MUJI Case Study for essay PDF

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Marketing management for muji brand case...

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Brand Management Written Assignment Cover Sheet

Name:

Lin Wen

Student Number:

670413

Subject Title:

Brand Management

Subject Code:

MKTG90006

Word Count:

2937 words

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Brand Management Assignment – MUJI

Executive Summary MUJI, short for Mujirushi (no-brand) Ryohin (quality goods), is a Japanese retail/manufacture company known for its wide variety of products from housewares, furniture, lifestyle goods, foods, apparels to cosmetics. This report analyses primarily MUJI’s branding strategies and customer-based brand equity, which is divided into sections and explained in-depth. In order to understand MUJI to a greater extent, the brand resonance model provides a concise framework in terms of four underlying dimensions – brand identity, meaning, responses and relationships. To measure MUJI’s level of awareness, we examine brand salience and product extension strategy which illustrates how product lines create harmony and consistency. Moreover, to understand MUJI’s brand meaning, performance is evaluated based on the marketing program employed and the use marketing mix strategies. When determining MUJI’s image, customer profile, secondary association and positioning are taken into account to generalize customer perceptions toward the brand. By looking into brand elements such as slogan and its “no-label” approach, point of parity and point of difference, we gain an understanding of customers’ response and based on what criteria they judge MUJI on. Subsequently, we identify what feelings MUJI extracts from customers through its integrated marketing communication and what emotional benefits it conveys to create resonation and response from customer. Lastly, in order to develop relationship with them MUJI communicates its CSR commitments to build a common ground on which customers would engage and feel related with MUJI at an intimate level. Lastly, recommendations will be provided after a thorough analysis on MUJI: establish a clear brand image boundary when adapting a new market, reduce overhead and other costs, embrace celebrity endorsement and provide consistent, Japanese-style customer service. Overall, the central focus of this report lies on MUJI’s unprecedented implementation of a “no brand, no logo” approach and how it triggers robust customer affections and brand equity.

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Introduction Background and History - Also known as Ryochin Keikaku Co., Ltd., Mujirushi Ryohin was originally a manufacturer started in 1980 serving as a private product brand of The Seiyu, Ltd., a supermarket chain, with 40 products ranging from ordinary household and consumers goods. With a clear vision of providing customers with fundamentally essential products that are functional, high-quality, simple and reasonably priced, Ryochin Keikaka Co., Ltd. managed to expand to overseas productions and procurement in 1985, subsequently developing materials globally in 1987. Later, it withdrew from The Seiyu, Ltd. and ran independently as both a manufacturer and retailer handling all Mujirushi Ryohin products and operations including planning, development, production, distribution and sales. With its continual growth and expansion, it has over 7000 products ranging from stationary, apparels, housewares to lifestyle items in late 2000’s and more than 200 international retail stores in 2013 (See Appendix 1). In terms of future plan, riding on an expansion momentum in Asia with 27.3% revenue growth in 2012 (See Appendix 2), MUJI aims to expand in the Mainland China region with 100 stores across 29 cities (Ryohin Keikaku Co., Ltd. Annual Report, 2013). Branding Strategies - The name “MUJI” was derived from Mujirushi Ryohin, which in translation means “no-brand, quality goods” (Lee, 2007). MUJI can be categorized as a ‘generic brand’ which does not employ advertising or promotion focusing on the brand itself, but rather leverage on product features and functionality - a very unique “nobrand strategy”. Instead of relying on conventional marketing schemes and approaches, MUJI has gained strong competitive advantages from word-of-mouth, memorable shopping experience and distinctive product designs – they are deliberately made aligned to their brand characteristics of style, simplicity, value and uniformity. MUJI’s product designs, with elements of ‘Bauhaus style’ (Lange, 2009) and simplicity, have enhanced its brand value and won five product design awards in 2005 (MUJI History, 2012). Value has been a fundamental focus for MUJI to inform the company’s design aesthetic, with an array of products that are bereft of unnecessary ornamentation (Pellegrin, 2012). Uniformity reflects MUJI’s brand image and identity from its philosophy, production, design to store layout to deliver a degree of consistency throughout the globe and a holistic brand experience to which customers are emotionally attached. This “no-brand” strategy has been successful under the context of

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an overcrowding, saturated and bombarding market where brands are constantly reinforced. An intriguing aspect about MUJI brand, as some may argue, is the potential use of “reverse psychology” through its advocacy of “no-brand” to strengthen its brand equity – the absence of a brand has become a brand in itself.

Customer-Based Brand Equity Salience In MUJI’s context, product extension strategy serves to increase its brand salience among customers; though its product range varies across different categories, it has diligently maintained a consistent product image and design revolving around the idea of simplicity. Its product category hierarchy may be complex in both breadth and width, but customers have no problem recalling their product range – a strong association between no-brand, simplicity and quality materials to MUJI. Its no-brand identity has been leveraged effectively to strengthen its brand equity – instead of contemplating on which brand to choose from, MUJI’s no-brand, no-logo element has helped customers easily create a top-of-mind awareness and instant recall.

Performance To create brand equity through marketing programs such as personalized marketing, product, pricing, promotion and distribution strategies are not only integral parts collectively helping customers meet their functional needs and evaluate brand performance, but also develop relationships and experience with MUJI. Meaning is defined by the relationship; by successfully managing the relationship between brand and customer, one successfully manages the meaning of that brand (Sweterlitsch, 2009). Product – With an upheaving overconsumption trend, MUJI constantly exercises selfrestraint in its product design and manufacture – it strives to prolong product life cycle and creates a sense of product adequacy through its “Product Fitness 80 Project” (MUJI Product Fitness 80, 2013). This project aims to reconsider and remake its existing products with only 80% of the materials that it has been using, reflecting MUJI’s belief in seeking product improvements with regards to quality, reliability and durability, which customers are able to relate and create emotional benefits. Furthermore, MUJI complies strongly to its product development criteria: products are made to solve problems; scrutiny over materials used and streamlining processes according to “Ryohin

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Standards”; minimum and simple packaging based on “Ryohin Keikaku Environment and Safety Management” (Ryohin Keikaku Co., Ltd. Annual Report, 2013). Price - Pricing has been an intriguing aspect about MUIJI because of the different strategies adopted in different markets. Based on Porter’s generic strategies, MUJI employs “cost-leadership” strategy in Japan, focusing on reducing costs on product sizes, colours and packaging and thereby follows its “lower priced for reason” principle; simplicity has made the brand unique – eliminating everything but their functionality – and more affordable in the Japanese market where prolific augmented features and excessive packaging lead to high prices. On the other hands, MUJI has successfully implemented “differentiation” strategies in countries such as Taiwan, Singapore and U.S. through forward, innovative product offerings at a higher price to reflect on their intended premium image. Customers perceive pricing as a significant association to performance, and when pricing strategies are different across markets, MUJI brand must be conveyed in a corresponding fashion – either as premium/innovative or simple/functional. Promotion – Aligning with its strong focus on no-brand, quality value and maintaining a simple and clear image, MUJI rarely offers sales promotion and only communicates through designated channels. From 2002 to 2008 MUJI has run a series of magazine advertisement (Hara, 2008). Rather than directly selling, MUJI enhances their brand image and equity through visually introducing aesthetic product attributes in a passive manner (See Appendix 4), which triggers customers’ interest in experiencing the products. Place – Since it had vertically integrated retail channels in 1989 and launched online stores in 2000, MUJI’s unique store layout has help reinforce its service effectiveness and empathy – soothing music, relaxing ambience, organized product placement and light store background colours – provides a holistic, pleasant shopping experience and brand satisfaction that meets their emotional needs and generate a sense of trust and familiarity from its uniform physical layouts.

Imagery Imagery is an abstract concept about a brand from which customers form associations with their psychological needs beyond simply looking into functionality. Firstly, MUJI’s

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user profile can be classified demographically between 20-40 years old with occupations ranging from university students, young working adults, business people and housewives; to describe in terms of psychographic traits, MUJI’s customers support its environmental stance and CSR, detest corporate branding and desire quality products at affordable prices. They are rational people interested in the right values, and choose to connect with a firm that is interested in promoting social good and satisfaction from life (Aaker, 2009), which are congruent with MUJI’s brand personality and values. Secondly, MUJI has effectively leveraged its country of origin – Japan - to create a pivotal secondary association. As Japan is widely known for making quality products with thoughtful design and delicate packaging, MUJI can be considered as an iconic Japanese brand and thereby its association with MUJI is inseparable – demonstrated explicitly through its name and advertisement in Japanese. Positioning plays a significant role in shaping MUJI’s imagery and since MUJI competes in various markets, the nature of competitions and competitors must be taken into account. Competing in the furniture market with IKEA, housewares market with Target and GAP in the apparel market, MUJI positions itself as a simple, functional and affordable brand which focuses on minimalism yet maintains its strict quality standard. While IKEA encourages DIY and affordable solutions, MUJI provides problem-solving lifestyle items with emotional and self-expressive benefits, creates its own subcategories and pursues no-brand strategy.

Judgement An aggregation of customers’ opinions on brand performance and imagery will assist them to judge and form a response toward MUJI through the use of brand elements, which act as devices that serve to differentiate brands and elicit positive judgements. Apart from its overt slogan, “Lower Priced for Reason”, MUJI possesses an implicit, unorthodox brand element through its no-brand practice: no labels, logos and no brand name printed on their products whatsoever. By reiterating their beliefs and value, this no-brand policy leaves customers impressed, conveying strong meaning and memory which are easily transferable and adaptable across all its product lines. Their strong commitments in no brand labelling become a unique brand element that stimulates

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customer likeability. However, there is a degree of brand features that are shared among market players: both IKEA and MUJI focus on aesthetic product innovation, affordability and simplicity – a point of parity lies on a shared interest in solving people’s problems in life with quality products. In addition to point of parity, while IKEA’s strength lies on customer co-creation, MUJI’s well-known minimal packaging approach is another point of difference that displays how it is true to its cause through actions. It insists in using bags and packaging from 100% recycle paper and eliminate all unnecessary wrappings – customers receive what they see and what they see is functionality with quality. It is the inversion of all elements of branding that allows the brands to exist with such distinction as to create a kind of anti-branding movement among consumers.

Feeling MUJI focuses on simplicity, moderation, humility - its philosophy is to deliver functional products, not the best but ‘enough’, conveying a feeling of satisfaction knowing that the product will deliver what is needed and no more (Aaker, 2009). Integrated marketing communication is essential to deliver the essence of MUJI’s spirit and stimulate consumers’ feelings toward the brand, unconventional tools such as “MUJI Calendar”, “Notebooks” and “MUJI to go” apps (Dachis, 2010) with a minimalistic style and simple interface are introduced; they provide a degree of virtual complimentary services made consistent with its products. Furthermore, with the focus on improving people’s living in mind, MUJI launches its 4th international design competition with a theme of “Long Lasting Design for Living” (MUJI Awards 04, 2013) and an aim to encourage participants design durable modern products incorporating cultural traditions with a view of longevity. In the end, the products developed, designed, manufactured and distributed to be the purest, most essential version possible (Sweterlitsch, 2009) elicit customers’ emotional response, evoking a sense of trust, security, self-identity and self-esteem that align with MUJI’s corporate mission and environmental stance.

Resonance Intensity - With numerous standards and policies in place, MUJI is majorly differentiated for its prominent, active CSR engagement (Ryohin Keikaku Co., Ltd. Annual Report, 2013) – through its “Pleasant Life” initiative (See Appendix 5), which

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display a sense of sincerity and perseverance and being true to its value and the environment, which are something perceived as genuine and precious in today’s market conditions. Through its environmental activities MUJI is able to create a sense of community and attitudinal attachment from consumers for supporting social causes. To further add, as part of MUJI’s “Laboratory for Life” project, it launches a joint “One Village One Product” project with JICA (Japanese International Corporation Agency), an organization with an aim to reduce poverty, improve governance and achieve human security (JICA Mission Statement, 2013), in Kyrgyz to revitalize the region through the cultivation of specialty goods utilizing local resources. With MUJI’s techniques, locals can improve their hand-made products, operation process and sales supported; they also attempt to raise local public and private manufacturers’ awareness See Appendix 6). Such empowerment to communities and nurturing is communicated through PR, conveying MUJI’s personality and value to stakeholders who generate immense emotional attachments and benefits. Activities - On the other hands, customers now have multiple tools to actively engage and express their behavioural loyalty to MUJI – through social media such as Facebook, Twitter, Instagram and Pinterest – the online sharing of their attachment and experience with the products is the best demonstration of how MUJI has helped and become parts of their lives, and this subsequently develop into word-of-mouth and buzz marketing which MUJI has been leveraging effectively to create a large scale of impact without adopting traditional marketing approaches. Social media platforms enable a two-way communication that benefits both parties – MUJI can learn about customers at a personal level, gaining insights into their characteristics and commonality, while customers are able to reduce purchase risks through peer reviews and online Q&A with administrators.

Recommendations As information become more accessible and transparent across the globe, pricesensitive customers might be driven to patronize MUJI stores in Japan rather than U.S. or Singapore. To avoid brand image confusion as a result from the potential disparity between cost-leadership and differentiation strategies across markets, MUJI should emphasize more on its pricing strategies so the price discrepancy between markets is insufficient to trigger unintended consumer behaviour, and employ adaptation of

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product lines and communication better to reflect their respective projected brand image. This can be implemented as an integral part of differentiation strategy – leveraging on MUJI’s famous designers including Jasper Morrison, Enzo Mari, Konstantin Grcic and Yohji Yamamoto (Amos, 2012), who would remain anonymous once their designs reach the shelves – to create an element of unique, innovative and high-standard product design. With this central emphasis, MUJI is able to establish a premium image, through creative product assortment and complimentary communication approaches and content, and charge high prices, yet maintaining its essence in the U.S., Taiwan, Singapore markets. While in the cost-leadership markets, communications should be designed to portrait the idea of essentiality, functionality for every-day-use items in a non-extravagant fashion. Another recommendation for MUJI is to accommodate local celebrity ambassadors who not only support its products and value, but also fits MUJI’s image and personality accordingly - someone consumers can easily associate to the brand. Celebrity endorsement can be shown in a way that demonstrates the use of MUJI products and how they enrich the celebrity’s life at a personal level – it reinforces the communication to be more vivid and relatable to customers. However, the challenge lies on the strategic evaluation, selection of the celebrity ambassadors to find the perfect fit, otherwise it could distort MUJI’s image drastically. To further drive down the costs, retail stores should consider reducing lighting bulbs used or other overhead expenses; while since it is, to some degree, a destination shop, MUJI can reconsider relocation of their retail stores from malls, where rents are high, to somewhere cheaper, large in area size and proximal to customer traffic. Moreover, shopping experience can be enhanced from local Japanese customer service practice, which is already adopted by Uniqlo and Nobu Restaurant. This not only strengthens its association with Japanese culture but also provide a consistent, impressive in-store customer service across the world.

Conclusions This report comprises of a holistic analysis on the MUJI brand and essence through which readers gain insightful understanding on its branding strategies and how they manage to build brand equity with an unconventional “no-brand” approach. What makes MUJI interesting is its persistence on “no brand, no logo” throughout its products,

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distribution channels, integrated marketing communication and pricing strategies, and yet, with a sole focus on product simplicity, environments and people, MUJI is able to create a “blue-ocean strategy” and its own niche market that is not been exploited by any other market players. Whether MUJI’s iconic “no-brand” image serves as a brand or not, its target market has one common trait – they all desire the simplicity in life - as consumers have seen the downside of the debt-driven commercialism excesses of today’s society, there is alm...