In this series of posts from the front line of global market research, we would like to discuss how market research methodology differs from within Japan and overseas, including the latest overseas market research methods, and information to make global market research more familiar to our readers.

For those that missed our previous two articles in this series, they are:

• (1) Market Research in the US and Europe is a Science!
• (2) Differences Between Japanese and Western Market Research

Previously, we talked with our resident expert, Mr. Kawaguchi, about the differences between Japanese and Western market research companies, and in this article, we’d like to look specifically at research costs.

Are there any price differences between Japan and the West in terms of market research? How much of a difference is there?

Among developed countries, the cost for surveys in Japan is extremely low. As mentioned in the previous article, survey companies overseas often have original analytical models, etc., and these naturally add to the overall cost, but even when conducting online surveys using the same specifications, Japanese prices are more than 40% lower.

One reason for this difference is that in the United States or Europe, more and more online research is being conducted in-house, by specialists who learned market research as an academic profession in university. Thus, the choice to use a market research company overseas is made due to distinguishing factors over a DIY model, whether that is a specific analytic model or some other value-added distinction.

I imagine that the reason why market research in Japan is so affordable, but less likely to be used than in the West, is largely due to the educational or social environment we discussed last time, but would you say there are other factors?

One of the major peculiarities of the Japanese market is the emphasis placed on trends, to the point where many Western companies cannot comprehend them. What are unique about Japanese trends? Generally, Western societies place more importance on individual tastes than societal trends. On the other hand, in Japan, trends are more important than individual tastes, and if a particular trend becomes popular, that trend becomes idealized and representative of “perfect” taste, thus dominating the market without exception.

In other words, even if you develop a great product based on extensive market research, that product may become outdated and unsalable due to fluctuations in trends?

In market research taste preference surveys, we’ll often ask the question, “how much do you like X?”, which will then be used in the product development stage to create products superior to competing manufacturers. Based on how people answer, we will aim to analyze the data and identify targets and their needs in detail, for example, “Generations X and Y like …,” “Single people like …,” or “Families like …”. However, in some cases, when a strong trend emerges, most consumers will seek the same product, regardless of how they answered before. This will make all the research and preparation put into it worthless.

To put it in extreme terms, even if you have been steadily analyzing consumer preferences when developing your products, if you are caught out by the wrong trend, your efforts will not be noticed by consumers. Market trends also exist in the United States or Europe, but not to the same degree. They may only resonate with a limited segment of the population, but most segments will not break from their own stated preferences.

In other words, in areas where trends are less powerful, it would be beneficial to use market research surveys for product development and marketing.

One thing to note is the speed at which Japanese companies develop one new product after another, with old ones disappearing quickly after a short period of time. This speed of development is unrivaled compared with the West, though it probably has a big affect on reducing their overall profitability. Because products are developed so quickly, there may be no time to consider developing new ones based on market research, or even conducting verification surveys prior to launch. In addition, Japanese companies often have an imbalance, where marketing departments may have a research budget, but product development departments do not. Various other factors also play a role. For example, marketing departments may be able to avoid conducting research themselves if they purchase POS data instead. Also, new products roll out quickly in a convenience store environment, meaning that older products aren’t in stores long enough to conduct research to improve them.

Finally, Japan is dominated by owner-operated companies, with authority centralized and upper management decisions taking priority over survey results. In contrast, many Western companies make it a rule that when launching new products, research must show that there is a market potential, connecting management decisions directly with the results of the research.

What do you expect from Japanese market research firms going forward?

This will really depend on future survey requirements. If you are doing business in Japan, surveys are less important than in the West, and Japanese companies do not need to hire market research specialists or have a department specifically in charge of surveys. As a result, Japanese market research companies have no need to up their game, as there is no demand for new analytical models. Since all companies will offer similar services, there will be a strong tendency towards price competition.

On the other hand, while market research may be more essential when expanding overseas, Japanese market research companies are not accustom to working in foreign markets, and Western-affiliated research companies are too expensive for most Japanese clients. Given the realities of the Japanese marketplace, using an in-house researcher or outsourcing some research services, like many Western companies do, should be considered.

What is the difference between hiring a market research firm and outsourcing research services?

In the first article we talked some about research tool providers and support services for those conducting market research in-house. I think this is key. In Japan, market research survey skills are not very high amongst corporate clients, so it is vital that support for this is provided as well. The key is to create a model suitable for Japan, one that helps companies through lower costs, time savings, continuous use, and widespread adoption.

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The use of DIY survey tools with guided support is quite a different business model than conventional Japanese survey companies, but seems to be a credible one in light of the market research markets in Japan and overseas. While we talked a lot about the differences between Japan and the West in this series, we hope to expand more in the future about market research survey models. If you have any questions or comments about this article, please feel free to contact us.