Interviewee: Mr. S (Customer consultant, Ginza Building), Mr. S (Customer consultant, Kichijouji Building), and Mr. I (Customer consultant, Machida building), Interview date: Feb 5th 8th, and 10th, 2015, Interview time: 2 hours each
6.1 Company Background
Suncity Ginza is a fee-based senior housing managed by Half Century More which was found in 1979 and originally engaged in healthcare business for medical institutions.
Company started a luxury-type senior housing business since the company’s CEO had a strong ambition to provide an appropriate retirement residential care services for those who had a certain level of social status and income, since he had seen numerous people who worked as companies’ upper than managerial positions had lived below their means without privacy and dignity in long-term care facilities and medical institutions’ bed rooms. In those days, there were few residential care services for above middle-upper income class elderly people in Japan, therefore, he found a market’s potential investment opportunity which a business can satisfy a niche demand of customer group. In 1994, company started long-term residential service, Half Century More, for the above upper-middle income class elderly people and there are 17 corporate senior housings with 4368 rooms in total; 12 housings in Kanto area and 5 housings Kansai area. Because of business networks of board members with numerous commercial entities, Suncity successfully fundraised 12 billion JPY operation capital invested by 97 companies and banks in 1990. Utilizing this huge corporate capital, corporate developed a mission statement which rules “no debt management policy to reduce default risk and operate long-term business for its customers.”
Three Suncity’s housings were interviewed for further understanding of its business model and services: Suncity Ginza, Suncity Kichijouji, and Suncity Machida.
Suncity Ginza was founded in 2006 to target the elderly people of above upper-middle income class who wish to have secured luxury retirement living in the center of Tokyo
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with receiving numerous supportive services and nursing care services. Although residents need to bear moderately high residential service fees and lump-sum payment lifetime to acquire lifelong residential right, this housing is popular among the customer group who are in good financial shape. Therefore, independent-living room is fully occupied and there is only 15% vacancy room rate for bedridden living room as on 2015. From the interview result, it is found that company spends few marketing expense and acquire existing customers mainly through word-of-mouth marketing conducted by its customers as a result of their high level of satisfaction toward organization’s services. There is also in-house fund for future business uses and social activity uses which has been largely raised by existing customers’
donations resulting from company’s high level of hospitality toward its customers.
Residential service fee within company’s group housing mainly because of different real-estate price in each geographical location while each housing’s service quality and residential quality are consistent. Also, since each housing is located in an area with different geographical characteristic, company’s customer segment chooses the one based on their financial ability and preference of retirement life environment.
There are many leisure facilities inside the housing, such as theater room, ktv, gym, swimming pool, and board game rooms, in order to solve the potential needs of leisure activities of residents and interaction with friends and family. Those leisure facilities can also motivate resident’s family to visit their elderly parent more frequently, therefore, usage frequency of each of those facilities are not paid large attention by the housing managers according to interviewees of three distinct housings locations.
Unlike the other elderly housings, Suncity’s housings are less willing to organize a community activity with external entities due to high level consideration of its customers’
security since most of them are financially well-off and their potential risk of fraud or other accidental cases are higher. Therefore, company only cooperates with some organizations that have high level of mutual trust for in-house social event and a leisure activity.
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Suncity housing’s safety confirmation services are well-managed through the usage of multiple safety-check devices inside resident’s room and each area of the building. Motion sensors are equipped at near bathroom and bedroom of every resident’s room, and longer than 10-hours stationary state of resident will be detected and reported to operation room of the housing. Also, there are 4 to 6 emergency call buttons inside resident’s room in order to respond to resident’s urgent situation quickly. There are also full-time security guards and numerous numbers of security cameras possessed at each area of residential building to ensure resident’s safety.
Based on company’s interview results, it was found that company mainly uses on-the-job training for its employees since company considers its employee training method is most effective to learn required skills and business manners without spending much expense.
Another reason of using on-the-job training method is employee’s high turnover rate, especially young workforce, which makes company less willing to spend money for human resources development. Thus, company usually offers temporary job positions for middle-aged women who are more patient and willing to work without much employee welfare programs.
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Table 6.1: Company Profile
Source: Corporate referring materials and registration certificates
6.2 Business Model Analysis
Company’s business model is analyzed and described using the business model theory of Osterwalder & Pigneur (2010) in the same as it is described in the previous chapter.
6.2.1 Customer Segmentations
Half Century More Co. Ltd has 17 elderly housings in most urban areas of Japan where adobe upper-middle income class people live in. Although income level might be differed by each geographical location, the target customer segment should be characterized to be elderly people who are financially well-off and pursue upper class lifelong retirement
Ginza East Machida Corporate information
Foundation date: Oct 24 2006 July 2000 (1st, 2nd building)
March 2006 (3rd building) May 1979 (company's foundation) Capital
Lifetime membership fee
for room and shared facilities 59 ~ 140 million JPY 30 ~96 million JPY Lifetime fee for care service 5.4 million JPY 5.4 million JPY
Rent fee 254,000 ~ 426,000 JPY 98,000 ~ 143,000 JPY
Meal service fee
Each fee is recorded and residents are required to pay on the monthly basis 51.6 ~ 76.2 ㎡ (15.6 ~ 23坪) 42.30 ㎡～111.80 ㎡ Independent living
42 ~ 97.1 ㎡ (12.6 ~ 30坪) 23.63 ㎡～50.80 ㎡ Assisted living
Employee number 79 235 1000 total as group
Shared facilities facility if they pay the balance fee of the new room
Joint facilities Clinic, pharmacy
Fully depreciated in the first 5 years
Room size
12 billion total as group
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residential service with supportive services which can support them until the last day regardless of changes in their physical conditions.
This customer segment tends to value the quality of residential environment and facility’s hospitality that do not harm their dignity, they have developed throughout their lives. Therefore, neither public long-term care facilities nor other residential services for the lower-income class elderly people would be able to satisfy their psychological demands.
Some of resident’s family may also wish their older parents to have upper-level retirement residential life instead of sending their parents to public care facility, medium-level elderly housing, or hospital’s bedroom whose residential environment and quality are lower or inconsistent with their social and income levels.
6.2.2 Value Propositions
According to the interview results, there are following five factors that company’s targeted customers highly value: 1) luxury residential environment, 2) meals service, 3) highly financially secured corporate financial structure, 4) organization’s lifelong supportive living services system, and 5) employee’s high level of hospitality mindset.
Suncity housing’s luxury residential environment with supportive care services is highly valued by its customer segments. In the past, there were few luxury residential service for the elderly people in Japanese market since aged-people were often less respected and considered that they should not take their residential quality into consideration. As a result, elderly people’s demands toward residential quality had been disregarded and some of aged-people had been sent to low-residential quality facilities or hospital’s bedrooms regardless of their social status and income level. Therefore, Suncity’s housings were highly appreciated by large number of elderly people whose financial status and social status are above upper-middle class and have higher level of dignity as a man/woman succeeded in some fields.
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Suncity’s meal service also provides value to its customers. There are over 50 types of meals and each of them is designed and cooked under careful nutrition administration by chefs who had work experiences at well-known restaurants or hotels. Those meal services do not require reservation and residents can have the meal any time they want. The meal service fee is reasonable and calculated based on the amount resident actually had and charged on the monthly basis. Residents also can invite their friends and family for this meal service without limitation.
Company’s highly financially secured corporate financial structure is also appreciated by its customers. Customers of elderly housing usually pay more attention to operating company’s management status since company’s business default not only lose residential environment of resident, but also result in lapse of high-priced lifelong residential right and usage right of nursing care services which customer purchases in advance.
Therefore, company’s “no debt business management policy” with 12 billion corporate capital invested by more than 100 business organizations are highly valued and provide psychological security for customers to acquire company’s services. Besides company’s “no debt operation policy,” company also claims it will not any surety contract under any
circumstances to avoid risk factors that may harm its business.
Suncity’s lifelong residential care services through providing both residential setting for independent living and bedridden living also increase the value of its customers. Since some care facilities only solves a specific issue of its customers, and customer’s physical condition changes will result in transferring to another facility, which may result in a certain level of psychological costs to aged-person and his/her family. Suncity’s in-house healthcare facilities and care staffs and partner medical institutions will dedicatedly take care of
residents even if they become completely unable to conduct activities of daily living.
The housing’s high level hospitality management is one of most appreciated values by its customers. Although Suncity group does not have much human capital development
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programs and mainly utilize on-the-job training method to increase level of employee’s service quality and hospitality mindset to provide good quality comfortable living for its residents. New recruits are taught Suncity’s corporate culture and hospitality mindset in the first few weeks, then, they learn how to serve for Suncity’s customers under the supervision of senior managers and colleagues. Through the interaction with customers, employees develop their work skills and hospitality mindsets, that make them provide assistance services voluntarily without harming one’s feelings. In order to sustain its customer satisfaction level, each Suncity housing leaves opinion boxes inside the building which can be posted
anonymously and continuously solve its problems.
6.2.3 Channels
Suncity group mainly utilizes personal selling channel in order to link with its chosen target customer segment. Once company could successfully approach its target customer group, company educate potential customers through demonstrating its residential
environment and services through providing a housing tour to let them evaluate company’s residential services, including tasting of housing’s meal service. Once customer purchased company’s residential service and start to live in the housing, company provide dedicated supportive living services with high level of hospitality in order to retain its customers.
Direct channels of company include website, brochure distribution, periodical issued catalog of each Suncity housing, and face-to-face contact and housing tour in order to develop relationship and understanding of how company’s residential services can solve customer’s problems. Based on interview result, company’s online information page is not effective channel to acquire its customers due to limited information about company’s residential services and customer group’s infrequent usage of the internet. Therefore, company’s website is used only as a reference for each housing’s brief introduction and contact information.
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Company’s indirect channel include existing customer’s recommendation to the prospective customers and introductory articles in print media and TV, and real estate agents.
Among indirect channels, existing customer’s word-of-mouth marketing is most effective channel to link company’s prospective customers since about 50-60% of customers were acquired from existing customers’ recommendation to friends or colleagues who have similar level of financial and social status and potentially have age-related issues or anxiety toward future retirement living. Since each customer has own social network which people have similar characteristic and problems, increasing customer satisfaction to make them introduce company’s residential service to his/her friends voluntarily is beneficial and more effective customer acquisition method than spending huge money for marketing activities. Company had conducted marketing activities through print media and TV media, however, none of them were effective enough to reach its customer segment although they require high financial cost.
6.2.4. Customer Relations
Development of a good customer relationship with existing customers is critical to Suncity housing’s business success since it will result in customer retention, boosting sales, and acquisition of a new customer. The category of customer relationships of Suncity housing should be characterized to be dedicated personal assistance, which is effective to make a long-standing relationship with individual customer through its luxury residential
environment and customization of the customer experience and services based on traits and preference of each customer.
To increase customer’s segment’s recognition and awareness of Suncity’s residential service for the elderly, company initially had utilized TV and print medias and direct sales to potential customers within board members’ social networks as marketing mediums during the 1990s. However, company no longer conducts neither of TV advertisement nor print
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advertisement because these two marketing mediums are costly but not effective enough to approach company’s chosen customer segment. Later, company found there are abundant numbers of potential customers within customer’s social networks, therefore company switched its marketing strategy to word-of-mouth marketing strategy through developing a good long-lasting relationship with existing customers and continuously improving service quality and customer satisfaction.
In order to retain its customers, Suncity has continuously improved its residential services to meet with its customers’ demands and provide dedicated supportive services with high level of hospitality. Company accepts its customers’ criticism and opinions about its residential services as they are constructive and sincerely meant for company business’
betterments. All employees are educated to treat housing’s residents as if hotel’s “guests”
instead of “patients,” “friends,” or “socially vulnerable,” therefore Suncity’s residents can enjoy their retirement living maintaining their dignity. Therefore, company’s employees support and greet residents voluntarily. Several opinion boxes are also left inside the
residential building which can be posted anonymously in order receive customer’s feedbacks.
Developing a good customer relationship and providing high quality supportive services would be the company’s tactics to boost its sales of supportive services and acquisition of new customers. Since elderly housing business service provides long-term services and support for customers, company considers developing a good customer
relationship and trust will increase the usage of company’s optional supportive services, such as meal service, room cleaning, care services, and recreational services. Therefore, company focuses on managing the quality of every service to ensure that the business excels in meeting the customer requirements and expectations, which will result in boosting the sales of other services and acquisition of new customers through satisfied customer’s word-of-mouth marketing within his/her social networks.
107 6.2.5 Revenue Streams
Suncity housing business generate its revenues through the following three ways:
asset sale, usage fee, and subscription fee, and each of those revenue streams has characteristic of transaction revenue and recurring revenue.
Company’s asset sales are divided into sales earned for providing lifelong residential right and lifelong health management fee that are both paid in advance before residential services start to be provided. The lifelong residential right provides customers for their lifelong usage of residential room and facilities inside the Suncity residential building, which price can be varied based on the size of resident’s room and the located area of each Suncity housing. Lifelong health management fee provides regular medical checkup service,
temporary assisted living and nursing care service before public insurance can be used, and the services uncovered by public care insurance. Both of them are depreciable assets and the monetary value of residential right is fully depreciated in 15 years and health management service is depreciated in 10 years while those services are provided even after they have no salvage values.
The revenue earned from customer’s usage fees is divided into meal service fee and the fees charged for usage of optional supportive services. This type of fee is charged by service actually provided to customers, therefore, company focuses on management of service quality. For example, company’s meal service is cooked based on nutrition management and it has over 50 types of foods charged for reasonable price. Residents are also accepted to invite his/her friends and families to use housing’s meal services. As a result, Suncity’s housing can retain high usage ratio of meal service.
Housing’s subscription fee is a fixed monthly charged management fee for residential services which include residential building’s utility expenses, maintenance fee, operation fee, and employee’s salary fee. This fee is fixedly charged to every resident on a monthly basis equally regardless of resident’s room size and usage of supportive services.
108 6.2.6 Key Resources
Half Century More’s key resources, which are required to make the company’s business model work, could be described by the following three types of resources: physical resources, intellectual resources, and financial resources.
The company currently operates 14 luxury elderly housings and 3 intensive nursing care facilities in total in Japanese domestic market, and these buildings which has numerous leisure activity facilities and upper-level residential environment are company’s most important resourceswhich are used to create its value proposition to company’s customer segments. Company’s luxury residential environment and services inside those buildings are directly relevant to the number and type of key activities that company engages in. Since there were few residential service for the above upper-middle income elderly citizens during the 1990s, company’s luxury residential setting with leisure activity facilities for retirement living were highly appreciated by those income class elderly Japanese people who wished to have luxurious retirement living with supportive services instead of living in low-living quality care facility or hospital’s bedroom. Possession of both residential facility for independent living and intensive nursing care required aged-residents also can deliver the lifelong residential service to its customer segment. Company’s luxury residential
environment with numerous activity facilities also functions to motivate resident’s family to visit more frequently.
According to interview questions and analysis of company’s business, Half Century More corporate groups’s intellectual resources can be broadly classified into structural capital
According to interview questions and analysis of company’s business, Half Century More corporate groups’s intellectual resources can be broadly classified into structural capital