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Japan Brands in Decline – the Importance of Meaningful Difference

Japan Brands in Decline – the Importance of “Meaningful Difference”

Hidehiko Otake

Chairman

Kantar Japan

When WPP started publishing global brand rankings back in 2006, there were nine Japanese brands among the BrandZ™ Top 100 Most Valuable Global Brands - mainly in the automobile, electronics and finance industries. Last year, however, that number declined to three. Not only that, there have been no Japanese brands to rank among the top 10 since 2008. This seems to indicate that Japanese corporations have been neglecting investment into their brands. The fact that an increasing number of top-ranking global corporations are high-tech or internet-based brands also seems to indicate that Japan has fallen behind in shifting its industrial focus to these industries, and as a result, has not cultivated brands that lead the world in high-growth fields. Brand worth is increasing around the world, and the total value of the top 100 brands has tripled since 2006. In this climate, Japan brands that have failed to increase their worth have gradually disappeared from the list; in contrast, many of the world’s top-ranking brands are from the United States and China. If this trend continues, I cannot help but fear that there will be a day when no Japanese brands rank among the Global Top 100.

It has been proven that strong brands bring business growth and increases in stock prices. This means that by failing to strengthen their brand equity, Japanese brands have also fallen behind other countries’ brands in attracting investors from around the world. What, then, needs to be done to create stronger Japanese brands – brands, in other words, that have the power to be chosen over others? According to Kantar’s analysis, the factors that contribute to building strong brands in Japan are: Saliency (40%), Meaningfulness (40%), and Difference (20%).

It is important for a brand to be Salient: that is, the brand must be “recalled spontaneously and instantly by consumers.” However, heavy placement of advertisement and fresh and memorable advertising campaigns – both strong contributors to salience - are not the only factors that build strong brands. It is also necessary for a brand to create, through other touch points, strong perceptions of “Meaningfulness” and “Difference.” In other words, consumers must feel that the brand “is relevant to their needs and favorable” (Meaningfulness) and that it “is different and advanced” (Difference).

Successful brands indeed provide “Meaningful Difference” to consumers in countries around the world. And what these brands have in common is an uncompromising pursuit of five factors: “Brand Purpose,” “Innovation,” “Communication,” “Brand Experience” and “Love.”

  1. Brand Purpose: improve consumers’ lives and sustain that improvement
  2. Innovation: lead market creation, disruption, and expansion
  3. Communication: be consistent in creating narratives in collaboration with consumers
  4. Brand Experience: satisfy consumers’ needs at multiple touch points (especially, in recent years, through online experiences)
  5. Love: simply be loved by consumers

Japanese corporations tend to think that differentiation in objective measures of function and performance is the most important factor to a brand’s value. In reality however, in order to create a strong brand the most important factor is “Meaningfulness” - which is irrational and emotional. Consumers want to feel an emotional connection with brands – and unfortunately, Japanese corporations often lack management leadership and marketing schemes for generating such “Meaningful Difference.” It is my hope that Japanese corporate management will endeavor to create brands that have “Meaningful Difference,“ rather than to focus solely on differentiating brands by their saliency and function.

Given that around 10 new brands debut in the Global Top 100 brands list each year, Japanese corporations still have plenty of opportunities to rebound. I hope that this will happen sooner rather than later.