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2.29.2012

Feeding the Addiction: Marketing in the Drug Dealer Mindset (1) Getting the Consumer "Hooked"

Everyone knows that acquiring new customers cost money and repeat customers are your best customers and most profitable.

And if you happen to be selling a very "addictive" product that requires very little effort on your part to get repeat customers coming back for more, than you should be thinking like a drug dealer and make sure you get as many new customers hooked as quickly as possible.

I guess mobile phone service providers understand this best in Japan.

In the late 1990s when mobile phones were becoming more common, electronics stores were offering rows and rows of 0 yen phones. Yes, the mobile phones (hardware) was FREE.

The catch was that if a consumer takes up the free phone offer, they have to sign up for a two-year contract with the service provider.

The dealers (electronics stores, etc.) received kickbacks on the monthly subscription fees paid by the consumers to the service providers, and that is how they made their money.

Since all my benefits from my initial two-year contract with Softbank (the leading iPhone service provider in Japan and third largest provider who bought Vodafone Japan to acquire their network) expired this month, and my poor iPhone 3 is struggling with the demands on its limited memory, not to mention that I cannot carry the over 2,200 songs I have in my iTunes library on it; I decided to go for an upgrade to iPhone 4S, as belated as it is.

When the lady tending to me came out of the back room with the white iPhone 4S (64GB) version with many more boxes, I braced myself for a sales pitch for the optional accessories.

Much to my surprise, she wasn't selling them to me - she was GIVING them to me!!!


So the phone came with not one, but TWO cases - one hard and one soft (I had to chose the colours), an extra charger, a lithium ion battery that charges the phone (or acts as an external battery), a bluetooth headset, and a wireless clip type head set (earphones) for which I got to choose the colour as well (from black, pink, blue, white, and red).

The extra energy sources tell me that the iPhone 4S has a short battery life.

But the fact that Softbank is giving all this to me for free makes me wonder how well iPhones are selling to begin with, and how tough a competition au (No.2 provider in Japan) is putting up for Softbank. The market is now being flooded with Android smart phones and Softbank is also promoting many of them.

On top of all this, if I opt for the 24 monthly installments payment plan for the phone at 0% interest, my payment won't start until 2 months from now... But the discounts I get on my basic subscription price starts this month.

I have signed up for the flat fee Wi-Fi plan and minimal air time mobile phone plan as I never use it as a phone. In fact, I don't even know what my phone number is.

But it is obvious they make their money not on the hardware, but on the subscription payments.

Another example of "drug dealer" mindset marketing here is what the mail order companies (including e-Commerce players) call TEIKIBIN or subscription plans for goods that a customer may purchase regularly. Think: cosmetics, dietary supplements, water and other drinks, detergent, food items, and sanitary products.

Many offer the first purchase at a ridiculously cheap "trial price" like 500 yen (less than US$5) so long as you promise to make a purchase the following month as a minimum. After that, if you don't like the product, you can stop your subscription.

The subscriptions often come with loyalty benefits like a free gift or discount voucher for every fifth purchase one makes. And consumers are rarely charges for shipping. (That goes to showing how longer-term repeat customers bring profit!)

Others offer longer cooling off or guarantee periods like "60 days money back guarantee even if you use up the product," to make the first purchase as easy as possible.

Of course, there is always the "be a monitor" campaign where consumers are offered the opportunity to get the product for free in exchange for extensive feedback on the product after use.

I have recently learnt first hand that "system jewelry" or "build your collection as you go" jewelry a.k.a. "Lego for girls" can be marketed and sold in the same way.

My then 12-year old daughter asked for a charm bracelet for Christmas, and thereafter, all she wanted was new charms until she could not fit any more on her bracelet!

She is now 14 and of course she wants to start a second bracelet!

Lastly, I also see beauty salons in very competitive areas practicing the same kind of marketing.

Manicure and gel/gelish nail salons incentivise customers coming from other salons for nail polish or gel removal services and may even offer 50% discounts on the treatments as a "trial price" for first time customers. And then, they offer discounted removal services if the customer makes the booking for her next appointment before leaving the salon.

Eyelash extensions seem to be the same: "Put as many extensions as you like the first time for only 4,900 yen (about 40% to 50% of the regular price) the first time" - one salon advertises. And once again, customers are incentivised to make their next booking when they leave.

Come to think of it, my great aunt understood this well, too.

She was Japan's top sales person for life insurance for Japan's largest life insurance company. Her tactic was simple: "I will pay for your first installment out of my own pocket. You just have to pay from the second month, and I will make sure you get coverage from today!" She said.

Oh, I must mention that Softbank did this today, too.

There are three subscription based services that I will get for free for two months. If I don't want to continue the subscription, then I need to go and unsubscribe on my phone before 10 April. Each service costs 350 yen a month. Peanuts, yes, but peanuts that add up for the sites!

Mobile game services provider DeNA makes more than 2 million dollars a MONTH selling small fee  add ons @150 yen to @350 yen per app. To the user, it is the equivalent of less than a cup of coffee at Starbucks or a burger at McDonalds. But it adds up!!!

So, why not get people signed up for free for the first 2 months and then see if they notice they are even paying it from month 3. Or, rather, get them to use the service first and decide they cannot live without it from month 3.

Hosting services do the same. You can get one year for free, and thereafter, you pay as you go! But by the time you have built your site and it is hosted on their server, how many people want to move it?







2.16.2012

Japan is Still No.1 When it Comes to Services

Japan has been surpassed by China as the world's second largest economy.

With a population of 130 million on a land mass that is 1/25 of the US, of which only 28% is arable, it was merely a matter of time, wasn't it?

But there is an area where we are still No.1.

And it is not consumer electronics or automobile manufacturing. 

It is services. 

If a company can boast that they are the No.1 service provider in Japan, I strongly believe that that business can boast to the world that their quality of service is No.1 in the world. 

Nikkei Trendy recently ran a very interesting series of articles (unfortunately in Japanese only) on how Japanese manufacturers are re-visiting the original Japanese R&D spirit of "living with the target customers" to live, experience, and crave for the same needs that will make the end products sell. 

The examples they cite are Pokka in Singapore, with 50% market share and Shiseido's mens' cosmetics brand MANDOM in Indonesia. 

In the article, the writer touches upon how brand recognition of some of the most powerful brands in Japan is non-existent outside Japan. 

Of course branding and brand advertisement is important, but what I want to stress here is the impact of being able to claim that something one offers is "No.1 in Japan."

That still means a lot.

And perhaps, now, a lot more than "made in Japan" when it comes to positive attributes. 

Of course, "made in Japan" electronic goods are still popular, but it also means that the goods are expected to be expensive - a double edged sword. 

Same with denim. Every denim enthusiast owns or dreams to own a made in Japan pair of jeans.  Japanese selvedge denim is used by such global brands as Nudie, but few jeans are engineered in Japan like SAMURAI and MOMOTARO. And once again, we are looking at price tags starting at EUR 250 and upwards. 

But what I fail to yet see is Japanese service providers - be it a restaurant, a hotel, courier, retailer, or even maybe a car dealer or Internet portal - claim that their service is No.1 in Japan. 

Why do they fail to do this?

My simple answer is that the majority of senior managers in major Japanese corporations today, if they have any international business experience at all, made their careers by IMPORTING goods, styles, patterns, innovations, designs, etc. from the west. 

It has never occurred to them that Japan has more to EXPORT than cars, music players, cameras, PCs, and mobile phones. 

Painstakingly slowly, some fashion houses are going abroad to broaden their sales base, and Tokyo menswear brands are picking up steam again after a sharp drop in business after the radiation scare post-3.11 earthquake and nuclear plant accident. (Many people thought that the clothes may be contaminated, too, and cut back on ordering from Japanese brands)

UNIQLO is perhaps the only one making bold strides by opening successful flagship stores in Paris, London, and New York.

Of course, this is what is making my life interesting right now, because I am advocating such marketing campaigns outside Japan and I am using all my powers of persuasion, influence, threats, begging and pleading, as well as suggesting and recommending to do this. 

We have the world's most pampered and discerning consumers whose choices are often driven by convenience and receiving good quality of service. 

And any business who can claim that they serve this client base well with high quality of service should have the confidence to boast that their service is No.1 in Japan outside Japan... because being No.1 in service quality in Japan may well mean that they are No.1 in the world. 

2.08.2012

When Will My Silence of the Lambs Come? - CEO 101 Ignored Triggers Cries from the Trenches

On my second or third trip to the Great Wall of China - of the world, really; given that it is or was the only man-made structure that could be seen from outer space - the guide said to us,
"The Wall is bound not just by cement. The blood and flesh of the workers who died building it is holding it together, too."

Hearing that made me appreciate anew the fact that the Wall is closed to the public at night.

Be it the Great Wall, the Pyramids, or the Taj Mahal, no doubt the rulers of the time did not lose sleep over the cries of the underlings that worked to create them.

And as the world watches corporate scandal after scandal unfold, we wonder if CEOs hear the cries of the employees who feel unappreciated, frustrated, and down right angry that their top manager fails to do what he is paid the big bucks to do - to lead and run the business in a profitable manner.

One of my now good friends is a teacher who runs coursers for students preparing for their certifications in accounting (CPA) or corporate compliance management (CIA). And he "stars" in a publicly available demo video of one of his classes. In it, he is teaching his class that the role of top management in a corporation is to develop and implement a chain of logically and realistically connected strategic initiatives that enables his business to continuously maintain competitive advantages in the market.


I used to tease him at the office and tell him that he needs to be preaching just that to his boss, the CEO.

He laughed, but I doubt he ever felt that the student, who has been CEO for nearly two years now, is ready for such "CEO 101" to date.

Some CEOs know this and want this, eat, sleep, and breathe this, but others who seek only the kudos of the title and the big pay check fail to see that there is a reason why he is paid the big bucks.

And I know as a fact that my friend and I both are in the rare position of watching a publicly listed company quickly and surely fall from grace and be branded a "black company."

The "lambs" being prepared for "slaughter" and those around them began to cry on the last day of January.

As the emails and text messages started coming in, I knew that people had backed out of their promise to me to "protect my team" and have begun to literally shoot from the hips.

One would think only a fool would start recklessly cutting down the pillars in his house with no heed to which ones can and cannot be spared to keep the ceiling and the entire structure from collapse. And any manager could be that fool if he has no understanding of how to read the blueprint that explains the structure of the house he is in, or worse yet, there is no proper blueprint to begin with.

Had my friend been successful at reminding his boss the responsibility and mission of the CEO, perhaps a proper blueprint would have been created. But what seems to be happening now is that the house is on fire and the manager thinks he can protect the room he is in by chopping down the pillars and knocking down the walls of the other rooms. In the mean time, those around him are hoping that the structure will hold long enough for this crazy man to be thrown out and that what little "water" is being thrown onto the fire will be enough to keep it at bay.

When I was CEO of an e-commerce business, my counterpart in Canada said to me from one CEO to another that if he had ONE advice for me, it was to never procrastinate a dismissal of a senior employee if I, as the CEO, felt that he was a bad apple that could rot the whole bunch in a short period of time.


I learned that his advice was a really important one the hard way - by doing exactly what he told me not to do: procrastinate.

I knew the CMO had to go. His subordinates were resigning because of his lack of consistency of direction or lack of vision, period. His colleagues were coming to my office and closing the door behind them to tell me that if I don't do something about this guy, the whole plane will go down because he is literally an engine already in flames.

By the time I finally gave him the pink slip, the damage had been done. But what surprised me the most was how happy he was that I ended his anxiety over his fate. He knew he was going to be fired. And he did not have the guts to resign. So he was waiting. And the wait was killing him and his subordinates.

Last night, I heard another bout of screaming from the "lambs."

I asked why they were calling me. "There is very little I can do for you from where I am now," I told them. They said they know. But they needed an empathetic ear to hear them out.

It was ironic and made both the man who said it and myself laugh when he said,
"You know, I now wish you actually had hit him."

Ha, ha, ha... we both laughed. He was among the handful of men who worked hard to stop me as I was uncharacteristically emotional that one afternoon when my team were in shock that their CEO did a 180-degree about face over a project they had been working on nights and weekends.

"Then again," he said in parting, "the rate the hatchet man is working now, he probably fears dark shadows at night anyway, as any one of his victims could decide to go postal on him."

But then one wonders if such men are sensitive enough to even think that anyone other than himself is suffering under the current circumstances, which is what makes the crying of the lambs so heart breaking and in vain to begin with.

I fear I will not yet have silence from the lambs for a while yet...

2.06.2012

Grateful for the Art of Taekwon-Do and the Family Spirit It Spreads

This is an open letter to thank Grand Masters Choi Hong Hi and Choi Jung Hwa. 

First, to General and Grand Master Choi Hong Hi, for creating Taekwon-Do, an art that has changed my life since the moment I read about it in my early 30's, planting a seed of curiosity in me to learn the art one day.

Then, to Grand Master Choi Jung Hwa for upholding the spirit of Taekwon-Do as the late General had envisioned it and created it; and for sustaining the International Taekwon-Do Federation as the constructive, inspiring, and warm group it is today. 

Yesterday, a quiet Sunday like any other, I received a phone call at my home in Ashiya, Japan, from Singapore. It was from Master Daniel Sng.

"There is a student here from Japan. He says he trained under Master Park Jong Sa in Hyogo with you. Do you remember him? He is on free trial with me today. I just wanted to ask you about him. Would you like to talk to him?"

The gentleman came on the phone and said,
"I remember you from when you were a red/black belt. Then, you became a black belt. We trained together at the Kobe Dojang."

Unfortunately, I could not put a face to his name, but we spoke briefly about the dojang, and I told him what I think of Master Sng and Island Taekwondo Centre.
"He is my Master for Life. He is the most humble and most enlightening instructor one can hope for in Singapore. His fundamental exercises are tough, but all of his senior students are of high moral standards and you will find everyone including Master Sng warm, inviting, strict, and respectful. I highly recommend that you become his student."

"I travel often for work and will miss some lessons,"
he said, with concern.
"The beauty of ITC is that Master Sng does not mind if you come once a week or seven times a week. When I worked in Singapore, I traveled a lot, too. But when I was back, I took all four lessons on Sundays and trained every night. All for the same price! You can train as often as or as little as you like at ITC."

"Thank you so much for your recommendation. I was thinking I want to join the school here. Now I feel even more confident that I have chosen well."

"You have indeed," I reassured him.

Then, he handed the phone back to Master Sng with whom I exchanged greetings again.

The world of Taekwon-Do is so small and so warm!

And I am nothing in this vast world.
I have no international title.
I am a mere I degree Black Belt - a baby in the bigger scheme of things.

Yet, Master Daniel Sng treats me like a life time friend.

Yes, I was a crazy student for him.
In my peak, I trained 40 hours a week at his dojang.
I was 38 and pregnant when I went to the Malaysian Championships in Genting and won a gold medal for sparring and a bronze for patterns shortly after I graded for my I degree black belt, which took us from 9:00 am through 17:30 with no lunch!

(OK, I do NOT recommend this to anyone else. I was really crazy...!)

Then I took 6 years off to have and raise my twins.
During which time I have changed jobs and had a "divorce" with the father of the twins, a live-in partner, and who was also my training partner.

I am not at all proud about his, but I promptly forgot most of my patterns that I used to do in my sleep (my partner woke up with bruises on his face and chest as I no doubt was practicing Dosan tul or another pattern in my sleep). Yet, when I came back, Sabum Park Jong Sa and my fellow students welcomed me with such warmth, it literally felt like I came home. Master Lee Jong Mok of ITF Japan continues to be too generous with his encouragement and praise for this humble middle-aged woman.

Only last December, one of our World Champions came to our dojang and said,
"I heard so many nice things about you at the Asian Championships in Hong Kong. It was quite surprising to hear your name in Hong Kong! Master Sng sends his regards."

I met him for the first time, but thanks to Master Sng, it felt like we had trained together for years.

In 2003, that fateful day in Dubai, when the social dance class I showed up for was cancelled due to the teacher not being available, I met my first instructor. He casually invited me to "try" a class - and I have never thought twice about continuing my training since.

When I moved to Singapore, after an unfortunate encounter with a "fake" teacher - fake, because he lied about his rank; fake, because he was not at all a teacher but a mere imitator of one - I was able to meet my Master for Life, Master Daniel Sng (VII degree) of Island Taekwondo Centre.

The very first time I called Master Sng, he said,
"I am still studying Taekwon-Do myself. You are welcome to come and train with me."

His humility struck me like lightning, and even before I met the man to whom the warm, gentle voice belonged to, I knew I would sincerely bow to him when we met.

It was such a change from the fake teacher I met before and wasted a whole month with! That man tried to project himself as being bigger than he actually was. Master Sng, then a VI degree black belt who had been training for over 20 years called himself a "fellow student" - what a difference it was!

I started with one class a week.

I couldn't skip for more than 30 times without getting stuck.
Doing 30 push-ups seemed like a feat I would never accomplish.

I even remember almost crying the first time I was able to skip 100 times without getting stuck!

I used to say,
"I wonder if I will ever become a black belt... It seems like such a long way away."
I was a yellow belt then, but I knew Dangun very well!

Within a year, I was taking nine to ten lessons a week and training out of hours until Master Sng chased us out of the dojang so he could go home before midnight.

Push-ups were still not my forte, but I could handle about 120.
And to think Master Sng once grabbed me by the back of my belt as I struggled to say,
"At least she has perseverance!" with a laugh...

Skipping became my strength, and I could skip for 45 minutes without stopping.

Jump double side kicks holding a 7kg medicine ball was not my favourite activity, but I believe I did 20 x 3 sets for my grading.

I had the honour of being team manager as a green belt when Singapore went to the World Championships in Daejung, Korea.

There, I met many inspiring women and men.

When I was visibly pregnant, I continued to go to the dojang to teach.
I had to wear my partner's dobok as mine was too tight, and soon, with twins, I could not really tie the belt without putting the knot at my name.
But I loved being there and teaching... just doing Taekwon-Do.

I gave natural birth to very healthy twins at 37 weeks and 0 days in just under 12 hours from when I broke water.

This was despite my age (38), the fact that I had partial hysterectomy in 1999, and that my babies were twins. My obstetrician referred to me on my charts as a "triple high risk pregnancy" and yet, I breezed through it all thanks to my fitness and positive attitude. (I was convinced I was going to have nothing but a very natural pregnancy and birth that did not require any extraordinary medical intervention.)

Last May, when my twins turned five, I started talking about Taekwon-Do with them. Soon after, they began to ask me for lessons. I let them kick targets at home.

Then in July, as if he had heard my twins, Sabum Park Jong Sa called me and invited me back to class.

The kids and I had visited Singapore in February, when Master Sng gave the twins doboks as gifts.

So the kids and I were ready and looking the part when I returned for classes.

I saw some old faces - promoted, of course - and some new ones.

But once Sabum Park introduced me to the group as someone who has been away for six years after winning medals in Malaysia, I felt a bit of pressure as well as the feeling of coming home.

Later, a fellow student who was assigned to me so that I could check his Dangun in preparation for his grading, confessed that I was very scary.
"You don't miss the smallest of moves and your explanations were detailed and to the point, but there is an air about you that says 'don't mess with me' and I was terrified! After that session, the test was actually not scary at all!"

Last December, I competed for the first time in 6 years, and I was not even planning to compete until Sabum Park invited me to in October.

After losing to me, the lady who sparred with me at the finals said,
"I will train harder so that I can be like you."

I laughed and said,
"You should try to be like someone who is younger and more agile. You are too kind."
But she and her fellow teammate said,
"No, we have heard so much about you as I prepared for this competition, and we are lucky to have a senior student like you in our group."

That was one of the most rewarding experiences that made me feel more humble than ever before.

I continue to train - not as much as I once did, but still - and aspire to great students like Sabum Park and Master Lee. And yet, I have fellow students who look up to me to set examples.

My dream now is to one day be beaten by my children in sparring.

I tell myself I must train and become an opponent worth fighting to beat.

Of course, as every parent would, I want my children to excel over me and become great at whatever they are meant to achieve in this world. But Taekwon-Do gives me a tangible way of connecting with my children.

Taekwon-Do is also something that connects me to people around the globe in a way that work or social networking cannot quite achieve. Of course, the SNS platform helps to facilitate communication and sharing of ideas, events, ideals, and warm wishes. But the glue that keeps us together is Taekwon-Do.

And I am so grateful that I am part of this global family and that training hard and working with my fellow students and instructors has created so much good will for me.

So, I am forever grateful to Grand Masters Choi Hong Hi and Choi Jung Hwa. Without them, I would not have Takewon-Do. And without Taekwon-Do, I would not have the friends and family I have today.

Taekwon.

2.01.2012

Another Department Store Disappears from Tokyo

Sogo Department Store's Hachioji Store closed on 31 January after 28 years of business.

In 2011, we said good-bye to Daimaru Nagasaki Store after 157 years of business, and soon, Tenmaya Hiroshima will close after 39 years as well.

Closer to the heart of Tokyo, Marui Curren, Japanese retailer Marui's attempt at competing with H&M and Forever 21 in the fast fashion category alongside Shibuya's 109, has admitted defeat and will close this year. Marui Curren joined the so called fast fashion wars in February 2009.

Mitsukoshi Alcott, currently home to such global super brands as Tiffany & Co and Louis Vuitton, is also closing its doors as at end March, and the venue is planned to be converted to a huge UNIQLO and BIC Camera.

In 2005, there were 43 department stores in Tokyo. In 2008, that number was reduced to 34.And this trend is not being reversed.

Where do people shop, then?

Retail in general in Japan in 2009 (read: pre-3.11 earthquake) shrank by 2.3% according to METI, the Ministry of Economy, Trade and Industry. Yet, non-store retail recorded its 12th consecutive year of growth and E-commerce grew by over 30% in some key sectors including fashion and pharmaceuticals.

It is not rocket science.

Japan is the country of convenience.

There are 44,164 convenient stores (i.e. Seven-Eleven, Lawson's, Family Mart, Circle K...) in Japan with just the top 10 convenient store chains. That is one store per every 294,000 people.

People shop where it is convenient.

An internal source in a major underwear maker told me that their sales now peak at midnight every day, and their best-selling channel is convenient stores.
"People realize they have no clean underwear for the next day and they go to their local convenient store to buy one,"
he told me.

"What is the matter with HAND WASHING one at home?"
I asked in astonishment.
"Nothing, but consumers find it more convenient to buy a brand new one at a convenient store."

Right.

According to the Ministry of Transport, in 2010, there were 3.22 billion small packets and parcels delivered in Japan, reversing a shrinking trend in the previous 2 years. Its growth is largely attributed to E-Commerce and non-store retail.

So, I take a closer look at home, and think a bit more in realistic terms.

I asked myself:
What do I need to go to brick and mortar stores for?
And why would I go to a department store?


To the first question, there is very little I need to go to brick and mortar stores for.
The answer is: food and sundries that I need immediately. 
Yesterday, I had to go and get some milk as my son drank all that was delivered by the milk man the previous week in his current drive to "drink lots of milk and grow as fast as he can."
The day before, I had to go and get a light bulb.

My weekly grocery shopping is done online through the Co-op web site.
I have regular deliveries on Saturday afternoons that meet 90% of my requirements for the week.

I love browsing in book stores, but I never have the time for it any more.
Amazon and Rakuten Books are my best friend and if I get the urge to get something cheaper, I go to Book Off Online, a second-hand book store.

Travel and music, the top two items that are no longer purchased in brick and mortar applies to me, too. Though I do enjoy buying a CD or two on Amazon vs. downloading albums on iTunes all the time.

When it comes to clothes for myself and the kids, I guess it is 50%-50%.
I buy a lot of staples online, and visit my local "select stores" or boutiques to pick up the latest funky stuff.
Never to a department store. 

Actually, I deliberately took the time to walk around Shinjuku Isetan and Hankyu Umeda last week, to check out the two leading trend-setting department stores in Japan.

I was appalled.

Where did all those fashionable people go?

I couldn't tell if I was in Isetan or Mitsukoshi.

The clientele looked the same - ultra conservative people aged 50 and above. 

No wonder why brands are now moving out of department stores and into Station Buildings, Fashion Malls, and "select shops."

There is a growing number of fashion-conscious women in their 20s and 30s who have never shopped in a department store in their lives.

The post-bubble economy 30s and 20s are not interested in the European luxury brands.
Research shows that their favourite brand is UNIQLO followed by COACH.

2012 will no doubt see more department stores close their doors and give way to UNIQLO and other businesses.

The more consumer-conscious brands are quickly beefing up their E-commerce presence and offers.

Thus, the more conservative brands too afraid of the E space will soon be extinct as their current clientele die out of old age.