Lessons from the Japanese: The Third Paradigm

Abstract

In the 1960s and 1970s, the marketing and production policies of Japanese manufacturers exerted a strong impact on marketing strategies as they saw market segments as being almost isolated from one another. “Product concepts” differed from one segment to the next. Together with the variability of purchasing behaviour, this led to highly varied marketing strategies and increased the intensity of the competition. Toyota pioneered a new approach that became known as the Toyota Production System (“TPS”), later called “lean production”. The TPS combined the flexibility and accuracy of craftsmanship with the low cost of mass production. By using lean production methods, Japanese car manufacturer achieved production costs per unit well below those of European and American manufacturers, with greater volumes. They also succeeded in increasing the speed and efficiency of new product development, a significant ability in a competition in which time to market constituted an important advantage. The new Japanese production system had a major impact. It marked a radical new approach to the manufacturing process and created a paradigm shift in automotive manufacturing worldwide. In terms of marketing strategies, lean production made it possible to produce a variety of models on the same assembly line. By increasing the variety of the offering, it increased the capacity to open up new market segments.