Toto, we’re not in Tokyo anymore…

A neat international business story caught my eye in this week’s Economist. It draws our attention to the efforts of Japanese toilet technology leader Toto and their efforts to convince international markets of the merits of wiz-bang toilets that do a lot more than flush.

These guys are at the cutting edge of the water-spurting, control-padded, programmable, intelligent toilets that amuse and confuse visitors to Japan. They are taking the big gamble that there is sufficient audience for such costly gizmos in the West (and other Asian markets, especially Japan).

As the article points out, the world of plumbing regulations (especially in Europe) is almost enough to kill this straight away. We shouldn’t forget that electronics companies have overcome such differences with relative ease (although their impediments may not have been quite so idiosyncratic and location-specific).

The bigger question is the scope to change the behaviour of potential customers in that most private of domestic settings. As any traveller knows there is enormous variation in lavatory layouts, protocols and the like from country to country and culture to culture.

Clearly this will only be a niche market for many years. A strategy of increasing product awareness (and hopefully cache) via placement in prominent public spots should generate some noise (I presume they’re talking restaurants, hotels, conference centres etc). I look forward to encountering one somewhere some time soon (let’s hope they are easier to use than some other electronic products).

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Putting a pretty face on internationalisation

There was a nice piece in yesterday’s paper on the international expansion by Aussie cosmetics wonder Napoleon Perdis.

It is chock full of value chain choices that appear to have made considerable difference to his firm’s success:

1. Building a dedicated distribution facility in Los Angeles (thus cutting out the middle-man and accessing those rents)
2. Tapping into the retail outlets of Target across US (and helping them to go upmarket)
3. Jumping onto parallel value chains in terms of the beauty school, body and bath, skincare and now even health spa and hotel businesses (leveraging strong brand awareness and relatedness)

In an international business sense, the firm doesn’t seem to have been hampered by any particular liability of foreignness. I guess it might be hard for a consumer to work out where the product is from anyway…. Greece? France? Australia? Austria?

More on income elasticity – wanna buy a Bentley?

I am starting to think that my fixation (see 1 and 2) on products suffering in the current frosty economic climate might well be case of schadenfreude. But I soldier on…

Now another likely candidate is getting attention – premium and luxury cars. It seems the market for such vehicles is proving fairly inhospitable, as manufacturers cut prices in the face of lower demand and more testing finance requirements. This has flowed on to the second-hand market too.

Unlike champagne and fancy shirts, cars are not consumption goods per se, so its not necessarily that consumers have stopped partaking of the good, rather they are deferring upgrading models etc. So, it looks like it isn’t just the mainstream auto companies in the firing line. Car manufacturers have nowhere to hide…just ask Porsche.

Time for a rethink of business models and strategic positions?

Now, surely there must be some more surprising examples of businesses suffering as incomes become more uncertain (or drop)…

More belt-tightening

Answering one’s own question is possibly a sign of madness, but I have found a response to my question about what other products are hurting because of income elasticity.

Australian retailer of snazzy suits, shorts and ties Herringbone has collapsed in the past week. It seems fine clothing for merchant bankers, lawyers and the like is not quite as big a market as it was 12 months ago. Like champagne, consumers apparently find it very hard to justify such luxury as their income falls.

The search for further examples continues.

The perils of income elasticity

A reminder this week of the dangers of selling products that are income sensitive: champagne producers are seeing their sales drop as consumers start to tighten the belts and reduce spending on non-necessities. Four of the five largest producers have reported drops in sales compared to 2007, with one down 30%.

Presumably folks have switched to substitutes that meet some of their celebratory/ commiseratory needs at a lower price. I wonder if it’s beer or chocolates? Either way,  firms like Rémy can build in very few switching costs to prevent such consumer behaviour. Wonder if it will be time for more consolidation in this industry…

What other products are experiencing such drops in sales?