It's More Vital Than Ever for Marketers to Target Ethnic Consumers, but With an Approach That's Updated for the 21st Century
By: Stephen Palacios
At the fictional Sterling Cooper ad agency in "Mad Men," Pete Campbell urges a client to "take a look at the Negro market." In the TV show the year is 1961. It's a reminder that the push to understand and target consumers on the basis of their ethnic identity goes back decades.
Throughout that history, multicultural marketing advocates were hamstrung by the relatively small number of minority consumers and media outlets with national reach, as well as a lack of corporate expertise. There was little infrastructure for execution or metrics of evaluation and, of course, there was the issue of discrimination.
These issues remain, but to a far lesser degree. Changes in demographics, marketing tools and corporate expertise have made multicultural marketing more relevant than ever. In fact, multicultural marketing, particularly targeting Hispanics, has grown at a faster rate than overall marketing in the past 10 years .
Consider the contributing factors of the last decade:
- A whopping 80+ percent of all population growth in the United States came from Hispanics, African Americans and Asians, with Hispanics making up 54 percent of total growth, according to the 2010 U.S. Census.
- National media targeting minorities has exploded, from People en Espanol, Univision, Telemundo and BET to digital portals like Black Planet, AOL Latino and others.
- We have more consumer research, more sophisticated data analysis and better systems of evaluating multicultural marketing efforts. Examples include Nielson panels, Simmons syndicated research and customer research from TNS, Milliard Brown and my firm, Cheskin Added Value.
- Companies such as Pepsi, Coke, P&G, Ford, Wells Fargo, Disney (yes, Disney) and many others have accumulated 10 more years of experience in addressing ethnic consumers.
- Attitudes have shifted in the general population, leading to a greater degree of cultural openness among American adults. A 2011 study by Cheskin with the Futures Company confirmed this trend.
So why is multicultural marketing finding itself once again in a highly visible defensive posture? Two factors make the traditional multicultural approach seem outdated and possibly unnecessary:
1) We know much more about the nuances of ethnic identity and 2) We are reaching a tipping point where such a large proportion of the "true" American consumer is African American, Hispanic or Asian that "minority-majority" is an oxymoron.
The multicultural argument has centered on the premise that ethnic identity is core to consumer attitudes and behaviors in commercial decisions. Being Hispanic is the most important dimension for a consumer buying Oreos, for example. But with more sophisticated market tools and analysis, we understand the need to sub-segment ethnic identity consumers into more specific groups. Less acculturated vs. more acculturated, African American single head of household women decision-makers vs. African American young influencers, Cantonese vs. Mandarin (let alone Vietnamese, Thai, Korean). A study of People en Espanol conducted by Cheskin in 2010 showed, for example, how reliant Latinas are on their Hispanic identity in their fluid roles of mother, daughter, lover and friend.
Some read this nuance as either too complicated to deal with, or as justification to subvert multicultural marketing entirely. This is a lowest-common-denominator approach, tempting for mass marketers but ultimately heading on the wrong track. The necessity is to know your customer more deeply, to use customization on a grand scale. Market-leading companies like McDonalds have institutionalized this philosophy by having all marketing filtered by Asian, African American and Hispanic consumer segment leaders.
With over half of all U.S. economic activity coming from the top 15 Designated Market Areas (according to the Federal Reserve) and most of the organic growth (new customers) coming from ethnic consumer segments, marketers more and more recognize that "getting ethnic consumers" is vitally important.
How, then, do you shift your general market strategy to be more culturally relevant? Several approaches are developing:
- The multi-agency reconciliation model: Companies like Walmart are revamping processes so ethnic agencies can weigh in on their overall marketing strategy.
- The general market co-option model: General market agencies, like Ogilvy and Euro RSG, have co-opted or created a multicultural competency to serve the "total market" – new terminology intended to replace "general market" and reflect ethnic consumers. Burger King and Home Depot have bought in.
- The ethnic agency inversion model: Ethnic agencies, competing on their deeper consumer knowledge, are going after the "big boys" (general market agencies).
Is multicultural marketing dead? Hardly. An updated version, call it cultural marketing, with a more refined understanding of identity fluidity and underlying values, is the future of marketing.