The company that does nothing but air conditioning became No. 1 in the world: Daikin’s focused-specialist strategy [Marketing Course for Newcomers, Season 10, Vol. 12]

Within diversified electronics manufacturers, air conditioning is not merely one division among many, while a pure-play company has a distinctive inability to withdraw. Because discontinuing air conditioning would jeopardize the survival of the company as a whole, the willingness to continue investing in research and development and overseas operations over the long term creates depth in its investment. This is the point explained here.

Daikin pursues a market-development approach to overseas expansion. Rather than simply exporting products, it develops markets by establishing local production, training local personnel, building sales networks and arranging financing options locally, then adopts a strategy of dominating the markets it has developed. Examples such as subscription-based air conditioning in Africa are also introduced as ways of lowering barriers to adoption.

Specific examples of overseas expansion include establishing local factories, training local engineers, developing installation and maintenance networks, and securing payment methods. The discussion emphasizes the importance of creating, as a whole, the conditions needed for air conditioning to take root. It also points out that an approach similar to Yamaha’s development of a population of music performers is being applied to B2B market creation.

As the conclusion of Part 3, moats are organized into 4 types: assets, networks, inventory and focus, with Daikin forming a moat through focus. The conclusion is that the depth of investment by a pure-play company that cannot withdraw becomes a competitive advantage distinct from that of diversified manufacturers.