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MARKETING

9.25.98  
Find a Niche — and Start Scratching
Diversity marketing isn't just for the big guys — and may not even cost much

If you thought diversity was simply an employment issue for your business, consider this: According to market research, Hispanics eat more fast food than other groups, and African Americans spend more time on their hair. Older folks consume a lot of luxury travel, while gays and lesbians, proportionately, drink more imported beer.

Starting in the mid-'80s, big companies such as AT&T, Sears Roebuck, and Coca-Cola learned to use market research to target distinct ethnic and demographic niches. They realized that an increasingly diverse community of Americans doesn't necessarily respond to mass-market pitches. But small companies have been slower to jump on the diversity bandwagon, assuming they lack the knowhow and resources to penetrate these markets.

The good news is that diversity marketing is easier than it looks -- and not always an expensive proposition. It can be a viable growth strategy -- even a survival tactic for your business, says Andrew Erlich, a Woodland Hills (Calif.) multicultural marketing consultant.

Most small businesses still don't target diverse niches, but those that have stumbled into an unmet need like the results. Take Tracey Campbell, who runs InnSeekers (www.innseekers.com), a telephone and online listing service for bed-and-breakfasts. In June, 1996, Campbell asked members of an Internet discussion group for disabled people what they would prefer to be called in her listings. A contact she made online led to a mention of her service in New Mobility, a magazine for disabled people. Calls flooded in. Within 10 days of the article's appearance, inns that pay to be included on her service received bookings for more than 400 room nights from wheelchair-bound travelers. Turning what she calls her ''fluke'' discovery into a strategy, Campbell now writes a quarterly column in Emerging Horizons, a newsletter for disabled travelers, and caters to the disabled over her Web site.

PERFECT FIT. A small business can be well suited to carving out an ethnic or demographic niche. David J. Reibstein, professor of marketing at the Wharton School of the University of Pennsylvania, says there's often less direct competition and the customer base may be more geographically concentrated. Still not convinced? Consider some compelling statistics: Among ethnic groups in the U.S., Asians and Pacific Islanders have the highest average household income ($56,547) as well as the fastest population growth (3.81%). Only 7% of gay adults have children, meaning they tend to have more disposable income. And if you've discounted Americans over age 50, note their $130 billion in spending power.

Diversity marketing can be a relatively simple matter: Take your existing product or service and let a particular group know you're there to serve it. Five years ago, for example, when the Boreal Ski Area -- a resort near Lake Tahoe in Truckee, Calif., with about 30 full-time, year-round employees -- wanted to boost business, its ad agency suggested reaching out to San Francisco's large Chinese population. Market research showed that Chinese people value family activities and that Chinese immigrant parents perceive skiing as an activity to help their children assimilate. Since then, the resort has run ads in four local Chinese-language newspapers, advertised on a Chinese TV station, and sent press releases and photos to the Chinese press. ''Since we've started the campaign, our Asian customer base has increased by about 10%,'' says Sheila Greeno, director of marketing for Boreal, now owned by Powdr Corp. in Park City, Utah.

WEB WONDERS. Sometimes, by focusing on niche groups, you can extend your product line. For almost 20 years, Nandini Shah, a general printer in Irvington, N.J., never reached out to fellow Indian immigrants. Then someone asked her to print a traditional, ornate Indian wedding invitation. Word spread, and suddenly she had numerous requests for a catalog. Shah obliged. Now she advertises in India Abroad, an international newspaper, and sells her intricate cards from her own Web site. Shah projects the sales of invitations will double from 10% to 20% of her total revenue this year.

Another approach: spin off a whole new business related to your expertise but aimed at one group. Setting up a Web site is one efficient way to do that. For example, Walter Schubert, a gay member of the New York Stock Exchange and owner of a 25-employee investment company, Schubert Group International in Manhattan, took stock of the spending power and computer savvy of the gay community, as well as its concerns about social investing and specialized estate planning. Last April, he launched Gay Financial Network (www.gfn.com) to market directly to them. GFN has signed up more than 3,500 members, who register for free for electronic trading and other services. Schubert was particularly struck by research showing gays and lesbians ''are more apt to own a personal computer and stay online longer.''

Of course, you can figure out what you think people want -- and still run into marketing trouble. Cadaco, a Chicago-based toy and game manufacturer, still sells its eight-year-old ''Senior Series'' of Tripoley and Poker-Keeno, featuring larger chips, cards, and typefaces to appeal to players aged 65 and up. But the company says sales growth has been stymied by one problem: ''Retailers don't have specific shelf space for senior games,'' says Mark Abramson, director of operations for Cadaco, ''so consumers don't even know where to look for our product.''

How do you decide if diversity marketing makes sense for you? If your business is primarily local, think about the predominant groups in your area. Is there a large elderly population or a big Hispanic community? A good starting place for gathering such market information is your own customer database. See who's buying what and where they live.

For professional help, you could hire an ad agency or market research firm specializing in diversity issues. (A marketing report costs about $5,000.) But if you can't afford it, you might do your own legwork. Assemble your own focus group by inviting members of the target community. You might offer some incentive, such as refreshments, free product samples, or discount coupons. Or, do a little of your own trend-spotting by walking around an ethnic neighborhood. Check out how people are dressed and what's selling in their local stores.

To determine whether a group might be a good target, you might also test the waters by participating in a local event, such as a Caribbean Day Festival. Set up a booth there to gauge the interest in your product or service, suggests Ken Smikle, president of Target Market News, a Chicago-based research firm specializing in the African-American market. Or, if your audience is national, you could exhibit at a specialized trade show, such as New York's annual Gay & Lesbian Business & Consumer Expo.

CULTURE CLASH. Advertising in foreign-language or niche publications can be effective -- and economical. A full-page ad in the Los Angeles Times runs about $31,000, vs. only about $1,500 in the World Journal, L.A.'s leading Chinese-language newspaper. Often, ethnic newspapers will translate your ad for you.

But be aware of cultural nuances when translating your ad or brochure, cautions Wanla Cheng, a principal at Asia Link Consulting Group, a marketing research and consulting firm in New York. For instance, she says, the Vietnamese, as recent immigrants, will respond better to an ad depicting nostalgia for one's homeland than the longer-established Chinese. Beware, too, of offensive color choices. White symbolizes death to the Chinese, while red, for South Koreans, is linked to Communism, says Saul Gitlin, director of strategic marketing services for Kang & Lee Advertising in New York City, which specializes in the Asian-American market.

To be sure, looking at the world through rainbow-colored glasses takes practice. But give it a try. You just might be surprised at what comes into focus.

By Barbara Hetzer in New York
barbara_hetzer@businessweek.com

This article was originally published in the Sept. 14 print edition of Business Week's Enterprise.


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Target Group 1998 Pop. (millions) Buying Power (billions)
Hispanic 30.2 $300
Asians and Pacific Islanders 10.3 150
African American 34.3 450
Disabled/Handicapped 54.0 175
DATA: U.S. CENSUS BUREAU, CHISHOLM-MINGO GROUP

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