Market Segmentation in Japan, a Quick Guide
Who should you be selling to in Japan? What are their spending patterns and driving interests?
Knowing who you are trying to sell to is critical to creating an effective Japanese marketing campaign. So what should you know about market segmentation in Japan?
Globally, terms such as boomers, Gen Z, and Gen X give us a snapshot of generational market segments. However, in Japan, marketing consultants use different terms to refer to generational market segments.
In a study published by the Nomura Research Institute (NRI), titled "Perspectives on consumer behavior from a generational analysis, (trans. title)," NRI examines Japan's unique generational consumer profiles, their interests, and keys to each generation, based on a survey of 10,065 respondents ranging from 15 to 79 years old.
Here's our summary of NRI's generational analysis to get you started in finding your ideal customer.
Bubble-era generation (51- to 61-year-olds)
Japan's bubble-era generation was born between 1960 and 1970 and spent their formative years experiencing Japan at its economic height.
Buying brand items was a matter of prestige for this era, so being mindful of what others think is essential in marketing to the bubble-era generation. Other key takeaways about marketing to this generation include the following:
Prefers to buy well-known brand items even if they are on the pricy side.
Willing to spend money on relationships and entertainment.
Company relationships are at the center of their social nexus. However, in the future, hobbies and new skills will be the keys to this demographic.
Primary information sources are Internet and TV commercials for gathering information about a product.
Second-wave/post-second-wave boomer (40- to 50-year-olds)
Japan's second-wave/post-second-wave boomer generation was born between 1971 and 1981, often called the "unlucky-generation" as they entered their twenties after the bubble burst in 1991 and deflation set in, influencing career choices and trajectories.
Respondents in this age category gave answers that revealed values geared toward personal freedom over salary. Key takeaways about marketing to this generation include the following:
Willing to spend a tremendous amount on their children's education to give them every advantage possible.
Far more individualistic than the older generations.
Prefers looser relations and connections with people and enjoys spending time alone.
Many in this generation segment are in double-income households and look to convenience as a key when making purchasing decisions.
Primary information source is the Internet when looking to purchase a product.
Enlightenment era (27- to 38-year-olds)
Japan's enlightenment-era generation (satori sedai) was born between 1983 and 1994 and spent their formative years in the aftermath of Japan's bubble economy collapse.
This generation correlates with the US's Gen-Z age bracket. Japan's satori generation grew up during economically stagnant times and have seen large companies go bankrupt, which has affected their attitudes toward work and consumption.
Avoids excessive consumerism in efforts to preserve financial stability.
Values their private lives over their work.
Values experiences over things.
Spends on average 3 hours on the Internet daily.
Finding ways to lower uncertainty over purchases is an important issue for this generation.
Digital natives (16- to 26-year-olds)
Japan's digital natives were born between 1995 and 2005. This generation grew up using the Internet and likely owned a smartphone by the time they started high school.
Like those of the enlightenment era, digital natives grew up in a more relaxed education environment and currently show the least interest in excessive consumption. Key takeaways about marketing to digital natives include the following:
Highest contentment rate compared with other generations.
Average Internet usage time per day is 4 hours.
Spends the most time on social channels, compared to other generations.
Online circles are a persuasive force in making personal decisions.
Twitter, Instagram, and social media influence purchasing choices.
Non-generational market segments
Outside of the generational forces at play, marital and employment status and household makeup significantly affect consumer habits.
The following are emerging market segments that hold increasing purchasing power in Japan:
The solo man. According to Hakuhodo Consulting, this segment is between 20 to 50 years old, independent/lives alone, and enjoys being self-sufficient. Common characteristics include valuing hobbies and a preference for a leisurely lifestyle over a high salary. Purchasing interests center on lifestyle enhancement and hobby enjoyment.
Power couple. As researched by the National Life Insurance, this segment's characteristics are where both partners work, and each makes over 7 million yen per year. Purchasing interests include time-saving goods and services and a willingness to outsource to reduce time costs.
The new adult generation. Profiled by Shin Otona Ken, this category is in their 40s to 60s who look at retirement as a second lease on life, a chance to get to the things they have been putting off. Interests include starting a new business, joining new clubs, etc.
Across the majority of market segments in Japan, Japanese are increasingly reluctant to part with their earnings.
Therefore, even a slight mismatch or misunderstanding of spending patterns and values will hold you back from finding your customers.
This article broadly summarizes Japan's more widely discussed market segments. Yet, the more specific you can get with market segmentation—such as looking at reports on monthly expenses of various income-earning brackets—the easier it will be to identify your ideal customers and position your product or service accordingly.
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