European luxury brand perfume bottles, such as Dolce & Gabbana and Guerlain, arranged on a white faux fur rug
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[Marketing Seed 128: Does Japan Coexist with Advanced and Backward Aspects? (Part 2)]

European luxury brand perfume bottles, such as Dolce & Gabbana and Guerlain, arranged on a white faux fur rug

💡 The Limits of “If You Make Good Things, They Will Sell” and the Culture of Selling High Value

For many years, Japanese companies have invested massive amounts of time and money into improving product quality, driven by the belief that “if you make good things, they will naturally sell.” Indeed, their precision and durability are world-class. However, what the global market demands is a strategy to “maximize value and sell at a premium.”

Take European luxury brands as an example. Armed with high quality plus a brand story, they have maintained high price points for many years. Brands like Louis Vuitton and Rolex, for instance, sell products at prices many times their manufacturing costs. By convincing customers that “the value is well worth it,” they secure impressive operating profit margins in the 20-30% range.

On the other hand, while many Japanese companies strongly appeal to their high quality, their lack of an attractive brand strategy makes them highly susceptible to price competition. Furthermore, there is a vicious cycle where an excessive pursuit of quality drives up manufacturing costs, making it difficult to sell at a fair and profitable price. As a result, there is no end to cases where overseas competitors snatch market share.

📊 Reference Data:

  • Operating profit margin of Japanese manufacturing (2022 average): Approx. 5-6%

  • Operating profit margin of European luxury brands: 20-30% range

  • Advertising expense ratio of Japanese companies: Approx. 1-3% of sales (5-10% is common in the West)

From a marketing perspective, taking root a “culture of selling at an appropriate price” is an urgent task right now. To achieve this, a strategy is needed to deliver not just mere functions and performance, but the brand’s background, philosophy, and story to consumers, fostering a sense of conviction and satisfaction even at high price points.

For Japanese brands to regain their presence in the world, redefining value is essential. If they can learn to compete on value rather than price, their competitiveness should recover significantly. Next time, we will delve into specific methods of this “brand story building” and successful examples. (To be continued) 📈✨

You might also be interested in our past articles? → Seeds of Marketing 33: The Influence of MTR Advertising

Reference Article: METI “White Paper” LVMH “2025 Full Year Results