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. Now two companies are changing all that for good - Special Advertising Section

Japan, Inc., August, 2003 by Benjamin Freedland

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.

"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 industries. 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.