Toto displays its plumbing products to Japanese consumers while paying respect to traditional patterns of distribution.

The typical plumbing showroom is owned and operated by one of three people - wholesaler, contractor or kitchen & bath dealer. Manufacturers? Kohler does have its Design Center, but that's one part showroom and two parts showplace. American Standard used to operate a consumer showroom in Manhattan, but that closed down several years ago. By and large, manufacturers seem happy to leave this marketing chore up to others.

Halfway around the world, however, Toto Ltd. operates 66 showrooms, including one Tokyo facility that attracts more than 6,000 consumers a month. (Such superlatives need to be kept in perspective when discussing Japan. Keep in mind, Tokyo is home to 12 million.)

With real estate at such a premium in this densely populated nation, a plumbing manufacturer with more than $3 billion in sales may be the only party to underwrite such an expensive showroom campaign. The company plans on running a total of 123 showrooms in four years as part of a strategy to diversify away from new construction to remodeling.

PM was a guest last year on a Toto-sponsored trip to Japan, and we found the showrooms one of the most interesting differences in East vs. West. The Toto facilities are true "show"rooms since the consumer has a chance to see plenty of one manufacturer's product in action - but can't walk out the door with any of it.

Similar Distribution

Distribution in Japan follows the same traditional two-step pattern we're all familiar with in the United States (or at least used to be). While the showrooms' main focus is on the consumer, the company has also figured out ways to make sure the trade get its share of the action both for product sales and installation. (Home centers, at least in the guise of Home Depot and Lowe's, are not much of a factor in Japan. For more, see sidebar.)

The showroom concept isn't new; Toto opened its first facility in the late-1960s. "In the past, we had two main objectives with the showrooms," says Kazuo Watanabe, vice president/marketing, Toto USA. "First, we needed to express our presence to the public, and second, we wanted to provide a place for consumers to actually see our products. Contractors did not have these capabilities."

But Toto made showrooms a priority as Japan's recent economic collapse underscored the importance of reaching out even further to consumers. The last decade has been anything but easy for companies tied to the vagaries of new construction. New housing starts in Japan, for example, plummeted 21.6 percent in 1998 to 1.3 million units.

"The company always had close links with contractors, but marketing becomes more difficult when the economy weakens," says Newbold Warden, marketing and communications manager for Toto USA. "Toto had to move away from a dependency on new housing starts and more directly to consumers who plan on remodeling."

Japanese homes are ripe for remodeling. Forty-five percent of the homes are more than 20 years old. Add to that, a growing population of senior citizens - growing at an even higher rate than in the United States - in need of making modifications to existing bathrooms.

"The challenge with the senior citizen market is that each customer's needs and requirements are different even if he or she has the same symptoms of others with a common ailment," Warden says. "An ability to consult with these customers one on one in a showroom will become critical in selling accessible product."

Super Space

During our trip, we toured the grandest space of all, the 8,500-sq. ft. Super Space spread out over the 26th and 27th floors of a Tokyo skyscraper.

A staff of 36 showroom attendants are on hand to answer virtually any question about Toto products - no small undertaking considering that everything in the company's 875-page product catalog is on display. The Super Space is open from 10 a.m. to 6 p.m., seven days a week and only closed twice a year for national holidays.

The showroom staff all attend a one-week course held offsite at Toto's training facility that covers plumbing products, architecture and interior design. Obviously, a special focus is placed on communications skills. Recently, the company even began monitoring conversations between customers and attendants and made additional improvements to training for customer service. The basic curriculum is reinforced with additional training every year. Toto employs 300 attendants throughout its showroom chain.

While there's no shortage of consumer-style special events to draw in the homeowner, the Super Space as well as the other showrooms make the contractor a part of the deal. "Our focus on the consumer is strong in Japan," Warden says. "But even though we are focused on consumers, we spend more on the trade." Toto currently spends $100 million a year in consumer and trade advertising in Japan.

Many of the showrooms, for example, provide contractors with a reserved work space and a dedicated showroom attendant when discussing projects with consumers.

A recently developed Remodel Club gives contractors an added boost. Membership in the club provides contractors with various marketing and sales aids, opportunities for special training and first dibs on consumer leads not only from the showroom network, but also Toto's Web site. The club currently has 1,770 members who each pay a $300 membership fee, plus an additional $300 annual fee.

In any case, the showroom advisors make cost estimates, minus any installation costs. In addition, product prices are given at Toto's suggested retail price, allowing contractors to make their markup on the sale.

All this information is also shared with Toto's sales force, and they follow up with contractors. In addition, showroom advisors also make calls with consumers to ensure the sale is closed.

Finally, the company doesn't leave future sales to chance either. All sales information is put into a database in expectation of additional remodeling projects.

"This is especially important when just a partial remodeling is done, such as adding a water closet," Warden says. "We certainly expect future cross-sales for other related Toto products."

Warden says Toto has no plans at the moment for opening one similar showroom in the United States, let alone a chain of such facilities.