The man from Mars shares his view: How a Western company can still “win in Japan.”

Freedom and responsibility. Two concepts, says Atsushi Morisawa, that fuel his “internal engine” and drive his approach to life and work.

They are concepts as evident in his personal passions—jazz trumpet and motorcycles—as they had been in his decision to join The Boston Consulting Group, a place he knew to have a reputation for accountability but where he would find the flexibility to work toward the things he believed in.

These concepts of freedom and responsibility remain pertinent to Atsushi (Tokyo, 1994-2009) today in his role at Mars Japan, where he has been general manager since 2010. Despite its worldwide presence, Mars Inc., founded in 1911, remains family-owned and maintains what Atsushi describes as a unique corporate culture with a strong sense of equality—employees are referred to as “associates”—and autonomy.

“Mars operates on a system of five principles, one of which is, in fact, freedom. That’s not to say that I’m at liberty to do absolutely anything I want, but rather that I am free to earn the trust and credibility needed to do what is best for the company,” explained Atsushi. “I am free to run things as if I were the owner of Mars for this market. As such, I take responsibility for and make decisions on all aspects of the business, from people to marketing, from investments to growth strategies, everything.”

He has his work cut out for him. Japanese market characteristics create an unusual set of hurdles for any Western food company hoping to operate there: a highly fragmented retail and distribution structure, consumer demand for perfect quality, a never-ending stream of new products, the need to customize products to suit local tastes, and high costs for advertising—to name just a few.

These factors, says Atsushi, when superimposed on traditional Western management systems and expectations, can make it difficult to grow a business in Japan. Mars has been making a go of it since 1976, with a focus on pet foods and chocolate—its biggest brands being Snickers, M&Ms, Pedigree dog food, and Whiskas cat food.

Prior to Atsushi’s joining the company, it had experienced seven consecutive years of share decline in Japan. It has since enjoyed share gain and sales growth in both categories. Credit for this, he says, must be shared with senior leaders at the company’s global headquarters in McLean, Virginia, who continue to show support, trust, and an eagerness to learn.

“Last year alone we had about 500 visitors—associates from other factories, top executives, even the president of the business—from overseas here to experience first-hand what this market is all about, what the opportunities are, how the rules of the game are applied, and what we at Mars need to understand if we are to win in Japan,” Atsushi said.

Selling fast-moving consumer goods here requires the successful navigation of an extremely complex and fragmented distribution and retail network. “In order to carve out, say, 80% of the market,” he explained, “we have to do business with more than 100 retail chains. To increase that to 90%, we need to do business with more than 200 chains.”

Atsushi adds that he must also consider the influence of wholesalers who, because manufacturers are so highly fragmented—there are more than 30 nationally distributed pet food companies and dozens of domestic confectionery category competitors—have a lot of say in what retailers put on their shelves.

Also apparent to Atsushi’s visitors would have been the significant differences in consumer tastes, attitude and expectations as compared to other parts of Mars’ global market.

For example, marketing for Mars’ Pedigree dog food had, for years, been globally aligned with a picture of a dog on every package. “A breed of dog—a big dog—that we rarely see here in Japan,” explained Atsushi. “Generally, we have small living spaces and, as such, small pets. Dogs are often smaller than cats. It’s easy to imagine all those shoppers looking at the package and thinking, ‘This can’t possibly be for my little pooch.’ We had to persuade the company to move beyond its global guidelines for this product design and to put the image of smaller dog on our packaging.”

When it comes to food, Japanese consumers put an almost obsessively-high premium on freshness and quality. This is true not just for items like meats, fish and vegetables, but carries over into snacks, packaged foods, and even pet products.

On top of this, there is immense demand for variety.

“Japanese consumers are always looking to discover something new—a new flavor, a new package, a new shape—particularly among snack food items and chocolate,” said Atsushi. This demand is illustrated by the massive number of new products launched perpetually into the Japanese market. In the chocolate category alone there are around 2,000 new SKUs per year.

For its part, and primarily because Snickers and M&Ms are manufactured outside of the country, Mars Japan tries to stay above the new-product fray. Its focus, says Atsushi, is fixed firmly on quality.

“If there is even a tiny smudge on the printing of, say, a snack wrapper, the Japanese retailer will tell us, ‘This is imperfect; I’m returning it.’ We’re now passing these same standards back to our own manufacturers—even the minutest blemish is unacceptable. If we want to win in Japan, we need perfect-quality products.”

As a result, Mars Japan’s broader quality controls have improved significantly—with the Japanese consumer demanding perfection from products made in factories in places such as Thailand and Australia, the competitiveness of Mars’ products has improved in the many other markets those factories serve across Asia. “While we are importing our products, we are, in a sense, exporting new levels of quality control,” Atsushi said.

Mars Japan is also exporting product ideas.

For example, smaller purebred dogs have explicit individual requirements—miniature dachshunds, for instance, need specific nutrients to maintain healthy joints while toy poodles require particular nutrients to maintain attractive coats—and tend to be much fussier than larger dogs, all of which requires sophisticated designs for food palatability. As the percentage of small pet dogs increases around the world it becomes important, says Atsushi, to address the expectations of their owners.

“This smaller-kibble with its health, beauty, and high-palatability concept developed in Japan, can further drive competitiveness of Mars in many urbanizing markets across the world,” said Atsushi. “I find this to be very exciting. Key stakeholders at Mars headquarters know that I can get quite passionate when, with examples like this, I work to convince them that Japan is a strong market in which to invest.”

He is equally passionate about leveraging the capabilities of his associates in Japan and about opening up career opportunities for them. The seeds of this passion, he explains, were sewn when he was a member of BCG’s consumer goods practice area. “Everybody talks about the great learning at BCG—logical thinking, structure, hypothesis, all that stuff," Atsushi said. “But what fascinated me most was that I felt our client work was always, ultimately, about people—about how to keep everyone engaged and focused.

“A lot of the concepts I learned at BCG are proving useful today in helping me determine who is committed, who is struggling, who needs nurturing, and who believes in the value and potential of the Japan market.”

Atsushi admits that through much of his work at BCG he had become concerned that a pervading undervaluation of the Japanese market would lead, as he puts it, to “suboptimal strategies for large corporations across Asia.” But, citing a pet food market that is the second biggest in the world and a chocolate market that is one of the top five in the world, he believes that large corporations have much to gain in Japan that would give them leverage to win in other parts of Asia.

“By focusing on our core brands, by making them appealing to the Japanese consumer, and by supporting our brands with strong marketing and advertising, Mars has been winning in Japan,” he concluded. “We have a great opportunity to put Japan back on the map and, hopefully, to encourage other global companies to reconsider doing business here.”

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