Homer Said It Best
Did you know that the United States Census Bureau keeps a population clock? The clock constantly calculates an estimate of the national population using the latest available data on births, deaths and immigration. On November 1, 2011 at precisely 14:09 GMT, the U.S. population stood at 312,541,460. But as you are reading this, that number will have grown. That growth will continue pushing the population to an estimate of 439 million in 2050—a few short years from now. For businesses, this can be good news because the potential market pool will explode. Embedded within this growth are fresh opportunities brought about by diversity.
Multiculturalism is redefining what it means to be an American today and what it might mean to be a consumer tomorrow. While Caucasian Americans are currently the racial majority, population growth is fastest among minorities, taken as a group. By mid-century, the U.S. Census Bureau projects that today’s Caucasian majority will be the minority, falling to about 46 percent of the population. In the opposite direction, those who describe themselves as Hispanic, African American, Asian and Native American will increase to about 54 percent. “The new projections move up some of the changes that are happening. The minority population will become the majority eight or nine years earlier than we had thought,” said David Waddington, head of the census bureau’s population projection team.
With the changing face of the U.S. population comes an evolving picture of tomorrow’s consumers along with new opportunities and challenges for any business trying to reach those whose tastes, customs and primary language may differ from those who have been their traditional customers. The biggest mistake any businessperson can make, however, is to view the minority segment as homogeneous. Every ethnic group has its own markers, values and hot buttons, making a myriad of sub-groups, even within each ethnic identity.
So let’s take a look at the three largest minority groups—Hispanic or Latino, African American and Asian American—to see what opportunities might await your business.
Hispanic or Latino
With purchasing power estimated to be $1.2 trillion in 2011, virtually every business and organization in the United States is being impacted by the growth of the Hispanic population. We see it in advertising, menus and by the increasing number of schools offering Spanish language classes. These developments are premised on the fact that speaking Spanish in the United States is here to stay. In fact, a study recently released by Hispanic U.S.A. says that the number of Spanish-dominant and bilingual Hispanics will increase by 45 percent over the next 15 years.
There is an opportunity for your business to tap into the Hispanic market, but don’t think they are all the same. Country of origin, language reference, and level of acculturation make for countless unique sub-segments. In the United States, the term Hispanic includes subcultures from more than 20 countries in Central and South America, the Caribbean and Spain, with the majority being of Mexican heritage. Each has tended to “adopt and adapt” to the American culture without shedding individual traditions and values. So you cannot simply transfer the marketing strategies that have historically worked with more traditional markets. In other words, don’t just translate your promotional materials into Spanish and expect to be successful—although Spanish is, and is likely to remain, the language of preference.
The basic lesson for any business is threefold. First, you have to identify and understand the unique demographic profile of those Hispanic segments that are potential customers. Which of the 20-some subcultures are they? Are they Spanish speaking, English speaking, or bilingual? Your promotional materials may be effective on a 26-year-old bilingual professional, but will be totally lost on his 50-year-old parents who only speak Spanish. Secondly, be sure to use the right words in the right context. Remember when General Motors introduced the Chevy Nova in South America? It was apparently unaware that “no va” means “it won’t go.” After the company figured out why it wasn’t selling any cars, it renamed the car Caribe in its Spanish markets. Ditto with Ford and its efforts to launch the Pinto in Brazil. The company found out that Pinto was Brazilian slang for “tiny male genitals.” Ford replaced all the nameplates with Corcel, which means horse. And when an American T-shirt maker in Miami printed shirts for the Spanish market promoting the Pope’s visit, instead of printing “I Saw the Pope” in Spanish, the shirts proclaimed “I Saw the Potato.” Your business can’t afford to make similar mistakes.
The entire, but diverse, Hispanic market is ripe for picking but there needs to be careful, prior planning to make sure that you know whom you are targeting, how to promote to them, and how to support them with service. With careful planning of a targeted strategy, you can be ahead of the competition.
The official U.S. Census defines African Americans as those who have origins in, or are descendents from, any of the black racial groups of the original people of Africa. During the civil rights movement in the late 1960s, the term “Black” gained status as an ethnonym with strong racial pride. Twenty years later, toward the end of the 1980s, the term “African American” gained popularity when black leaders advocated its use as an alternative ethnonym for anyone of African decent. In today’s media, however, the terms tend to be used interchangeably.
About 13 percent of the U.S. population is African American; while the actual number will grow, the percentage is expected to hold steady through mid-century. Of particular importance to Lansing businesses is the fact that that segment’s buying power is projected to reach the $1.1 trillion mark by 2015, representing a significant part of the U.S. buying power.
When marketing to African Americans, remember that, like Hispanics, there is no one market. They split on the question of whether they are or are not a single race because there is so much variety in that culture, with values based on age, gender, socioeconomic status, education as well as family and geographic heritage. One study, called Black America Today, identified 11 different consumer segments, each with its own diverse preferences and needs. As Pepper Miller, president of Hunter-Miller Groups, an African American market research and consulting firm, points out, “We have never been a homogenous market, but we have never been as different and segmented as we are today.” No wonder any business has both challenges and opportunities with this market.
So what should you do to attract this market? Here, the lesson is twofold. First, define and develop a process that identifies and measures your opportunity in the area. Because African Americans share a common language with White Americans, businesses can mistakenly assume they share the same culture and same interests. This isn’t always the case. Second, research and understand the segments to know into which your potential customer falls. Read the local ethnic media; tap into the local market, ask questions and listen. This is particularly important when it comes to which ethnonym to use. If you ever studied a foreign language, you know that there are often two ways in which the word “you” is used. One is familiar and is used with family and close friends; the other is formal and used for acquaintances and strangers. It is much the same way with this community. According to the Hunter-Miller Group, when African Americans use the term “Black,” it is usually with each other, and implies familiarity or intimacy. When it comes to marketing, however, their preference shifts to the term “African American” because they don’t have that familial relationship with the brand.
A third significant minority market to attract is the Asian American population, which has experienced the fastest growth of all racial groups in the country. Standing at 5 percent of the population in 2005, their numbers will expand to comprise 9 percent by 2050. They are, in many respects, an ideal target market. In general, they are highly educated, affluent, have a high savings rate, but will spend money on luxury items. By 2014, their buying power is projected to reach $700 billion. They enjoy a high median household income as well as high rate of business ownership. The have a high rate of home ownership and their mean home value leads all groups in nearly every state. When compared to the population as a whole, they are younger and have larger families. They are trendsetters in many spheres of life and brand loyal. You quickly understand why this ethnic group can be a marketer’s dream.
Like the two other noteworthy minority markets, Asian Americans are not a monolithic group. Asian Americans are comprised of people from 27 different countries, each with its own distinct culture, language, religion and economic system. They are immigrants from or descendants of immigrants from places such as the Philippines, China, Japan, Korea, Vietnam, Cambodia and India. So again, it is critical that, if your business finds an opportunity to attract this market, you must research and understand your target sub-segment.
Since the early 1980s, the Asian American market began garnering attention from businesses because of their high value as consumers. Since that time, successful marketing campaigns seem to focus on three hot buttons which you can readily adopt. I call them the “3 Fs”: Family, Face and Future.
First, with larger families, higher incomes and a strong appreciation of education, Asian American parents look for opportunities for their children, as well as themselves. So promoting the family experiences is a good strategy.
Second, it has long been accepted that saving face is important in the Asian cultures. Buying a certain brand can become a visual manifestation of success or status, which actually translates to face, yielding another sound strategy.
Finally, this market has a long view of time; for them the future begins with building relationships today. If you have ever conducted business in an Asian country, you know that you don’t go in like gangbusters and expect to seal the deal at the first meeting. In fact, you may not even discuss business at that first meeting. It is the same with your marketing. It takes time, so you have to have patience promoting your brand.
As 2012 begins, we can certainly say that the opportunity for multicultural marketing has come of age. The 2010 census reinforced the significant population shift that has evolved over recent years. Whereas in the past, minority members may have been considered good options, they are increasingly being viewed as market imperatives. While there are certainly other minority groups, these three—Hispanic, African American, and Asian American—are the largest and most viable for any organization. Those which have the vision to develop specific strategies to attract these markets will enjoy a first-mover advantage, giving them a robust position in these cultural segments. If yours is one of these farsighted mid-Michigan businesses, the move will inevitably be noticed by all competitors—but you’ll still be first.
And your bottom line will thank you.
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Bonnie J. Knutson, PhD is a professor at The School of Hospitality Business and Broad College of Business at Michigan State University.