Japan's consumer renaissance: how Japan's Otaku are changing the way we do business.

You've seen them shuffling around Akihabara, shopping bags held closely to chest containing prized comics or lined up outside computer stores waiting for the latest release of limited edition action figures.

These Otaku, or geeks who have a passion for animation and manga, are a ubiquitous modern symbol of Japan. And while Otaku sub-culture may inspire derision among ordinary Japanese, inexplicably, out of Japan, these geeks have gained cult status. In this edition we examine how Otaku have indirectly led Japan's cultural renaissance and evaluate how Japan is transforming from primarily a manufacturer exporting goods to an exporter of ideas. Lastly we examine how this societal Change Point impacts your business.

Background

The word Otaku came to prominence at the end of the 1980s when it was coined to describe a person, usually male, who had an extreme interest or fanaticism in one particular subject, generally in manga or anime. It was used in a derogatory fashion and those branded with the term found solace in their fellow collectors or geeks, or even in their non-animate objects.

How times change. Most latterly the name Otaku has become something of a rousing cry by men and women who are passionate about their hobbies and the term is bandied around more generously. With the advent of desirable, appealing electronic goods such as the iPod or Powerbook laptops manufactured by Apple and stylishly designed electrical items by Japanese brand 'amadana', technology is now appreciated by larger numbers of people. This Change Point means consumers such as housewives or the elderly, who previously bought appliances and electronic goods generally on price rather than form, are proud to own and talk about electronic items in the same way. Otaku talk about the nuances of a manga character's superpowers. In this regard, increasing numbers of people are Otaku in one form or another, be it in the fields of blogging, fashion, music, electronic goods, cars, food, spas or sake. According to The Nikkei Weekly, the Nomura Research Institute estimates that there are 1.72 million people willing to spend considerable amounts of time and money developing their collections. If the less obsessive are included, this number grows to about 6.5 million people.

We're all Otaku

With the realization that Otaku can be connoisseurs in a variety of fields we witness a Change Point from a 'Whatever' attitude to an 'I care' culture. This Change Point translates into highly informed consumers who use a variety of media, especially blogs, online community sites and specialist magazines both offline and online, who understand aspects of a product more deeply, in some cases than the marketers promoting the product. At the recently launched Omotesando Hills there are a number of stores chosen by developer Mori Building Co. which focus on one product with the only differentiation being a particular style or taste. For example, there is a model car store selling accurately scaled down replicas, a sake shop with more than 160 varieties in a boutique-like setting and a store that sells character inspired apparel by Japan's famed anime production company, Studio Ghibli.

Otaku become trendy

The emergence of Otaku as a sub culture or a set of people with distinct behavior and beliefs has led to Otaku becoming Japan's first, originated in Japan, human cultural export in a similar way the punk movement from the UK spread worldwide. While punks were characterized by their hair and make-up, Otaku are more difficult to pin down with identifiable dress codes and musical tastes since these differ between one Otaku and another. The link that bound Otaku was they were a cultural group whose values and norms were at odds with the rest of society, but even this definition is evolving. What's taboo often becomes trendy. So by effectively dropping out of conventional Japanese life: with its emphasis on work, Japanese Otaku have put leisure interests ahead of salary, marriage, and traditional pursuits. The Change Point here is a rejection of convention and a shift towards more intensive, experiential based activity. This ultimately has an impact on traditional areas of spending. Marketing to all with one message is over. Targeting individuals and treating them as individuals with personalized messages will win the day.

Brand 'Japan'

So here's the crux. Otaku have evolved into a definable Japanese sub culture and since the pursuit of exploiting what's cool is now an integral component of marketing, Otaku have risen to prominence and become mainstream. Successes like last year's film 'Train Man,' about an Otaku who falls in love, have sparked a mini trend in professional women seeking similar guys who emphasize substance over form. However, nerd culture is no mere economic blip. Economist Takuro Morinaga at UFJ Institute puts the overall domestic Otaku market at three to four trillion yen (US$24 billion to US$26 billion) and the trend is spreading. There are now Otaku in North America, Europe and the rest of Asia who describe themselves by the Japanese term, in the same way punks were known by the same name, world over. These international Otaku identify with Japanese animation, read translated manga and effectively create a word of mouth distribution of modern Japanese cultural exports. Those national icons of Japan, Mount Fuji and kimonos, evoke little in a Hong Kong teenager's life but there is a fair chance either she or her friends dress in costumes from a manga show (Cosplay), follow a Japanese band and eat sushi because it's cool to do so. In tandem, Japanese goods across all product categories become desirable due to their association with 'Cool Japan', and an international recognition and respect of Japanese originated products forms.

The idea producers

The days of associating Japan with cheap calculators and unreliable cars have ended since transformation from manufacturing superpower to exporter of ideas can only occur once a nation has reached into the hearts and minds of international consumers. This is not only because quality levels have improved, but perceptions of Japan's image have changed too. When an American consumer test drives a Toyota, it is not just a well known manufacturer they are taking out on the road but Japan's technologically forward brand image.

Thus by using this 'Japanese Advantage' companies reach out to local consumers and reinforce 'Designed in Japan' messages, no matter where in the world the product was manufactured. Additionally, businesses also connect emotionally with international consumers who view Japan in a more positive light than its geographical neighbors. Lastly there will always be neighboring countries that produce goods more cheaply than Japan but until their 'advantage' or national brand cache kicks in, will lack the sales pitch to magnify product sales especially on higher priced, premium categories.

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Where to from here?

International brands with bases in Japan can capitalize on their first-hand Japanese know-how by exporting 'Designed in Japan' products to home and other markets. These products should utilize Japanese technological/R & D breakthrough or imagery.

There is a lesson to be learned in why Otaku collect limited edition goods. These items develop a higher brand cache and become more valuable when manufactured in limited production runs, a lesson that is not used often enough by premium category brands.

By establishing innovation or R & D centers in Japan or collaborating with non-competitive companies to form a mutually beneficial relationship, international brands can gain consumer insight, knowledge and product development first-hand. This development could be furthered with the establishment of a 'Japanese Innovations Association', in which group members share information and progress research in the same way Otaku swap information on and offline.

Ensure your category appeals to the Otaku or connoisseur within us all by considering your product's uniqueness, 'collectability' and design aesthetic. Mass production is cool, as long as it is cool mass production.

By David Meredith, President, Bates Asia Japan Inc.