Transfer of Food Business Marketing Knowledge in Asia
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Transfers of Marketing Knowledge in Asia By Food Corporations from Japan Abstract Hiroshige Hayashi This paper discusses the transfer of marketing knowledge in Asia relating to consumer food business by three Japanese corporations: AJINOMOTO, EZAKI GLICO and Otsuka Pharmaceutical . Through their respective product offering, these companies each aim to provide consumers with ‘ spiritual value’, promoting it as ‘the joy of enjoying tasty foods with family’, 'the joy of sharing pleasure with someone precious to you’, and ‘the sheer pleasure of doing your body good’. The transfer of consumer marketing knowledge for spiritual value creation by these three corporations will be analyzed through the applications of the marketing transfer model by Hayashi. Key words Marketing transfer model, 4Ps of marketing knowledge, Product/Program/Process/People, Civilization product and culture product, SA transfer and AI transfer 1 Chapter1. Introduction This paper discusses the transfer of marketing knowledge relating to consumer food businesses, with particular attention to AJINOMOTO Co., Inc., EZAKI GLICO Co., Ltd. and Otsuka Pharmaceutical Co., Ltd. Neutraceuticals Division, in the geographical region of ASEAN countries and China. See Exhibit 1. < Exhibit 1> 1.1 AJINOMOTO Co., Inc. Around 80% of AJINOMOTO’s overseas consumer food businesses are concentrated in Asia, mainly in six ASEAN countries – Thailand, Indonesia, Malaysia, Vietnam, the Philippines and Singapore. The local subsidiary in each country has grown to become a general manufacturer of foods in its own right. AJINOMOTO has established its own brands in many product categories, ranging from a global brand of umami seasoning 'AJI-NO-MOTO' to strong local-specific brands, and despite food being generally considered to be the most conservative aspect of the local culture, these brands have taken firm root in each country’s culinary repertoire. At present, AJINOMOTO is actively implementing a strategy of consolidation growth, including the introduction of new products and market expansion into South-West Asia and the Middle-East. AJINOMOTO’s business performance in China has been quiet. 1.2 EZAKI GLICO Co., Ltd. Over 80% of EZAKI GLICO’s overseas sales occur in Asia. This is mainly driven by 'Pocky' and 'PRETZ', which are originally from Japan but are now growing to become global brands. The core target is wealthy middle-class children, particularly female high- school and university students. Cultural marketing with a soft value focus, featuring the target audience's favorite pop culture has been employed to successful effect. Among EZAKI GLICO’s Asian operations, Thai and Chinese operations have a longer history and are becoming the two main sales pillars. In Thailand, sales areas are spreading from urban districts like Bangkok to rural districts, and even to neighboring countries like Indonesia and Vietnam. In China, sales development has been scaled up from key regions, including coastal areas, to large cities across the nation. 1.3 Otsuka Pharmaceutical Co., Ltd. Neutraceuticals (NC) Division The core products of Otsuka Pharmaceutical NC Division include 'POCARI SWEAT' and 'SOY JOY'. The Division has carried out marketing in Asia in the same way as in Japan; they sell scientifically-proven health foods and drinks through constant consumer education. Their sales tactic is one of tenacity and continuity, exhibiting a reluctance to abandon a program until success is achieved. As of 2013, Indonesia is their biggest sales arena in Asia. The growing sales network covers the whole national archipelago, which consists of 18,000 islands of various sizes, spanning 5,000km from east to west. Otsuka Pharmaceutical NC Division is now aiming to drive penetration in Thailand and Vietnam. In China, they have experienced slow growth. 2 Chapter2. Transfer of Marketing Knowledge1 Global marketing is 'a business management activity carried out via the global and reciprocal transfer and practice of company’s marketing knowledge. It is a source of customer value creation, while seeking to learn from both its country of origin and host countries, with the aim of achieving global optimization of the company’s business performance (sales and profit)'. I explain below my theory of marketing knowledge transfer, which constitutes the framework for this section. 2.1. 4P strategies for marketing knowledge First, we look at the marketing knowledge that is transferred globally and reciprocally by Japanese companies in terms of the 4P strategies (Product, Program, Process, and People). Product strategy guides product development, which creates customer value. It focuses on competitive advantages. Program strategy facilitates the establishment and execution of the 4P marketing strategies, consisting of strategic measures for individual products and brands, advertising and promotion, distribution and pricing. Process strategy concerns the marketing management process for planning and implementing program strategy. Hence, as marketing knowledge is passed on from person to person, People strategy is needed to optimize the diversity of human resource management (HRM) globally. 2.2 Global evolution of marketing knowledge < Exhibit 2> See Exhibit 2. Japanese companies acquire overseas marketing knowledge; they transfer and internalize it within themselves; and they evolve – we define this mode as three-step AI transfer or AI evolution, which results in the realization of internal globalization. Product transfer stages, typically, follow this pattern: a Japanese company will learn about a certain product category (such as home electric appliances) from the West, which it adopts and imitates, producing a second-and-cheaper product to launch as Japan’s first-to-market exploration. Next, by adapting and improving what has been learnt, the company makes a second-but-better (performing/functioning) product and evolves the existing market. Eventually, the company becomes adept and innovative, enabling the delivery of a first-and-best product on the world market, with a view to creating a new niche. Meanwhile, the transfer operation carried out by Japanese companies seeking growth opportunities overseas can be described as a two-stage SA transfer of standardization and adaptation, facilitating external globalization. It is still fresh in our memory that in the home electric appliance sector, Japanese companies once swept the world with successful SA exports and SA local production while undergoing AI evolution. Japanese companies are now learning from consumers worldwide, and in addition to taking the adaptation stage of SA transfer, by conducting AI transfer in local markets, they are developing and selling localized products or local-specific brands. First-and- best values for customers are being created locally through localization and AI transfer. In the case of locally specific models of automobiles and home electric appliances, reverse innovation is carried out by the local development of products, and later those 3 products can also be sold to low to middle-income consumers in the markets of developed countries. In the case of foods and cosmetics, local lifestyles are studied to develop wholly new products and brands to be marketed locally. 2.3 Global transfer: 'civilization' versus 'culture' products To work on product strategy, it is necessary to divide products into 'civilization' and 'culture' typology (There are also hybrid products sharing characteristics of both types). Moreover, individual products need to be characterized as representing either 'physical' or 'spiritual' features. See Exhibit 3. < Exhibit 3> For civilization products such as cars and home electric appliances, the product’s competitive advantages can be evaluated objectively by technology-determining function and performance. Therefore, the global development of this product type concentrates on standardization that makes few changes to the 'physical' side of Japan- born products, and on the adaptation to local cultures through effective communication, thereby modifying the product’s 'spiritual' features to meet local psychological/emotional needs and wants. As the civilization values of 'physical' features, such as function, performance, usability and price, are hardly affected by cultural differences, they are culture-free and their global transfer is based on a trade-off relationship with cost. Until recently, Japanese companies excelled at globalization with civilization products; automobiles and home electric appliances are typical examples, and these industries have produced numerous global companies. In contrast, the global development of culture products, such as foodstuffs and animation media, focuses on standardization, preserving the cultural values of 'Japan- only/Japan-like', which constitute a 'spiritual' feature, and on the adaptation to local cultures by modifying 'physical' aspects such as flavors and fragrances. In some cases, without changing 'physical' or 'spiritual' features, completely ‘Japan standardization- only’ transfer is carried out. Alternatively, in some cases, by moving away from Japan- origin foods and studying local food culture from the basics, 'physical' and 'spiritual' features are created through localization and local-based AI transfer, developing local- origin food products. Japan-origin culture values are not universal, but specific values to those who appreciate and are willing to accept them, so they are tied to cultural acceptance, or culture-bound. In recent years, even in the civilization product