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Multicultural marketing strategy by michael

Learn how to leverage culture in your marketing practice

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Multicultural marketing strategy by michael

  1. 1. 1 MulticulturalMulticultural Marketing Strategy:Marketing Strategy: The Asian SegmentThe Asian Segment Prepared by Michael Hong June 2010
  2. 2. 2 The Diverse Nation U.S. is one of the most diverse population in the world • Ethnicity, Language groups and Race attribute to diversity • Diversity is increasing rapidly across the nation • 18% of US population speaks a language other than English
  3. 3. 3 Market Over View General Market is already Multicultural • One third of US population is Hispanic, Black or Asian segment • Hispanic and Asian are the fastest growing segments US Census 2000
  4. 4. The Forgotten Market Multicultural segments purchased 24x more than the total amount purchased through online retail space, however, the media spending on multicultural market is less than a half of the online market. $10.7 trillion purchasing power from the multicultural segment in 2008. $10.7 trillion roughly translates to 18.5 percent of all U.S. buying power(GDP) where $913B for African American, $951B for Hispanic, and $509B for Asian. Since retail spending is about one third of the purchasing power, multicultural market retail spending can be estimated to about $3.5 trillion. On the other hand, in 2006, E-commerce product sales totaled $146.4 billion in the United States. Nielsen reports that in 12 month period of July ’08 to June ’09, total advertising spending for combined Hispanic and African American, not including Asian American, is about $7.3 billion which is 4.6% of total media spending in the US. About the same time, digital marketers spent about $16billion or 10% of total US advertising spending.
  5. 5. 5 Part I : Asian Market Cultural Insight
  6. 6. Why culture matters? Culture is a DNA that distinguishes how the target thinks, say and does. Effective marketing begins with understanding how the target thinks, say and does.
  7. 7. Cultural Dynamic MeltingMelting PotPot SaladSalad BowlBowl Diversification Assimilation Peoples from various cultures come to America and contribute aspects of their culture to create a new, unique American culture. People retain unique aspects of their cultures that are identifiable within the larger American society, much like the ingredients in a salad are still identifiable, yet contribute to the overall make up of the salad bowl. Need to Fit In Need to Stand Out Culture of society and individuals continue to change over time. The evolution of life stages, lifestyles and life trends impacts both long term and short term marketing plans.
  8. 8. Source: Hofstede Dimensions The cultural difference manifest through, symbols, heroes, rituals and values where values are the deepest DNA of mental map that drives cultural behavior. Symbols: Visual/verbal icons Heroes: Role Models Rituals: Collective Activities Values: Belief System Evil vs. Good Decent vs. Indecent Forbidden vs. Permitted Natural vs. Unnatural Normal vs, Abnormal Irrational vs. Rational Ugly vs. Beautiful Cultural System
  9. 9. Source: Hofstede Dimensions Cultural differences can be measured in 5 different bipolar dimensions. Marketing Communication should relect accordingly. Power Distance Uncertainty Avoidance Individualism Collectivism Masculinity Femininity Long vs. Short -Term Cultural Dimensions
  10. 10. Cultural Differences Source: Hofstede Dimensions China Korean Japan Vietnam India Philippines USA Mexico Large/Small Power Distance 80 60 54 70 77 94 40 81 Strong/Weak Uncertainty Avoidance 30 85 92 30 40 44 46 82 Individualism/ Collectivism 20 18 46 20 48 32 91 30 Masculinity/ Femininity 66 39 95 40 56 64 62 69 Long/Short term Orientation 118 75 80 80 61 19 29 29
  11. 11. Power Distance Source: Hofstede Dimensions A degree of acceptance and expectation that power is distributed unequally. Hierarch Equality
  12. 12. Power Distance Large power distance Small power distance China, Vietnam , India , Philippine Japan and Korea USA and European countries Might prevails over right: whoever holds the power is right and good The use of power should be legitimate and is subject to criteria of good and evil Power is based on family or friends, charisma, and ability to use force Power is based on formal position, expertise, and ability to give rewards Less powerful people should be dependent on the more powerful; in practice, less powerful people are polarized between dependence and counter dependence There should be, and there is to some extent, interdependence between less and more powerful people Teachers are expected to take all initiatives in class Teachers are gurus who transfer personal wisdom Teachers expect initiatives from students in class Teachers are experts who transfer impersonal truths Both more and less educated persons show almost equally authoritarian values More educated persons hold less authoritarian values than less educated persons Wide salary range between top and bottom of organization Narrow salary range between top and bottom The ideal boss is a compassionate autocrat or good father The ideal boss is a resourceful democrat Centralization is popular of organization Decentralization is popular of organization Subordinates expect to be told what to do Subordinates expect to be consulted Source: Hofstede Dimensions
  13. 13. Large Power Distance Dimensions Marketing Implication Segment Large Power Distance (Status) In the past, social status was defined by birth, caste, family position or profession. In modern society, social status is defined by economic power for the most part and it is prominently displayed through personal possessions such as luxury houses, cars and designer items. Fact:25% of traffic to luxury brand website are consist of Asian American Chinese, Vietnamese , Indian , Pilipino Japanese and Korean
  14. 14. Individualism Collectivism Source: Hofstede Dimensions This dimension measures how much members of the culture define themselves apart from their group memberships. Individuality Conformity
  15. 15. Individualism Collectivism Source: Hofstede Dimensions Individualism Collectivism USA China, Korea, Vietnam, Philippine Identity is based on the individual Identity is based in the social network to which one belongs to (School, company, profession, religion etc) Everyone is expected to have a private opinion Opinions are predetermined by group membership Consumption patterns show self supporting lifestyle Consumption pattern show dependence on others Task prevails over relationship Relationship prevails over task Everyone has right of privacy Private life is invaded by groups Individual contribution important to Teamwork Team accomplishment prevails over individual Media is the primary source of information Social network is the primary source of information Low Context Communication; Favor content over context. In other words, they expect their words to be interpreted literally without regard to situational or relational circumstances. Feel that getting things done relies on following procedures and staying focused on the goal. High Context Communication; Favor context over content. In other words, their actual message is often quite different than the literal words they use and relies on situational and relational circumstances. Feel that getting things done relies strongly on relationships with people and attention to group process.
  16. 16. Collectivism Dimensions Marketing Implication Segment Collectivism In collectivism, information from reliable friends and family members has higher believability. Building personal relation is the key. Grass root and sales agent based marketing works well. Free product trial could formulate opinions that may be pass through the word-of-mouth. Generate positive opinions from the influencers and channel the buzz through social media network. Facts: Other than twitter, Asian Americans are over indexed in many social media space. 3 out of 4 uses social media. Chinese, Vietnamese , Pilipino and Korean
  17. 17. Femininity Masculinity Source: Hofstede Dimensions This dimension measures the value placed on traditionally male or female values. The assertive pole has been called ‘masculine’ and the modest, caring pole ‘feminine’. Femininity Masculinity
  18. 18. Femininity Masculinity Femininity Masculinity Korea, Vietnam Japan, Chinese, Philippine, USA Dominant values in society are caring for others and preservation Dominant values in society are material success and progress Both men and women are allowed to be tender and to be concerned with relationships Women are supposed to be tender and to take care of relationships In the family, both fathers and mothers deal with facts and feelings In the family, fathers deal with facts and mothers with feelings Sympathy for the weak Sympathy for the strong Both boys and girls are allowed to cry but neither should fight Girls cry, boys don't; boys should fight back when attacked, girls shouldn't fight Friendliness in teachers appreciated Brilliance in teachers appreciated Stress on equality, solidarity, and quality of work life Stress on equity, competition among colleagues, and performance The needy should be helped The strong should be supported Dominant religions stress the complementarities of the sexes Dominant religions stress the male prerogative Women's liberation means that men and women should take equal shares both at home and at work Women's liberation means that women will be admitted to positions up till now only occupied by men Source: Hofstede Dimensions
  19. 19. Femininity Masculinity Dimensions Marketing Implication Segment Femininity Focus on people and Stir their emotion Warm , Caring, Emotional, Down to earth, Spiritual, Social Korean, Vietnamese Masculinity Focus on performance and Excite their five sensors Fun, Humor, Confident , Facts, Logical, Exaggeration, pride Japanese, Chinese, Pilipino 2002 World cup in Korea Making fun of Tiger Wood
  20. 20. Uncertainty Avoidance Source: Hofstede Dimensions This dimension measures how much members of a society are anxious about the unknown, and as a consequence, attempt to cope with anxiety by minimizing uncertainty. (Strict vs. Flexible code of conduct) Uncertainly Avoidance is not risk or fear avoidance. It’s degree of people expressing emotion or anxiety outwardly.
  21. 21. Uncertainty Avoidance Strong Uncertainty Avoidance Weak Uncertainty Avoidance Japan, Korea, China, Vietnam, USA, Philippine, India Acceptance of familiar risks; fear of ambiguous situations and of unfamiliar risks Comfortable in ambiguous situations and with unfamiliar risks What is different, is dangerous What is different, is curious Many and precise laws and rules Few and general laws and rules Aggression and emotions may at proper times and places be ventilated (Korean Drinking culture) Aggression and emotions should not be shown Belief in experts and specialization Belief in generalists and common sense Family life is stressful Family life is relaxed Emotional need to be busy; inner urge to work hard Comfortable feeling when lazy; hardworking only when needed There is only one Truth and we have it One group's truth should not be imposed on others Scientific opponents cannot be personal friends Scientific opponents can be personal friends In shopping, search for purity and cleanliness In shopping the search is for convenience Hesitant toward to accepting new products New products are subject of test Appeal of expertise in advertising (Give facts and figures) Appeal of humor in Advertising Source: Hofstede Dimensions
  22. 22. Uncertainty Avoidance Dimensions Marketing Implication Segment Strong UA Popularity and familiarity helps choosing a product. Spokes person or expert ease the uncertainty. Higher price means higher quality. Avoid controversial topics. Brand plays a bigger role. Ie T-Mobile 11% ATT 22% Verizon 54% (Korean) Japan, Korea, Weak UA Willingness to try new product. Innovative feature captures people attention. Highlight common sense. Unique Selling Points to focus on convenience and comfort. Higher price does not means higher quality. Humorous ad is well received. Price plays a bigger role. Ie T-Mobile 34% ATT 40% Verizon 14% (Chinese) China, Vietnam, Philippine, India, USA
  23. 23. Long/Short term orientation Source: Hofstede Dimensions “Making the children feel good and gain their love” “Contributing to their children’s education and financial situation”
  24. 24. Long/Short term orientation Long term Orientation Short term Orientation China, Vietnam, Japan, Korea USA, Philippine Persistence , Perseverance efforts toward slow results. Effort should produce quick results saving, being sparing with resources Social pressure toward spending Respect for circumstances Respect for tradition Concern with personal adaptiveness Concern with personal stability Willingness to subordinate oneself for a purpose Concern with social and status obligations Having a sense of shame (Humbleness ) Concern with face Focus on Virtue Focus on Truth Life time career path Opportunistic career path Investment in real estate (Saving for future) Small savings and little money for investment Leisure time is not important Leisure time is important Source: Hofstede Dimensions
  25. 25. Long term orientation Dimensions Implication Segment Long term orientation Focus on virtue, hope, endurance, sacrifice, vision Long term financial investment and preparing children for the future are the priorities in life. China, Vietnam, Japan, Korea
  26. 26. Conclusion Culture is a DNA that distinguishes how the target thinks, say and does. Effective marketing begins with understanding how the target thinks, say and does.
  27. 27. 27 Part II: Asian Market Marketing Strategy
  28. 28. 28 MM is Segmentation Marketing Multicultural Marketing is Customer Segmentation Marketing • It is to reflect changes of demographics, socioeconomic and ethnicity of the US population. • Traditional mainstream or “mass” marketing no longer provides the most effective or efficient approach to reach increasingly fragmented audiences. • With improvements in data base technology and multicultural media, marketers are enabled to target the specific segment efficiently and effectively. • In addition to age, gender and geographic location, marketers are now capturing language preference and cultural affiliation to maximize segmentation opportunity TargetingFragmented Market Homogenous Market Demographics Ethnicity Socioeconom ics Segmentation
  29. 29. 29 In-language as Strategy Retail Face2Face Telemarketing CareOnline Advertising A brand should speak the customers’ language, celebrate their lifestyles and respect their cultures. An in-language capability should serve not only as a communications tool but also as an intricate part of the marketing strategy.
  30. 30. 30 Strategic Approach to MM “… sell a single customer as many products as possible - over a long period of time, and across different product lines.” Peppers, Don & Martha Rogers, Ph.D., The One to One Future: One Customer at a Time. New York: Doubleday, 1993 Market Driven Product Focused Homogenous Market Mass Advertising Market Share Brand Driven Customer Focused Segment market Database / Direct Share of Wallet Selling a single product to multiple customers Selling multiple products to a single customer VS.
  31. 31. 31 MM Marketing Process Product Lifecycle Management Customer Contact Management ITM, OTM Web, Retail, AS MM and Sales Management Segment P&L Communications Programs Multicultural Marketing Communications Mass Ad, DM , Online & PR Database Management Database Management Target Segment Market Research Multicultural Marketing is not limited to creating culturally sensitive advertising. Rather, it is about creating a business process by managing the brands, products, customer relationships and sales channels that are effective and relevant to the target segment.
  32. 32. 32 MM Strategic Framework How to communicate Where to find the target Role of your brand Who the target is. Targeting Multicultural segment requires considerable knowledge of demographic, culture, behavior around your brand and access to communication channels.
  33. 33. Communication Strategy Event DM Mass Web PR Retail Direct Target SalesTarget Sales Sales EffortSales Effort Brand BuildingBrand Building To deliver the target sales, all sales and branding effort must work together. Optimum media mix is imperative at all brand funnel levels. AwarenessAwareness FamiliarityFamiliarity ConsiderationConsideration
  34. 34. 34 MM Branding Strategy MM is not about creating a unique brand positioning within individual segment rather it is to reinforce and unify a single brand strategy through multilingual/cultural communications that are relevant to the target segment MM is to change or reverse any undesirable brand image to a desirable brand that will attribute maximum market opportunities WH BL TargetTarget BrandBrand PositioningPositioning KO CH AI HS Unified Brand effort In-language effort
  35. 35. Moment of Truth Website Retail Sales PersonServiceAdvertisement To build memorable and meaningful brand experiences, managing the MOT is an imperative marketing process. MOT experiences are high at the retail level. Ideal MOT strategy reflects cultural insight about the target segment.
  36. 36. 36 Executive Summary 1. Today, most marketers believe that multicultural market has become too big to simply ignore. Hispanic, African-American and Asian now constitute one-third of the total US population and command purchasing power of $10.7 trillion. General market is already multicultural. 2. Multicultural Marketing is an extension of segmentation marketing. It is to reflect changes of demographics and life styles of US population. Multicultural Marketing is not limited to creating culturally sensitive advertising rather it is about creating a business process through managing brands, products and sales channels that are effective and relevant to target segment. 3. Asian customers are heavily dependent on in-language. 80% of Asian customers order services through in-language sales reps. Purchase decision is heavily dependent on information acquired through word-of-mouth from in-language speaking friends and/or Asian sales reps. Inaccurate or misleading offer information creates undesirable brand/product positioning, customer dissatisfaction and reduces customer loyalty. 4. Asian segment is highly educated, tech savvy and upwardly mobile. The market is ideal to promote the latest technology and premium services or goods. To attract Asian segment, leverage culturally relevant product benefits that are unique as the main differentiator. 5. We can developed a marketing strategy that could immediately generate a new revenue opportunity for the brands challenged with new growth area. We will help the general marketer to win the Asian market in a speedy and cost effective manner through both traditional and alternative sales channels.
  37. 37. Michael Hong Marketing Consulting Michael is a Senior Marketing Management professional with exceptional skills and experience in e- Commerce Marketing. Michael has 20 years of marketing and marketing communications experience at corporations such as AT&T and LG Electronics. He is a creative marketer and a thought leader in digital marketing and multicultural marketing industry. He spoke at numerous conferences such as Internet Retailer and the eM9-Marketing Conference. Specialties: Advertising Strategy, Planning and Execution, Digital Marketing (SEO, SEM, Social media, Word-of-Mouth), Direct Marketing, Multicultural Marketing, B-B Marketing Education: Cornell University, Ithaca, New York B.A. 1985 School of Art, Architecture and City Planning 2 Brookstone Dr. Boonton Twps., NJ 07005 (C) 201 841 9659 njmikehong@yahoo.com Thank You