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As Japan's economy starts to rebound from years of stagnation, are we finally seeing the emergence of distinct social classes?
In the summer of 2005 Japan's largest business publisher, the Nikkei, released its latest list of hit products for previous 12 months. The ranking system used was based upon a set of criteria that included sales, social impact and media exposure.
The striking feature of this year's list was the mix of products and services targeting very wealthy consumers with those having an economy positioning, overtly targeting lower income shoppers.
Several Japanese newspapers have pointed out that this segmentation of hit products is only the latest indication that the historical sense of the cohesiveness of Japanese society, as a uniform middle class, is finally beginning to disappear.
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Japan: changing fast... |
The homogeneous nature of the Japan's "no class" system dates back to the era of the Meiji reforms of the late 19th century. The new government of that period aimed to make Japan a democratic state with equality among its entire people. The big losers at that time were the samurai who lost many of their elite privileges.
But the Japan of 2005 has a new elite - approximately 1.3M millionaires (based on US$ equivalent assets). Moreover it would now seem that this narrow, but extremely wealthy, segment is attracting the attention of marketers.
At the 'high end' this year's Nikkei hit product list are Toyota's Lexus line of luxury cars, exclusive memberships for the Tokyo Bay Court Club, a resort hotel, and private banks (subsidiaries created by the major retail banks).
At the same time, rudely violating the core Japanese value of "modesty is a virtue", the wealthy are now more willing to show off their affluence, while a trend has developed among the masses of admiring the luxury lifestyles of elite and celebrities via the media.
The losers in the new Japan are those who are seeing their incomes and spending power eroding sharply.
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| This year's hits include 100yen shops and luxury Toyotas |
Thus it is no surprise that this year's Nikkei list shows the "100 yen" (about 90 cents) phenomenon is spreading. Previously confined to "100 yen shops", the latest hit is "100 yen groceries" sold in regular convenience stores and lower-end supermarkets. Similarly, McDonald's has expanded its market share via the introduction of a "100 yen menu".
Price wars abound in many categories including cell phone providers, Internet ISPs and package tours.
In the category of "affordable luxuries" Apple scored a hit in Japan with its low-priced version of the iPod, iPod Shuffle. However MP3 players from Japanese manufacturers are now raising a fierce counter-attack.
Price sensitivity among the Japanese has it roots in corporate life. The traditional expectation of being protected by lifetime employment, with guaranteed seniority, is disappearing with the adoption of performance-based remuneration systems. This has exposed both the society and individuals to stiffer competition. In contrast to the "bubble era of the 1980s", very few Japanese still believe the rapid economic growth will make the fruits of the nation's wealth available to everyone.
However, as the recent general election results indicate, with a resounding majority supporting Koizumi's (mainly postal) reform package, there is an understanding that things need to change.
As far as market research is concerned, until now the socio-economic classification systems favored in the west have had little meaning in Japan. However, as the country's flat class system erodes, it's likely that such classification methods will also be needed to describe Japan's rapidly segmenting population.
Japan is rapidly changing. This much is clear.
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