In a recent episode of the Scaling Japan Podcast, Robert Purss, founder of McLaren Group Marketing, sat down with Tyson Batino to discuss the critical role of market research for small and medium-sized enterprises (SMEs) entering Japan. With over 15 years of experience, Robert shared insights into how SMEs can use market research to navigate Japan’s unique business landscape. This blog summarizes key takeaways from their conversation, offering actionable advice for companies looking to make informed, data-driven decisions in Japan’s competitive market.
Table of Contents
- What Is Market Research?
- Defining Market Research
- Why Market Research Matters for SMEs in Japan
2. Exploratory vs. Explanatory Market Research
- Understanding Exploratory Research
- Explanatory Research for Validating Decisions
3. Market Research Tools for SMEs
- Low-Budget Research Methods
- In-House vs. Professional Research
4. Practical Application of Market Research in Japan
- Consumer Behavior Insights
- How SMEs Can Leverage Research to Grow
1. What Is Market Research
Defining Market Research
At its core, market research is a strategic tool that businesses use to understand consumer behavior, market trends, and competitive dynamics. It’s often seen as a broad term that includes everything from consumer insights and competitive analysis (desk research) to social listening and focus groups. For SMEs looking to enter Japan, market research is essential to navigating the complexities of consumer preferences and market expectations.
Essentially there are 2 types of Market Research;
Quantitative research – focusing on numbers and statistics, identifying the ‘what’
Qualitative research – delving into the ‘why’ behind consumer decisions and market dynamics
Why Market Research Matters for SMEs in Japan
For foreign companies entering Japan, the stakes are high. Without understanding the nuances of Japanese consumer behavior, many businesses fail to connect with their target audience. Market research allows companies to gather critical information about consumer needs, cultural expectations, and competitive gaps. This data-driven approach ensures that businesses make informed decisions, avoiding costly mistakes. For SMEs, market research helps validate hypotheses about market opportunities or challenges. It also allows companies to adjust their strategies before making significant investments in product launches or marketing campaigns.
2. Exploratory vs. Explanatory Market Research
Understanding Exploratory Research
Exploratory research is used when companies need to make decisions based on fresh insights. This is especially important for businesses testing new products, entering unfamiliar markets, or evaluating different consumer segments. For example, companies can use surveys, focus groups, or social listening tools to explore how Japanese consumers respond to a new concept or product.
Key benefits of exploratory research:
- Helps validate assumptions about the market.
- Identifies potential opportunities for growth.
- Provides insights to fine-tune marketing strategies.
Explanatory Research for Validating Decisions
Interestingly, Robert also highlighted the use of explanatory research—where companies conduct research to justify decisions that have already been made. In Japan, where data is often expected to back up decisions, explanatory research helps companies communicate the rationale behind their choices. Japanese stakeholders, especially in B2B markets, appreciate data-driven explanations for business strategies.
Companies use explanatory research to:
- Justify pre-made decisions with research data.
- Build trust and credibility with partners and clients in Japan.
- Show data-backed rationale for marketing or product strategies.
3. Market Research Tools for SMEs
Low-Budget Research Methods
Many SMEs worry about the cost of market research, but there are affordable options available. Robert shared some practical tips for companies with limited budgets. For example, free data can be gathered from government websites, like Japan’s E-Stat, and industry reports from organizations like Yano Research or Statista. Online surveys are another cost-effective method to gather consumer insights without breaking the bank.
Low-budget research methods include:
- Accessing free or low-cost reports from government or industry websites.
- Conducting low-cost online surveys to collect direct consumer feedback.
- Visiting stores or online competitors to observe consumer behavior.
In-House vs. Professional Research
While in-house research is an option for some businesses, it has limitations. Robert highlighted how McLaren Group adds value by providing more robust insights and professional execution of consumer research studies from low-cost online surveys, to focus groups and interviews. When companies conduct research internally, they often lack the expertise to interpret the data in a meaningful way. By working with professionals, SMEs can gain a clearer understanding of market dynamics and develop strategies based on actionable insights.
The benefits of professional research include:
- More reliable and unbiased data collection.
- Expert analysis of market trends and consumer behavior.
- Access to a wider range of research tools and methodologies.
4. Practical Application of Market Research in Japan
Consumer Behavior Insights
One of the most powerful aspects of market research is its ability to uncover consumer behavior insights. For example, Robert shared a case where research revealed that while a product had gained visibility (the “sell-in” phase), it struggled to gain traction with consumers (the “sell-out” phase). Understanding why consumers weren’t making purchases led the company to adjust their product messaging and improve in-store promotions.
Key insights gained from consumer research can include:
- Why a product is failing to gain traction despite visibility.
- Adjustments needed in product messaging, pricing, or promotions.
- Consumer preferences and buying behaviors in specific regions of Japan.
How SMEs Can Leverage Research to Grow
For companies entering Japan, market research is an invaluable resource for both launching new products and growing existing ones. Robert recommended mapping out the sales funnel to identify where bottlenecks might occur, then using research to validate potential hypotheses. Is it the product concept, the pricing, or the placement that needs adjustment? Research allows companies to make data-backed decisions at each step of the process.
Steps to leverage research for growth include:
- Mapping the sales funnel to identify bottlenecks.
- Use research to validate potential issues with product, pricing, or placement.
- Adjusting marketing and sales strategies based on research findings.
Additionally, market research helps SMEs adapt their product offerings or business strategies to fit the unique characteristics of the Japanese market. Whether a company is launching a new product or trying to grow market share for an existing one, market research can guide strategic decisions that lead to better outcomes.
Conclusion
To successfully enter and grow in the Japanese market, SMEs must prioritize market research. From understanding consumer behavior to validating business strategies, research provides the insights necessary to make informed, confident decisions. While conducting in-house research can be a starting point, engaging with experts like McLaren Group Marketing ensures a more thorough and actionable approach. The Japanese market is complex, but with the right data, businesses can navigate it successfully.
Why Statement
For foreign businesses, partnering with experts who understand the nuances of Japanese consumers and business practices is essential for long-term success. With McLaren Group Marketing’s experience and insights, you can confidently enter the Japanese market and grow your business with precision.
Gain a competitive edge in Japan by partnering with McLaren Group Marketing. We provide end-to-end support from initial Market Research and strategic planning, through to Marketing plan execution and ongoing business development. Leveraging over 15 years of on-the-ground experience, we help you navigate Japan’s complex market landscape. Let’s explore how we can fuel your business success. Book A Free Session Today!