What Ogilvy’s ‘V12’ means for Japan

Read our introduction to the ‘V12’ here

Japanese companies have not built as strong a footing in South Asia as in Southeast Asia. Does this mean they should start rebalancing their investment?

Japanese companies will need to re-look at their investment strategies to ensure that they do not miss out on the important growth of South Asia in the next decade. 

Japanese companies have historically built stronger ties with Southeast Asia due to various historical, cultural, and geographical reasons. However, South Asia is both geographically and culturally further for Japanese companies, as these countries have very different cultures. 

With 400 new middle-class consumers emerging in India in the next decade—500 million-plus when you combine India, Pakistan, and Bangladesh—it is the vital new epicenter of middle-class growth.

Japanese companies must push themselves to connect with these countries, or they will lose out in the next, vital wave of global development.

What challenges do you anticipate for Japanese companies in building strong brands in markets like Pakistan, Bangladesh, Nigeria, Mexico etc.?

Japanese companies tend to make distribution and supply chain management their primary focus. However, to win in the V12 markets, they will need to focus on brand building. This will require them to develop deep local consumer understanding, in particular foresight about the speed of change of social norms and attitudes among middle-class consumers.  

This will mean understanding ‘Muslim futurists’ (progressive Muslim consumers) as a growth segment in some of these markets, where Muslims are the majority, or a significant minority of the population. Across all of the V12 markets, Japanese companies will need a deep understanding of local women, who are at the center of more purchasing decisions. 

Most of these V12 markets also have a great deal of regional variation within the country, so Japanese companies will also have to understand the regionalisation issues (variances in preferences and tastes) within these markets.

What are for you the most important lessons from this report that that marketers should take into account?

The middle-class of the V12 represent a social tapestry of greater ethnic, linguistic, cultural and religious diversity than previous generations of middle-class consumers in the West; marketers will need to master greater diversity and local insights in less familiar markets.

V12 middle-class consumers enjoy the power of connectivity to a global grid of commerce, influence, and social interaction, which means that many velocity market consumers have the same access to information and competitive options as higher income markets; therefore, marketers need to take a much more progressive approach to these V12 markets, deploying omni-channel strategies, social strategies, and more progressive messaging than many expected in the past of ‘emerging markets’.   

The middle-class consumers of the coming decade will have a more accelerated understanding of their options than prior generations of middle-class consumers, plus a megaphone for expressing their tastes and opinions; marketers will need robust influence and relations strategies (government, consumer, and employee relations), plus more robust relations strategies, not just communications or advertising strategies.

Local brands are seen as preferred in these markets. What does that mean for foreign brands (in particular Japanese brands)?

A majority of V12 consumers—virtually two out of three respondents—buy a combination of local and international brands. However, in some markets, local brands have a distinct advantage. In fact, the proportion of V12 consumers preferring local brands is twice as large as those that prefer international brands (24% vs. 13% respectively). This heralds a growing battle in the years ahead as multinational brands will meet stiffer competition from more sophisticated and nimble local competitors who can exploit this preference for local brands and products in some markets.

However, international brands do enjoy stronger preference in some V12 markets, and in certain categories and areas of performance. In terms of markets, international brand preference is strongest among the Burmese— as the market has opened up after years of sanctions. Burmese, Nigerians and Egyptians display the strongest preference for international brands in their weekly consumption, with consumers in these markets tending to prefer international products across most product categories tested.

Overwhelming majorities of V12 respondents believe that international products are higher quality and more innovative than their local rivals. There are also emerging, new battlegrounds for international-versus-local brands. Consumers are most divided about the environmentally-friendly credentials of international products, with Chinese, Egyptian, Vietnamese and Burmese respondents saying that international brands were stronger on this attribute while Brazilian, Filipino, Mexican, Indonesian, Indian and Nigerian respondents more likely to say that local brands were stronger.

So, Japanese brands will need to stress their credentials for high quality and innovation, plus be mindful of ensuring that they are seen as eco-friendly.

This article was first published in Japanese on Campaignjapan.com.