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During the time it enjoyed extremely good sales in Kyushu, Totsuko depended almost totally on that single region. So when sales in Kyushu suddenly dried up, Totsuko, still a small company, was easily dragged into a loss. How could the loss be covered? Fortunately, the company somehow managed to get over this difficulty with slight sales increases in other regions.
"If we had depended on Kyushu alone, Totsuko would have gone bankrupt." It then occurred to Morita, what would have happened if the company had depended only on Tokyo and if Tokyo had been hit by a big earthquake? So he clearly realized how risky it would be for the company to limit sales to only one area.
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"The wider the market, the better. If so, selling only in japan can be just as risky. It would be safer to depend on the entire world. We are not ready yet, but we must expand our market worldwide," Morita thought. With a big market, Totsuko could always find one region or another in which to sell its products, no matter what might happen in a particular locale. Thus, Morita and his colleagues agreed that it would be safer for the company to draw sales from as wide a market as possible. Though it might sound like a simple solution today, this proved to be a very valuable lesson to Morita and the others who had very little marketing experience.
One of the keys to Totsuko's success in tape recorders was the fact that they had the patent on AC Bias Recording. This patent enabled Totsuko to virtually monopolize the market. Yet the license would eventually expire, like any other patent license. Fully aware of this, Morita and the others worried very much about the expiration as that day was fast approaching. When the patent was about to expire, they heard that Matsushita Electric Industorial Co., Ltd would enter the tape recorder market. It could be nothing but a threat to have such a big company directly in competition.
But then something mysterious happened. As Matsushita Electric Industorial Co., Ltd launched its tape recorder sales campaign, Totsuko sales rose in collelation. Everyone puzzled over this phenomenon. After about a year, Totsuko had achieved a dramatic sales increase. As competition increased, Totsuko's sales increased further.
Through this phenomenon, Morita and the others learned a strange lesson : one company should not monopolize a market even in such a small country as Japan. Markets would be stimulated by the presence of many competing companies. Totsuko, as a future leader in new product development, fully realized that it could not be effective in stimulating ting the growth of a new market. create a new market by itself alone.
It would be another story, though, if Totsuko products were inferior in performance to those of its competitors. But Totsuko had a five-year lead over its competitors, a lead that it had gained by tha sheer intensity of its efforts. Backed by this fact, Morita and his colleagues were confident that Totsuko products were highly competitive in both quality and price. As long as they persevered with this policy, they had no need to fear any competitors that might come along. In fact, Totsuko could only benefit from competition. Through those two lessons, Morita gradually but surely acquired sales and marketing expertise.
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