Magazine

Commentary: Minorities: An Almost-Invisible $1 Trillion Market


It should have been the start of a marketing bonanza. The recently released Census 2000 numbers revealed an explosive population increase among blacks, Hispanics, and Asians, with those groups now accounting for 79 million out of 281 million Americans. Collectively, they represent an estimated $1 trillion in annual spending power. So companies will soon be flooding the markets with targeted products, services, and ad messages designed to woo those consumers, right?

Don't hold your breath. A host of barriers will block any stampede into multicultural marketing. First, there's an appalling lack of data on buying habits among minorities, making it hard for marketers to make good decisions. Then there's the economic slowdown. Any marketing effort deemed discretionary is in danger of outright cancellation these days. But the biggest obstacle may originate from inside the executive suites, where many decision makers are hobbled by a range of tenaciously held misconceptions about minorities' buying power and brand loyalty.

COMFORT ZONE. Some companies, of course, have gotten it right. Sears, Roebuck & Co.'s (S) most profitable stores are the ones near Hispanic neighborhoods that carry clothing and cosmetics specially designed for Hispanics. Bank of America (BAC) has prospered by targeting Asians in San Francisco with separate TV campaigns aimed at Chinese, Koreans, and Vietnamese.

But for many marketers, such efforts would require them to move outside their comfort zone dealing with white, English-speaking Americans. Many simply haven't caught on that these fast-growing groups have similar aspirations to other Americans--and the money to achieve those goals. With minorities underrepresented in upper-management ranks, such attitudes are difficult to change. "They need to realize even terms like `minority' don't quite fit the reality any more," says Eliot Kang, CEO of Asian-marketing agency Kang & Lee. It's no accident that some of the most aggressive ethnic marketers, like Sears and Verizon Communications (VZ), have had minority execs among their top brass.

Even for the motivated, there are practical hindrances. Spending decisions hinge on marketing data that simply don't exist for many ethnic groups. Mott's Inc. has managed to build a following among Hispanics for its Mott's Juice, Hawaiian Punch, and Clamato brands--but says it has had few numbers to guide it. Supermarket-scanner data on Hispanic purchasing behavior is reliable only in Los Angeles and San Antonio because in most cities the samples underrepresent outlets in Hispanic neighborhoods. Meanwhile, household-survey data that should offer a more detailed profile of these consumers are rare, says Lesya Juchymenko, vice-president of marketing for Mott's.

The gatherers of broader data haven't proven any more adept at counting minority groups. Nielsen Media Research Inc. and Arbitron Inc. (ARB) have struggled to get a handle on Hispanic TV and radio households, while many non-English print publications are not even tracked. That means that companies determined to reach ethnic markets are forced to improvise. Mott's, for instance, ferrets out hidden pockets of demand by studying the U.S. touring schedules of Latin American bands such as Banda El Recodo and Los Tucanes and beefing up its marketing in those areas. Procter & Gamble (PG) has gone so far as to establish a unit in Puerto Rico to direct the Cincinnati company's Latino-marketing efforts.

Progress is at hand on some of these issues. Data from the census long form, due later this year, will offer a more detailed glimpse of ethnic Americans, including language-usage patterns. And Nielsen has already promised to redo its national-TV home sample to better reflect the increased Hispanic presence.

That will help, but the truth is most companies still treat ethnic marketing as an optional effort, a little something extra to pursue when times are good. That's a shortsighted view. Marketers need to wake up to the fact that there are now 79 million reasons why ethnic-marketing programs are no longer simply "discretionary." By Gerry Khermouch

With Aixa M. Pascual in Atlanta


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