Abstract
Japanese manufacturing firms are known for their competitiveness in the global market; however, firms in the service sector have drawn less attention. This chapter investigates the Japanese market research industry and sheds light on how digital technological innovations have changed firms’ business models and competitive dynamics. One of the main jobs of market research firms is to prepare questionnaires, choose suitable respondents, and analyze results to evaluate the effects of advertisements, brand image, and customer satisfaction. Before 2000, these firms conducted surveys via mail, telephone, fax, home visits, and group interviews—Internet research emerged in 2000, becoming a disruptive innovation in the industry. Internet research consists of questionnaire surveys posted online and completed via the Internet. This disruption drastically changed the business model of market research. Traditional research methods incurred large variable costs, but new business models utilizing Internet research spent their budget on information systems investment, causing market leaders to enjoy economies of scale. A successful Japanese startup, Macromill Inc., grew rapidly in the 2000s; it gained the second-largest market share in the industry 10 years after its founding. However, a unique development in this industry was the rise of another startup that connected incumbent firms with disruptive technology. Cross Marketing Inc. formed alliances to provide Internet research services to companies that found it difficult to respond to disruptive technological changes. As a result of Cross Marketing’s strategic positioning, incumbent firms have survived the disruption caused by Internet research, and the company holds the third-largest market share in that industry. These case analyses of the Japanese market research industry reveal a unique aspect of the competitive dynamics raised by digital disruptive innovation.
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