Market Research in Japan

It's one of the world's biggest consumer markets, but when it comes to market research, Japan is way behind. These two companies aim to change all that for good

WALK DOWN ANY STREET, jump on any train, open any magazine: When it comes to advertising, Japan is probably the world's most congested place.

The explosion of marketing in Japan coincided exactly with the explosion of its economy. It got going in the 1960s and flew off the scale in the 80s. Despite more than a decade of economic slump, however, Japan spent the 90s taking marketing and advertising to even greater heights.

But throughout all this there has been a central flaw. Japan and Japanese companies are deeply committed to marketing, and spend millions using it to gain an edge on the competition. When it comes to market research, however, much of the country is left in the dark ages. For all the money that is spent on state-of-the-art innovations in advertising, management teams at many companies have allowed themselves to be satisfied with second-best when it comes to compiling the critical data about their campaigns and using research to plan future strategies.

Two leading market research companies have realized this yawning gap in the market, and are offering companies operating in Japan a unique chance to bring their market research into the 21st Century. Intage and Japan Market Intelligence (JMI) stand head and shoulders above their competition: In their own way, each is offering the Japanese market something it has never had before, taking the whole industry to the brink of revolution.

As JMI director Mark Ferris explains: "Japan as a research market is not so evolved, and the methodology is cumbersome and inefficient. There is a gap in bringing in new technology, but that is where the future lies. This company is making great strides by providing to big globalized firms the sort of levels of data and intelligence in Japan that they expect from global projects."

Norio Taori, president of Intage, agrees that operators in Japan could benefit hugely from the combination of IT and market research. "With the slowdown of the Japanese economy, companies are being forced to rethink their approach to satisfy a more discerning type of customer and diversifying needs," he says. "In this environment, the product development and marketing strategies of retailers requires a fast and accurate grasp of consumer trends. At the same time, the importance of market research has increased not only for manufacturers but also for a wider range of business areas such as finance, services and communications. Although the Japanese economy is in recession, the services we offer are profiting from the benefits of this structural shift in consumer society."

Intage has been around since 1960 and is Japan's biggest market research organization. When it spotted the huge opportunity offered by a combination of market research and IT, the company put in place in 2002 a three-year management plan. The purpose of this was to channel resources into areas where it believed it could achieve the most growth: a move into TV commercial measurement services through its Single Source Japan (SSJ) operation and the development of Contract Research Organization (CRO), serving the pharmaceutical industry. Overall, the company is striving to reposition itself as an "intelligence provider" -- underlining the way that its integration of IT with market research has created a new breed of information of far greater practical use to customers.

As Intage manager Toshihiko Hino puts it, "Amidst an environment where management and information are becoming increasingly integrated, the smooth distribution of information and effective use of accumulated data is becoming vital in order to develop a strong company that can compete successfully in future generations. The key to this effort will be the further evolution of providing intelligence."

Hino adds: "Intage's unique ability is to provide a combination of IT and market research. Our IT division alone has 300 staff. We are spearheading the use of Internet research, and although the future is extremely hard to predict, it is clear that market research will remain a critical aspect of business survival."

JMI, meanwhile, realized that it too could reap the rewards of being quicker than the rest of the industry to find how far market research in Japan was lagging behind the rest of the developed world. Although it has unique strengths in analyzing MR data from mobile phones and other technologies, JMI is also the sole license holder in Japan of the most advanced eye-tracking machinery.

"Japan is one of the most cluttered
marketing environments in the world,
and the eyes are the gateways
to breaking into it"

"Attitudes to market research in Japan have taken a long time to mature," says senior JMI consultant Vanessa Oshima. "It is still the case that a lot of projects are undertaken by women with clipboards: They pull people off the street, offer them a small cash incentive and then usher them into a hall to ask consumers' perceptions of what they notice and what they are able to remember."

But eye-tracking -- literally gaining data on the way that people's eyes look at ads -- turns that whole practice on its head. The machinery itself was designed for use in the defense and medical industies. The founder of the US licensor of the eye-tracking technology (PRS) discovered more than 30 years ago that the technology could be used to provide ultra-accurate information about the actual movement of a consumer's eye across given marketing communication such as print and packaging. The technique therefore works with any piece of marketing that contains a visual element. Packaging, billboards, Web sites and print can all be analyzed for impact and appeal.

"Japan is one of the most cluttered marketing environments in the world, and the eyes are the gateways to breaking into it," says Oshima. "The four key words for advertisers are 'attention-grabbing, memorable, meaningful and motivating.' Until now, the 'attention-grabbing' part of that has been hard to quantify, but eye-tracking allows you to assess it."

People are asked to volunteer, and their eyes are calibrated for the machine. They are then asked to look at the screen, on which anything can be projected -- anything from an advertisement to a mock-up shelf in a shop. A camera records every motion of their eye, and this movement is then superimposed on the projection. Thus JMI is able to record exactly where, and in what order, people looked at the image. Coca-Cola was once a client when it wanted to find out more about product positioning in vending machines.

"In the case of a shelf, eye-tracking gives clients vital information on the importance of positioning and the attention-grabbing ability of packaging," says Oshima. "A major food brand decided to change its trademark purple packaging to a crisp white design. The company went through the usual route of bringing in focus groups to do qualitative tests and they absolutely loved it -- it was a winning design. When the eye-tracking test was conducted, however, the crisp white packaging that everyone liked so much was completely lost against the competitors. It became recessive on the shelf."

Eye tracking also gives advertisers vast amounts of information about the effectiveness of their campaigns. Eye-tracking can explain, for example, why people could look at a poster or print ad for several seconds but come away not recalling the brand. "With normal research, you would scratch your head and wonder why. Eye-tracking would show that it was because two-thirds of people did not even look at the corner of the advertisement where the brand name was written," says Oshima. "We are approached by global companies who are sick of hearing that Japan is a difficult market to crack. Conducting one of our eye-tracking tests will only really add about 10 percent to the overall cost of market research, but its results could end up saving millions of dollars in wasted advertising. IBM are big adopters of this -- every print ad they produce gets tracked."

But eye-tracking is only one of a number of techniques. Intage, meanwhile, has begun to use its history of innovation to even greater advantage. As a demonstration of its confidence, in 1999 Intage started operations in Shanghai. "A modern consumer society is developing there with remarkable speed, and we expect marketing research needs to increase," says Taori. "Our current investments in the businesses are expected to produce large returns. This is especially true of our expertise developed in targeting the highly demanding Japanese consumer."

A prime example of one of Intage's new innovations is its ability to track the effectiveness of TV advertising. As Taori explains: "As the company is evolving into an Intelligence Provider, we will expand operations to pure intelligence provision by leveraging our strengths in new business domains. The recession is forcing companies to create ever more accurate management strategies. We have a market survey system that can measure advertising effectiveness through the dual analytical tools of television ratings and product purchasing data. By integrating SSJ's business with our existing businesses, we can create new intelligence from the seamless integration of three sources of consumer, retail and advertising data."

The company is also strongly pushing as a core competency its Contract Research Organization (CRO). This side of the business has been particularly attractive to Japanese pharmaceutical companies that are working to become internationally competitive and meet the stringent requirements of good clinical practice standards for clinical trials. Intage also provides a comprehensive support system for drug development -- a growth area with massive potential. "We design and monitor medical experiments, create systems to support clinical trials, offer consulting, prepare documents and materials for drug approval applications, manage case study data, and conduct statistical analysis of case studies," says Taori.

Underpinning all of this is the sprawling market research business that Intage has built over the past 40 years. It dominates the world of Japanese syndicated consumer panel services (continuous monitoring of consumer goods purchasing trends). A total of 12,008 monitor households provide details of products purchased on a daily basis using a handheld bar code scanner to collect data. This data is then sent to Intage, which sells the information on through a syndicated data service. The company performs a similar service for point of sale, tracking 4,485 retail outlets such as supermarkets and convenience stores to produce "an unprecedented volume of highly reliable data."

The age of the company is a big asset: There are high barriers to entry by competitors and because Intage has been running the system for some time, clients gain the added benefit of historical comparison. Big clients can use the information for decision-making in relation to marketing strategy.

In its Systems Solutions operation, where it develops applications for a wide range of industries (transport, travel, medical treatment, education, insurance and publishing), it again works with the aim of "turning data into intelligence."

JMI may be considerably smaller than companies like Intage, but it has amply demonstrated the concept that "working smarter" wins every time. As Ferris says, "The biggest difference between JMI and our rivals is that we can handle more than just research. We offer a full package for multinationals that want to conduct the Japan contingent of a global market research project. We were founded with the vision of integrating technology into market research."

When it comes to successfully using market research to grow their business, tomorrow's winners will be those companies who are willing to take advantage of the potential offered by these new technologies.

Directory
When calling from outside Japan please dial the country code (81) first, then 3 for Tokyo (omitting the 0), followed by the number.

INTAGE Inc.
Tel: 0424-76-5164
Fax: 0424-76-5178
1-4-1, Honcho, Higashikurume-shi,
Tokyo 2003-8601
www.intage.co.jp
Contact Person(s): Toshihiko Hino
t.hino@intage.co.jp
INTAGE has over 40 years of experience in providing comprehensive market research services including brand and image analysis, concept evaluation, customer satisfaction, and advertising measurement. Our staff is well versed in all common survey methods including face-to-face, mail, Internet, FGI, telephone and in-depth interviewing. Our strength lies in the ability to combine our 250 IT staff and 330 market research experts to provide our clients with in-depth technical market analysis.

Japan Market Intelligence (JMI)
Tel: 03-5428-8150
Fax: 03-5489-2825
3F, Fuji Bldg. 37, 1-18-3 Dogenzaka, Shibuya-ku,
Tokyo 150-0043
www.jmintelligence.com
Contact Person(s): Vanessa Oshima
Oshima@jmintelligence.com
Full-service market research company specializing in providing foreign companies with easy access to markets in Japan and high-quality customized data collecting and analysis.