Macro-level analysis

The macro level of analysis aims to identify the country market which has a potential for the new entry. On this level of analysis different types of distances to the new market are investigated. These distances include political, cultural, demographic, economic, legal, geographic, psychic, and other distances which may influence the decision of entering the new market made by the firm

In order to measure different types of distances which separate Muji brand from entering the Russian market, PESTLE analysis has been applied:

The analysis of different risks and business environment shows that there is not substantial distance to entering the Russian market. However, several factors should be taken into account. First, the customer readiness to buy Muji products and their attitudes to design minimalism and “No-brand” policy of the company. In order to investigate this, we developed a questionnaire which was distributed online among consumers. Other factors, which should be taken into account, are the political factors and legislative procedures which are needed to be considered and completed when entering the Russian market. 

*  Corruption Perceptions Index 2012 (http://cpi.transparency.org/cpi2012/results/)

** The World Bank Data http://data.worldbank.org/indicator/NY.GDP.PCAP.CD 

SWOT

Strengths            Generic brand positioning is powerful marketing tool nowadays.            Simplistic and minimalist design attracts broad range of consumer groups.            The brand idea is catching in the modern world.            No direct competitor due to combination of product range and specific design.            Sustainable consumption is preferable for consumers.            Reasonable pricing.

Weaknesses            Easily substitutable as the one of the core brand features is in its products’ design.            The collections do not show much of new items and design.

Opportunities            Consumers from emerging markets start paying attention to design and sustainable consumption.            The brand philosophy could be applied to broader range of products.            Further partnerships for co-branded products, such as Nissan Muji Car 1000.

Threats            The ideas that the brand promotes could be easily used by other companies.            Brand statement would not be attractive and clear for emerging market customers.            Increasing competition at the organic products markets in developed economies.

Russian market overview

There are no analogs for Muji in Russian market. The close markets are stationery retail shops, homeware, home furnishing, gifts and souvenirs, DIY centers, personal accessories. In most of these categories there are strong leaders, such as Krasniy Cub (souvenirs), Ikea (home furnishing) Leroy Merlin (DIY), Tupperware (homeware, kitchenware), Komus (stationery). Most of the categories show constant growth and according to forecasts their growth will continue in the future. Additionally to the good future prospects of these categories, the markets, at which these companies are operating, are quite fragmented in Russia. That gives Muji a chance to be successful on the market.
Let's make a closer look to the market data:

So, the forecasted growth value till 2016-17 for the core product types is on average 10-12%, varying from 6% to 31%. However, writing instruments category shows the decline of around 4%, but this category is not very considerable.

The shares, that belong to the companies, which obtain less than 0.1 % market share, vary from 44.5 to 82.5%, which is very promising for Muji if it enters Russian market.

Porter’s 5 forces for Muji market
Power of customers - medium	High price sensitivity and low switching costs. But increasing attention to quality and design among customers.
Power of suppliers - low	Production is made outside Russia, by well-established partnerships. As for shipping services, there is no particular difficulty to establish contracts.
Threat of new entrants – medium to high	No feasible barriers to enter the market, but for retail chain there is considerable capital requirements
Threat of substitute products - high	Many product items are easily substitutable by: free and corporate goods (free branded pens, organizers, notebooks), already-used package, that can be applied for further usage at home (packaging boxes instead of storage containers, bottles from beverages instead of special kitchenware end others)
Competitive rivalry within the industry - medium	No straight competitor, but strong players on sub-category markets, such as Ikea, Leroy Merlin, Komus, Krasniy Cub and others.

Product Line

Before discussing the general possibilty of entering to Russia, it is essential to observe the wide range of products MUJI produces and sells in order to understand and forecast both entry mode and and the product line the company may base its operation in Russia on.

***

MUJI, beeing Japanese retail company, introduces the wide and useful range of products that are tailored to the customers needs in the mimimalism way. The company sells a rich and splendid variety of household and consumer goods throughout the Europe, USA and Asia.

In 1980s MUJI started with 40 products mainly ranged from stationery and clothing for men & women, to food items and major kitchen appliances. One of the company's primary business was Cafe Muji, Meal Muji, Muji Campsite, Muji florist and home furnishing. The outstanding example of the diversification of MUJI - architectual project called Muji houses - was also present in the line.

Up to the end of 2000 MUJI is being selling more than 7 thousand different products. The company positions the brand as reasonably priced - by keeping the retail prices of products "lower than usual" by the materials it selects, streamlining its manufacturing process and minimising packaging.

The starting point for MUJI"s products was Japanese market, then it expanded to the first international store in UK and then the turn came for the stores in USA, other European and Asian countries.

These are the categories of MUJIs' products:

Apparel, Accessories, Shoes, Bags, Travel, Electronics, Housekeeping, Bathroom, Kitchen, Storage, Furniture, Home fabrics, Health & Beauty, Fragrances, Stationery, Art & Kraft, Gift & Memory, Special Offers.

MUJI. Brief history

“Lower priced for a reason”

Muji (Ryohin Keikaku Co.,Ltd), also known as Mujirushi Ryōhin  (Mujirushi – “no brand”, Ryōhin – “quality goods”), is a retail company, which sells Stationery, Kitchen appliances, Health and Beauty products, Storage containers, House Keeping items, Travel goods, Electronics, Bedding, Home living, Furniture, Men’s, Women’s and Kids Fashion, as well as Innerwear and Accessories. 

Muji began as a product brand of the supermarket chain The Seiyu, Ltd. in December 1980. It offered 40 items, 9 of which were household articles and other 31 were food products. The Mujirushi Ryōhin product range was developed to offer cheap good quality products and was marketed using the slogan “Lower priced for a reason”. Products were wrapped in clear cellophane, plain brown paper labels and red writing. Mujirushi Ryōhin's drive to cut retail prices for consumers saw the company cutting waste by for example selling U-shaped spaghetti, the left-over part that is cut off to sell straight spaghetti.

In 1983 Muji opened the first directly managed store, “MUJI Aoyama”, in Japan. 8 years later, in 1991, the first international store was opened in London. Now it operates in 24 countries in Europe, Asia and North America.

The idea that lies behind Muji, which is originally “no brand”, is the idea of completely eliminating wastefulness and providing quality products for everyday life. The assortment of product that makes up a Muji store are brought together through a careful selection of materials, streamlined processes and simplified packaging which provides the consumer with good quality products at reasonable prices. Muji is known for its distinctive design, which is based on the Japanese concept of 'Kanketsu', the concept of simplicity. The aim of such concept is to bring a quiet sense of calm into strenuous everyday lives.

Muji's no-brand strategy means that little money is spent on advertisement or classical marketing, and Muji's success is attributed to word of mouth, a simple shopping experience and the anti-brand movement. Muji's no-brand strategy also means its products are attractive to customers who prefer unbranded products for purely aesthetic reasons. Once, it released T-shirt with a rubber square on the chest for customers to design their own logo or message.

In its design, Muji also follows environmental guidelines, using materials that would not impact significantly people’s health or environment and trying to reduce waste. The company’s products are not attributed to individual designers, however Muji has stated that some of them made by famous designers, but has not disclosure their names. Muji participates in design collaborations with other companies. In 2001 it created a car by collaboration with Nissan Motors – Muji Car 1000. As well as its designers, ordinarily Muji keeps its manufacturers private.

Muji business includes the following divisions:

Muji Café & Meal – deli, that offers wide selection of healthy and tasty dishes.

Muji Campsite – 3 campsites in Japan, offering hands-on workshops, regional crafts and farming activities.

comKIOSK – small shops located in stations, which offer snacks, stationery, undergarments and socks – all that people need on the go.

Family Mart – convenience store, which provide great selection of Muji products.

Muji House – two open-plan homes sold in association with builders around the country. The project proposes ideas for living in the spacious and airy House of Wood and House of Windows.

Hana Ryohin – flower department.

Muji to Go – airoport and large Muji stores shop, which offers bags and storage containers, travel and on-the-move items.

Most of the Muji projects operate in Japan, while there are small and big retail stores in international locations.

To sum up, the cornerstones of the Muji's strategy are presented on the graph below:

"Advertising copy for canned salmon flakes that utilize parts of the salmon that are usually discarded – a metaphor for MUJI’s commitment to efficiency and disdain of waste".

 “ENJOY EVERY EDIBLE PART OF THE SALMON - FROM HEAD TO TAIL!”

MUJI Roshia Intro

April, 26, 2013. The project "MUJI Roshia" is launched to study the possibility of the Japanese brand MUJI establishment within the Russian envinronment. Further marketing analysis will follow, while all the ideas, suggestions and procedures implemented while coming up with the final recommendation will be displayed on the blog. Stay tuned, feedback is welcome.

***

The group project “MUJI Roshia” was launched to study the possible opportunity of Japanese brand MUJI to enter the Russian market. The analysis is being implemented as a part of final project for the GSOM Master’s course International Marketing by Maria M. Smirnova (PhD, Associate Professor).

Project team of four students will focus on existing MUJI business model and day-to-day operations in other countries in order to estimate the existing possibility to enter to Russia. At the same time, due to the uniqueness of the products and services MUJI provides, the corresponding analysis of the Russian niche market will follow in order to decide over its competitiveness and opportunities for entry.

All the procedures and steps of analysis will be displayed on the main page of the blog, and the final recommendation given to MUJI will be based on all the data concerned.