Diaspora Marketing—A Market Entry Route
Tuesday December 24, 2013,
4 min Read
How does an emerging market brand break into the US and other major markets? Try diaspora marketing, advise Nirmalya Kumar and Jan-Benedict E. M. Steenkamp in an October Harvard Business Review article. Diasporas are groups living away from their birth countries such as first-generation immigrants. The idea is to market your brand to a group that is familiar with and has an affinity for offerings that come from their home country. When that group provides a sales base, it gradually expands to people connected to the diaspora and finally to a broader market. This strategy avoids the often unfeasible attempt to build a brand on foreign shores from zero.The diaspora strategy not only provides a solution to a tough problem for many brands. Firms attempting to engage in brand extensions can learn from these ideas. Look first to customers who are already using your brand in another context and let them provide a base business and build from there. Furthermore, diaspora marketing may signal another form of Clayton Christensen’s market disruption whereby a new competitor gets a foothold that goes unnoticed until its brand builds a wider following. In any case, it’s a strategy worth understanding.
The Mexican beer brand, Tecate, built US sales by reaching out to first-generation Mexican-Americans and now has 20% of that segment. India’s Reliance MediaWorks has tapped into the US Indian population that watches Bollywood films by setting up quality theaters aimed at this market. Dabur, a manufacturer of herbal medicines, also from India, secured a foothold in the United Arab Emirates by focusing on the Indian segment—some 5 million Indians who live in the Gulf Region. Bangladesh’s food brand, PRAN RFL, set up distribution channels where the Bangladeshi diaspora exists, such as East London.
Diaspora marketing requires segmentation. One attractive segment is the ethnic assimilators, those who prefer home country products. An even more attractive segment is the biculturals, those who not only will buy home country products but can help diffuse products into the host country. Then there are the assimilators, who prefer host country products and find cheap alternatives.
In deciding whether a diaspora strategy will work, several questions need to be posed:
- Is the diaspora large enough? It must have a critical mass, and in general, diaspora markets are substantial. Since 2000, the number of first-generation immigrants in the world has risen from 150 million to 215 million and their average income is often above the nation’s average. Additionally, many keep in contact with their homeland through travel and communication with relatives and friends.
- Is the diaspora distributed throughout the country? In addition to critical mass, they also need to be dispersed enough to support a breakout.
- Does the brand have an appeal that goes beyond the diaspora? Does it pave superior product performance, compelling value, and/or positive country-of-origin effects?
This article provides one route to leveraging an emerging country brand into another country. I noted in my post last year that in “The New Emerging Marketing Multinationals,” the authors discuss four other strategies. The first is acting as a cost leader by leveraging local low-cost human resources to provide low-end products, often starting with private-label or price brands but with plans to move up the value proposition spectrum. The second is the knowledge leverager who draws upon specialized knowledge of customer needs when conditions are primitive. The third is the customizer whereby self-owned, flexible firms can customize products and services with low-cost, frugal innovation. The fourth strategy is to employ focused innovation to enhance the cost advantage and to develop customer improvements.
The emerging market brands have some natural assets and can become disruptive competitors. It is worthwhile also to understand the strategies they can employ so that established brands will not be surprised and can engage in defensive actions.