Consumers, brands and innovation in a stagnant economy – five lessons from Japan

Nicole Fall
Five by Fifty

As Japan enters its third decade of stagnant economic growth, it illuminates how other developed countries could fare in the future. It answers the question we should all be asking at this uncertain economic moment: how does a period of prolonged economic weakness affect consumer behaviour? After 20 years of deflation, it takes a lot more than it once did to tempt Japanese consumers to spend their precious paycheques.

Lesson 1: Micro-innovation

A low-growth economy means manufacturers need to put more emphasis on incremental, rather than breakthrough, innovation. Manufacturers in Japan continuously provide updated releases of products to stimulate the interest of increasingly cautious consumers, while working quietly on the bigger-picture stuff.

This continued search for perfection is known as kaizen, or continuous improvement. It's about knowing that the product you put out today isn't the final deliverable, but a product that can be continuously improved in different flavours, packaging, sizes, variants and through innovative marketing campaigns.