Muji & Balmuda

The role model and the rule breaker of Japanese lifestyle brands

2018.08

Muji & Balmuda: The role model and the rule breaker of Japanese lifestyle brands
Muji & Balmuda
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I. Muji: A brandless brand

During the extravagant years of Japan’s bubble economy, Muji was launched with the business philosophy of simple and essential product designs.

  • Muji started as the private brand of Seiyu, the operator of many Japanese supermarkets and shopping malls in the 1980s. At the time, Japan’s economy experienced a historic boom, and expensive luxury items with colorful designs grew massively popular. As concerns over excessive spending grew, the Japanese government began to emphasize the importance of frugalness, and many companies launched affordable PB products in response. Seiyu planned to create a brand with superior quality and design, as well as reasonable prices to set apart from the expensive foreign luxury goods and low-cost PB products already flooding the market.
  • Mujirushi Ryōhin was founded based on two philosophies: no-brand (mujirushi) and quality goods (ryōhin). The concept of focusing on the essence and removing all unnecessary parts was something of a rarity in Japanese society during the boom. In 1983, Muji’s first independent store was opened alongside luxury brands such as Hermes and Louis Vuitton in Tokyo’s richest district.
  • Tired of fancy, dressed-up products, Japanese consumers were thrilled by the items that demonstrated Muji’s simplicity and attention to customers’ needs. Muji grew to be independent from Seiyu in 1989, and Japan’s long-term recession that began in the 1990s attracted even more customers to their door. After first selling only food products, the company now sells nearly 7,500 products spanning the entire lifestyle category.
  • Muji’s product design, rather than being determined by the designer’s taste or contemporary trends, is defined solely by the product’s purpose, and continually improved over a long period of time. The most representative example is Muji’s CD player, which has been sold since its release in 1997. With buttons of various functions removed and only a single cord to start music, the CD player is included in the permanent collection of the Museum of Contemporary Art in New York, and is still on sale even after the era of CDs have passed. This CD player is a quintessential example of Muji’s philosophy.

Despite the passage of time, through the founder’s retirement and changes in CEOs and designers, Muji has (1)remained true to the central values it set for itself.

  • As the recession continued until the 2000s, Japanese consumers began to feel that Muji products were too expensive. Competitors such as Uniqlo and Daiso rushed in at this opportunity with lower prices, ultimately leading to Muji’s crisis.
  • Tadamitsu Matsui, the CEO of Muji since 2001, has made extensive reforms in an effort to restore the brand’s “Muji-ness.” He began his investigations at ground level, visiting all 107 nationwide stores alongside Kanai Masaaki, the current president of Muji. Matsui disposed of the entire $50 million worth of inventory that was still on sale more than three years after the launch, and sent employees all over Japan to search for good materials and conduct quality checks at manufacturing sites.
  • Additionally, Matsui worked to change the corporate culture of Muji; he eliminated unnecessary internal competition and politics by integrating the company’s organizations and encouraging interdepartmental collaboration. Matsui used product sales to encourage friendly competition within the company, instituting a program to increase employee engagement by letting store staff each choose a single product to promote and sell at 20% off.
  • CEO Matsui shared his management policy and detailed rules with all employees in a 13-volume manual called “MUJIgram.” It includes comprehensive guidelines on customer service, store displays, product development, etc. to standardize everything from employee behavior to Muji products, and to strictly regulate quality. Rather than aiming to control employees through this manual however, he shares his work processes in order to encourage employees to discover and fix problems on the field.
  • Kenya Hara, who has been leading the design of Muji products since 2001, applies the philosophy of clean and spare emptiness onto all products. He tried to purge everything unnecessary from the product and concentrate on its substance. In the way that people buy thicker pasta dishes once they realize their insulation purpose, Hara wants people to understand the function and principles of the product and make smarter purchasing decisions. Just as you’d buy an absorbent and soft towel instead of a fancy, lacier option if you understood the purpose of a towel, Muji seeks to eventually change customers’ consumption patterns by highlighting the products’ functions.
  • After these reforms and changes, there has been an increase in customers who sympathize with Muji’s spirit of sustainability over growth, seeking performance that meets standards and needs rather than competing for the best features. In addition to recovering sales in just one year, the company grew rapidly, selling 7,500 products at more than 700 stores worldwide in 2017 and achieving sales of about $4 billion with an operating profit of $2 billion.
  • Even though the founder retired, and the CEOs and designers have changed over the years, Muji has preserved its fundamental principles such as simple plain-colored design and use of eco-friendly materials, which emphasize nature and simplicity. Muji’s simple colorless designs that are not associated with certain age groups or genders have been positioned as universal products for anyone to use, and this has been the driving force behind Muji’s steady growth despite changes in trends and the economy.


II. Balmuda: The Apple of East Asian home appliances

Balmuda was founded in 2003 by Gen Terao, who has a unique life history.

  • Balmuda, a Japanese electronics manufacturer, sells toasters, humidifiers, fans, etc. that are beautifully designed and boast of great performance. Their sales were about $60,000 in the first year, but increased more than 1,500 times over 15 years, reaching $90 million in 2017.
  • Founder Gen Terao dropped out of high school as a sophomore in protest of a survey about career aspirations. He thought writing something under the career slot and deciding his future at age 17 was an insult to his own potential, and believed that both the school nonchalantly enforcing this and the students wordlessly following were wrong. He left the school and traveled to Spain, Italy, Morocco, France, etc. After flying for 40 hours or so, he arrived in Spain Andalucia where he discovered a small bakery. There, while cold and hungry, he ate bread, cried hot tears, and realized the meaning of life. After reaffirming his purpose of life through a year’s worth of travel, he decided to return to Japan and pursue his dream of becoming a rockstar.
  • He signed a contract with an agency that liked his demo tape, but eventually gave up his music career after 10 years of going unnoticed. One day he went over to a fan’s house—and, excited by the creative work of Dutch interior design magazine Frame, he founded Balmuda Design. Balmuda is not a word with a specific meaning, but rather a combination of the brand’s desire for exoticism and a dreamy sound evocative of ancient seas.
  • In the early days of the company’s establishment, he could not find a factory to materialize his ideas into products, so he learned CAD and created his own blueprints. After countless rejections, he began to pick up manufacturing skills by working part-time at a factory for about a year and a half. Gen Terao, who was operating Balmuda solely through the technology he learned at the time, was on the verge of bankruptcy due to a decrease in orders and a rise in debt caused by the 2008 economic crisis.
  • Faced with a string of failures in music and business, he saw people enjoying their meals at a family restaurant he always passed by and fell into contemplation; he thought, “The global economy is bad, and Balmuda is in danger of bankruptcy, so why is this business doing so well?” He realized that Balmuda’s great products were not selling as well as he expected not because of price or advertising, but because they weren’t necessary to customers. As a (2)last-ditch effort before bankruptcy, he decided to create an electric fan, a product he personally likes.
  • Fans at the time were similar in design, loud, and used up a lot of electricity—they were a product that saw no further advancements. Gen Terao developed the dual blade structure patented as The GreenFan technology in order to combat experiences of exhaustion from sitting in front of harsh fan winds. The white noise of this fan with 14 dual blades (an innovative product) is only 13dB which is only a little more than the flutter of a butterfly’s wings, and consumes only 3W at the lowest setting.
  • He needed $600,000 for production and sales, but this was more than Bermuda’s annual profits at the time, and no one would lend money to a company on the brink of bankruptcy. Terao persuaded the factory to make a prototype, and succeeded in collecting about 2000 preorders while traveling around stores with it. He produced GreenFans with the help of a regular factory that funded some capital after seeing the volume of preorders, and sold 12,000 units—more than twice his original goal—in 2010. When low-power and high-performance products were in the spotlight after the 2011 earthquake in eastern Japan, the sales of GreenFans soared to 25,000 units despite being quite pricey at $350 per unit; he sold 50,000 units by 2012.

By continually releasing products with sensible designs and innovative features, Balmuda has gained a reputation for being “the Apple of home appliances,” and received explosive popularity in the Japanese, Korean, and Taiwanese markets.

  • Balmuda’s toaster, known to “revive dead bread,” is yet another product that shows the brand’s innovation. Toasters have not advanced much technologically since the late 1800s, and products with similar features, prices, and designs have been sold in the market without much differentiation. While standard toasters focus on toasting bread thoroughly, Balmuda focused on finding techniques that would make the bread crunchy on the outside and soft on the inside.
  • Gen Terao, who was working hard on developing a toaster that could recreate the taste of bread that he ate while traveling in the Ronda province of Spain, remembered that it had been raining during his travels—and finally realized that humidity was what determines the taste of bread. In 2015, Balmuda included a thumb-sized water cup in the toaster and applied a technique to control humidity, resulting in reviews that Balmuda toasters can “revive dead bread”. It became a sensation. The next year, Balmuda released The Pot (a coffee pot with specialized pour-over spout) and The Gohan (an electric rice cooker that makes very tasty rice), both of which saw explosive demand in East Asian countries such as Japan, Korea, and Taiwan.
  • Not only did Balmuda use technology to troubleshoot the inconveniences of products that are essential to customers’ lives, but it also focused on making refined products designed to be a great piece of interior decoration. Customers rave over Balmuda products’ features, ease of use, and pleasurable sound effects, as well as their designs that naturally complement the interior of a room. By maximizing brand value with product-specific features and classy design, Balmuda is demonstrating how medium-sized enterprises can survive in a premium market.


III. The role model and the rule breaker of lifestyle brands

Muji is maintaining its design philosophy of emptiness while continually expanding business fields and regions. It is rising as a role model of lifestyle brands.

  • Muji doesn’t get tied up in any specific industry like clothing or furniture, but extends its philosophy of “focusing on the essence and eliminating unnecessary parts” to all areas of life. When opening a store, Muji includes a bookstore, multi-purpose hall, cafe, etc. to create a space where you can naturally hang out and purchase products that you like instead of having to make time out of your schedule.
  • Muji products continue to grow in the food and beverage sector by selling healthy foods that minimize chemical seasoning and processing, in addition to opening restaurants, cafes, and supermarkets. The Umeda Muji Store in Osaka, the biggest Muji store in the world that opened in 2018, is a supermarket that provides fresh and healthy food ingredients without pesticides and chemical fertilizers. Muji applies its philosophy to its supermarkets as well, providing customers with the bare necessities by not only eliminating chemical products but also cashiers.
  • Muji, excellent in integrating customers into the lifestyle they propose, is also building and selling houses, deeply penetrating the lives of customers. In this era of brands, Muji has become a role model for other lifestyle brands by focusing on function and need without branding.

Balmuda is rewriting the rules of the market and industry by addressing the inconveniences of daily life through superior technology and design.

  • What sets Balmuda apart from its competitors is not using market research to predict customer demand and making products that they think consumers would buy, but rather focusing on creating markets that have never existed before. Balmuda does not try to predict future demand based on customers’ past purchases, nor does it waste time researching unknowable future market trends. Balmuda values its ability to design products that do not currently exist.
  • Balmuda doesn’t trust customer surveys or market research, nor does it conduct them. It focuses on discovering inconveniences in everyday life and communicating them with employees to create new product plans as quickly as possible. The dual structure of the GreenFan wings were inspired by a game of chase-the-tail that children were playing on TV, while the Balmuda toaster technology was inspired by Gen Terao’s travels.
  • Gen Terao is running Balmuda not as a home appliances company, but as a lifestyle brand and venture company. The air purifier “Air Engine,” one of Balmuda’s flagship products, was innovative and beautifully designed, with the dual structure of the GreenFan (lowering wind power through dispersal) and a turbo fan that draws in the bad air; it was developed in just 10 months. Other features that set Balmuda apart are its prodigious awareness of everyday inconveniences, fast decision-making, and active use of the latest technologies such as 3D printing.
  • The newly released rice cooker, The Gohan, was likewise created in the process of finding the best tasting rice. Stone pots made the best rice, but they made it difficult to control the water and fire properly, and required constant and inconvenient scrutiny. Balmuda began to brainstorm an implement more convenient to use than stone pots.
  • When Balmuda learned that what made rice taste good was not the rice cooker but the rice itself, the company initially concentrated on developing a microwave specifically for reheating frozen high-quality rice. However, while experimenting with rapid cooling and liquid nitrogen, it realized that newly cooked rice was far better than any reheated rice and began researching forms of rice cooking.
  • In the process of researching and experimenting how to make delicious rice with electricity (which has only one-third the firepower of a gas stove), Balmuda learned that when you cook rice in an earthen or iron pot, the rice kernels don’t move as much. If you make rice using steam, then the kernels don’t move, so you can minimize heat-to-kinetic energy loss; plus, the lack of motion increased both the flavor and springiness of each rice kernel. Based on this discovery, Balmuda overlayed two pots, and created steaming technology that cooked rice by sending heated water vapor from the outer pot to the inner pot.
  • Balmuda’s products such as fans, humidifiers, rice cookers, and toasters are all already common household items, and are not of much interest to consumers. However, Gen Terao is breathing new value into these familiar appliances with completely novel approaches, not simply developing new electronics, but rather creating fresh experiences for its customers. For example, what Balmuda sells is not an “expensive but good toaster,” but a toaster that makes the tastiest toast in the world and provides a special experience for its user.


IV. Implications

There are two lessons we can learn through Muji and Balmuda.

Lesson #1: Both brands have succeeded in creating loyal customers by focusing on their company values and the essence of their products.

  • Rather than economic conditions, customer preferences and needs, and trends in the industry, Muji focused on upholding and disseminating the values they put first. It prioritized spreading its philosophy (i.e., not overexerting oneself, researching lifestyles, eliminating excess, aiming to lower prices, all while pursuing the beauty of simplicity that can compete alongside fancier brands) and communicating with customers who agree with their values.
  • Balmuda is also focused on not just making products that will sell well, but also on technology and minimalist design that remove unnecessary parts and inconveniences.
  • People don’t think of Muji and Balmuda as companies that simply sell clothes or make electronics. They recognize these companies to be innovative like Apple, and always want to buy new releases. People who buy the Balmuda toaster will buy its kettle, air purifier, and rice cooker, while those who buy Muji clothing will also purchase furniture, electronics, stationery, and other goods. In this way, the values and philosophy of these two companies have turned customers into loyal fans.

Lesson #2: A culture of constant experimentation and challenges without (3)putting a cap on target industries drives the growth of the company.

  • In January 2018, Muji opened its first hotel in Shenzhen, China, and began to showcase its values to customers through this new multipurpose space. Masaaki Kanai wanted to make a proper, clean hotel that wasn’t too luxurious or terrible, but just enough, recalling his own experience in a small inn in Shizuoka where nothing was in excess, and he slept well on a sun-dried white cotton sheet. He made his hotel so that patrons can experience Muji products and then purchase them on the spot.
  • If needed, Muji does not (4)shy away from collaboration with competitors. With its similar design philosophy, Balmuda managed to threaten Muji’s home appliance sector with its constant releases that saw raving reviews for their unique technology and sensibility. Rather than competition, Masaaki saw a chance for collaboration. Basing their research on Muji employees’ trying out Balmuda products, the two companies jointly developed and released air purifiers containing Balmuda’s design philosophy and engine.
  • Gen Terao wants Balmuda to grow into an organization structured around design management, not driven by one individual. Although Balmuda is still a medium-sized company with about 100 employees, he has signed a contract with Audi’s designer and creative manager Satoshi Wada as an external design director to evaluate and advise the internal design team’s work, driving growth within the company. Additionally, Balmuda is constantly challenging itself by collaborating with Tokyo’s famous bakeries and baristas for product development, making more than 2,000 design drafts for the perfect single product, and experimenting for more than 1,000 hours.

Discuss Muji and Balmuda with your Ringle tutor, and also receive feedback on your English usage.

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