Volume 12
The Imperative for a Multicultural Growth Strategy
OCT 2019
Level5 Perspective
At a Glance This perspective paper offers key insights into: • The importance of a multicultural growth strategy to capture a substantial and growing portion of the North American market • How to apply a multicultural lens to developing meaningful customer insights • The importance of embedding multicultural thinking into all strategic and operational functions of an organization • How to apply customer journey thinking to develop nuanced approaches to different newcomer segments
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Navigating an Increasingly Diverse Marketplace I
t’s no secret that multicultural customers are a growing population as the world becomes more global. In Canada, 22% of the population (roughly 8 million people) report being or having been an immigrant or permanent resident—a figure estimated to grow to 30% by 2031. Even today, multicultural populations are the majority in Canada’s largest cities. Such a large and growing population of customers simply cannot be ignored.
Some organizations have recognized this and attempted to cater to these segments. Canada Goose has added Fusion Fit as a sizing option for its jackets, designed specifically to better fit the average body frame of Korean, Chinese, and Japanese consumers. Tim Hortons significantly developed its brand loyalty within the Chinese Canadian community and then leveraged crossborder word of mouth to help launch a highly successful expansion into Shanghai. While some companies have been successful at engaging multicultural consumer segments, conducting business across different cultures rarely comes naturally to organizations and blunders can prove very costly – both financially and in terms of brand reputation.
Example 1: Superficial communications A bank produces Chinese language advertisements for Chinese New Year, but they go no deeper than promoting existing products using Chinese zodiac imagery and traditional themes of “luck” and “happiness.”
Example 2: Fundamental cultural misunderstandings A grocery chain promotes halal chicken, a Muslim product, when celebrating Vaisakhi (a Sikh and Hindu religious holiday), while being unaware that Sikhism prohibits the consumption of halal meat.
Example 3: Direct translations of existing messages A not-for-profit healthcare organization translates its donor marketing materials to target Chinese Canadians, but fails to recognize the importance of creating messages that resonate with Chinese Canadians. By simply taking a direct translation approach, they only manage to generate a minimal increase in donations. The problem behind all these missteps is a fundamental misunderstanding of the customer.
“Multicultural strategy needs to be embraced by the organization. It is very important for businesses in today’s world to be mindful of this, and it must start from the leadership and flow down throughout the organization.”
Traditional thinking applies the logic that “people are buying from us today, so let’s use the same products/services and messaging with multicultural customers.” As a result, organizations’ multicultural strategies get “stuck” within marketing communications, with many taking the superficial approach of simply translating their marketing (e.g. websites, advertisements) into another language. The reason why this doesn’t work—beyond potential misinterpretations when directly translating words—is because there are different motivations, behaviours, and context from being brought up in a different culture that cannot be reflected through direct translations. Without a deeply rooted understanding of multicultural beliefs and behaviours, companies risk not delivering what matters to different customers when doing business across cultures, countries, and ethnic groups. Worse yet, they may make significant cultural mistakes that can permanently hurt their reputation and brand among these groups. In order to create meaningful impact and truly win over multicultural customers, an organization must embed multicultural thinking into multiple facets of the business and ultimately deliver an experience that reflects the needs of these customers. Modern day companies need a growth strategy that considers multiculturalism; the time to act is now. This perspective paper explores how organizations can learn to incorporate multiculturalism at all levels to best serve their clients, customers, employees, and stakeholders.
- Retail Executive, Microsoft Canada
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Level5’s Perspective on Multicultural Strategy “A multicultural growth strategy must play a role within the overall brand and guide how each component of the company’s internal business system operates, in addition to market-facing components.”
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evel5 defines a brand as the value of a promise consistently kept (Figure 1). Brand is not just a market-facing identity, but rather represents the entire business system. This means that an organization’s brand promise filters through all aspects of the business.
A multicultural growth strategy must play a role within the overall brand and guide how each component of the company’s internal business system (e.g., sales, HR, IT, culture) operates, in addition to its market-facing components (e.g., logo, advertising, products and services). Not only can this improve a firm’s bottom line, but it can also help connect with new customers and find new avenues of growth. Figure 1 shows this relationship: multicultural research can uncover what these segments “value,” strategy work can
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be conducted to determine how to integrate these insights into the brand’s “promise” to multicultural customers, and deeper organizational analysis can show where and how the business has to change to “consistently keep” this promise. A successful multicultural strategy must consider all operational areas in the organization, not just a flashy marketing campaign. Figure 2 shows examples of how a multicultural growth strategy would manifest itself in various parts of a business system.
attracting and retaining multicultural customers by simply running a separate webpage or producing translated content. Senior executives need to embrace multiculturalism and adopt a multicultural strategic ideology as a positive asset throughout their entire management team, transforming how each component of the business operates to address this growing market.
We believe that identifying, understanding, and resonating with multicultural customers is critical to organizations’ success; these customers represent a major (often overlooked) growth opportunity. Companies will not be successful at
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Figure 1: The brand is reflected through more than marketing-related activities and instead must be operationalized through the entire business system below the waterline.
Your brand is the Value of a… Name
Promise
What do we stand for?
Logo Price Packaging Advertising
Value Proposition
Public Relations Environment
Services
Human Resources Operations Recruitment
Consistently Kept
What must we do operationally to consistently deliver on our promise?
Finance
Culture
Customers
Sales
Quality Control
Financing Terms
Information Technology
Employee Training
Supply Chain
Systems & Structure
Level5 views brand as your entire business system. It’s not just what people see and hear (above the waterline) but also how you operationalize and consistently deliver your promise.
Core Knowledge Management Processes Internal Communications Assets
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Figure 2: A multicultural strategy should be part of an organization’s overall growth strategy and operationalized through all levels of the business. Products & Services: Offer customized products based on a deep understanding of multicultural consumers
Name Logo Products & Services Price
Value Proposition
Public Relations
Operations
Recruitment Financing Terms
Environment
Promise
Human Resources
Culture
Quality Control
Employee Training
Partnerships
Systems & Supply Chain Structure
Knowledge Management
Core Processes
Internal Communications Assets
© LEVEL5 STRATEGY GROUP™ 2019
Finance
Customers
Sales
Information Technology
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Advertising: Communication messages need to be based on a deep understanding of multicultural consumers’ worldview and behaviours
Advertising Packaging
PR: Leverage key influencers within ethnic communities and develop an overarching theme-based partnership strategy to engage the community Environment: Continuous scanning, analysis and learning of global trends and behavior, and understanding these impacts on the business locally and internationally Recruitment: Attract and retain top talent from the targeted cultures and communities Culture: Foster cross-functional appreciation of different cultures and an inclusive and collaborative approach to value creation Sales: Identify appropriate sales channels (e.g. direct, online, mobile)
Training: Equip employees with key skills to serve targeted ethnic groups Partnerships: Invest time and effort to foster authentic long-term partnerships within and across borders Knowledge Management: Continuous learning and dissemination of new global trends and insights that impact current and future customers of different cultures
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Level5 Perspective Our Approach to Developing an Organization’s Multicultural Strategy
Multicultural strategy can be thought of as a lens that is applied to an organization’s current strategy that positions the company for growth by tapping into and engaging with multicultural segments. It is not a standalone strategy, but rather a component of the overall growth strategy. When we talk about multicultural customers, it is important to note that this is not limited to newcomers; families continue to identify with and maintain connections with their home countries even generations after immigration.
Applying a Multicultural Lens The Settlement Journey
W
e cannot view a different culture or immigrant group simply as a single segment. Nor should we just break them into standard demographic cuts like age or income level. Instead, it is important to also consider the various “settlement stages” they go through as they enter a new country.
Understanding these stages also enables organizations to develop strategies that are based on customer needs across the settlement journey and their associated touchpoints. Figure 3 illustrates how one of our previous clients has looked at a specific culture’s settlement journey and considered influences from the home country and from Canada.
important to go deeper and develop more detailed journeys for the specific segments being targeted. For example, a student who is considering studying abroad falls within the “Pre-immigration” stage of the settlement journey. Some Canadian banks target this group by partnering with local banks and appearing at information sessions for prospective students, promoting special products that mimic account structures in their home countries. Because these individuals are still under full home country influence, organizations must cater to these preferences in order to build an early relationship and become a familiar and trusted brand. Doing this will increase the bank’s ability to onboard the student once they land in Canada.
This is a high-level framework used to conceptualize the overall path of an immigrant, but when building a multicultural strategy it is also
However, what prospective international students are interested in may be very different from what a family in the “Pre-immigration”
stage looking to permanently re-settle might be searching for. Another international student who has already lived in Canada for a year may also have very different needs. This necessitates multicultural segmentation to factor in both the demographic dimension and where they are in their settlement journey. Using this approach helps us appreciate the fact that multicultural segments are not one-dimensional, and that it is crucial to consider the differences between them.
Figure 3: Example settlement journey of a Canadian Immigrant.
The journey does not end after an immigrant has settled, and their cultural background will always stay with them and influence the way they make decisions.
Before
Preimmigration Individual is thinking about leaving their country
Home country influence
Canadian influence
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During
After
Planning
Landing
Settlement
Maturity
Individual decides to immigrate to Canada
Individual lands in Canada and lives in Canada for 6 months
First 2 years of living in Canada
Living in Canada for more than 2 years
Higher
Lower
Lower
Higher
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Understanding Multicultural Customers W
hen generating market insights and building a fact base to inform new growth strategies, it is important to apply a multicultural lens. Figure 4, a traditional 5Cs framework, illustrates the need for an additional multicultural lens to filter through and adjust each of the existing dimensions.
Figure 4: A multicultural lens applied to the traditional 5Cs analysis.
Category
Category Context
Company
Channel
Competitors
Customers
The Importance of Home Country Context
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In the past, we’ve used this framework in a number of ways based on the needs of each of our clients. For example, when analyzing an industry, our multicultural strategy framework reminds us of the importance of understanding both the category and the context of the customer’s local environment (e.g. in Canada), as well as that of the origin environment of multicultural customers (e.g. India, China) to see how their home countries have influenced their expectations and behaviours. Businesses are
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Company
Competitors
Competencies
Comparators
Channel
Customers
Community
Multicultural Customers
often unaware of these “self-imposed” cultural CONFIDENTIAL – DO NOT COPY boundaries when scanning the market to understand product and service categories, and neglect to understand how one’s own business may need to change to best serve customers who call two or more countries home.
The Unique Behaviours of Multicultural Customers
just relying on demographic segmentation (e.g.5 Filipino Canadians) in isolation. The settlement journey helps companies develop a strategy that fits the needs of a customer as they are in a particular point of their journey. A recent immigrant from the Philippines and a long-settled Filipino Canadian have very different behaviours, wants, and decision-making considerations.
As previously discussed, it is important to also consider the unique settlement journey that each multicultural segment goes through. This allows for a more comprehensive strategy compared to
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Figure 5: BrandMap™ of a Big 5 Canadian bank.
We regularly use our proprietary BrandCardTM and BrandMapTM methodologies to quantify cross-cultural perceptions of brands and map customers’ rational and emotional needs (Figure 5). Generally, an organization should cultivate a strong heat signature in the core while also adequately differentiating itself in one of the other sections of the BrandMap™. The above figure depicts customer perceptions of one of Canada’s Big 5 banks. What we see is a strong but undifferentiated brand that is mildly perceived as knowledgeable, confident, and rich. However, it lacks strong attributes relating to being interesting, trustworthy, friendly, and nurturing. How different would this picture be for different cultures and settlement stages?
Learning from Comparators In terms of competition and broader industry learnings, we have applied both an “inside-out” and “outside-in” approach to understand how local competitors are targeting various cultures. This includes understanding what players in multicultural customers’ home countries are doing in terms of their communications, community
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“We regularly use our proprietary BrandCardTM and BrandMapTM methodologies to quantify cross-cultural perceptions of brands and map customers’ rational and emotional needs.” CONFIDENTIAL – DO NOT COPY
engagement, and products and services. Hence, organizations must consider relevant comparators and not just direct competitors within the local environment when taking a multicultural lens to assess the competitive landscape. A prime example of this comes from some interesting findings we uncovered in the financial services industry. Most major Canadian banks use similar tactics when targeting the Chinese-Canadian population with little to no differentiation. However, we found that Chinese
financial institutions are evolving to adopt new service models. For example, we currently see a transformation from “fintech,” which focuses on using technology to enable finance, to “finlife,” which is a scenario-based service model that emphasizes the importance of using tech-enabled finance to serve the real life needs of customers.
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Uncovering Unique Community Channels Following the development of a more nuanced view of customer touchpoints across the various settlement stages can teach us how direct and indirect sales and business development channels can be optimized to cater to each profile at each stage. The mapping of touchpoints across different settlement stages can even inform how businesses engage with customers before they arrive in the country through partnerships and community engagement initiatives in the home country. Insights in this dimension can help
organizations serve their customers through the entire pre-immigration, landing, and settlement stages and become the “go-to” product and service provider upon their arrival.
Developing New Competencies Finally, the fifth dimension involves engaging all client stakeholders to better understand where the company stands, what the various stakeholder perspectives are, and what competencies it needs to develop to move forward in an aligned manner. Businesses need to collaboratively uncover opportunities, challenges, potential solutions, and
recommendations. Then, they must reaffirm the strategic push to better target and serve various ethno-cultural communities. This often requires a major cultural shift within the organization that changes its perspective. Importantly, in line with the company’s vision, it is important to develop new “future states” and value propositions that focus on serving multiple cultures. This keeps the organization accountable for delivering a consistent brand promise to its target customers and sustaining its new strategy across all cultures.
“A change in practice and perspective requires a change in corporate culture, but corporate culture is something that is slow to change. Hence, it is important to identify where the pace of change would be the slowest across departments and anticipate the most critical barriers.” - Business Growth Transformation executive, MaRS Discovery District
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Is your organization equipped for a multicultural growth strategy? Level5 Strategy is fortunate enough to be sitting at an epicenter of ethnocultural transformation in Toronto, and we have had the opportunity to help organizations develop and execute their multicultural strategies. Our approach tackles the complexities of understanding and connecting with multicultural customers, and enables businesses and their processes to support their overall strategy. Is your organization adequately positioned to drive a multicultural growth strategy?
YES
NO
Has senior leadership aligned to the importance of targeting multicultural segments to grow the business? Does your executive team acknowledge the new Canadian landscape when formulating strategic plans? Has your organization developed the capabilities to embed multicultural strategy across all functions of operations (e.g. sales channels, partnerships)? Are your customer-facing staff equipped and trained to serve key multicultural segments? Has your organization dedicated resources to developing seamless customer journeys for multicultural customers?
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Authors Hua Yu is a Managing Partner at Level5 Strategy. Hua has over 25 years of work experience in business and general management roles in Canada, the US, and China. Hua possesses deep experience in multicultural growth strategy and people/organization strategy. Hua is the founder of #WeWorkingWomen, North America’s most influential Chinese Women Leadership platform. Hua received her BA in International Business from Shanghai University and her MA in Communication Arts from the New York Institute of Technology. Frank Zhang is a Senior Consultant at Level5 Strategy who is a versatile and analytical strategist with a decorated tenure in consulting for diverse and prominent businesses and organizations. He applies an international perspective and extensive consulting experience to inspire sustainable growth for clients. Frank holds a MSc from Ivey Business School and a BBA from the University of International Business and Economics. Richard Wang is a Consultant at Level5 Strategy with experience in brand & enterprise strategy, customer journey design, and organizational transformation. Through his own experiences, he believes there are significant opportunities for today’s organizations to deepen their relationships with multicultural audiences. Richard holds an HBA from Ivey Business School. A special thanks to Richard Baran-Chong and Aaron Zhou for their contributions to this perspective paper. For more information, please contact: Hua Yu at hyu@level5strategy.com Frank Zhang at fzhang@level5strategy.com Richard Wang at rwang@level5strategy.com Click here to sign up for the Level5 Perspective newsletter, featuring a wide range of Level5 insights and perspectives on the subjects that matter in business and management. Š 2019 Level5 Strategy. All Rights Reserved.
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Level5 Strategy is a leading strategy and transformation consulting firm that helps our clients achieve profitable growth and a superior ROI by leveraging the power of their brand. We focus on four distinct yet interconnected core services: Insights, Strategy, Transformation and Customer Experience. Since our inception in 2002, Level5 Strategy has partnered with over 300 clients across B2B, B2C, government and not-for-profit sectors in Canada, the U.S. and other parts of the globe to navigate their most critical challenges and opportunities and to build and execute practical strategies that convert decisions into actions.
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