In the world of business and product development, companies often adopt one of two strategic approaches; “market-in” or “product-out.” These terms denote fundamentally different approaches to understanding customer needs, developing products, and driving growth. In this blog post, our editorial team examines the benefits and drawbacks of both approaches in relation to Japan. We go over the methodology which foreign companies tend to favor, and lastly offer our own perspective on this fascinating topic.

Success By Different Routes

Apple Inc. (“Apple”) and Amazon.com Inc. (“Amazon”) are both undeniably successful companies which rapidly expanded beyond their home markets. On the surface, they seem to share many similarities. They provide in-demand products in ways which consumers appreciate. But, under the hood, their approaches to product development and business strategy are profoundly different. This difference lies two business strategies termed “market-in” and “product-out,” representing fundamentally distinctive approaches to product development and business strategy.

For example, Amazon took a “market-in” approach. The company developed their product organically, based on customer use and reviews. They adapt their services as required in different markets and treat customer demand as paramount. In this way, Amazon created a global product, so ubiquitous with modern life that it is hard to deny its convenience.

On the other hand, Apple released the iPhone in 2007. Developed over two years in total secrecy, it was a product which no-one saw coming, but which revolutionized the daily lives of millions. Thanks largely to this market-disrupting product, Apple became one of the most profitable companies in the world. This product-out approach relied on having a product so good that it needs little adaptation in any market.

Product-Out: The Company’s Vision

A product-out approach begins with the company. The focus is on leveraging the company’s existing strengths or innovations to create products, which are then pushed into the market. Rather than being driven by specific consumer needs, the company introduces a novel product, compelling customers to recognize its value. This approach is favored by businesses with a high technical skill set and extremely specific products. As seen above, Apple’s introduction of the iPhone, which combined several previously separate technologies into one revolutionary device, is an example of product-out thinking. Consumers did not realize they needed the iPhone until it was launched, when it instantly became a global phenomenon.

The main advantages of a product-out approach are that the product itself needs minimal adaptation no matter which market it enters. A Product-out approach also makes market-disrupting innovation possible. This can save on costs concerning labour and marketing while bringing exceptional value to society. However, this approach can flounder in markets with a high degree of difference from the home economy. It can also result in a disconnect from the needs of the consumer. Poorly envisioned products can flop, fail or quickly fade from public interest.

Market-In: The Customer’s Need

The market-in approach is all about putting the customer first. Businesses using this strategy begin by understanding their audience. They research what customers want, what they need, and what problems they face. Through extensive market research and consumer feedback, companies shape their products or services around the preferences of the market and customers they aim to serve.

This customer-centric strategy involves a high degree of flexibility. As consumer trends and preferences shift, businesses must adapt their offerings to stay relevant. This results in a reactive and dynamic approach, ensuring that the product or service aligns with the market’s expectations from the start. As mentioned above, companies like Amazon excel in this approach. They constantly refine and expand their offerings based on customer usage data, ensuring they meet customer needs in any market.

A market-in approach can be a safer way to develop products since it responds to existing demands. This can reduce the risk of a product flop. This approach can also allow for a stronger connection with customers, since the product has been designed around their preferences.

Foreign Companies In Japan

Foreign companies entering the Japanese market often rely on a product-out approach. Driven by confidence in their offering, they frequently push products developed in their home markets without fully considering the unique preferences of Japanese consumers. While this approach can succeed when the product is truly innovative, it often misses the mark in Japan. In the Japanese market, customer expectations for quality, service, speed and localized features are arguably higher than in other economies. Without adapting their offerings to the local market, foreign businesses may struggle to gain traction in Japan.

This issue can sometimes be difficult for foreign companies to grapple with. When a product has performed well in other markets, it should follow that it would perform well in Japan. However, this economy is renowned for the exceptional quality of its products, with consumers expecting a high degree of convenience, localization and a customer-centric approach. For this reason, thorough market research and a flexible approach to product adaptation are indispensable when entering the Japanese market.

The YOUNEEDS Approach: Market-In For The Win

At YOUNEEDS Co., Ltd. (“YOUNEEDS”), we often encourage our clients to adopt a market-in approach. This helps to prioritize understanding of the Japanese market and encourage foreign companies to respond to the specific needs of Japanese consumers. We believe that a market-responsive and customer-centric approach is crucial for long term success in Japan.

Adapting an offering for the Japanese market can be an uncomfortable process. It requires the foreign company to look at their product or service and make effective changes. However, data-based market research can provide a roadmap for success in Japan. This is why YOUNEEDS always recommends market research as the first step to Japan market entry. While adopting a market-in approach can be difficult, it will ultimately lead to the creation of a stronger offering in Japan, as well as lasting success in the Japanese market.

YOUNEEDS is ready and waiting to assist your company in its entry into the Japanese market. We offer consultations and differing price brackets designed to meet your specific needs. We can advise you on how to adapt your offering to align with the Japanese market. By taking the realities of the Japanese market and consumer needs into account, we are confident that your business can flourish in Japan.

Understanding the Japanese market is central to everything we do. But, like our name says, we are here to meet your needs in Japan. For advice on developing a market-in approach in one of the world’s largest and most exciting economies, contact us here or via our LinkedIn.