Understanding Your Value Proposition to Japanese Customers
On May 29, 2019, btrax and GlobalSaké collaborated to bring the event “Defining Value Proposition for Asia New Market Entry” to those interested in international market expansion. By listening to presentations from btrax Director of Innovation Services, Kisa Nakashima and Yewser CEO/GlobalSaké Co-Founder, Talia Baruch, attendees gained a better understanding of what a value proposition is, why it’s important when looking at new markets, and factors to consider when scaling a business to Asia.
This article will recap Kisa’s presentation on the importance of understanding and validating your business’ value proposition along with sharing a few case studies on less than successful expansions. As the Director of Innovation Services, Kisa has facilitated innovation training sessions and provided service design consultations to many top companies.
What is a value proposition?
According to Investopedia, a value proposition “refers to the value a company promises to deliver to customers should they choose to buy their product”. To shorten this, Kisa defines a value proposition as, “the reason why customers buy your product.”
Value proposition is “the reason why customers buy your product.”
Your value proposition is the sweet spot where you provide what your users want and what competitors don’t provide. But, how can you achieve offering something that falls into that intersection? That’s where the value proposition canvas comes in.
Using the value proposition canvas to understand the relationship between your customer and product
Each part of this value proposition template focuses on an area that helps you to see your customer’s point of view and develop a product that helps to solve their problems.
The value proposition canvas considers three elements of a value proposition: the company (Product), the customer (Customer), and the competitors (Substitute/Competitor).
Here are two tips from Kisa on how to use the canvas effectively:
1. Define the customer’s goals and desires by breaking down the “Customer job(s)” category into 3 jobs—functional, social, and emotional.
2. When determining the potential competitor/substitute, think about it from the customer’s perspective.
How to use the value proposition canvas
The value proposition canvas will help confirm that your product is solving the customer’s problem by understanding the customer’s point of view. Once you understand that, you can modify your product to fit the customer’s needs. Here is a step-by-step list on how to do so using the above image:
On the customer side, you will identify your customer’s goals (Customer jobs), your potential competitors (Substitute/Competitor), positive elements that will lead your customer toward their goal (Gains), and negative elements that could prevent your customer from achieving their goal (Pains). This can be done through a combination of user interviews and researching case studies, trends, etc.
List the features and characteristics of the product or service (Products & Services).
List positive gain elements (Gain Creators) and solutions to alleviate their pain points (Pain Relievers).
Check whether the “Gain Creators” are creating gains for your customers, as well as “Pain Relievers” mitigating the pain points. You will then be able to create a product (Company/product) that adds value to your customer’s life and determines the modifications you make to your product or service to improve your value proposition.
Example: Major gym chain
Please refer to the image above:
First, the company comes up with its product (Major gym chain) and identifies its target customer’s goals and needs, breaking it down by their functional (work out everyday), social (get compliments), and emotional (feel proud of myself) jobs.Then, it determines its competitor (YouTube), thinking from the customer’s perspective.
STEP 2 and 3:
The company figures out what drives the customers to go to the gym (easy to go) and what factors prevent them from going to the gym (program too intense) through research and user interviews.
Now that the company sees the problem through the customer’s perspective, it can think of gain creators, such as placing gyms closer to homes, and pain relievers, like offering low-intensity programs. This ensures that the product incorporates solutions that provide value and relieve pain points.
By thinking of the customer throughout the whole process, the company will better understand its target customers’ needs and will be able to modify its product to continue adding value to customers’ lives.
Why is value proposition important?
1. Different Perspectives
Many times marketers, engineers, designers, and others involved in the customer journey will forget to look at their solutions from the customer’s point of view just as it is creatively depicted in the image below.
2. Different Values
It is also important to remember that one person’s trash could be another person’s treasure. One example provided was the importance of saving time for two different demographics: business people and elderly retirees. For business people, saving time is a valuable concept when it comes to balancing work, meetings, deadlines, and possibly family duties while saving time may not be as important to elderly retirees because they don’t necessarily have as many obligations or responsibilities.
There are many factors to consider when it comes to overseas expansion, as well. For example, the user experience of the main search engine in Japan and America are very different. Many Japanese use Yahoo! and prefer that the home page be filled with information making it feel cluttered to Americans. On the other hand, Americans use Google, which has a lot of white space and thought of as very clear and simple to use.
2 companies that failed to localize their value proposition for the Japanese market
Walmart, an American multinational retail corporation, failed to sustain its business in Japan because it did not determine the right value proposition for Japanese consumers before launching. Unfortunately, the idea of “everyday low prices” was not very appealing to the Japanese as they only appreciate low prices by seeing the gap between the “normal prices”.
Ikinari Steak, a Japanese steakhouse chain, did not gain much popularity in the United States after launching in New York. The restaurant became very popular in Japan for their prices and the unique experience of eating steak while standing. In Japan their value proposition is selling high-quality steak at affordable prices while encouraging customers to eat and leave quickly. However, the concept of quickly eating steak while standing is foreign to Americans who like to sit down and eat their steak. The “fast steak restaurant” concept did not resonate nor convince Americans to change their steak eating habits.
Always think about what you provide that customers really need and what your competitors don’t offer when determining your value proposition. The value proposition canvas is one tool that helps you understand your customers’ needs. Also, remember to consider the customer point of view because you may not know a customer’s value system—especially when expanding to new markets.
Although it may be obvious to consider the customer’s perspective, companies forget this all the time. Hopefully by now value proposition is ingrained in your head and you will think about it the next time you have an idea and especially when expanding outside of your home market.
Interested in expanding your business to Japan? Along with years of experience living and working in Japan, we at btrax have a rich understanding of the culture, customers, and business structure. Contact us if you need help determining your value proposition in Japan! If you like our content, sign up for our newsletter and follow us on Twitter and LinkedIn. We look forward to connecting with you!
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