Yamaha 2006 Annual Report Download - page 29

Yamaha Annual Report 2006 29
(Top two images) System kitchen DolceTM and berryTM
(Lower two images) System bathroom BeautTM
Market trends and business strategy
The market for products in Japan is divided into two sectors; the new
construction and remodeling sectors. In each sector, requirements differ
between stand-alone houses and condominium apartments. During the year
under review, the market for stand-alone houses in the moderately-priced
range constructed by so-called power builders (strong regional base house
providers) and the remodeling market posted the strongest growth.
Traditionally, Yamaha has mainly developed and marketed products for stand-
alone houses. However, Yamaha products in the medium-to-upper price
range where the company’s expertise lies did not necessarily fit the market.
Yamaha was also late in responding to needs in the remodeling market and
was also lacking brand awareness, notably among first-time buyers.
In view of the past year’s operating loss, Yamaha Livingtec reviewed the
medium-term business plan aiming to restore segment profitability through
corporate restructuring and to establish a business model that brings profits.
This process of review included a thorough analysis of market trends,
assessment of Yamaha resources and challenges, organizational changes,
formulation of a new ground design of business and the resulting actions to
strengthen corporate management foundations.
Organizationally, a vertical multi-layered structure was replaced with a
flat and web-like management system to enable Yamaha to respond more
quickly to market trends. A new strategic task force was established in April
2005 to actively develop business in the remodeling market sector, where
growth in demand is expected to outpace that of the stand-alone houses.
Further improvements included the formation of a strategic task force
to revitalize Yamaha showroom operations. Yamaha showrooms are
Yamaha’s important contact points with customers and have now been
defined and positioned as Yamaha business centers for area marketing
where demand of potential customers be turned into actual demand.
Yamaha opened a few showrooms, relocated some to enhance their
functions and renovated them to have a consistent store image throughout
Japan and help customers to get ideas for living scenes. All these changes
have been favorably commented upon by customers.
In the field of products and technology development, Yamaha has
continued to pursue refinement in the cutting edge technologies for artificial
marble materials and injection molding, piano coating, wood processing as
well as artistic cosmetic design. Based upon the technology, Yamaha efforts
are focused on the development of highly customer-oriented products that
consist of impressive appearance and ease of use with such functional
benefits as excellent storage capacity and easy maintenance. More female
staff have been recruited and assigned to the jobs of product development
to reflect female customers’ point of view for products. As for advertising,
an approach of market segmentation advertising for targeted potential
customers has been adopted and proven effective in boosting sales.
For the year ending March 2007, Yamaha aims to strengthen
foundations of customer-oriented business for sustainable growth. Yamaha
continues to implement further business process renovation to increase
productivity and to establish a profitable business structure. While continuing
to develop new products that leverage Yamaha’s core technology, the
company ensures further reduction in its operational costs and reinforcement
in the home remodeling sector.