Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Entry Into The Japanese Dental Market Marketing Essay

Paper Type: Free Essay Subject: Marketing
Wordcount: 3912 words Published: 1st Jan 2015

Reference this

Dental industry is a part of medical industry, but it is very exclusive, and has little relationship with other industries. The whole pie of market is relatively small, therefore big enterprises rarely eager to enter this area. Furthermore, consumers generally stick to the brand they are familiar with, so it is not easy to enter the market. Again, the size and conservativeness of the market create the barrier.

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

Korean society has changed itself to developed-country style. The demographics of Korea show that Korea is changing into an aging society, which means medical market now has great potential growth. A number of doctors including dentists open hospital every year. Main customers are private dental hospitals, general hospitals, universities, and public offices. Those demands are quite stable, and less affected by business fluctuation. Recently, the digitalized products and implant industry are rapidly growing.

Another feature of dental market is narrow target consumer group. As dentists are not major in medical industry, dentists and producer of dental equipment formed intimate community. Because of this, the advertisement strategy is not effective as other industry. They know all alternatives in market very well. Moreover, there are not much alternatives, due to small market size.

“Long times ago, there was an attempt to smear my company’s reputation by media.” Yeungkyu Lee, the founder of Shinhung said. “And that never work. Dental society is really small. We know how everything is going around. It is not easy to deceive others in this market.”

After Korea’s opening of market in 1988, the dental market is under intense competition. Small importers are importing dental equipment from developed countries, every players in the market are promoting their specialized items.

2. Company Introduction

The Shinhung Co., Ltd was founded in 1955 from small dental store, not long after the Korean War. It was a first Korean company which produce dental unit. In 1970, it produced Korea’s first dental unit chairs, which have been a main product so far. Over the 50 years, Shinhung researched and developed the high-end unit chair and other various products. As a first mover, Shinhung keep its dominant position all along. As mentioned above, dental market is very small and conservative, so first mover’s advantage was very strong. Currently Korean dental products market is under intense competition, but in unit chair market, Shinhung still has 50% of share.

Shinhung has also introduced its product to international market, but the sales from exporting were just 3% of whole sales.

3. Why Japan?

Although the Korean dental market has great potential, the absolute size of market is quite smaller than that of developed countries. That is the reason why dental companies in Korea try to enter the international market. However entry into foreign market is not an easy task. Without strong domestic business base, there might be high risk of failure. Some small companies have already been though bankruptcy after the impractical entry attempts. However Shinhung is the biggest dental company in Korea, and it has consolidated its stable domestic market foundation. Ahn said “It is reasonable for Shinhung to seek international market.”

Then why Japan? Originally, Shinhung tried to enter developing countries, like China and other south-east Asian nations [1] . But after some trials and errors, Shinhung learned important lesson – developing countries were not able to afford the expensive dental equipment. Medical infrastructure in developing countries was still under construction, and Shinhung couldn’t find much demand. Moreover exporting business in Europe was neither profitable due to the deep recession triggered from Greek economic crisis.

On the other hand, Japan has many attractive conditions. The size of demand shows the great profitability of Japanese dental market. Please see below.

Japan

South Korea

Number of dentist

1,000,000

20,000

Number of Hospital

68,000

14,000

Annual unit chair consume

14,000

5,000

According to the chart above, figures show that Japanese dental market size is 5 times larger than that of Korea. “The size itself is making Japan very attractive.” Ahn, the chief manager of international division, said. “People say the Japan becomes less promising market due to the economic depression. Also there have been many disasters like tsunami, or meltdown. Nevertheless, Japan is still alive.” He also stressed that Shinhung considers this crisis as an opportunity. “Medical industry of Japan is high-end market, obviously.” He said. “It is true that it has conservative culture. Unless they find evident strength from foreign product, Japanese consumers cling to reliable domestic equipment. However, recently there were some pressures to Japanese market-customers started to find cheaper product to save the prime cost of business. There comes our niche market.”

Ahn pointed out that entering Japan is not just business expansion. “We’ve been developing cutting-edge equipments. Penetrating into Japanese market means that the Shinhung has proper product for high-end market of developed countries. Therefore, the entry itself can be a strong message to our potential international customers.”

Also, Shinhung has another advantage in Japan. Shinhung and Yoshida have been involved in strategic contract. Yoshida is the most dominant dental company in Japan, which will be described at next chapter. They agreed to develop and share their technology. This contract helped Shinhung in some ways. Automatically, Shinhung get opportunity to learn new technology from best Japanese company through co-development and sharing. Therefore, by doing collaboration, transition of knowledge, skills will nurture Shinhung’s ability to do business in Japan. Chief manager Ahn confidently mentioned that it means Shinhung can provide cheaper-but-not-inferior product to Japan. Also, Shinhung learned about how much technological standard that Japanese consumers require.

4. Japanese Market Environment

Regulations

The manufacture and sales of medical equipment are strictly regulated for both domestic and international manufacturers in Japan. In case of foreign manufacturers (å¤-國 除朝辭), there are 4 steps to complete before they start business in Japanese market. First of all, they need to obtain the permission of manufacture and sale by the authority of each province. In this process, each province will check the ability to bear the ultimate responsibility for the product’s market, job responsibilities, quality assurance, and safety management responsibility for their business. Second of all, they need to pass inspection of their product conducted by ministry of health, labor and welfare and obtain qualification of manufacturing/marketing of medical equipment. In this process, it will confirm that their product has no problem for functions and safety management. Third, it has to obtain foreign manufacture accreditation according to 3 articles 13 of the pharmaceutical affair laws. At this time, the foreign manufacturer has to appeal its abilities to produce sophisticated medical equipment and maintain its quality. At the final step, they have to apply for final inspection at each province. It will check whether their production method and management system meet a fixed standard established by each province. After these 4 steps are completed, final permission for manufacture and sale of medical equipment or medicine is provided. In fact, these regulations for the products in Japan are strongly enforced compared to The U.S or Europe. As a result of these strong regulations, it becomes very hard for both domestic and foreign manufacturer to enter Japanese market, considering cost and time consumption.

These high standard and examination system takes long time to start business and cost much. Normally it takes a few years to make a use of foreign product in Japanese market so equipment lag which is worth to 1 year and 8 months often occurs. Furthermore, the complaints rate of medical unit is very high, almost at the top. Therefore it is possible to worsen the company image, which could cause overall downturn. Moreover, distribution cost is bit higher than the other countries because the locations of medical center are spread out all over Japan. As a result, few manufacturers are not likely to enter this market, domestic and foreign companies both.

Currently, the demand for medical equipment – which is used for prevention and diagnosis of disease and treatment – is rapidly increasing, because of the population growth and aging society in the world. In case of Japan, it recently became second largest medical equipment market in the world. Although it used to be only worth to 1.9 trillion yen in 2000, it became worth to 2.3 trillion yen in 2010. Moreover, more than 50 percent of its domestic market is made up by treatment oriented equipment. Basically, medical equipment is divided into two kinds which are treatment oriented equipments such as catheter and syringe, and diagnosis oriented ones such as MRI and endoscope.

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

However, according to the research by Mizuho Corporation, it showed that Japan highly depends on importing medical equipment from overseas like U.S and Ireland. Interestingly, 46 percent of medical equipments are imported, which is worth to 6,000 million yen excess of import. Specifically, although the import rate of diagnosis oriented units is less than 20 percent, the rate of treatment oriented units is more than 50 percent. For instance, dependence on import for contact lenses is more than 85 percent.

In this situation, Japanese government is considering to ease these strict regulations on medical equipment and clarify a standard to increase the number of new domestic entry to Japanese market. Moreover it will also improve the effectiveness of inspection and make it faster to decrease equipment lag. In detail, it will shorten 19 months between first development and permission for sale. Furthermore, it will increase the number of inspector from 35 to 109 people. This relaxation of regulation can lead to two consequences. First, the situation that Japan intended. It would encourage domestic manufactures to develop new medical equipment and enter the market. The other is a kind of side effect. It could allow more foreign manufacturers enter Japanese market so the rate of import would go up.

This challenging situation can be summarized like this ; it is very hard to medical equipment business because of many strong regulations. Although it is easier for domestic manufacturers to start it than foreign manufacturers, Japan is highly depends on imported products. To solve these problems, Japanese government currently discusses the relaxation of regulation.

Competitions

As mentioned in chapter 3, Japan could be an attractive market to enter for the dental equipment, like unit chair. Compared to statistics in Korea, Japan has much larger number of dentists and hospitals. It is true that some of the hospitals are disappearing due to the economic reasons, but there still is increasing number of dental hospitals starting their business in this field. Therefore, from these numbers, it could be estimated that Japanese market is worth paying attention and going for the entry. Before Shinhung to enter the market, it is very important to investigate about potential competitors and analyze the data in terms of management style/philosophy, objective, and relationship with the customers/dealers. Japan is a country which seeks a long-term relationship with the customers and people put the importance on trust and respect. It is not applied only to dental-related companies but most of the companies in general. Consequently, the top three companies that sell the dental unit chair generally have the motto of contributing the society by providing the proper medical treatment.

Yoshida (株式会社ヨシダ) could be one of the most powerful in this dental equipment field. It has the biggest market share, about 27%, and it has long history of over hundred years since the foundation of Yoshida factory in 1906. Yoshida’s sales income has been consistent from its beginning, despite the crisis including the oil shock and big earthquakes, due to development of its own selling routes. Yoshida has the objective of “gathering technology, knowledge, and human resources with honesty and harmony, supporting medical field and its management, and creating human’s health and happiness.” [2] It especially emphasizes the relationship between dealers and seeking a good way of managing the company together. Focus on training employees (both men and women) also contributed to the total growth of Yoshida and its scale becomes larger and larger. It has approximately 50 branch companies all over Japan and is in close cooperation with other top companies that sell the medical equipment. Therefore, Yoshida could be very influential in this field regarding not only the size of the company, but also a sophisticated style of a unit chair and broad connection with other top companies.

Another company that put the importance on the human relationship is J. Morita (株式会社モリタ) whose share is 25.8% next to Yoshida. Not only development of the products, J. Morita also introduced the norm of oral health care which support customers by making a comfortable and happy environment. With the history of 96 years, this company was successful in control all the manufacturing, selling, and distributing process by its own. While inventing the unit chair that focused on the creativity and conformity, J. Morita also kept good relationships between other companies and founded a lot of branch offices widely in the world starting from the United States. One of the reasons why J. Morita became consistent in this field is because of the long-time after care service. By providing the reliable service and safety to the customers, it has obtained trust and reputation.

A company that has little bit different characteristics is Takara Belmont. While Yoshida and J. Morita mainly focused on medical equipment – mostly dental-related – Takara Belmont was first founded as a cast-metal statue and later applied cosmetics/beauty. It had passed 46 years when Takara Belmont entered the division of dental or medical related equipment in 1967. Regardless of being a late starter, its share is already powerful, 15.6%, due to the technology of creating salon chair or hair cutting chair. Although beauty and cosmetics consist 46% in total sales, the unit chair or medical material play important factors for the company. Management philosophy of Takara Belmont is to listen to the customer’s fundamental wishes such as becoming more beautiful, happier, and healthier. Furthermore, president, Yoshikawa, stated that “we will step forward toward to the world to achieve universal values about health and beauty.” TAKARA COMPANY N.Y. INC was the first branch office in overseas and continuously it is increasing more and more in Asia and Europe.

These top three companies seemed to be very powerful in this unit chair field. It is interesting to find out that all the companies emphasized both the human relationship and products. It seemed that without trust generated over time and efforts, it will be extremely hard to enter into Japan. If Shinhung want to sell its unit chairs successfully, it is required to spend enough time and cost to understand what buyers really want. In addition to it, unit chairs manufactured by Japanese companies are very sophisticated and colorful to catch customers’ attention. Mostly, unit chairs are very expensive, but since all the companies have historical backgrounds to support guaranteed quality, customers are relieved and confident about buying the products. What Japanese buyers require is, of course, the product that satisfies their need, but importance of keeping the good relationship should not be neglected. Shinhung could be successful in this field because if it offers more affordable unit chair than Japan and other European countries. Definitely there is a demand for cheaper dental unit chair because of the larger number of hospitals and dentists in Japan. If Shinhung can wait until Japanese buyers feel confident about the relationship between own company and Shinhung, it can have substantial influence on other competitors.

At this point, Shinhung’s business expansion to Japan can be analyzed by SWOT model like below;

Strength: Competitive price, high-end technology

Weakness: Low recognition

Opportunity: Strategic contract with Japanese top tier company

Threats: Regulation, risk of fail to find the right local partner

5. Business proposal

Entry mode choice

We propose exporting to Japan model and distributing their product through local partner. Conditions required to be a proper local partner for Shinhung is, first, it must have strong relationship with final consumer (dentist). Second, it also should have reliable recognition in local market and strong brand image. This strategy is recommended because of the following reasons.

First of all, as already mentioned, several local major dental equipment companies like Yoshida have strong position in Japanese dental equipment industry. So, as a new-comer and foreign company, making risk low is strategically important. So instead of setting up the branch or other high-involvement method, dealership with local company is more reasonable.

Also, using local partner, Shinhung can save cost and time by taking advantage of distributor’s experience and relationship. Under the weak brand recognition in Japanese market, selecting popular and trusted distributor is very important for Shinhung. Furthermore, as the mentioned in chapter 4, relationship with local market is very important in Japan. If Shinhung build up trust with the partner who already has reputation among local market, then the effort for relationship could be saved greatly. In addition, proper partner could help Shinhung to penetrate the regulation barrier. Local knowledge is necessary to get through the legal problems. (In this aspect, contract with Yoshida also can help setting relationship and reputation among Japanese market)

The third reason is manufacturing cost. After approach through cost-benefit analysis, it is revealed that the exporting final product to Japan is better than making product in Japan. In later option, high land fee and labor cost of Japan offset the saving transportation cost. Also, Ahn said the first option have the competitiveness rather than others. “Bringing equipment parts or incomplete item to Japan is not good idea. In basic manufacturing area, Japan has very strong industrial background. Only final product can appeal Shinhung’s uniqueness among Japanese customers.”

Marketing strategy in Japan

As a part of marketing, localization is another method of attracting local consumers. As consumers generally prefer familiar design, functions and services, localized versions generate better results and draw deeper loyalty from target consumers. The localization is not just translating language, but includes adapting product to the characteristics of the local marketplace – its customs, culture, social environment, regulations, etc. Therefore to successfully localize in Japan, it is important to better understand Japanese culture.

One of the distinct characteristics of Japanese consumer was that they have developed more of an interest in European style or design. For example, there are couples of famous resorts in Japan such as Yufuin or Huis Ten Bosch where the whole villages were filled with European style hotels, stores and restaurants so that people easily can feel European atmosphere there. Every year growing number of Japanese tourist visit the places, which reflect Japanese’ interest in European culture. Not only for the resorts, even in utensils, furniture markets, made in Europe have products or European style goods generally accounted top sales. With this characteristic, it is considerable that Shinhung pays more attention on design sector by redesigning unit chair into Japanese-preferable style, so that it can attract more Japanese customers at their first sight.

Additionally, Japanese people are generally meticulous about punctuality and security. They are pretty sensitive about malfunction or instable result. Ahn said “Do you know what Japanese users’ first thing in the morning is? They check machines to know whether it still works well or not.” True or not, it is obvious that offering regular after sales services and increasing punctuality of the machine are important issues. As a foreign company, it is important for Shinhung to build customer trust and loyalty, which related to high-quality of services and technological improvement in details.

The contract between Shinhung and Yoshida can be helpful here again. Another advantage from this contract is getting more consumer trust. Japanese consumer is conservative and brand-royal as they concerned about reliability much (particularly in dental equipment). Manufacturer’s brand works as a reliable index to Japanese dentists. So at the moment of decision making, Shinhung can improve their brand image referring their contract with Yoshida.

6. Conclusion & Summary

So far, we’ve investigated why Shinhung needs international market expansion, why Japan is the most appropriate country to penetrate, and how to enter the market. Since its establishment in 1955, Shinhung has concentrated on forming bedrock in Korean market. As a result, Shinhung was able to achieve its top position in the industry. After successfully ensconcing itself in domestic market, Shinhung now seek to expand its business to abroad. Many Asian countries came up for candidates, but it is obvious that Japanese market is the most attractive and promising nation for Shinhung to set up its international business with its prominent market size which exceeds 5 times of Korean dental market size.

With the partnership strategy, Shinhung can reduce newly entrant risks, easily get useful knowhow or information from its partner, and save set-up cost a lot. In addition, building strategic relationship with Yoshida, the top player in Japanese dental industry is critical. Finally, it is also recommended to develop proper marketing strategy and care for design and services to attract consumers and by extent, to effectively penetrate into the market.

 

Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: