Catalina Marketing Corp.'s Japanese subsidiary has added another store chain to its network for distributing manufacturer and retailer promotions based on customer purchase behavior.
The Catalina Marketing Network installed recently in all 106 stores of Japan's Kasumi Stores chain will offer coupons, advertising, loyalty programs and encourage sampling at supermarket checkouts. Promotions will be delivered through Catalina Marketing Japan's behavior-based applications.
“We'll no doubt bring the targeting aspect to Japan,” said Tom Buehlmann, Oxford, England-based senior vice president of Catalina Marketing International. “Right now we only do [targeting] based on transactional information. No historical is running at this time.”
With this expansion, Catalina Marketing's store count in Japan rises to more than 1,000. Its European and Japanese network combined exceeds 5,000, and the U.S. store count is 17,500.
Catalina Marketing's blueprint for Japan is the same as for its overseas markets in France, Britain and Italy. It established its base business model, then introduced the country to targeting and consumer packaged goods companies to coupons. A store network is then built starting with leading retailers.
But these markets vary from the United States in many ways.
Shoppers overseas buy less per trip but make more shopping trips per week. There is less private-label development. Marketers undervalue targeting. Direct-to-consumer spending is underdeveloped relative to the United States. Not surprisingly, coupon response rates are 50 percent higher overseas.
Though overall these markets do not differ in terms of application of Catalina Marketing's U.S. business model, there are other differences in the level of retail concentration and sophistication. Britain's retail industry is highly concentrated. Italy's, by comparison, is more fragmented.
“Establishing a retail network is a key challenge in all countries,” Buehlmann said. “The reason is that European retailers are concentrated; that is, they have a powerful market position, and initially they think they can go it alone.
“Our key arguments are: One, we bring you additional above-the-line funding; and two, developing a top-class targeted capacity is expensive and difficult to do, and we can do this for you,” he said.
On the marketer side, there is a lag, too.
“European manufacturers are generally behind the U.S. in terms of behavior-based marketing,” Buehlmann said. “Conversely, European retailers are pretty sophisticated in their use of customer data via loyalty card databases. But I could not say whether they are more sophisticated than their U.S. counterparts.”
Packaged goods players in these markets typically reach consumers through television, print and radio ads and some trade spending. Promotions are used, but not on the scale as in the United States. However, database marketing is catching on.
“Retailer loyalty programs are widespread and increasing in sophistication,” Buehlmann said. “The UK is relatively advanced in direct-to-consumer database marketing, especially using direct mail.”
Another challenge, albeit not unique to Japan, is language. Then there is the major stumbling block — the lack of a coupon clearing process.
So what Catalina Marketing is doing is creating a syndicate of retailers. The support of the largest Japanese retailers to a uniform agreement is crucial to its success there. It also is helping create a clearing process with third-party suppliers. And, of course, this is being done through bilingual staff.
Experience has taught Catalina Marketing that consumers generally are the same worldwide. They respond to targeted incentives, at least in the markets where Catalina Marketing operates. There is also a growing use of loyalty programs for direct merchandising efforts. But promotions are more continuity-based than segmented.
“We're making good progress in France and Italy,” Buehlmann said. “We're also investigating entry into another European market at this time … In Europe we use largely transactional targeting. We're starting to acquire historical information and are rolling out our Checkout Direct product progressively.”
Japan is in the early stages of adopting behavior-based marketing, and it is a matter of time before the market gets savvy, he said.
“At this stage,” Buehlmann said, “American marketers are ahead of Japan. We can help them drive marketing waste out of their budgets.”