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MulticulturalMulticulturalMarketing Strategy:Marketing Strategy:The Asian SegmentThe Asian Segment

Prepared by Michael HongJune 2010

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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

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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

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.

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Part I : Asian Market Cultural Insight

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.

Cultural Dynamic

Melting Melting PotPot

Salad Salad 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.

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 iconsHeroes: Role ModelsRituals: Collective ActivitiesValues: Belief System

Evil vs. GoodDecent vs. IndecentForbidden vs. PermittedNatural vs. UnnaturalNormal vs, AbnormalIrrational vs. RationalUgly vs. Beautiful

Cultural System

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

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 30Masculinity/ Femininity 66 39 95 40 56 64 62 69

Long/Short term Orientation 118 75 80 80 61 19 29 29

Power Distance

Source: Hofstede Dimensions

A degree of acceptance and expectation that power is distributed unequally.

Hierarch Equality

Power DistanceLarge 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 classTeachers are gurus who transfer personal wisdom

Teachers expect initiatives from students in classTeachers 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

Large Power DistanceDimensions Marketing Implication Segment

LargePower 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

Individualism Collectivism

Source: Hofstede Dimensions

This dimension measures how much members of the culture define themselves apart from their group memberships.

Individuality Conformity

Individualism Collectivism

Source: Hofstede Dimensions

Individualism CollectivismUSA 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.

CollectivismDimensions 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

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

Femininity MasculinityFemininity MasculinityKorea, 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

Femininity MasculinityDimensions Marketing Implication Segment

Femininity Focus on people and Stir their emotionWarm , Caring, Emotional, Down to earth, Spiritual, Social

Korean, Vietnamese

Masculinity Focus on performance and Excite their five sensorsFun, Humor, Confident , Facts, Logical, Exaggeration, pride

Japanese, Chinese, Pilipino

2002 World cup in Korea Making fun of Tiger Wood

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.

Uncertainty AvoidanceStrong Uncertainty Avoidance Weak Uncertainty AvoidanceJapan, 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

Uncertainty AvoidanceDimensions 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

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”

Long/Short term orientationLong 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

Long term orientationDimensions 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

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.

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Part II: Asian Market Marketing Strategy

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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

Dem

ogr

aphi

cs

Ethnicity

Socioeconomics

Segmentation

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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.

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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 FocusedHomogenous MarketMass AdvertisingMarket Share

Brand Driven Customer FocusedSegment marketDatabase / DirectShare of Wallet

Selling a single product to multiple customers

Selling multiple products to a single customer

VS.

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MM Marketing Process

ProductLifecycle

Management

Customer ContactManagement

ITM, OTM Web, Retail, AS

MM and SalesManagement

Segment P&L Communications

Programs

Multicultural Marketing

CommunicationsMass Ad, DM , Online & PR

DatabaseManagement

DatabaseManagement

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.

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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.

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

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MM Branding StrategyMM 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

BLTargetTargetBrand Brand

PositioningPositioning

KO

CH

AI

HSUnified Brand effort

In-language effort

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.

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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.

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

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