By Dr Glenn McCartney and Dr Andy Nazarechuk
In the second of their five part series on the development of Japanese integrated resorts, casino and integrated resort experts Dr Glenn McCartney and Dr Andy Nazarechuk look at the wide range of visitor segments a Japanese IR must address and how they differ from other jurisdictions.
When developing a new Integrated Resort (IR), there are always two vital factors that must be clearly identified. Neglecting this development step can lead to costly mistakes later, such as a casino marketing campaign that underperforms or a product with the wrong design or theme (for example a restaurant, retail outlet, or slot machine).
The first factor to identify is a clear understanding of the Japanese and regional market demographics and dynamics. The second is an understanding of customer expectations, all within a highly competitive landscape. The talk is of a few IRs in Japan, but we must not forget that jurisdictions such as Macau, Singapore, the Philippines and Korea will still actively engage, if not ramp up, their marketing efforts to patrons.
As an example of market insights, McDonald’s has restaurants in every corner of the globe because they understand that there is a need for their product. They are also in some IR properties. In a fast-paced society, getting a meal quickly is something everyone wants. However, knowing what your market needs is different from understanding what they want. With this in mind, McDonald’s has tailored their menu to each market’s local needs. In India, you can order curried vegetables; in Germany you can order Bratwurst with mustard; and of course, in Japan, you can order an Ebi Filet-O-Shrimp Burger. McDonald’s understands that while their markets need quick service, their markets also want products they enjoy.
Bringing Western IR concepts verbatim to Asian audiences has led to events, bars, clubs and even IRs lacking in appropriate Feng Shui insight, forcing them to close or undergo a redesign due to a subsequent lack of interest from Asian audiences. On the flip side, strategic marketing and competitive edge in IRs has meant bringing something new to market. It may be an event, restaurant or IR theme which wasn’t there before, but suddenly locals and tourists alike want and enjoy it.
Years ago, no one even knew they needed a smartphone, but once this gadget came to market, people wanted it and would pay sufficiently to get it. The trend continues as consumers continue purchasing revised smartphone models. Marina Bay Sands in Singapore is an example of a property that is so well designed and perfectly located that it not only attracts locals, but also customers from around the world who want to experience its unique features including its iconic swimming pool and nearby amenities such as Garden on the Bay.
The market for the Integrated Resort in Japan will be primarily for the Japanese, although regional audiences will be part of the marketing campaigns. Therefore, any cultural nuances need to be considered. The presence of multiple Chinese restaurants in Macau’s IRs shows that cuisine tastes differ between different ethnicities or provinces – whether from Beijing, Guangzhou or Fujian – and food is a major attribute of decision-making criteria. For any IR to be sustainable, it must cater to the needs and wants of a diverse group of Japanese consumers.
It is reported that over 30,000 businesses in Japan are more than 100 years old – some over 1,000 years – and obviously steeped in enormous consumer brand loyalty. The future of IRs is in introducing something bigger and better, bringing the best of luxury and iconic brands and making the next IR more unique than the previous one. But consideration must be given to Japan’s legacy of long-established brands and companies.
McDonald’s has mastered the art of adapting its menu for local customers
When Sands opened in Macau, there were thousands of people crowding the entrance pushing and shoving to get in the doors and up the elevator to the gaming floor. It was a true crowd rush and became an image that drew instant global attention from investors and operators. This type of rush would never happen in Japan; as a collective society, everyone knows the rules and behaviors that are appropriate. Therefore, when an IR opens in Japan, there will be thousands of people waiting to enter in an orderly line. This is another unique cultural difference in Japan.
With an estimated population of 129 million, there are two distinct local markets that any IR will need to cater to when developing the IR’s facilities. According to some reports based on age, 27% of the Japanese population is over 65 years old. This is one market that has accumulated wealth and has sufficient leisure time to enjoy the features of a new IR. The second market is the 25 to 64-year-olds, who comprise 50% of the population. Of course, the third market is the 24 million overseas visitors who journeyed to Japan in 2016. That year there were also 6.3 million visitors from China, five million from South Korea, 4.2 million from Taiwan, and 1.8 million from Hong Kong. These represent nearly 73% of all overseas visitors to Japan, spurred by the convenience of access and growing airline links from these destinations. Further investigation would need to done to see if these were unique visits or repeating visitors. Macau’s IR has a large repeat segment built up over several years and this loyalty segment is important. For Japan’s IR, cultivating loyalty and repeat visitation from the outset within all markets will be important.
Any Japanese IR will need to provide entertainment, facilities, services and food to meet the needs of these different markets. Based on lifestyle, Japanese seniors are generally early risers and have a socially and culturally active lifestyle. They focus on their health, are conscious of their budgets and many seek leisure activities and travel opportunities. Another market segment consists of “salary men.” These are men who are totally engaged with their careers. They work long and hard and are known for going out with their co-workers after work to eat and drink at local restaurants. This is the type of group that would be eager to take advantage of casino entertainment and features such as “Izakaya” bars within IRs.
Yet another market segment consists of young, single women, typically 24 to 33 years old, who live with their parents, have university degrees and ample discretionary income. They enjoy luxury shopping, quality full-service restaurants and international travel. Finally, overseas visitors to Japan are mostly seeking the “Japanese Experience” such as visiting the beautiful Japanese gardens, eating Japanese cuisine and enjoying Japanese entertainment. Gambling is not the primary reason tourists visit Japan, but Singapore recognized the importance of including the casino gaming option within an IR development as part of the tourism destination product mix. A unique Japan IR would add one more experience opportunity to their visit – a reason to stay longer and spend more.