The Japanese consumer market

Mariko Fujiwara

Hakuhodo, Inc., Tokyo Japan

Demographics

（ Area） （Population）

Hokkaido 5,684,842 4.55%Tohoku 9,865,006 7.90%Kanto 39,159,557 31.35%Hokuriku 5,614,151 4.49%Tokai-Koshinetsu 15,672,025 12.55%Kinki 22,226,969 17.79%Chugoku 7,763,515 6.22%Shikoku 4,220,707 3.38%Kyushu 14,707,601 11.77%

Total Nearly 125,000,000

KantoTokaiKansai

4.5%

4.5%

12.5%17.8%

6.2%11.8%

7.9%

31.4%

3.38%

62%

Urbanized populationUrbanized population

HAKUHODO

Average life expectancies grew significantly

Fastest aging population in the world today

Female

Male

The very old dominate the senior population

Total fertility rate

Japan

USA

Korea Italy

SwedenDenmarkFrance

Fertility rates dropping rapidly

Labor force will continue to decrease in size

• Labor force

6,384

6,779 6,7526,645

6,6426,650

6,666

6,7876,711

6,6156,578

6,505

6,6666,689

6,7666,793

5,000

5,500

6,000

6,500

7,000

90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05

（万人）

Labor force

10,000

Japanese population pyramid 1950-2050

Japanese households decreasing rapidly in size

Nr. of persons per householdNr. ofhouseholds

19801975 1985 19951990 20052000

(thousands)

More couples live by themselves and more alone

CouplesCouple with children

One parent with children

Other families

Single person household

Non family

2000

1995

1990

1985

Nuclear families

Families

Most significant demographic facts are:

• Fastest aging society in the world

• Fertility rate continues to drop very fast

• Total population began decreasing in 2005

• The population is highly urbanized

• Live in smaller families

• More live as couples or alone

How they translate into consumer behavior?

• They are not interested in large quantities

• They need smaller/ individual portions

• They can exercise discretion easily

• They can focus on what they really want and forego others because nobody suffers

• They can afford more expensive things

Japanese families

Marriage and divorce per 1,000

Marriage

Divorce

Younger generations are marrying later

First marriages

Husband

Wife

First marriage

Age differences

Marriage and starting a family

• Fewer marriages• Marrying later• Waiting longer to start a family• Having fewer children• More having no children

• More divorces • More remarriages

Greater variety of families

• Half of them have members 2 or less• Parents and two children not so typical any more• Single-person households grow fastest• Husband and wife (couples by themselves)• One-parent and children less • Other • The rest in special care facilities

Japanese women

Japanese women receiving increasingly more education 1954－ 2005

MaleFemale

Lifecycle of Japanese women today

Care for the elderly members

of the family

Women in the workforce by age group

China

Pakistan

India

Malaysia

Japan

Korea

Hong Kong

AsiaAsia

Sweden

USAItaly

Czech

Holland

Europe

France

Japanese women by occupation, role and experiences 1986-2005

Traveled abroad

Manufacturing

Gov’t committeeMedical doctorUpper HouseResearchers

Lower House

Section chief

All employee

School teachersTotal Population

More Japanese now work part time

Part time worker/ all workers in Japanese workforce

%

Signs of recovery?

• More companies report profit

• More companies began higher many more new recruits

• The prices of property has begun recovering • Consumers replacing their old appliances with more

new ones sooner

• Some suffer from negative equity while the first time buyers enjoy relatively affordable housing costs

Consumer durables 1955-2006

Refrigerator

WasherVacuumCleaner

Color TV

Cars

Microwaveoven

VTR

PC

DVD P/R

Mobile phone

Digital cameraAir conditioner

Consumers have begun replacing old with new

Average interval Japanese consumers replace their appliances with

Color TVRefrigerator

Washer

Air conditioner

Market regains consumer confidence?

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000

90 91 92 93 94 95 96 97 98 99 00 01 03 03 04

可処分所得 消費支出（円） Discretionary income Household expenditureYen

Internet access by age group

68.5 68.4

36.8

10.7

62.8

90.7 92.3 90.584.8

65.8

26.0

49.2

72.8

59.0

1.3 1.31.3 1.4 1.3

2.4

1.4

1.8

0

20

40

60

80

100

12

６～

歳

13

19

～歳

20

29

～歳

30

39

～歳

40

49

～歳

50

59

～歳

60歳

以上

1.01.2

1.41.6

1.82.02.2

2.4

2001年末 2004年末 増加率

（％） （倍）

New and altered behavior

• ICT and e-Commerce or m-Commerce

• ICT and info-communication industries altered the lifestyle of Japanese consumers

• ICT empowered consumers with voice

• ICT allowed consumers to actively shape the market

Consumer values and preferences

Areas of consumption Japanese wish to focus /improveLeisure and hobby

Clothes

Durable　 goods

Housing

Food and Diet

Recent experiences for the Japanese “Seikatsusha”

• Prolonged recession has forced Japanese “Seikatsusha” to reexamine their consumer behavior

• We saw negative growth in some years, and the record high unemployment rates in post WWII deprived the younger workers of good jobs

• Changes in “Japanese” employment pattern and

salary structure had an impact on consumer confidence

• Some suffer from negative equity

“Mosaic” Consumption

• Two orientations coexist in consumer behavior– 1.Preference for the real thing

• “It’s worth spending more money to get something good”

– 2.Preference for lower prices• “Would like to pay less for things that they’re not so

particular about”

» Source : A publication from Hakuhodo Institute of

Life and Living,1997

　　　　　“Mosaic” Consumption

• The Reason Behind this Situation... – Japanese consumers are getting used to

an economy that is growing more slowly– They’re noticing that…. The economy is growing

not so fast as before.

Be selective and focused..

Quality of life is important...

Promising targets

Women in the Japanese market

– Better educated– Highly qualified women enter the workforce– An increasing number of young women are

working and the wage gap is narrowing for them

– More women are pursuing careers– Women are becoming more visible in well-

paid positions and in higher management positions

Seniors

Today’s Japanese seniors

36%

31%

22%

11%

50s60s70s80s & Over

Young Seniors• The generation who worked hard to rebuild and modernize

the economy.• They are the first to have accepted and adopted Western

ideas and technology.• They have ample time with disposable income and / or

sizable savings to enjoy life.• They are actively seeking ways to enjoy life for themselves.• They try to remain young at heart.• They try to remain active and want to look stylish and

attractive.

The First Postwar Baby Boomers

• 80% of assets held by individuals in Japan belong to those aged over 50.

• They are in late 50s now and are well aware that they are getting older.

• Most of them feel that they are young and capable of competing with their younger colleagues in many areas.

The First Postwar Baby Boomers

• Finally, they are seeking ways to live their lives for themselves.

• They like to think of themselves as being fashion conscious and fashionably dressed.

• They have interest in maintaining good health through healthy diet.

Japanese seniors today want to serve themselves

How I want to spend money

010203040506070

50-64 65-74 75+

%

Spend formyselfSpend forfamily

Japanese seniors want a lot of communicationLLook forward to communicating with

0

10

20

30

40

50

60

70

80

90

Child spouse sibling grand child friends

Male

Female

Child Spouse Sibling Grand child Friend

Quality of Life Issues

• Good health

• Sensible diet

• Focus on healthy lifestyles

• Interest in sports

• Participation in sports events

Quality of Life Issues

• Quality of Experience

• Time Value

• Focus on Leisure

• Focus on Style

• Slow and genuine process

• Slow life

Younger generations

The New Breed Generation

• Born in ’60s (9.3 million)

• The first generation to have grown up in the affluence generated by the rapid economic growth after the war.

• They have an entirely different value system from their parents– Martians ~ their attitudes toward life are

extremely alien to the older generations

The New Breed Generation

• First generation to have cultivated a lifestyle that puts emphasis on enjoyment and leisure activities.

• They want to enjoy freedom.They do not want to look far ahead into the future. They did not have to.

• They are willing to pay premium prices for information in order to remain well informed and thereby enjoy life.

• They are the first generation of parents who do not want to give up their preferred lifestyles for the sake of their children.

The New Breed Generation

• “Life is to be enjoyed”

• Strong sense of “entitlement”

• “I am important”, “ and therefore I deserve a lot” “I do not want to give up anything”

• The society and the environment “must accommodate us”

The Second Postwar BabyBoomers

• Born in early ’70s (8.1 million)

• The first generation born into a predominantly middle-class environment.

• They assume that everybody lives in much the same way as they do.

The Second Postwar Baby Boomers

• They also believe life is to be enjoyed and assume a “let it be” attitude.

• They are self-conscious and protective of privacy in their lives.

• They want to be well informed but they tend to reject anything that has the power of authority.

• They have strong desire to try new things and explore the unknown in trying to establish their “personal style”.

The Second Postwar Baby Boomers

“Make life just as I want but do not lecture me”

Today’s Young Recruits

• Born in the early ’80s. (7.3 million)

• Growing up when the population of young people began to decline significantly.– Water Spiders

Today’s Young Recruits

• They are perceptive and discerning. They are quite realistic and practical.

• They are more tolerant and more accepting of other people’s values and standards. They are open to people from a wide variety of cultures and backgrounds.

• They are quite sociable and outgoing.

• They are quick to adapt new trends and high-tech innovations.

Today’s Young Recruits

“ Live and let be”