We started this book by
asking, “What will the New America look like?”
Now that we have shared
information and insights that sheds light on that question, it is time to ask a second one:
“What will new American business look like?”
How will it operate? What will
its priorities
be? We invited
Victor
Edozien of The Asaba Group to share his views. Victor, a
seasoned strategy consultant, is
originally from Nigeria. He holds undergraduate and graduate
degrees in electrical engineering and
geology from Syracuse University. Also, he studied
business administration and management at University of
Pittsburgh and University of
California,
Berkeley. He started his career as an engineer at United Technologies, where he
was awarded a US patent. He then went to business school and joined the Ford
Motor
Company.
After Ford, he joined a Bain
& Company consulting spin-off called The Lucas Group. This was a corporate strategy consulting
practice focused on the needs of private equity funds and their portfolio companies.
Here, he led numerous growth strategy engagements, which has led to substantial
growth in revenue and profits for
private equity investors and Fortune 500 clients. Recently Victor
helped launched The Asaba Group, a strategy consulting practice focused on developing pragmatic winning growth
strategies in the multicultural environment. The goal of The Asaba Group, located in Boston, is to help corporations, private
equity investors and middle market
companies enter and prosper in this new market.
How should a company find
success in America’s growing multicultural markets?
That is a disarmingly simple
question. Therefore, I will answer in an equally simple way.
A company should think about
entering the new markets in essentially the same way it would think about
entering a new market abroad. You begin by asking these strategic questions:
What are the relevant market
segments? (Size and defining attributes)
What is your unique value
proposition to these segments? How well do your products fit the needs of the
target consumers?
What are the optimal channels
to fulfil the requirements of the target segments?
Let us say you had decided to
sell your products in Vietnam. How should you undertake your marketing efforts?
You would not simply go there
with your same products, place advertisements in Vietnamese electronic media
and magazines, and expect to succeed. You would most likely begin by asking the
key strategic questions mentioned earlier.
Yet, many American businesses
approach ethnic markets without asking these same strategic questions. These
businesses proceed by spending money and time placing ads. This is indicative
of viewing ethnic markets as only a downstream
tactical initiative.
Repeatedly, we see mid-level
marketing and brand managers who are charged with making decisions about the
ethnic markets without clear knowledge on how to approach these markets. These
managers have defaulted to hiring ethnic advertising agencies and placing ads
in what they have defined as “culturally relevant” media. Creative content is
typically an African- American, Asian or Hispanic face in their ad. These, in
most instances, maybe the same ads used in the mainstream media. With this
done, it assumed that the job is done.
This approach reflects the
prevalent attitude that ethnic marketing is really an afterthought - something
that comes after your mainstream marketing efforts. The result? A number of non-strategic and uncoordinated
efforts that get very little incremental revenues or build lasting customer
loyalty. Non-strategic investments with little or no economic returns.
Let us return for a moment,
think again, about how you would go into Vietnam, and try to achieve market
success there. (The same questions might be asked about China, Eastern Europe
or any emerging market.)
If you followed the current
practices - hiring an ethnic-oriented agency, placing some ads - you would sell
some product, because there is always latent demand in any market for products,
which meet the needs of consumers. However, are these sales the true potential
of the product? Would these practices get the sales and ROI you should expect
from growing markets?
To achieve success you must
find answers to the questions mentioned earlier:
What are my relevant market
segments?
Remember that not every
Vietnamese will buy your product. It is more likely that a target segment,
perhaps two million Vietnamese, will potentially buy what you have to sell.
They are your relevant market segment.
Then, taking things further,
you can divide the potential two million target consumers. You may determine
that there is a segment that will buy your premium product and another segment
that will buy your value product.
What is your value proposition?
How well do your products match the needs of customers in these segments?
What products will these
consumers want? Keeping in mind that the desired products may be somewhat
different from those you have in your current portfolio.
Back to our example, in
Vietnam, you might identify two unique customer segments to target: Upscale
consumers and more general, value-oriented consumers.
It is unrealistic to view the
Vietnamese population as monolithic. Yet here in American, some corporations
market to African-Americans, Asians or Hispanics through a monolithic lens.
By way of example, let us say I am a manufacturer of fine
dinnerware and I am going into the Vietnamese marketplace. There may exist a
consumer segment, which will desire high-end, premium dinnerware.
Now when you look at your product portfolio and say,
“What product do I have in my portfolio that is high-end fine china?”
You might say, “Okay, I have some elegant gold-encrusted
patterns which might meet the needs of the consumer.” Alternatively, you might
do even better and say, “The patterns that will sell best must be unique and
culturally relevant to that population - I can’t position something in my
existing lineup as what they want.”
Therefore, you can take the product and make incremental
changes so it is relevant to the high- end Vietnamese customer segment. This is
all about ensuring optimum fit between your products and the target customer
What is the relevant channel for selling your product?
In other to sell product, you must have it available
where the target customer will most likely seek it. In our example, high-end
Vietnamese consumer will seek the product in the higher-end channels e.g.
department stores etc. While the value product at the mass-market retailers.
This same principle applies to ethnic markets.
So the key point for corporations, is a need to
understand that multicultural marketing is not simply taking existing products
and advertising it to your target consumers through appropriate media, but its
determining the appropriate products and placing it in the relevant channels
and markets.
Bringing it Back Home
Three Questions to Ask
* How big is the relevant
business opportunity?
* What are the relative
consumers segments?
* How do those segments
overlap with my product portfolio?
Therefore, it is critical to
take a strategic approach, and not simply spending money advertising in
appropriate media.
This is one reason many marketers find themselves in the
unfortunate position of saying, “I’m spending all this money in the ethnic
segment, but I have no idea whether I am making any sales.”
When marketers express this
concern, it is because fundamental marketplace questions have not been asked
and answered - the fundamental questions we have discussed above, which must be
asked before going into any market.
In addition, questions that
are more logical follow.
Is Your Infrastructure Up
to the Job?
What portions of your existing
infrastructure can you leverage in going after the new multicultural market
opportunity?
If you are going after an
ethnic segment within the U.S., there are certain elements of your existing
infrastructure that you can leverage and some that you cannot utilize in its
present form. You might use the same distribution channel and maybe the same
sales force. Nevertheless, you have to ask, is that the right way to proceed?
Alternatively, is some new kind of thinking required?
As an example, let us consider
a marketing problem that can be quite revealing.
Let us say you are a skin-care
company and that you have products with a high potential usage with
African-Americans, e.g. a lotion that can be an effective remedy for razor
bumps. African- American men have a very high incidence of razor bumps and
ingrown hairs on their skin after shaving.
Now, if your company already
has a product that addresses this problem, the next question is how well are
you reaching African-American consumers? Do they have to go to Macy’s or
another department store to purchase it? If so, is that the optimal channel to
sell your products? I say no. I say the sales you are getting through such
general distribution channels are just general-market sales. If you are going
to tap the real potential of the African-American market, you have to repackage
your product, so that it becomes culturally relevant to African-American
consumers.
This can be an
African-American cultural image on the packaging - or some other relevant
message on the packaging. (Interesting to note, it can be the same product that
is already in your product lineup.)
The next question is; how do
you distribute the product? The best way is going to be through barbershops and
beauty shops that cater to African-Americans.
Because African-Americans, in
general, do not get their hair cut or get shaves at typical mainstream salons
and boutiques. They have their own hair care channel, which is unique and
different from going to your typical saloon. Therefore, if you are the
skin-care company and you have an appropriately packaged product, you now sell
it through all those beauty locations that are used by African-Americans.
Then you begin to advertise it
through African-American dominated media (print and electronic). Marketing
investments are promotional fees for free samples rather than listing fees,
coop dollars or floor space investments, which characterizes the department
stores channel. In addition, you have a unique SKU that allows tracking of
product sales and profit contribution in your targeted market segment. You are
no longer in the position of saying, “I’m running some ads, but I don’t know
how effective they are or if these ads are generating sales.
Because African-Americans are
brand-loyal, you are also building strong customer franchise and loyalty. Once
the African-American consumer knows you have a product, which works, and it is
sold at the point of need: barbing saloons, then you have achieved lifetime
value in that customer. The consumer knows that you have a product he needs and
it is conveniently available at the time of need.
With lifetime value, you can
extend your “share of wallet”. African-Americans, like all Americans, have a
variety of needs for skin-care products: for body cream, deodorants, and
astringents. Once you are underway, you can grow your presence and “own” that
customer in a particular product/commodity category.
Take it One Step Further
The next question is what is
your operating model?
The operating model is all
about People, Systems and Business processes.
This is where the
multicultural market strategies and approaches need to mesh with corporate
diversity initiatives. In corporate America, diversity initiatives are
implemented independently with no links to the realities of the multicultural
marketplace.
Companies talk about
diversity. And they talk about multicultural marketing on another track entirely.
Corporate executives are thinking, “Corporate diversity is a good thing . . .
the right thing to do.” But these same executives also wonder, “Does diversity
make sense from a business point of view?”
Well, the more important
questions that needs to be asked:
How can we get the most ROI
from the economic potential in the multicultural markets?
And next,
How can we link our
recruitment, hiring and retention of ethnic minorities to that multicultural
market opportunity?
Let me loop back to the
skin-care company example. If a company can develop and package a skin-care
product for African-American men and sell it through appropriate distribution
channels, it should logically go on to ask, “Who should be our marketing and
sales manager for this skin care product?” If the multicultural market
represents a significant share of sales, the company should then define the
competencies for that position through a multicultural lens.
The competency definition might be someone who
understands the issues of skin problems that are unique to African-Americans;
someone who can go to the salons and barber shops and build the required
trade/channel relationships.
What emerges is a competency
definition that consists of the required marketing and sales capabilities. But
in addition, it defines an individual who understands African-American culture
and can relate to African-Americans merchants. In filling this position, it is
very likely that the individual will be an African-American.
So, the candidate profile stops being a race-based
definition and becomes a competency-based definition. And nine out of ten
times, that competency definition defines an African American individual, even
though there is nothing about race in the profile.
But the company might well end up with a Caucasian who
can do the job. But the point is, looking for someone who understands the
market space - who can relate.
The Benefit to Your Company
So now that you are entering into the multicultural
marketplace, and hiring for needed competencies, it becomes much more likely
that you will be interviewing and recruiting appropriate diversity candidates.
In just a short time, the need to search for appropriate
minority candidates becomes less. You are attracting a strong set of
multicultural oriented candidates, because you have defined competency profiles
for jobs that fit their profiles
Over time, this kind of thinking comes to permeate the
organization. It defines competencies everywhere in the business process.
Another example is, if a customer (skin-care company) have a problem with a particular product,
and there is a toll-free number on the bottle for customer service issues -
well, when they call into the customer service call center, who will they
reach? Will the people who answer the phones understand African American
skin-care needs?
Well, the representatives at the call center need to
understand. So if you define the competencies for those positions, chances are
you will no longer have all Anglo-Americans answering the phones. You are going
to have some African-Americans, Hispanics - or other employees who match your
market.
And with sophisticated phone systems now available, when
a call comes in you can have a message that says, “If you are calling about
such-and-such a product, press 1 now . . .”. You can route that call straight
to an African-American representative who will understand the cultural nuances
of the customer.
Defining human resources needs based on competencies, you
get beyond the kind of thinking that dictates, “I need ten blacks, three
Hispanics, four women.”
And you can use this approach at a higher level in the
organization. Who will be your Vice- President of customer service? Or the
Manager for call-centers? Increasingly, to address your markets, you will need
people at all levels that understand the cultural nuances of the consumer. Your
entire organization may well begin to have a multicultural flavor.
If you have a sizeable and growing African-American
market, for example, you can go to your R&D department and say, “We need
four new products for our evolving African-American market.”
You soon need to have R&D employees who understand
the marketplace and African- Americans. So soon, you are hiring biochemists
that are African-Americans. This is how corporate diversity recruitment
initiatives are linked with multicultural market opportunities - and with your
business processes and competencies.
You are moving from race-based definitions to competency-based
definitions. It is so much more effective and needs based than saying, “We have
quotas.” Incidentally, if your company is ever questioned about its minority
hiring, you can point to the competencies you are hiring for, and how you are
filling them. No one will ever question your activities.
On a grander scale, America is increasingly becoming a
multiethnic majority country. By 2010, population experts forecast ethnic
minorities at 40% or more of the general population. Some early population statistics
forecast California to become the first state to have an ethnic majority
population by 2001. If you think about it, the more multicultural and flexible
an organization is, the more adaptive and better it will perform in the future.
Linking corporate diversity to the market opportunity
makes business sense. It becomes a holistic system. Everything is linked
together. The linkage between how you deploy your resources with the market
opportunity. And it all makes sense.
