Preliminary Market Research
Following its decision to expand its cookware business in Taiwan, Genjuro management contracted with a team of university-based students and researchers. The research team was part of the College of Management at National Taiwan Normal University in Taipei. The goal of the market research was to discover more information about Taiwanese cooking and lifestyle habits, including their perceptions if any of the brand and of cast iron cookware in general. At the time of this writing, the research was still ongoing, however some preliminary conclusions could be reached.
Research methods
The research team planned to conduct 40-50 in-person, one-on-one interviews in and around Taipei from April to July 2017. Each interview lasted for approximately 30 minutes.
Interview subjects were given a small token of appreciation in the form of coffee or tea and a trivet from Genjuro, with a retail value of approximately 500 NTD. See Appendix A for full list of interview questions.
The subjects were divided into four groups based on preliminary research as to who would be the mostly likely potential customers for Genjuro.
EMBA students (7 subjects): These students from NTNU had traveled from Taiwan to Iwate to visit the foundry and shop at the Genjuro factory store two years prior. As past customers they had a unique perspective on the products and could describe the way the products were actually used and displayed in the home.
Department store shoppers (15 subjects): Researchers interviewed shoppers at the Mega City department store in Banqiao. Department stores such as this one were among the most likely places that potential customers reported looking to buy cast iron cookware.
Steakhouse customer: (13 subjects): Customers at the Noble Family Steak House in Taipei were interviewed. Preliminary research found that people used cast iron cookware to prepare large meats such as steak, so people who enjoy eating steak were considered likely
customers.
Organic supermarket (# TBD): This stage of the interview process was still underway at the time of this writing. As cast iron is perceived to have positive health benefits, shoppers at an
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organic super market, who were more likely to cook and to be interested in healthy eating, were considered a strong potential customer base.
Preliminary Results:
Although interviews, coding and analysis were still ongoing at the time of this writing, consistent themes emerged from preliminary reviews of the interview records:
• Brand awareness: Almost zero subjects had heard of Genjuro. Even those subjects who had been to Japan to the factory struggled to remember the name of the company.
They were familiar with cast iron in general, but not with this company. Brand awareness of cast iron companies overall was very low, with Le Creuset and Zwilling being the two brands most mentioned by subjects.
• Positive aspects of cast iron: Subjects consistently mentioned that cast iron cookware conducted heat efficiently, was heavy, made the food taste better, and was healthier to cook with.
• Negative aspects of cast iron: The heavy weight was considered both a positive and negative aspect of the cookware, as it was a signifier of quality but also made the cookware more difficult to handle. Respondents also mentioned that the cast iron had special requirements for care and maintenance, and was typically more expensive than other kinds of cookware.
• Made in Japan: Respondents were likely to have a favorable view of items made in Japan and view them as being higher quality.
• Intention to purchase: At least half of interview subjects would consider purchasing cast iron cookware in the future. Most intended to purchase the cookware for personal use rather than as a gift
• Prior purchasers: People who had previously purchased Genjuro cookware were more likely to mention the beautiful design as a factor in their buying decision.
• Likeliest usage: Respondents said they would be most likely to use the cast iron cookware for traditional Taiwanese dishes such as stews, soups, meats, and frying food. No subjects so far said that they planned to use the cookware for European or Western-style dishes.
• Overall positive impression: Those respondents who had used cast iron cookware overall had a favorable impression of it and said they would consider recommending it to their friends.
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• Information sources: Respondents were likely to seek information online or from sales associates in department stores. They also relied on friends and family for recommendations.
• Buying channels: The majority of respondents said they would be likeliest to purchase cast iron cookware in person in a store, probably a department store. They would seek information and do research online, but wanted to see and feel the items in person before making a purchase.
Marketing Strategy and Opportunities:
Based on the preliminary market research, an analysis of the competitive landscape and prior research on the homewares market in Taiwan, the following are the major marketing
challenges faced by Genjuro:
• Very low brand awareness: Although the products are currently available in Taiwan, there is almost zero name recognition or awareness of the brand among potential customers.
• Low market penetration: Products are not available in a large number of stores, and pricing is inconsistent among stores where the merchandise is sold.
• Low product knowledge: Potential customers are not familiar with how to most effectively use the products, how to handle the product weight, and ways to make the cleaning and care of the products easy and efficient.
In light of the above challenges, the marketing goals for Genjuro in Taiwan are:
• Increase market share and revenue in Taiwan
• Ensure stable and consistent product pricing
• Raise brand awareness
• Increase customer knowledge about the use and care of Genjuro cast iron products The marketing mix, or 4-P model, can be used to address these challenges and meet the above goals. The 4-Ps are defined as “the marketing tools that the firm uses to pursue its marketing objectives in the target market" (Kotler and Keller 2011). The 4-Ps, which constitute the broadest levels of marketing decision making, are product, price, promotion, and place.
Product refers to the item that satisfies a customer’s needs or wants. Price is the amount the customer pays for the product. Place involves the strategies or locations for the customer to
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access the product. Finally, promotion is the marketing communications or messaging to reach the target audience.
Product
The existing line of Genjuro kitchenware is suitable for the Taiwan market. There are enough similarities between Japanese and Taiwanese cooking and eating that the products the
company currently produces will be suitable for sale in Taiwan. Creating a new product line is expensive and time consuming, and in this case the return would likely be insufficient to justify the cost.
As a future strategy, the company should consider promoting its line of tea kettles and pots in Taiwan, in addition to cookware. Most customers will purchase a few items of cookware and keep them for many years without replacing them, due to high quality and durability.
However, customers may purchase multiple pots and kettles for different occasions, and also purchase tea pots and kettles as gifts. Taiwan has a strong existing tea culture which would be well suited for the Genjuro tea pots and kettles as a future expansion strategy.
Price
Genjuro cookware is currently priced from $75-250 USD per piece, which is competitive with other cast iron cookware in Taiwan (see above for more detail on the competitive landscape). The most important aspect of the pricing strategy in Taiwan is not to change the price but to make it consistent. Prices can be nearly twice as much for the same items in some stores vs others. In order for customers to trust and value a brand, they must have confidence in clear, consistent pricing across retail channels. Implementing consistent pricing will likely require a change in distribution strategies, as discussed below.
Place
To ensure consistent pricing and to make products more widely and easily accessible to consumers, Genjuro should consider adopting the three-pronged placement strategy below. In order to make any of these strategies successful, step one will be to replace the existing distributor. Ongoing communication asymmetry, uneven pricing, and a total lack of
marketing have been characteristic of the relationship with the existing distributor, according to interviews with Genjuro executive management. Replacing the distributor with one or more new distribution partners is a critical first step in executing the placement strategy below.
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1. Official store in Taipei: Opening a dedicated retail outlet in Taiwan’s capital city will confer numerous advantages for the brand. It adds prestige, as customers are
introduced to the particular beauty and refined aesthetic of Genjuro. In addition, employees of the retail outlet can be directly trained by the company to be experts on the products and provide the highest level of service and customer education in terms of product use, care and maintenance. Taipei offers numerous potential high-end retail shopping centers that would be potential locations, and has a highly educated
population to supply the human capital necessary for the store employees. A
dedicated retail outlet could also afford the company new insights on its customers as it builds relationships and deepens local connection with the brand.
2. Distribution and branding in department stores: Department stores were repeatedly cited in the preliminary market research as the place potential customers were most likely to look for cookware. Although Genjuro products are currently available in some department stores, there is almost no branding and customers would have a very difficult time finding the products. The company should consider negotiating with department stores such as Mega City, Sogo and Shin Kong Mitsukoshi to provide special, dedicated shelving and sections with
Genjuro branding. Genjuro should also consider providing training to department store staff if possible to make them familiar with the product lines as well as cleaning and care requirements. Interview subjects cited department store staff as a potential
knowledge base, so educating staff to the degree possible is a valuable opportunity to ultimately reach customers. Chinese-language explanatory material, recipes, and other marketing collateral should also be available in all department stores where Genjuro products are sold.
Figure 3.1: Department store shelf dedicated to Le Creuset, a Genjuro competitor.
Source: April 2017 research visit
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3. Online retail: Although most potential customers in the preliminary market research said they would be more likely to buy in person than online, a branded web presence is an important complement to the in-person strategy. Potential customers look for product information online and a Chinese-language website dedicated to Taiwanese customers would be an important source of information, customer education, and potential sales. The official online store could also be supplemented by sales through other online retail outlets such as popular shopping site PCHome.com.
Promotion
The final piece of the marketing mix is particularly important, as promotion is an area in which Genjuro has considerable low-hanging fruit. Since there has been virtually no
promotion in Taiwan at all so far, the company has an opportunity to make a highly positive first impression and initial efforts are likely to see encouraging results. The company should consider a coordinated effort using the following promotional strategies to make a high-impact impression on potential customers.
• Cooking classes: Cooking classes and demonstrations would give Genjuro an opportunity to demonstrate how its Japanese products are highly adaptable to
Taiwanese cooking styles and recipes. Classes can be held in the Genjuro retail space, or in partner locations such as cooking stores. Even the bookstore in Eslite, a high-end department store with multiple locations, holds occasional cooking demonstrations.
Potential customers may be introduced to the recipes that are conducive to using the cookware, and shown that the cleaning and maintenance is actually not burdensome or time-consuming with a minimal amount of instruction.
• Bloggers: Influential bloggers such as 矽谷美味人妻 (KT) of How Living
(http://kthu1031.pixnet.net/blog) are an important source of information for home cooks. How Living, for example, has more than half a million Facebook followers, with an accompanying YouTube channel, LINE, and dedicated website. Providing products and training to selected online personalities can help the company expand brand awareness, build credibility, and reach new targeted customers who have an interest in cooking at home and healthy eating.
• Recipes: Genjuro has an existing recipe book, however at present it is only available in Japanese. Creating recipes geared toward the Taiwan market and making the book
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available in Chinese will be an important complement to the other promotional strategies. The recipe book can be sold at the company store, in department stores and online. Recipes can be used in each of the promotion strategies, including in cooking classes, distributing samples to bloggers, and in social media and other kinds of outreach.
• Magazines: Magazines and other publications are another important channel to build brand awareness and increase credibility among potential customers. The company can take a two-fold approach of both buying advertising as well as providing products and story pitches to editors to encourage them to write articles about the products. As noted earlier, the Genjuro products are well-aligned with current trends towards an increase in home cooking and healthy eating in Taiwan, and many people in Taiwan have a favorable opinion about products made in Japan. Pitching editors through this lens can be a potential source of valuable exposure for the brand.
• Social media: Coordinating social media will leverage the power and reach of each of the promotional strategies. Facebook and YouTube will be instrumental to this approach. Every new recipe, magazine story, blog post, and cooking class event is another opportunity to share the brand story and highlight key product features. In this way the company can have a viral reach that would far exceed an individual strategy taken in isolation.
Each of the promotional strategies is interconnected with the others. For example, when the company holds a cooking class in its store, it can also debut a new recipe, invite bloggers to the store in person, issue a press release to magazines and lifestyle publications, post a YouTube video, and create a Facebook event. Similarly, when the company receives a positive article in a magazine, it can invite bloggers to share and comment on it and post the article to its social media pages. A coordinated approach, which combines all elements of the 4-Ps—product, price, place and promotion—will be key to achieving the company’s
marketing goals.
Conclusion on sustaining competitive advantage
The potential for Genjuro to increase its revenue and market share in Taiwan is high. The economy shows signs of growth, with homewares being a segment predicted to have strong positive trends. In preliminary market research, potential customers indicated a favorable
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impression of cast iron, of products made in Japan, and said they would likely consider buying cast iron products in the future. Although there are several competing brands already, brand awareness is low overall for all competitors and space exists in the market for Genjuro to grow.
However, to take advantage of these favorable conditions, Genjuro must overcome its major challenges and use its core competencies in order to build and sustain competitive advantage.
The major challenges are low brand awareness, low market penetration with inconsistent pricing, and low product knowledge by potential customers. Fortunately, the products themselves are very high quality and beautiful, and are positioned to tap into existing trends among Taiwanese for healthy eating and more cooking at home. Plus, Taiwanese people have a favorable view of products made in Japan, and while brand awareness of Genjuro is low, it’s also low among competitors.
The strategies in the 4-P model, starting with replacing the distributor, will help the company meet these challenges and leverage its strengths. Opening a dedicated retail location and increasing the brand presence in department stores will both raise brand awareness and provide multiple opportunities for customer education. Outreach via cooking demonstrations, marketing collateral such as brochures, social media, and magazines are the interconnected strategies that will introduce customers to these exquisite, quality products. Customers will learn to use and care for the products effectively, and develop an understanding that features such as a heavy weight and premium price are indicative of high quality merchandise. Widely sharing the Genjuro story with consumers will ultimately be the key to leveraging core
competencies to sustain lasting competitive advantage.
34 References
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1.1 Have you ever heard about cast iron cookware, pots or pans?
1.2 Have you or your family ever bought cast iron cookware, such as pots or pans? Why?
1.3 Could you list three obvious difference between cast iron cookware and non-cast iron cookware?
1.4 Could you list three brands of the cast iron cookware?
1.5 Have you ever heard about [redacted]’s cast iron cookware?
Purpose of Purchase 2.1 What is your motivation for taking this course? (Only for cooking class
Purpose of Purchase 2.1 What is your motivation for taking this course? (Only for cooking class