Seminar on Marketing: Seminar on Marketing JulyｰAug 2006 by JICA METI Registered Management Consultant JETRO Certified International Trade Advisor METI Promoting IT Coordinator Y. Shigematsu


Seminar on Marketing: Seminar on Marketing Part 1 Product Planning -PPM -Positioning and Differentiation -Brand Strategy Part 2 CRM Finding Customer & Enclosure of Customer Part 3 Sales Promotion Promotion Mix E-marketing Part 4 Export Strategy -Finding overseas market by Japanese SMEs


Part 1 Product planning: Part 1 Product planning (1)PPM (2)Positioning & Differentiation (3)Brand Strategy


What　is　PPM-concept　?　: What　is　PPM-concept　?　 Originally, portfolio means investor’s folder to keep various stocks. Investors want to maximize profit using his fund. If the investor buys only safe stocks, return will be small. If he invests his money into risky company shares, profit may be bigger at one time but may lose money after all. PPM is to determine strategy how company optimizes return from the products using their resources.


Slide5: Question Marks Low share but high growth SBU. Potential Star or fallen dog in future Stars Cash Cow Dogs Low growth and low share SBU likely retire from mart Yearly Market Growth Rate Market Share 1x 10 1.5x Market Share: share of the company against biggest share % 10x 0.2x 22 High growth, high share SBU. May shrink growth rate but create cash flow Low growth high share. Create great cash flow


PPM- What can be done Using this theory?: PPM- What can be done Using this theory? SBU is going to change position in the matrix. Normally starts with ‘Question Marks’. If successful, it changes to ‘Star’ and as time goes on with slow growth of the market, it becomes ‘Cash Cows’. In the end, it becomes ‘Dog’. You can clarify cash flow from each product division and optimize them with best allocation of funds from total management view point. (Long term) You can determine a target to pursue by clarifying the position of the SBU in the portfolio- either keeping shares, or gaining market shares by new investment or withdrawing (Short term)


Slide7: Question Marks Stars Cash Cows Dogs Yearly Market Growth Rate Market Share 1x 10 1.5x Market Share: share of the company against biggest share % 10x 0.2x 22 Size: SBU turnover


PPM- advantage & drawbacks : PPM- advantage & drawbacks ◎Clear cut, visual clarification of the product ranges and strategy formulation by cash flow standard ▲ Growth and relative shares of the market are not all to bring cash flow ▲ Cash flow is not a strong measure to determine investment as ROI ▲ Difficult to determine certain products to place in either of matrix Star, Cash Cows, Question Marks and Dogs


PPM (alternative to PPM) Attractiveness of the market & Position and ROI : PPM (alternative to PPM) Attractiveness of the market & Position and ROI 1. As outcome of SBU(Product Div.) measured by more extensive ROI (Rate of return on investment) is used rather than Cash flow. 2. Not merely share & growth rate of the market, more factors are considered as SWOT analysis, more accurate from various angles


Part 1 Product planning: Part 1 Product planning (1)PPM (2)Positioning & Differentiation (3)Brand Strategy


Positioning of products: Positioning of products Meaning: The position of the products in the mind of consumer, comparing with competitor’s products. Often drawn as mapping. Important tool for product planning Points to address customers : Be clear & simple e.g. Dell computer “Low price & Direct marketing=BTO” Bear target customer in minds


Positioning Map: Positioning Map


Positioning standards: Positioning standards Following standards must be selected considering company, products, target market or environment: Characteristics (Specs) of the products Benefit, problem, solution,needs Special usage User category Contrast to Rivals products Special product from Standard products


Slide14: Products Products Market Segmentation Marketer promotes products for segmented demands Wins deep, narrow market Product Differentiation Marketer promotes one product for different demands Wins shallow, wide market yet may hit deep Market Product Differentiation　& Market Segmentation


Product Differentiation Products of similar quality & different quality: Product Differentiation Products of similar quality & different quality Physical difference: in material, performance, design or structure; heterogeneous- Substantial product differentiation e.g. Home electric appliances like TV, Audio, Laundry machine, Homogeneous Products: c.f. sugar, salt, paper, cement, petroleum, cotton, synthetic fiber, margarine, butter -How to make differentiation for Homogeneous Products See next slide…


Product DifferentiationDifferential Advantage (W. Alderson): Product Differentiation Differential Advantage (W. Alderson) Products of similar quality (homogeneous) Mental differentiation by naming, brand and packaging By service: credit facility, after sales service, provide information, seller’s geographical advantage Differential Advantage: These Differentiation is not only for Homogeneous Products but also applicable to strengthen Hetero products. Taste, income, purpose of use differs among buyers. So, seller tailors these for buyer and the buyer feel as if he (she) were treated specially. Ads, Promotion, IT prompt the trend → One to one marketing　


Market Segmentation (standards): Market Segmentation (standards) 1. Consumer characteristics (personal segment standards) (1)   Geographic: country, prefectures, region (such as Tokyo (2)   Demographic: such as age, sex, family member, family life cycle, income, occupation, education, religion, race and nationality (3)   Psychographic: social status, lifestyle (AIO; attention, interest, opinion)  2. Consumer response (product related standards) (1)   Benefits: such as efficiency, reputation, durability, economical (2)   Usage ratio: such as heavy user, light user, ordinary user (3)   Loyalty: such as very loyal, loyal, volatile (4)   Situation: TPO


Part 1 Product planning: Part 1 Product planning (1)PPM (2)Positioning & Differentiation (3)Brand Strategy


BRAND POWER(1)-Role of Brand: BRAND POWER (1)-Role of Brand For customer To make easier to select Product to buy A certain satisfaction Mental satisfaction as status symbol or *halo effect For owner of the Brand Repeat order and reduction of marketing cost To get customers lasting patronage Improvement of corporate Image


What is Brand-objectives ?: What is Brand-objectives ? 1 Started as signing the name of maker in artificial craft such as sword, chinaware or painting to verify the product was made by that person. 2. To differentiate product as the brand safeguards features of the products 3.To make easier sales transaction e.g. Self service, vending machine, mail order 4. To make demand selective and make easier repeated purchase 5. To make justification of the price difference


Brand Power (2)-Function of Brand: Brand Power (2)-Function of Brand Identification of product c.f. naming Indication of source Guarantee of quality Advertisement of product Asset Branding Decision Process “How to make brand for the products” by Philip Kotler　will follow. See next page…


Naming and Branding: Naming and Branding Naming: Stage one of formation of seismic value to the products. ‘Feeling’ Seismic Value Branding: Stage two of seismic value. Jumping to ‘Symbolic’ Seismic Value -Activities to give the products real seismic value using naming as tool. Branding Decision Process “How to make brand for the products” by Philip Kotler　will follow. See next page…


Slide23: Should develop the Brand for the Products ? Who will decide Brand ? What quality will be embodied? Individual Brand or family Brand? Branding No Branding Manufacturer’s Brand Private Brand High quality Middle quality Low Quality Individual Brand Total Brand Partial Brand Company/Individual Brand Should give same Brand to other products? Develop the plural Brands for the category Products ? Should modify the Brand positioning ? Extend to the other products No Single Brand Plural Brand Modify Brand positioning No Branding Decision Brand Sponsor Decision Brand Quality Decision Family Brand Decision Brand Extension Decision Plural Brand Decision Brand Positioning review


Slide24: Metal Parts Handle Inside \176,400 (US$1,534 @\115/$ Size S 28x21.5x11cm


Regional Brand (RB): Regional Brand (RB) RB concept: Branding the special products or the service in the region Branding of image of the region, culture & history Makes good cycle and sustainable vitalization of the region by bringing resources from outside Create Regional Brand, foster it, and export it ! See Part 4 Export Strategy…


Regional　Brand 　３　Perspectives: Regional　Brand 　３　Perspectives Good eva and Support Attractive, value added, competitive Regional Image serve active economy


OVOP-Step forward in DC w/ support of JG and UNDP : OVOP-Step forward in DC w/ support of JG and UNDP Korea, China, Malaysia, Philippine, Thailand, Cambodia, Malawi and more… http://www.meti.go.jp/policy/trade_policy/ovop/data/projecten.pdf http://www.meti.go.jp/policy/trade_policy/ovop/html/list.html


Quality expected in use(Qu) v.s.Actual quality in using (Q’u) by Prof.T. Yoshida: Quality expected in use(Qu) v.s. Actual quality in using (Q’u) by Prof.T. Yoshida i/v Purchase Use Repurchase Qm= Qu/P+S Product track survey yes yes yes No No? Corporate Principle Qu=q×u Index: q:product quality u:personal utility i: product image v. flow & stock (volume） in market　 Qm:quality in market P:price S:addable services Product Value Evaluation Value Service Value Seismic Value (Q’u) Product concept No


Quality in market (Qm) & Actual Quality in using (Q’u): Quality in market (Qm) & Actual Quality in using (Q’u) Determination　of　Repurchase： Qm＞Ｑ‘u→Repurchase　(No） Qm=Q’u　→　Repurchase　（Yes) Qm＜Ｑ‘u→Repurchase　(Yes）


Product Value　（summary）: Product Value　（summary） Formation of Product Value is made by creator of the product Evaluation of the product is after all made by user of the product. Feedback of Evaluation, either before or after use, make possible meaningful formation of product value.


Consumer buying action model-AIDMA (AIDA, AIDAS): Consumer buying action model- AIDMA (AIDA, AIDAS) Attention Interest Desire Memory Action Attention Interest Desire Action Attention Interest Desire Satisfaction Level Action


Part 2 CRM: Part 2 CRM Finding Customer Enclosure of Customers


Part 2 CRM: Part 2 CRM Finding Customer Enclosure of Customers What is CRM？ Parete Diagram & ABC Analysis New AGE Marketing+ LRV Case: ASKUL, Success in CRM


Customer Relationship Management (CRM): Customer Relationship Management (CRM) Concept: By knowing customers accurately, the company continues to satisfy customers view on value. The company manages, builds and keeps business relationship with customer. Object: a strategy to maximize of lifetime value (LTV) of the customer. i.e optimize share of sales & profit in individual customer Method: to gain continuous customer loyalty on the company brand Tool: Better result and efficiency by IT and reform of organization


Slide35: *Field *Contact Center Internet Shop/Agent Marketing Sales Service Internal Support, Monitoring, System, Infra Integrated Customer DB, Monitoring, System, Infra Customer Strategy Customer Insight Customer Contact Channel Job process Infra Level Action Level Strategy Level *Field: shops, Sales person, service *Contact center=contact center CRM 3 Levels- Strategy, action, Infra*** Tie Up Source: SAP Japan


CRM SYSTEM-IT solution: CRM SYSTEM-IT solution Since mid 1990s, CRM started to be acknowledged as important to maximize Customer Loyalty. IT(Information technology) is important tool but just entrance for CRM as tasks for CRM varies with company. CTI (Computer Telephony Integration)+Customer Database developed as tool for Call Center-one arm of CRM. Customer Database (DWH)　is indispensable


CRM SYSTEM-Integrate　Operational and Analytical : CRM SYSTEM-Integrate　Operational and Analytical (1)Operational CRM: quickly share accurate info about individual customers at front offices to respond timely and seamlessly. (2)Analytical CRM: select, bring up and keep loyal customer with regular updating for long term relationship. Integration　of (1)&(2)　is important　 Customer Profile Visit/Campaign Report Sales Info & Data Maintenance & Services Proposal back up data


CRM-Basic theory Retention & acquisition 1: 5 Rule: CRM-Basic theory Retention & acquisition 1: 5 Rule Nowadays, becoming difficult to sell as variety of goods and new products are readily available in market →increasing cost to increase new customer →inefficient to expand own market Acquisition　Cost Retention　Cost Times


Part 2 CRM: Part 2 CRM Finding Customer Enclosure of Customers What is CRM？ Parete Diagram & ABC Analysis New AGE Marketing Case: ASKUL, Success in CRM


*ABC Analysis of control method: *ABC Analysis of control method This method is used to measure the importance of objects of analysis, in which each component (A,B,C…) is graphed in parete in higher order of component ratio. In most cases, Top 20% components reaches 80% of total sum. This theory is used not only for determining customers, suppliers or products which contribute most to the buyer (shop) to order stock but also in similar other cases.


ABC analysis: ABC analysis


CRM-Basic theory Pareto 20%-80% Rule: CRM-Basic theory Pareto 20%-80% Rule “Customer of　20% contribute to 80% of the company sale” Sales A Company Customers


CRM-Basic theory Customer Analysis : CRM-Basic theory Customer Analysis We knew CS for all the customer is inefficient. Differentiation of customer started by analyzing customer Database to find good customer evident or potential. “ Enclosure of customer” is not right word. We treat customers fair in business. (Segmentation OK) ‘Relationship’ should not be emotional one but reasonable one to admit mutual benefit in relationship.


Part 2 CRM: Part 2 CRM Finding Customer Enclosure of Customers What is CRM？ Parete Diagram & ABC Analysis New AGE Marketing+CLTV Case: ASKUL, Success in CRM


CRM-Basic theory New AGE Marketing: CRM-Basic theory New AGE Marketing To respond to marketing　needs, now entered new marketing age from mass marketing to the marketing to gain continuing customer loyalty : Relationship marketing: One to One marketing: Permission marketing:


CＬＴＶ　　Customer Lifetime value: Total profit from a certain customer in his/her life time for the company or brand This is the way to think the company keeps the customer share long time This is equal to maximize value of a certain customer= CRM objective see next slide… CＬＴＶ　　Customer Lifetime value


CRM-Basic theory CLTV-Question : CRM-Basic theory CLTV-Question Question One smoker, long time loving cigarette of the company brand made phone call to the Customer Center said “ I feel the taste has changed. Kindly check with production side and comeback to me.” If you are a boss of Customer Center, how you will deal with this ??? Note: one pack cigarette costs $2


CLTV Company appreciation to high loyalty customer: CLTV Company appreciation to high loyalty customer Customer share 10 times* Ordinary customer Best customer Market share 1/10


CLTV question-who will be the best customer during 40 yrs life?: CLTV question-who will be the best customer during 40 yrs life? Q1 (Beer) Customer A. 30yrs old, life 70yrs. 2 cans daily(one can $2), nominated X.Co brand 100% Customer B. 30 yrs old, life 70yrs. 3cans daily (one can $2), nominated the Y. brand 25% Q2 ( Car) Customer C. 30years old, life 70 yrs One car every 6yrs, ave. $. 13,000 nominated . Z Co. brand 40%


Slide51: CRM-CＬＴＶ　　Happy Experiences for customer and the company Creation of customer experience Build royalty Increase of Sales Better Business Performances Happy Experiences for the customer and the company Source:INTEC Inc.


Post war marketing review: Post war marketing review 50s Managerial 60s International 70s Social 80s Strategic 90s Relation-ship Global Green By courtesy of Prof. Y. Oishi, Meiji Graduate Univ.


Relationship marketing (1990s): Relationship marketing (1990s) Ending of mass marketing and mass production ? Reengineering One to one marketing Mass customization ‘Best　client of 20% generates 80% profit’ Change ‘customers’ to ‘partners’-interactive marketing New Age　Marketing


Relationship MarketingChange ‘customers’ to ‘partners’: Relationship Marketing Change ‘customers’ to ‘partners’ Most of companies lose existing customers 25% p.a. If they keep less 5% loss, income will increase100%. It takes 5times cost to get new customer than satisfying present customers Satisfied customer tells 3 others and unsatisfied tell 10 people so. The higher satisfied, higher Loyalty. 69% customers stop to buy because of poor treatment in sales or service. In general, best 20% client bring 80% of sales turnover New Age Marketing


One to One marketing- Definition: : One to One marketing- Definition: By using computer database and network, the seller keeps interactive communications w/customer. The seller will repeatedly offer products or services customized personally to the customer. Customer feel as if the relationship is one to one with Manager. Thus, the lifetime value of the customer for a product could be rewarded to the seller, if successfully done. New Age　Marketing


New Marketing AGE Permission Marketing: New Marketing AGE Permission Marketing In e-mail communication with Customers, The company (sender) must get permission from the customer (receiver). Mail magazine: If you do not wish to receive this type of mail, please click so & so. Advertisement mail (legislation made to tell upfront, if prior permission not obtained).


Slide57: Doing so, how to keep Relationship W/ customer?- Service level Service Level A class customer Present SL ② ① Average customer ①　Unhappy ‘A’ customers ②　Excessive service to Ave customer SL appropriate to the Customer segment Source: SAP Japan


Slide58: Doing so, how to keep good customer?- Segmentation Question Marks Invest to become Star otherwise Dogs Stars Cash Cow Dogs Minimum cost investment CLTV Growth Rate Ave. customer Max.Invest Improve efficiency Increase Profitability Excellent Customer High Source: SAP Japan


Managerial marketing (1950s): Managerial marketing (1950s) Integration of 4P-administration of 4P as bundled Manager’s marketing-responsibility of middle management as integrator of 4P Marketing as management concept-marketing as guideline of business doing


International marketing (1960s): International marketing (1960s) 1958, EEC formed (common duties imposed to outside countries), recovery of exchangeability of European currencies Active production setup by US manufacturers in Europe →multi-domestic enterprises appearing Different marketing tasks from domestic marketing-International marketing born


Social Marketing (1970s): Social Marketing (1970s) Consumerism at 1960s →correspondence to living people, social responsibility theory Social value>company profit (W. Lazer) Marketing for Non-profitable organizations* (P. Kotler) *government, church, school and hospital)


Strategic marketing (1980s): Strategic marketing (1980s) M. E. Porter- strategic management theory Integration of marketing and other functions *procurement, production, finance, and legal matters Responsibility of top management* ‘pivot’ of strategic management Marketing as company concept


Global marketing (1990s): Global marketing (1990s) Today’s version of international marketing c.f. International marketing…extension Multi-domestic marketing Global marketing-web *under, hard worldwide competition, deploying concurrently homogeneous/heterogeneous marketing


Green marketing (1990s): Green marketing (1990s) Regional public nuisance → global environmental issues. Their　common points and different points Enlargement of Social value/social responsibility - developing green consumer Competitive superiority e.g. Toyota, Prius


Part 2 CRM: Part 2 CRM Finding Customer Enclosure of Customers What is CRM？ Parete Diagram & ABC Analysis New AGE Marketing+LTV Case: ASKUL, Success in CRM


‘We began with a simple concept:next day delivery on all orders from a single pencil to a truckload of office supplies…that’s the ASKUL Promise’: ‘We began with a simple concept:next day delivery on all orders from a single pencil to a truckload of office supplies…that’s the ASKUL Promise’ Started in 1993 as division within Plus Corp. i.e. in-house venture 1997 Askul spun off from Plus as independent (Plus retains 50% of \3,314mil share capital) Catalog* sales of office stationary, equipment and food　including　print service and office layout New Service: medical supplies started form Nov.05　tying up with various company specializing in this field　　　　　　　　　　　　　 Consolidated Sales:\254.5 bil.(May 05) Employee:278


Slide67: 6 DCM Centers DCM Center in Tokyo ( Start of operation since Apr. 2002) Respond to increasing Demand for Distribution in metropolitan area Respond to Distribution for Imported goods Charts & Pictures By courtesy of ASKUL


Order by internet is increasing: Order by internet is increasing


Slide71: Ｒｅｌａｔｉｏｎship　Center CTI+Customer Database By courtesy of ASKUL


Slide72: Askul New Business Model Cultivated Huge untapped market-by catalog, fax and internet order Small Office not tapped Individual had to go shop every time EVERYONE IN EVERY WORKPLACE IS OUR CUSTOMER Before Askul starts….


Askul (coming tomorrow) Business Model (DCM ): Askul (coming tomorrow) Business Model (DCM )


Askul (coming tomorrow)agent system: Askul (coming tomorrow) agent system


Slide75: ASKUL have evolved from a catalog sales company into a solution-oriented service provider. * *


Askul In order to create better value for our customers, ASKUL has built a "Social Optimization" system.: Askul In order to create better value for our customers, ASKUL has built a "Social Optimization" system.


Slide77: Askul Partnership in DCM ASKUL's Mission: Listen To Our Customers, Work with Our Partners, Create Value


Askul enters new service : Askul enters new service New Service: medical supplies started form Nov.05　tying up with various companies specializing in this field　 Food materials for restaurant All delivery by next day ! Medical care catalog


Slide80: Internet Surfing Exercise (1)　Search by Keywords SEIZOGYO Medical Insurance (2)　Search by URL ( If some of URL does not show HP, type URL in address column) http://www.askul.co.jp/kaisya/english/index.html http://www.rakuten.co.jp/info/ir/english/mission.html http://www.nc-net.or.jp/ncnetwork/e_info.html#about   http://www.jetro.go.jp/ (click global home) http://www.awagami.com/index.html http://www.kenyou.co.jp/kitajima/kitajima_top.htm http://www.nemoto.co.jp/product_e.html (see web showroom) http://www.ovop.jp/ http://www.meti.go.jp/english/information/data/OVOP.html http://www.meti.go.jp/policy/trade_policy/ovop/html/list.html


Part 3 Sales Promotion: Part 3 Sales Promotion Sales Promotion Mix e-Marketing


Part 3 Sales Promotion: Part 3 Sales Promotion Sales Promotion Mix e-Marketing (1) Case: B2C “Rakuten” (2) Case: B2B “ NC net”


Promotion Mix: Promotion Mix Promotion activities by Personal selling (salesperson) -ditto- by Institutional selling (1)ads -communications. activities w/cost, use mass media, idea, product or service (2)publicity-higher reliability, use reputation or authority of media, influence people not moved by other media Two weak points Q. What is those two ?* Sales promotion:cover and adjust making effective of Personal selling and ads ( trial show, sample products, user contest, prize sales, catalog, coupon, hot spring tour, opera and etc….)


Slide84: Advertise Expenditure in Japan (2004)- Dentsu Internet (\181.4bil.)exceeds Radio ads(\179.5bil) Total \5,857.1 Bil. Media Mix*


Push strategy &　Pull strategy *1 Personal selling by salesperson *2 Order by brand : Push strategy &　Pull strategy *1 Personal selling by salesperson *2 Order by brand Wholesaler Manufacturer Consumer/User Brand Product Manufacturer Product Wholesaler Retailer Retailer Consumer/User *1 *2 Ads Pull strategy Push Strategy


Pull Strategy & Push Strategy: Pull Strategy & Push Strategy Pull strategy: Media initiative. Company (or manufacturer) make advertises its products or brand, creates demand to induce consumer to buy nominating brand -e.g. soap, detergent,cosmetics , car, home electric appliances, Push Strategy: Channel initiative. Rather than by Ads, by personal selling push “the products” (Please do not push “Consumer”!) from Company (or manufacturer) , Wholesaler, Retailer to　consumer/user e.g. casual apparel　


Marketing　Communication: Marketing　Communication Intentionally transmitted to buyer as sales promotion, salesman, advertisement + symbolic message( product, packaging, Brand)+merchandising, display, shop layout, and shop location etc. “Marketing is dialog between Seller & Buyer” – H.W. Boyed Jr. & S.J. Levy –interactive conversation “ Seller’s job is to establish meaningful mutual relationship w/ potential Buyer”


Marketing communicationPersonal selling & Institutional selling: Marketing communication Personal selling & Institutional selling


Changing sales activities (1): Changing sales activities (1)


Multi Channel cost: Multi Channel cost Changing sales activities Source: SAP Japan


Changing sales activities Multi channels- Cost, Added value, Flexibility: Changing sales activities Multi channels- Cost, Added value, Flexibility Internet Contact Center Sales Person Complexity Transaction Cost Added value/Flexibility Contract Amount Old sales model New sales model


Changing sales activities　　 New salesperson’s role: Changing sales activities 　　 New salesperson’s role Salesperson concentrates market communication and knowledge management of ‘whole’ customer Skill set of new salesperson: Generalist (Sales activities) to Specialist of market communication Increase of sharing information job with other depts (esp. Net Sales, CC* or CR. Service, Product Planning) standardization of sales methodology & process required Sales person, more busy than ever !


Marketing communication Personal selling (more important than ever!): Marketing communication Personal selling (more important than ever!) Sales person shall provide Information on product and guide, assist and cooperate consumer for purchase with knowledge about Company, Product and above all Customer well. Consumers, now have high knowledge on products, saving money but buy what he/she really wants. Needs and wants always so changing as market research cannot catch up. For sales person, it is essential and important as ever to maintain relationship and conclude contract w/ customer,


Internet Advertisement –Why Internet ads increasing ? 2004 Government Report : Internet User increase -Internet user in Japan 79.48 mil.　(+2.18) -Internet user/total population: 62.3% (+1.7 point) -Broadband user: 62.0% (+14.2 point) Easy to get info by One Click e.g. Buy PC Inexpensive c.f. TV or Newspaper-high cost Clear effect←Measurable by Logs in Server Impression effect: recognition of company and brand Click effect GOOD for SMEs !!! Internet Advertisement –Why Internet ads increasing ? 2004 Government Report


Slide95: Internet TV Radio Outdoor Newspaper DM Magazine Easy Segmentation Difficult Segmentation Short Reach Long Reach Conventional Ads & internet Ads Conventional Ads & internet Ads


Slide96: Sales Corner Store Factory Web Site Maker Whole-Seller Blog Consumer Delivery instruction Order info Order Picture product info Picture product info Payment for goods by C.Cards Delivery of Goods Share profit Payment for goods (Price-Commission) Internet Advertisement Blog model


Internet Advertisement –1. Web Ads: Web Ads Banner Ads -Response effect: Advertiser easily knows effect by counting number of clicks -Branding effect: Advertiser make company image and brand known to clicker persons. Internet Advertisement –1. Web Ads


Internet Advertisement –Web Ads 2: (2) Keyword targeting Ads: If searcher input keywords, automatically ads shown e.g. search “Medical Insurance” the names of Insurance Co shown on the same page. Advertiser buys keyword by auction. If user searches it, ads shown in the order of auction price. e.g. Cost to be borne by Advertiser to Google: opening fee \500, CPC \7 Good for SMEs as cost abt. \100,000/month Google ads network includes: if you buy keywords and click it, your ads will be shown in following provider’s page. Internet Advertisement –Web Ads 2


Internet Advertisement –Web Ads 3: (3) Rich media Ads: Rich information by sounds or moving pictures e.g. Expands Ads, Interspacial Ads (4) Blog: Diary of Specific theme Ads of high efficiency expected Affiliate ads: Blog getting popular and affiliate ads in Blog used by e-marketer like Rakuten or Yahoo. Individuals having Blog site earns cash or points even big side income from e-marketer. Affiliate Ads market size \31.4 bil in 05 (y.o.y.77%) may eventually reach to 100.0 bil in 08.* Internet Advertisement –Web Ads 3


Internet Advertisement –2. Mail Ads: Mail magazine Ads: High Click ratio, less branding effect and less reach Opto in Mail : User register the area of interest to which advertiser can send e- mail with advertisement e.g. done recently by major internet portal site Internet Advertisement –2. Mail Ads


Slide101: Rich media Ads Search keyword Ads Mail Ads Banner Ads Branding Effect Response Effect Segmentation oriented Reach oriented


Internet Advertisement –3. Mobile Ads: Restriction：Small size, limited space User: 90mil. In Japan. High response rate as user can see in short time Different user-House wife and young generation e.g. supermarket advertise special sale or arrival of fish or fresh foods by real time Internet Advertisement –3. Mobile Ads


Part 3 Sales Promotion: Part 3 Sales Promotion Sales Promotion Mix e-Marketing (1) Case: B2C “Rakuten” (2) Case: B2B “ NC net”


Rakuten Online shop – largest B2C in Japan: Rakuten Online shop – largest B2C in Japan Ex Banker started Rakuten in 1996, registered at Tokyo OTC Stock Exchange in 2000 Number of tenant (shop): 52,297 Number of merchandise:16,315thou Range of Merchandise: Fashion/Apparel, Shoes, bag, brand goods, Jewelry/Watch, Food & Drink,, Living Interior, Bed, Kitchen Utensils, Hobby/pet.collection (2880019), Health/Beauty/Diet, Sports/Outdoor/ Golf, PC/ home electric/AV etc., Books, Tickets, Business estimate service


Rakuten CEO message: Our goal is to become the worlds No.1 Internet service Company: Rakuten CEO message: Our goal is to become the worlds No.1 Internet service Company E-commerce has changed the world. Each year, more and more people are becoming connected to a growing community. In February 1997, we founded Rakuten Shopping Mall in an effort to create new markets for Japanese business owners and bring better efficiency to markets. From our first year in business, we have grown our business greatly. In 1997, we had only thirteen shops in our mall. Today, we have over 8,500 shops.   We have expanded beyond our initial core business of operating an electronic shopping mall. Today, Rakuten has operations in many Internet sectors such as, Internet portal & media, travel & entertainment, and financial services.   The electronic world has changed so much since our inception and we strive to bring new services and opportunities to our members. Whether those services be in Japan or abroad, Rakuten is committed to bringing new world frontiers to our customers.   We are proud of the work done thus far but we know we must continue to explore for new acquisitions, partnerships and services to help better the lives of everyone who becomes a member of our growing community.   Our goal is to become the No. 1 Internet service company in the world. With this goal in mind, we know our best is yet to come. Each passing year marks another step in our long journey in helping people enjoy the Internet much more. August 2004   Chairman & CEO Copyright (c) 1997-2004 Rakuten, Inc. All Rights Reserved.


Rakuten Mission Statement: Rakuten Mission Statement In 1997, there were many Internet shopping malls around. Most of the shopping malls resembled web-style catalogs. We founded Rakuten Ichiba to bring people with strong commerce skills to the Internet and help them by providing easy-to-use tools to open and manage their Internet shops. Our goal was aimed at establishing market prices on the Internet. We provide merchants with three keys to success: store system, visitor traffic, and business know-how. Merchants are invited to attend classes either at one of our offices in Tokyo or Osaka or at one of our specially designated locations around the country. At these special classes, merchants learn not only how to set up their own storefronts but how to market them as well. One of the advantages of running classes for merchants is that they learn not only from our instructors, but also from one another. This spirit of helping one another has helped make Rakuten Shopping Mall the busiest online shopping destination for Japanese consumers. Merchants enjoy high traffic and strong sales as many of the people visiting Rakuten Shopping Mall come with one purpose in mind: Find the best deals on the Internet. We now offer three value propositions to our Rakuten Ichiba customers: (1) an overwhelming large selection of products; (2) convenient shopping platforms, either by personal computers or by Internet-enabled cellular phones; and (3) incentives to use more of our group services through our membership reward program. Our present sales target is one trillion yen in gross merchandise sales at Rakuten Shopping Mall. As more and more people become more familiar with the Internet and become more comfortable with online shopping, we believe our goal is achievable in the near future. With this goal in mind, Rakuten continues to improve its marketing and bringing new Internet users to our site. Since our IPO in 2000, we have made strategic corporate acquisitions to leverage our strengths and enter into new markets across the Internet. We have begun to bring broadband entertainment content to our customers as more people begin to use the Internet for their entertainment needs. Infoseek is one of Japan's busiest web portals. Through our web portal, Internet surfers can join online communities, share photo albums, keep an online journal or weblog, search for jobs, find new friends, and even join in online educational seminars. Bringing more entertainment to our members is ShowTime. ShowTime, our joint venture with USEN BROAD NETWORKS, offers the latest in broadband contents to Internet users. Whether it be Japanese-produced contents or programs produced overseas, ShowTime brings great entertainment value to our customers. For Internet users who want to see more of the world, they can use Rakuten Travel. Rakuten Travel is Japan's largest online travel reservations service. Rakuten Travel provides travelers with timely and helpful information to make the best choices on all their travel needs. Travelers can use Rakuten Travel to arrange both their domestic and international travel plans. We are exploring opportunities in the overseas markets, including China and Korea. Rakuten Travel is fast becoming the "gateway to Asia" and we continue to strive to bring the best the world has to offer to Japanese people who travel overseas. In order to help Internet users receive more benefits, we have introduced our own Rakuten branded credit card. Our credit card offers members the chance to earn Rakuten Super Points for purchases made both online and offline. Through strong marketing programs, Rakuten’s credit card introduces our card members to Rakuten Group's services such as shopping, travel and entertainment, portal and media, and brokerage services. Rakuten Credit, personal finance business, was added in the middle of 2004. Rakuten Credit offers consumer loan services to middle-to-high income individuals. Individuals have the convenience of borrowing funds and repaying their loans via the Internet or through ATMs nationwide. In the autumn of 2004, Rakuten was awarded franchise rights to found a new baseball team in Nippon Professional Baseball. Rakuten has chosen the city of Sendai, Miyagi Prefecture as the home for Japan’s newest baseball team, the “Tohoku Rakuten Golden Eagles”. The Golden Eagles provides a great opportunity for us to market our company across a much wider segment of the population and introduce our growing level of services to both Internet users and non-Internet users. The Internet has truly changed the way people live today. At Rakuten, we will continue to introduce new services and look forward to helping everyone enjoy the Internet even more. Our ultimate goal is to become "the No. 1 Internet service company in the world." http://www.rakuten.co.jp/info/ir/english/mission.html


Slide108: Copyright (c) 1997-2004 Rakuten, Inc. All Rights Reserved.


Slide109: Quarter Ended Q3 2003 - Q3 2005


Slide110: Group Gross Merchandise Sales


RakutenHow you Sell and Buy in the market: Rakuten How you Sell and Buy in the market Auction: Lucky find from many \1 items, to send goods to Auction Super Auction: Buy offer at Rakuten tenant shop. Offer buy \1. limit earn 20 points Flea market sales offer: First trial free for 30 days after start of selling after A. Auction fee 5% of sales price, B. Fixed price 10% on sales price (excl.5% items Fashion,apparel, shoes bag, brand goods etc.) Joint purchase:Rakuten Member (registration free) can do joint purchase. The more member , the cheaper price. Market for Mobile Phone, Prize contest available too.


Virtual shopping mall- Rakuten vs. Yahoo Japan : Virtual shopping mall- Rakuten vs. Yahoo Japan


***KEY to the success in Net business (H. Mikitani -President Rakuten since 97 ex.IBJ, 42yrs MBA at Harvard Univ.): ***KEY to the success in Net business (H. Mikitani -President Rakuten since 97 ex.IBJ, 42yrs MBA at Harvard Univ.) Q ( ) of the service & five key actions as follows: Always improve, always step forward Have Complete ( ) Always have ( ), do, prove it Maximize ( ) (　　　　　　　), (　　　　　　　), (　　　　　　　) Hint: speed, profit, new concept, traditional idea, hypothesis, customer satisfaction, technology, professionalism ‘My partners who took a risk and worked ‘day and night’ are now all millionaires and can pass even many lives’　-Mikitani


Part 3 Sales Promotion: Part 3 Sales Promotion Sales Promotion Mix e-Marketing (1) Case: B2C “Rakuten” (2) Case: B2B “ NC net” http://www.nc-net.or.jp/ncnetwork/e_info.html#about http://www.rakuten.co.jp/info/ir/english/mission.html


NC Network Co., Ltd ( since Feb 98) -B2B by& For SMEs: NC Network Co., Ltd ( since Feb 98) -B2B by& For SMEs 1997 Established NC Network Group by young executives from 9 small manufactures belonging to metal processing．They created an intra-network under public subsidiary. The purpose was a mutual use of factory machines by interchanging CAD data through internet. 1998 Established NC Network Co., LTD.Opened Web-site and “Emidas Factory Search Engine” (Engineers and Manufacturers Integrated Database Access System) cnt’d…


NC　network -largest virtual factory and marketplace for SM manufacturers : NC　network -largest virtual factory and marketplace for SM manufacturers


NC Network Search by key word “ manufacturing” at Google, Yahoo! MSN & Goo Japanese site, you hit: NC Network Search by key word “ manufacturing” at Google, Yahoo! MSN & Goo Japanese site, you hit Management of Web site community for SME manufacturers by ‘EMIDAS’ Search a manufacturer when you seek new suppliers Search a manufacturer when you seek new suppliers Include detailed info such as technology, machines and facility of each factory Manufacturers can meet new partners and clients big or small and win new business Major trading companies and banks and VC started to invest NC Net to become partnership now Share capital \442,375thou (US$3.7mil) incl.50 SMEs


NC Network Virtual Factory service of PV 2mil./month: NC Network Virtual Factory service of PV 2mil./month Registered Co. & factories in ‘EMIDAS’ Search Engine 12,857 Now, ‘EMIDAS Pro’ members get personal support from NC staff, advertisement and various seminars Total employee of the above: 585,838 Their total sales: \5,330,5 bil. Mail magazine : 13,000/at one time Emidas Magazine quarterly: In Japan 25,000 at one time; In China 30,000 NC Net brought order from new client ave. \26.5mil. at a Member. Total about \97.7 bil for all members


NC net SME factory owner see the WEB site every morning PV2mil./month: NC net SME factory owner see the WEB site every morning PV2mil./month SME factory owner: ‘As a habit in every morning open the Web site to find new chance ‘for sell or buy’ with other SMEs or LE’ Also, Manufacturers Q&A at ‘ Forest of Technology’ page offers the place to exchange technical solution required NC Detector: Sale of Secondhand NC machine tools and other machinery Real meeting event among members regularly done 9 times already


Part 4 Export Strategy: Part 4 Export Strategy Cases: Japanese SMEs entry into overseas market


Part 4 Export Strategy: Part 4 Export Strategy Cases: Japanese SMEs entry into overseas market Kitajima Shibori Co. Ltd Nemoto & Co. Ltd Awa Tesuki Japanese Paper Cooperative


Slide123: Japanese experiences - Kitajima Metal Processing Company in Tokyo • Kitajima Company: – Paid - up Capital: ¥ 16mil. – Employee: 28 – Annual sales: ¥ 100mil. • K company moved to new reclaimed island due to the environmental reasons as advised by Tokyo Metropolitan Board • Press industry cooperatives formed by 16 various forging, casting and plating companies of SME. • Government financed to Coop member in 20 years ago. As next slides


Slide124: Joint Finance for K. Company thru Coop for acquisition of the new land and factory in 1978 - The Central Cooperative Bank - 20% w/interest of Approx. 8 % p.a. - Government owned Japan Small Business Corp. 60 % interest 2.7 % p.a. with repayment of 12years after grace period of 2 years Own fund 20 %


KitajimaＳｈｉｂｏｒｉ since 1947-(Metal Spinning)　: KitajimaＳｈｉｂｏｒｉ since 1947- (Metal Spinning)　 Mr. Kitajima President succeeded from his brother founder, Chairman Business: Metal processing by Shibori of various metals inc. copper, stainless, tungsten, molybdenum, titanium, silver, gold platinum. Products initially kitchen saucer, kettle, then industrial goods car air cleaner, parabola antenna, semiconductor machinery parts, and rocket parts for NASA etc


Kitajima: Kitajima .Using, Hera＊(＊＊Spatula), Mr. Kitajima doing shibori, Picture show left conic die and round metal plate to be spun.


Slide127: Hera shibori: making conic shape from rotating metal round plate using hera (Stick of abt. one meter, named after Japanese cooked rice server) Pictures: H2 rocket booster and airplane Parts (above) Parabola antennae plate (right)


Kitajima　Rocket Booster & big cooling unit parts: Kitajima　Rocket Booster & big cooling unit parts


Start of Export by SMEs. : Start of Export by SMEs. SMEs have limited business resources (Fund, Staffs and Experience) So starts export, either in following way. (1)Indirect Export: SMEs delivering parts and components to major manufacturer in Japan who assemble the products (such as rocket booster) e.g. Kitajima (2)Export through trading company: When SMEs successfully done indirect Export couple times, the SME company may ask trading company to represent them for direct export. (3)The SME grew and has resources for overseas trade, it may start direct Export. This was the case for Sony, Honda or even Toyota. e.g. Nemoto & Co. now trying with a success.


Slide130: Normally, it takes 10 years to become Shibori expert..There is no manual for spinning well. Even K. Kitajima, President has been trained by His brother, the founder and chairman. Now, K. Kitajima is training his son on the job. Kitajima is not relying on traditional spinning only. They are using NC spinning machine as well for mainly mass production job (about 20% of orders). But, Data input needs expertise.


Slide131: Mr. Kitajima & visitors from South Africa invited by JICA


Part 4 Export Strategy: Part 4 Export Strategy Cases: Japanese SMEs entry into overseas market Kitajima Shibori Co. Ltd Nemoto & Co. Ltd Awa Tesuki Japanese Paper Cooperative


Nemoto & Co., LTD: Nemoto & Co., LTD Nemoto & Co., LTD Est’ed: 1941 in Tokyo Capital: \99mil. R&D Center & two factories in Metropolitan area Subsidiaries (In Japan) : －Nemoto Chemical (Phosphorescent & fluorescent pigments, processing of electronics parts) －Nemoto science: Custom Synthesis, Pharmacokinetic & Assay services- -N.P. Tsukuba (Clock, Watch dials, LCD displays) -T,N. Technos ( Pharmacological Research services) (Overseas) Production & Export including US Dept.of Defense,Rolex, Boeing and Mercedes Manufacturing: Portugal, Hong Kong, China(2, 1@FTZ) Sales: Holland, Switzerland, Korea, Italy MR. Ikuyoshi Nemoto President & CEO “Safety, Security, Health”


Nemoto & Co. since 1941Technology Many patented with strong R&D: Nemoto & Co. since 1941 Technology Many patented with strong R&D


Nemoto LumiNova patented in Japan, Europe, USA and China: Nemoto LumiNova patented in Japan, Europe, USA and China Self-Luminous Paint Technology:　　 Radium (1954 23 Japanese Fishermen suffered from US Hydrogen Bomb Test at Bikini Coral Reef) → Promethium　isotope ( safer radioisotope) 100 % share in Japan (91 Seiko Watch decided not using radioisotope dial) ) → Electro Luminescence, tested 3000 samples with accumulated research data. Finally, Nemoto invented and developed LumiNova, which is neither toxic or radioisotope


Slide136: Nemoto self-Luminas Production Process 1. 2 3 4


Nemoto Clock dial Paint : Nemoto Clock dial Paint


Nemoto & Co. Lufthansa Emergency Guide : Nemoto & Co. Lufthansa Emergency Guide Lufthansa cabin Emergency Self Luminous Guide


Nemoto R&D ‘only one technology’ more than 110 patented registered: Nemoto R&D ‘only one technology’ more than 110 patented registered Research report since 1976 (right) Precise Inspection, Various censor, Medical Animal test … New laboratory at Tsukuba


Slide140: Nemoto Self-Luminous printing on 100 Dollar Notes & coins of various countries ‘No fake money…’


Nemoto productSmoke Sensor : Nemoto product Smoke Sensor


With the president Mr. Nemoto “ Excellent company getting Royalty from the world” : With the president Mr. Nemoto “ Excellent company getting Royalty from the world” – Prime Minister Junichiro Koizumi


Part 4 Export Strategy: Part 4 Export Strategy Cases: Japanese SMEs entry into export market Kitajima Shibori Co. Ltd Nemoto & Co. Ltd Awa Tesuki (hand made)Japanese Paper Cooperative


 Success story of SMEby JETRO show supportm Textile Show Germany : Success story of SME by JETRO show support m Textile Show Germany Traditional regional products: Japanese Paper Awa Tesuki (handmade) Japanese Paper Cooperative -Business Discussion 166, Prospective order 15, Application of dealership 2 US Wholesale cos Reason of Success in Trade Exhibition Good Booth location Eye catching display next page Well prepared handouts-pamphlet, Samples, Price List, Delivery program, English speaking staffs Direct mail using Japanese paper products


AWAGAMI (handmade paper)-Regional Export Promotion at Shikoku Island : AWAGAMI (handmade paper)-Regional Export Promotion at Shikoku Island http://www.awagami.jp/


Slide146: -Heim Textile Show Germany Jan 14- Jan 17 04. Exhibition made at 3 booths for 2 cos and 1 group from Awa coop Drive for export made to Europe and USA as similar cheap products made in Thailand, Nepal and Butane http://www.jetro.go.jp/jetro/activities/export/story/success3-1.html


Slide147: The End Y. Shigematsu, Registered Management Consultant 3-11-8, Shimohoya, Nishi-Tokyo City, Tokyo, 202 Japan Tel/Fax81-42-478-3645 E-Mail: nra10494byx@nifty.com ; http://homepage2.nifty.com/shigematsu/