Making Money from Minority Markets

Courtesy of Christopher Pattberg

Considered one of the most multi-cultural country in the world, the United States of America has one of the world’s most culturally and ethnically diverse population. Presently, it has some 305 million people out of whom 68% are non-Hispanic whites, 15% are Hispanics, 12% are blacks and 5% Asian American.

While white Americans currently dominate the American marketplace, some of the country’s most profitable segments actually hail from the other segments. Projections by the Census Bureau show that by 2050 when the US population grows to about 439 million, non-Hispanic Caucasians will only make up 46% of the country’s population. By then, the population of Hispanics (the fastest growing group) will swell to 30%, with blacks growing to 15% and Asian Americans swelling to 9%.
From these figures alone, it is evident that companies in America – or any other country in the world with sizeable ethnic populations – can ill afford to ignore their minority customers. That is the main premise of the book Multicultural Marketing – Selling to a Diverse America by Marlene L. Rossman. Unlike the over crowded mainstream market comprising largely white Americans, minority segments like African-Americans, Hispanic Americans (ie those with a Spanish speaking origin), and Asian-Americans represent rich veins of opportunities that companies can capitalise on as America continues to embrace immigration and remains as the world’s most powerful economy.

According to the University of Georgia, it is estimated that by 2010, the combined buying power of African Americans, Asian Americans and Native Americans will exceed $1.7 trillion, which is more than triple the 1990 level of US$454 billion. That’s a gain of almost US$1.2 trillion or 268 percent! An earlier study has also estimated that the buying power of minorities are growing at a faster rate than white Americans.

Written in a direct and easily digestible style, Multicultural Marketing provides examples of the growing affluence of ethnic minorities in the US and their growing purchasing power. Despite being published some 15 years ago in 1994, the book’s premises are still highly relevant as immigration and multi-ethnic population growth surges in countries like the United States of America and Australia.

Topics covered by the book include the nuts and bolts of marketing strategy as applied to minority markets – the segmentation of minority markets, application of the marketing mix (product, price, place, promotion), examining the effects of geo-demographics, psychographics and generational changes, as well as issues linked to targeting, positioning, and branding. A common recurring theme throughout the book is the use of ethnic media like magazines, television channels and radio stations to reach targeted minorities. While the outlay per person reached may be higher, advertising on ethnic media may yield better returns.

Perhaps the most significant chapter in the book is the one on culture. According to Rossman, culture is “learned, shared, and passed on from one generation to the next, by families, by religious institutions, by schools and governments. Culture is learned behaviour that distinguishes members of a society and includes what the group thinks, says and does.” Asian and Hispanic cultures tend to be high-context cultures dependent more heavily on nonverbal gestures unlike Anglo American cultures, while African-Americans embrace a certain “blackspeak” unique to their group.

Aspects of culture like the translation of a foreign language, time, formality, individualism versus group consciousness, rank and hierarchy, religion, taste, colours, numbers and symbols, as well as the degree of assimilation or acculturation affect how minorities perceive a company’s advertising and marketing efforts. Examples of marketing boo-boos highlighted include how one company’s exported goods to the Middle East had designs resembling crosses and stars on its packaging which was heavily frowned upon by the mainly Islamic population. The company was subsequently kicked out from the market.

Detailed descriptions of the main minority segments – Hispanics, Asian-Americans, African-Americans, as well as others (people with disabilities, homosexuals, and the kosher/halal population) – are also covered in the volume. These sections cover some of the main characteristics of different minority groups and dispels some commonly held stereotypes (for example that Koreans and Japanese are culturally similar or that blacks are either very rich like Bill Cosby or notorious like Willie Horton). they also illustrate the differences between first, second and third generation immigrant and ethnic communities (Eg American Born Chinese or ABCs versus Fresh Off Boat or FOBs).

As a marketer of a cultural product, it was eye-opening for me to learn about the subtle nuances of marketing to different cultures and how diverse they can be. Appreciating the subtle cultural variations between Puerto Rican, Mexican and Cuban Hispanics can make all the difference between success and failure when targeting a Latin American demographic. Like Hispanic Americans, the Indians are highly diverse, with some 800 languages and dialects across the entire South Asian region.

While the book largely covered the American marketplace, its principles are just as important for us to note in Singapore, which is fast becoming a mosaic of different ethnic and lifestyle groups. Some of its suggestions – for example using models of the right race, or sponsoring of ethnic festivals to gain greater brand goodwill – are just as applicable in a multi-cultural Southeast Asian milieu like ours. In the age of hypercompetition, it pays dividends to focus on profitable and growing niche markets with emerging migrant communities.

Multicultural marketing as practiced in Malaysia (courtesy of Kopitehtarik)