Delissa in Japan

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of storage areas =>daily purchase habit. Japanese retail market is extremely fragmented, most retailing remains in the hands of the small businesses. Japanese distribution is much more complex and multilayered than in the West, costs are higher too.

- Economic: TV advertising rates in Japan are expensive compared to European rates.

- Competitive: “Yakult Honsha” yogurt drink with a different distribution type /”is not sold in shops, but through door-to-door sales and by groups of women who visit offices during the afternoon and sell the product directly to employees”/ “The Japanese market is very tough and competition very strong. Consumers’ brand loyalty is low.”

- European competitors are currently not doing any better, but should not be disregarded.

3. Alternatives comparison.

If we choose to leave the market completely, a “pro” is that we will be able to concentrate on other more successful markets but a “con” is that we might not be able to enter it again. In general this market has a potential amongst the younger population that might be lost to competitors. There is no reason to run away, none of the foreign competitors are currently doing better than Delissa. Our partner Nikko, despite some reports, is a good partner, definitely better than some other candidates – at least it has a basic milk distribute system that can be utilized and improved for our needs. Yoplait’s partner Zennoh has no previous experience in marketing yogurt, and Danone’s partner Ajinomoto has no experience in dealing with fresh dairy products at all. Some mistakes were made in the past and the relationship with Nikko is in danger, but this is still fixable.

4. Course of Action: option A (stay in Japan and stay with Nikko).

Recommendations:

On a larger scope, show respect to a different culture and develop trust with your partner. Be patient. Learn Japanese!

The Japanese seem to be so keen on the idea of having things Western, yet the successful yogurts in Japan have been the ones with that distinctive Japanese flavor.

Some specific recommendations:

Regular advertising should concentrate on plain yogurt because it makes up the largest segment in Japan. “Fashionable” and “European” concepts can be more stressed for fruit yogurt. Maybe lower the price for a plain yogurt but keep it higher than competitors for a fruit yogurt. Determine the core target group for different products. Pick a better time for advertising considering age of viewers. Find other ways (non-TV is cheaper). Pay attention to Nikko’s growing requests for puddings that are more popular in Japan than yogurts. Develop other products for Japanese market specifically. Implement alternative ways of distribution (like Yakult drink). Strengthen distribution in rural areas.