Target Costing as a Cost Reduction Strategy in FMCG Companies in Kyoto, Japan

Abstract

This study examines the role of target costing as a cost reduction strategy in Fast Moving Consumer Goods (FMCG) companies in Kyoto, Japan. The sector faces intense price competition, rapid product turnover, and rising operational costs, requiring firms to improve efficiency without reducing product quality. This study applies a qualitative systematic literature review. Relevant journal articles, academic books, and scholarly publications were identified through academic databases and search engines, screened using predetermined inclusion and exclusion criteria, and analyzed through descriptive qualitative analysis and thematic synthesis. The review focuses on target costing, cost reduction strategies, operational efficiency, profitability, and firm growth. The findings show that target costing is a market-oriented cost management approach that determines allowable product costs by deducting expected profit from the target selling price. Its implementation supports early cost control, reduces non-value-added activities and waste, improves operational efficiency, and encourages product and process innovation. These outcomes can strengthen profitability, price competitiveness, product development, and market expansion. However, the reviewed literature provides limited empirical and quantitative evidence on target costing implementation in FMCG companies, particularly in Kyoto. Therefore, the findings should be interpreted as a conceptual synthesis rather than statistically tested causal relationships. This study contributes to strategic management accounting by clarifying the links among target costing, cost efficiency, operational performance, profitability, and firm growth. It also recommends integrating target costing with value engineering, cross-functional coordination, supplier management, and reliable cost information systems.