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Case Study: Dought, Capturing the Japanese Market

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Case Study: Dought, Capturing the Japanese Market

         Dought, which made its first overseas business in 1960, commenced its operations in Canadian market sensing similarity to the USA market. The company pursued a vigorous strategy of overseas expansion, particularly in, Australia and other countries, which had similarities with the USA market. To ensure control and guarantee uniformity of standards, joint ventures and minority, Dought has avoided stakes. The company is now contemplating a move into the Japanese market. Following the customary pattern, Dought launched advertising campaigns, and national systems of franchises covering the main centers of population but could not achieve much success. Many problems have been felt to promote the business apparently due to Japanese having not much of a taste for cheese but liking for spicier and to more textured tastes. Other than Tokyo a limited demand for the product is also expected. Commercial property in Japan, and particularly in Tokyo being the most expensive in the world is also being felt a restriction in promoting Dought’s operations. Established competitors in Hamburger chains, as well as local firms are also offering Japanese food. For Dought having no brand identity in Japan, it would be costly to have established such an identity.  System being not well known or trusted in Japan the finding of suitable franchise holders is a point to ponder too. With such conditions the possibility to penetrate the Japanese market is to be found.

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Social Demography of Japan

Japan’s population

     Japan ranks as the world’s seventh most populous nation, with a population of 126,434,470. It is also one of the most crowded countries, with an average population density of 335 persons per sq km (867 per sq mi). The most crowded area is central Tokyo, where overall population density is about 13,000 persons per sq km (about 33,000 per sq mi). About 79 percent of Japan’s people are concentrated in urban areas, making Japan one of the most heavily urbanized nations in the world. (Microsoft® Encarta® Encyclopedia 2001).

Food Culture of Japan

     The Japanese are famed, for their mixing of outside and local influences. That is true with food as well. Ample opportunities for entertaining culinary adventures are available in Japan.  The Japanese have developed a knack for sampling foreign foods and modifying them to fit their own tastes. The Japanese do not have much of a taste for cheese. The more liking is towards   spicier and to more textured tastes. A refined lean cuisine based on rice, soybeans, pickles, and the Japanese, who have also embraced Italian pastas, rich French sauces, and fiery Mexican tacos, has inhabited fish. Even small-town restaurants offer dishes such as curry rice (beef in a rich, not-so-spicy sauce) or hot cakes.

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     Japanese life blends traditions from the past with new activities, many borrowed from other cultures. The Japanese diet emphasizes rice, seafood, and other items that have been staples in the society for centuries, but also includes international cuisine such as Italian and Chinese dishes, and American-style fast-food hamburgers and French fries.

     Japan has been assimilating Western food for centuries. The influx of Western food has jumped dramatically in recent years. The changes in eating habits of Japanese are most conspicuous, and these changes may have little parallel in the world. With the lapse of time, various changes have sneaked into Japanese life style as well as their diet consciousness. Formerly, improvement of the nutrition level and diversification of the consumption pattern have been their major concerns. Even some of the offerings at fast food outlets, such as those of a domestic Japanese burger chain, appeal directly to the public's appetite for rice. Sushi is probably the most popular and trendy Japanese cuisine at the moment, partly due to a few health conscious celebrities. There are several types of sushi being used: Nigiri Zushi, Maki Zushi, Oshi Zushi, Chirashi Zushi, and Inari Zushi. Sushi is used for various occasions, such as weddings, festivals, graduation parties, get-together parties. There are so many variations and it is impossible to cover all of them. 

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      While geneticists might argue that point, it's hard to find a fast-food specialty that hasn't been adapted to local taste buds. The Royal Hat pizza chain, for example, offers a variety of wafu, Japanese-style pizzas. One features mochi (sticky rice cake) with nori (dry seaweed) sprinkled on top. Burger chain First Kitchen attracts customers with French fries flavored with takoyaki--octopus balls.
    The rice burger (raisu baagaa) is a variation on the hamburger, with a grilled, circular cake of rice substituting for each half of the bun. The phenomenon isn't just about being playful. Culinary experts in Tokyo credit Japanese chefs with a certain artistic flair, in seeking out the most exciting combinations of ingredients spread among different national food groups.

This blending of cultures is emphasized more.  The fast food too involves an intriguing mix of American and Japanese tastes.

Penetrating the Japan’s Market

      The food-service industry has increasingly based its menu on foods grown and processed outside Japan. And it's not only a fast-food trend; up market restaurants also get into the act. Japanese consumers are very demanding, particularly in the area of service. Only the very highest standards are acceptable. Entirely different selling fields exist in Japan depending on articles; commodity details are mentioned on the packing instead of merely stating commodity name. Some important factors considered in order to penetrate the Japanese market, include quality improvement, design development, meeting customers' needs with a wide variety of items in small quantities, speedy production, punctual delivery, etc. Minimum quantity for each item is not acceptable to the Japanese market, as current demand is for a wide variety of items in small quantities. It is necessary to pay attention to minor details, as Japanese consumers are extremely quality-oriented. The actual commodity must be exactly the same as advertised in all respects. Defect rate must be kept as low as possible and grade up the checking system at the outlet: Check first whether the product contains health improving trend or not.  The product should be abided by Law regulations like Prevention of Unfair Competition Law, Trademarks Act, Patent Act, etc. In order to enter this market, called Japan, effective and efficient presentation of the fast food product holds the key to success. Needless to say that the actual product itself appeals through advertisements also known as "silent salesmen,” The messages must be precise and concisely easy to read. More than English, Japanese language is desirable. Consumer needs have changed from more than buying quantity to buying goods that meet individual likes. The situation has changed from quantity to quality. Furthermore, people do not desire things that are too high priced. Japan is no exception. It has spread like this around the world and in order to win the international competition, every point in efficiency and productivity must be raised, and it is necessary to make low cost production. Moreover, one cannot enter the Japanese market if one does not make something with originality. In order to sell in Japan, finishing and packaging are important. In Europe and America, it is thought that if it is a good product, no one cares about finishing and packaging, but that does not apply in Japan. The Japanese market is a variant market. There have been many barriers but it is not very hard to get in. However, in comparing Japan to Europe and America, duties are much cheaper than the average and there are many lists of items free from being taxed. There are fewer lists of items with restrictions. It can be said that the Japanese food market is plenty open. There are still some points with strict regulations, but gradually restrictions are being eased. The Japanese market is already widely opened. The Japanese do not like to be pushed when doing business. It is perfectly understandable that one should be keen to increase one's business, but simply continuing to push potential Japanese customers will only yield negative results. The Japanese as a whole dislike being pushed, and it is not good strategy to push them to buy a certain product or a certain quantity. There are some foreign companies that seek to sell particular types of products in Japan at one time. This is particularly true in the case of trading companies that do not manufacture their own products. It is quite understandable that they should want to increase the range of products they sell to have more business, but this all-round "jack-of-all-trades" approach does not go down well in Japan. What such companies do is start by offering the items that they are most confident in. Just as the Japanese saying "chase two rabbits and you will catch neither" goes, such a policy frequently ends in failure. It is important to do things carefully one at a time. One should therefore determine one's priorities and develop an appropriate sales plan on this basis.  It is important to recognize the benefits of Asian trade to the American intermediate producer and to the American consumer. High quality, low cost, easily accessible raw materials and manufactured products from Asia play a large part in improving efficiency, lowering costs In addition to high costs of production, costs added at the wholesale and retail markets comprise a large share of the retail price. These costs have often been particularly high, because of the complex structure of distribution and manufacturer-based pricing for processed foods.

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Undoubtedly, Asia is a real and potential major market for many American products, but these products will not be without competition, and there are no guarantees that altering the internal market structures of any Asian market will immediately redound primarily to America's benefit.

 The consumers of food industry in Japan have certain inbuilt weaknesses; the low spending power of consumers, the problems of guaranteeing high quality ingredients, lack of entrepreneurial experience and lack of capital among potential franchise holders.

    Still, Japan is by no means the world's easiest market to penetrate. The complex distribution system, based heavily on small "mom and pop" shops throughout the islands, is hard to enter without assistance. Patent application procedures are dramatically different from those in the U.S. The Japanese language is a formidable barrier, although it would be absurd to go so far as to label it a "non-tariff barrier". The Japanese consumer is used to extensive and high quality after service care.

Dought in Porter’s theory

     The competitive strategy is generally based on an analysis of a company's competitive position within its environment, using the "five forces" that drive competition. These forces are the: relative strength of buyers or customers; the relative strength of suppliers; the relative ease with which potential new competitors can enter the market; the potential availability of substitutes; and rivalry between competing firms.


           The menu at the Japanese chain Mos Burger brings new meaning to the concept "fusion food.". Mos Burger takes the Japanization of Western fast food to new extremes with its rice burgers. The buns are made of rice instead of bread. Nestled or between them is a choice of shrimp cakes Japanese-style fried beef. And they seem to be popular. Mos operates more than 1,500 outlets in Japan and have expanded into Malaysia, Singapore and China with its unique brand of blended fast food. And fast-food chains have proliferated, catering to those with a hankering for mayonnaise-topped pizza (a local specialty), fried chicken, or a hambaagaa, as burgers are known here.

 We have the example of global giant McDonald's, which actually bowed to local culture by adding to its standard mix burgers flavored with teriyaki and nabeyaki (a traditional pot-boiled dish).

Looking at a "Pizza California" flyer, one can see various interesting combinations like a "mochi combo" (rice cake, bacon, 'double cheese', seaweed, parmesan cheese), a "California special" (shrimp, squid, tuna, onions, mushrooms, corn, mayonnaise), and a "Curry German Deluxe" (potatoes, onions, mayonnaise, bacon, parmesan cheese - no curry) available with a tomato sauce base or a gratin base.

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Not to be beaten, "Farmer's Pizza" offers a whole slew of interesting pizzas as well. They even have "Japanese style" pizzas like the "Mentaiko (cod roe) Special" (cod roe, squid, onions, green peppers, mayonnaise, cheese) and "Teriyaki Jidori (Japanese chicken)" (onions, corn, bacon, fresh asparagus, mayonnaise, cheese). If one prefers an "American" pizza, one can try the "American Mix" (bacon, corn, mushrooms, onions, double cheese) or if prefers something European, there's the "German Brunch" (2 wiener sausages, mustard, potatoes, green peppers, onions, cheese).

Strengths of Dought

Dought has developed and refined a system, known as the “Dought Formula” that it has successfully transferred to its overseas activities. The key ingredients are:

  • A franchise system in which franchise holders are carefully selected, trained, and monitored to ensure that there is uniformity of product and behavior.
  • An emphasis on “home delivery” and take away rather than restaurants.
  • A service promise: delivery within half an hour or the pizza is free.
  •  A quality promise: fresh baked with fresh ingredients.
  • A variety promise: any topping you like

      The basis for success has been its ability to offer higher standards of product and service from its competitors

Operational problems for Dought

     Dought may not be having much of the organizational and structural difficulties but some of the operational problems may be faced. These include: -

  • Costly land and difficulty to find suitable sites for restaurants. It is said that; "If you sell the entire property of Tokyo you can actually buy the entire United state and by just selling the surrounding land of the Imperial palace you can buy Canada." 
  • The franchise system is not well known or trusted in Japan, and there are doubts about whether suitable franchise holders can be found.
  • The traffic in Tokyo is jammed, streets are often not clearly named, and homes are often unnumbered. This would present problems for the guaranteed delivery.
  • Although the take away and delivery market in Japan is large and growing, particularly in Tokyo where a high percentage of housewives work, it is highly competitive.
  • Dought has no brand identity in Japan, and it would be costly to build such an identity.


Japanese have always been open to western culture and ideas after Second World War and they have accepted the American way not only in baseball but also in fast food culture as well. We find that Japan has opened its markets and mind, to foreign culture and food. Japan can be seen as a market with a potential for assimilation and acceptance for the foreign ideas and tastes. Dought for a better business in Japanese markets should: -

  • Change recipe of traditional pizza to that having Japanese’s traditional tastes.
  • The service and home delivery must be extra ordinarily efficient.
  • Sites for the outlets must be carefully selected in the larger cities.
  • Presentations and toppings the pizzas must be having verities and should be nicely carried out.
  • Quality of the products must not be compromised.
  • For attracting the people the outlets should be a blend of USA and Japanese culture. And it should certainly be more than just rice dressed like a baguette. It should not be haphazard mixing of ingredients and just adding two recipes together but it should be altogether a different experience.


  Sidgwick& Jackson. The Bubble Economy   London 1992.

Food and Agricultural Changes In Japans Food System. Food And Agriculture Policy Research Center.  Feb 1997 

Joseph J. Tobin Re-Made in Japan--Everyday Life and Consumer Taste in a Changing Society Yale Univ. Press, 1992.

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