Monday, June 21, 2010

No. 13: Listen to the Voice of the Market, First

A municipality in the Tokyo Metropolitan area started to commercialize brandy using pears that are its signature agricultural products, but things did not go well as expected. It publicly sought a person to preside this business and recruited a competent person, but even he did not succeeded in making a turnaround. The greatest problem with this case is that the municipality did not ask beforehand whether or not pear brandy would sell fast enough to make the business viable. As this case shows, many municipalities try to commercialize products using their signature agricultural products, but few of them succeed.

It is obvious that some one already tried to commercialize pear brandy in the past and proved that it does not sell fast enough to keep the business running. Since ancient times, human has been trying to brew various kinds of fruits to produce original liquors. As the result of trial and error, only the existing products are available on the market. The same is true of jams. Many municipalities make efforts to commercialize pear jam and peach jam, but in vain.

To make the matter worse, agricultural products are greatly at the mercy of market conditions. You cannot stop producing liquors and jams only because the purchase cost of agricultural products is high, keeping the production equipment idle. It may be possible to market pear brandy on a small scale as a gift for sightseers. But, it is hardly possible to market it as business. To be rather modest, the municipality should not have tried to commercialize a product that large companies do not try to commercialize.

Quite some time ago, local brand beers created a sensation in Japan. Many municipalities joined the boom and introduce their own brand beers one after another. Today, we do not hear much about them. In this case, beer is beer. The point is how to differentiate your local brand beers from Asahi’s Super Dry and Kirin’s Lager. The story about pear brandy is totally different from the story about the local brand beer.

Today, every technology is highly advanced and product development is brutally fierce. Therefore, it is vital to change thought from using the signature agricultural product as it is to growing specific agricultural product best suitable to a product to develop. Otherwise, it is hardly possible to create products that satisfy consumers’ requirements. Think about grapes. The grapes from which wine is made are the result of selective breeding. In addition, it is important to know that the technology to produce best fruit is quite different from the technology to produce wonderful wine using the best grape. You had better not think illogically that you can produce wonderful wine only if you can get the best grape for wine.

Because business is the activities that involve the market and consumers, you always need to look into various aspects of the market and consumers. That is, you need to build a product concept by listening to the voice of the market and observe market trend in detail. It is not advisable to build a product concept only on the basis of your self-centered view, however wonderful your technology and know-how may be.

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