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The “Godiva Factor” and Other Important Issues

SINGAPORE — The distressing sound in boardrooms all over Japan is that of tightly clenched teeth sucking in air. It's the sound of uncertainty, change and desperation. You hear it a lot these days what with the Asian economy suffering and companies faced with hard decisions such as laying off workers, restructuring or closing down.

But for savvy direct marketers this woeful sound can be turned into the cheerful clanking of coins in your coffers.

As an American direct marketer who has lived in Tokyo and worked in Japan's direct marketing industry for the last two and a half years, let me tell you, if you're in business in Japan–don't leave now. If you're thinking about testing the waters–do it.

The Japanese have long memories. Foreign brands that come and go and show no commitment to the marketplace are often looked down upon–forever. Brands are everything in Japan and building them over time is critical to success.

If you're coming to Japan with a long term strategy to grow your business and your brand, success can be found. Look at the multi-level marketer Herbalife as an example. Four years ago they came to Japan with virtually no sales. By the end of 1998 they predict they will do one billion dollars worth of business.

Despite the soft economy the Japanese have money to spend. In fact, they have the highest savings rate in the world. Here are some suggestions to take advantage of tough times in Japan:

–First, the foreign catalog boom is definitely over and the “low hanging fruit” has been picked. Many foreign catalogers are finding that their existing customer base is still buying at near catalog boom levels but that new customer acquisition is costly.

As an interim strategy, offering greater incentives to prospects to buy, such as reductions in shipping costs or discounts toward next purchase, can help boost response tremendously.

–TV time in Tokyo and Osaka has always been a sellers’ market. But a weaker economy and the advent of DirecTV and cable is changing all that.

Stations are waking up to the benefits of CPI (cost-per-inquiry) media buys and are willing to negotiate big discounts off their ratecards-a never-before heard of experience. If you're looking to test DRTV in Japan, now is a sweet time to start.

–Take advantage of natural spending periods during the bonus/gift-giving seasons called O-seibo (summertime) and O-chuugen (wintertime). Pre-packaged giftpacks are particularly popular and businesses set aside large budgets for client gift-giving (great B-to-B opportunity here) and consumers spend heavily at bonus seasons on gifts for family, neighbors and co-workers.

Advertising on the trains and subways can pay off because during their average two hours on trains commuters have no where to look but up and they have the time to read your message in detail. Plus, an overwhelming percentage of urbanites carry cell phones and can respond to your advertising via phone immediately–from anywhere.

–Obviously, make sure your product offering is the right size for the Japanese and their homes. The Japanese worry about this and you can assuage their fears by demonstrating that you have designed items or selected merchandise specifically with their needs in mind.

–The vast majority of foreign catalogs who have translated their books into Japanese have found a real boost in sales. The novelty of having a foreign book with a language other than Japanese has definitely worn off.

–As always, the whole key is value. What does my product or service in Japan offer that gives greater, relevant differentiated value than my competitor's product or service? If your product or service is cheaper than domestically available goods, it's not enough. The Japanese are sophisticated consumers who typically prefer quality over price.

Unlike Americans, the Japanese would rather have one delectably luscious piece of Godiva than an entire 3lb. bar of Hershey's middle-of-the-road chocolate sold at the same price. The “Godiva Factor” is a critical insight to finding success in Japan.

Looking for other markets in Asia to explore? Singapore is the “Peoria of Asian test markets.” Why? Because of its central location in Asia, its amalgamation of Chinese, Indian and Malay cultures who use English as their lingua franca, its established telecommunications and postal infrastructure and concentrated population of 3 million.

The government of Singapore is stepping up efforts to develop Singapore as the direct marketing center for Asia. The Singapore Trade and Development Board (TDB) just announced that, “TDB will be looking into developing a package of incentives to assist companies' overseas business expansion through Direct Marketing…

In addition, a critical mass of international Direct Marketing companies will be encouraged to be based in Singapore.” That's good news for direct marketers around the world looking to do business in Asia.

Many companies are cutting back their marketing budgets in Asia. Although there have been cuts made to general advertising, funds are being shifted toward direct marketing and database marketing programs because they offer accountability and precision targeting.

In Thailand agencies are laying off people right and left or giving their employees drastic pay cuts. Since Fall 1997 the cost of rice has gone up 40% and the Thai Baht has devalued 100%. Bangkok taxi drivers can't afford to drive around looking for customers. That wastes gas and therefore money. They earn about $1.00 a day.

The Thai government is quietly suggesting that urbanites move back in with their families in the countryside and grow rice and sugarcane until things look up. Ford trucks is putting some marketing initiatives in place to take advantage of the need to transport sugarcane from the farms to urban centers.

Finally, for markets all over Asia one of the biggest difficulties continues to be finding people trained in direct marketing.

DM neophytes and seasoned professionals are around but the middle layer of skilled direct marketers with a few years experience is quite scarce. If you've ever thought about living in Asia, DM professionals are needed.

Come get some international experience. We need you.

Deborah Meissner is an account executive with Wunderman, Cato & Johnson in Singapore where she moved from Tokyo earlier this year

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