- a clever idea given how much time the Japanese spend in the tub, but an anathema in a country where people enter the fresh water of the bath only after they are clean.

Another flop: Playtex International's move to market bras in the early 1970s. "They hired a popular busty model, but no one wanted to be noticeable that way," Mr. Fields said. "To aggressively project your figure was embarrassing."

Another interesting flop was Atari. In the late 1970s, when video games were becoming popular, they were located in pachinko parlors, the Japanese version of pinball arcades, where young teen-agers are not permitted to enter. Later, when the games became compatible with televisions, they came into conflict with the obsession of Japanese youth -- studying.

"The competition wasn't a company. You were not selling a game, but something that was diverting a customer from his main activity," Mr. Fields said. "You can change habits and customs, but you can't change primary values."

Early Japanese entrants succeeded where Atari failed. They marketed the games as a product intended to bring a family together, even using the word family in the name of the sets. And, they used keyboards rather than a joystick to control the game, giving the impression that the product was enhancing education.

Soon, parents viewed the games as less offensive and accepted them into the home.

Appliance market grew

Just as vending machines were entering the Japanese market, U.S. firms were effortlessly dominating the home appliance market.

For free advertising, they had television sit-coms, which were just beginning to be broadcast in Japan.

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