It’s tough to ignore the multicultural consumers anymore
Date: Friday , June 03, 2011
Multicultural marketing has always been a debated and doubted proposition. But if you are a Corporate addressing consumers beyond native boundaries, and still ignoring the multicultutal population, it is time to rethink. So, what is cooking in the melting pot? Nothing, but a paradigm shift in the demographic pattern. The immigrant groups which include Hispanics, Blacks, Asians amongst others were once considered a minority population and are slowly outpacing the native population. This demographic shift seriously indicate that companies who ignore these multicultural segments in their 2011 budgets will be at a disadvantage. Incidentally, many businesses have been caught unaware by the resulting major shifts taking place in the American marketplace today, as minority groups increase in size on their way to becoming the majority of the population. Indeed, these companies are missing out on huge untapped markets emerging within U.S. because they are not adequately targeting the multicultural populations of the twenty-first century. In today's marketplace, selling effectively to this new America is key to the long-term survival and success of any company. Research still says that only 20 percent companies are seriously engaging and attracting the multicultural customers. For most, the era of the multicultural is yet to enter into a serious dimension. But facts points to a different proposition.
What statistics say
The latest census figures of 2011 speak volumes of the fact that this diverse market needs to be addressed and can not be ignored. According to the data reported from 27 states (or a little more than half of the state-level data at the time of reporting), Asian population is already seeing significant growth that far outpaces the total United States population by huge margins.
All 27 states showed double or even triple-digit growth in their Asian populations. The top five states with the highest increases in the Asian population compared to ten years ago are: Nevada, up by 116 percent; North Carolina, up by 85 percent; Delaware up by 78 percent; Arkansas, up by 77 percent; and Indiana up by 74 percent. In some of the larger states like California, Texas, New Jersey and Illinois, the Asian population growth is outpacing the much celebrated Hispanic growth. The same trend is being observed in most of the key counties in the Los Angeles and San Francisco DMAs (Designated Market Area). Asians accounted for 72 percent of the growth in New Jersey's population and 47 percent of the growth in Illinois' population. California saw a staggering increase of more than 1.4 million Asians, and Texas, an increase of nearly half-a-million Asians.
According to a survey by The Nielsen Company in 2009, in the U.S. alone, more than half of all families with children will be multicultural by 2025 and as this population grows; it will gain an economic advantage. Between 2009 and 2012, the buying power of Hispanic and Asian Americans is predicted to increase 40 percent, reaching more than $2 trillion. “The decision to market to the burgeoning Asian American population, is no longer a question of if, but rather a question of when”, says Saul Gitlin, Executive Vice President – Strategic Services/New Business Kang & Lee Advertising.
A Powerful consumer segment
Gone are the days when the minorities were a generation that could be easily get influenced; the Asian Americans today have become an influential generation. It is a group that has relatively high disposable income, is Internet savvy, and generates a high return on investment compared to other ethnic groups. Analysts opine that Asians have a combined buying power of a whopping $509 billion and a projected spending power of about $753 billion by 2013.
“Many South Asian American consumers have been resilient to a recession that sent shock waves across the country. What drives them today is a significant uptick in affluent consumer spending and optimism that have important ramifications for retailers. The shift to purchasing luxury goods has made the marketer stand up, take notice of the South Asian consumer and make special efforts to reach out to him. South Asians are becoming increasingly capitalistic,” says Neeta Bhasin, CEO of ASB communications.
They are the next growth segment and the change in their spending and saving behavior proves this. Traditionally a community that was conservative in spending is now becoming increasingly affluent. With the median income already at $85,000 and steadily on the rise, with over 75 percent possessing a bachelors degree or higher, the upswing in prosperity is not a trend, it is a reality.
Understanding the consumer
The Asian Americans leave their land and come to the U.S. to fulfill the great American dream. But these cultural groups tend to preserve key elements of their ancestral cultures. Marketing to these important groups is like marketing to other groups, except that one must understand their culture. Think locally and act globally is of relevance when it comes to marketing to diverse ethnic population in U.S.
Multicultural consumers have different cultural values than those of the natives and tend to be more responsive to messages that are reflective of their cultural assets such as personal pride, convenience-oriented, self-fulfillment, self-respect and accomplishment. They have also been known to exhibit different marketing responses such as product use, shopping orientation, response to promotion, brand loyalty, media usage, attitude toward advertising, purchase decision, and more.
For example, “There are some changes you can live with and some which you can’t,” states the Citibank ad. The ad strikes a chord in the heart of Indians as it touches his values, feelings for his homeland and some traditions. Citibank, like many corporates today are realizing the fact that many of its Indian customers are brought to its service by their need to connect to their loved ones. Hence, marketing to them has to be in the tone and language which appeals them and which seeks their attention. Marketers can no longer consider all members of their target audience as one huge, undifferentiated mass or assume that minority consumers will get swept along in mainstream mass marketing.
Values and self-identity
South Asians take immense pride in their culture and heritage. Now, with the shift in media attention towards South Asia through movies and as an emerging market, the second generation among South Asians also accepts their identity with pride.
Another aspect Vicky Wong of DAE points out is “This group is a hardworking lot. Anything which can be good for their future or for their future generation appeals to them the most. They value a financially and socially secure lifestyle and strive to achieve it.”
Technology and media use
Asian Americans are very tech savvy, quick in trial and adaptation of gadgets. They are heavy users of social media, mobile media and online gaming. To sum it up, with over 70 percent internet penetration in households, South Asians are on the attractive side of the Digital Divide. “Many recent studies have shown that the emerging, ethnic communities in the U.S. are tech-savvy and well-connected. Asian-Americans spend 80 hours per week using a computer, 75 percent of Middle Eastern-Americans have Internet access and Hispanics/Asians have the highest smartphone usage. However, these groups also tend to be family-focused and active in their respective communities. Fortune 500 corporations will have to implement a customized mix of traditional media, new media and grassroots initiatives to engage these consumers,” says Nawaf Soliman, CEO, Object DC.
Retail & Shopping
According to the Intertrend study, Asian Americans shop frequently at department stores with nearly one third frequenting at least 1 to 3 times a week. “Shopping is a pass time for Asian Americans” says Wong. “The Asian consumers are popularly known to be value driven, and that is reflected in their shopping too. They are a major spenders on luxury goods too and do not settle for anything mediocre, ” adds Wong.
Auto & Insurance
Among the immigrants the Asian Americans buy the most number of cars above $30,000 and own luxury cars. “Asians also are the most likely to buy new (versus used) cars, the most likely to spend more for a car, and the most likely to buy luxury makes. These facts propelled the automotive category into the Asian market during the mid to late 1990s with Toyota, Honda, Mazda, Ford, General Motors, and Daimler Chrysler competing for Asian American share of garage”, says Gitlin.
The Intertrend study found that Asian Americans have the highest product ownership rate for auto insurance followed by health insurance and life insurance. Price and reputation are the top criteria for selecting an insurance company.
Challenges in tapping the market
The South Asian consumer segment is fairly diverse with over 30 language groups and myriad cultural differences. This segment is also spread out across the United States and a large section is entrepreneurial, so they keep expanding to places where opportunities exist, so reaching out to them is a challenge.
“To dismiss them in the overall market strategy is a mistake for any company. Conversely, to err in approach and delivery in execution of a strategy targeting them can be devastating for the image, reputation, and credibility among this group -- damage that can take a long time to undo, if ever. A business can most cost-effectively deal with all these challenges by working with a professional marketing and advertising company that deals with such details and intricacies” says Bhasin.
Multicultural marketing goes beyond ‘ethnic’ marketing by recognizing that consumers will both identify and preserve traits that are unique to their cultures of origin while at the same time adopting aspects of the general market culture. The challenge for companies is to determine when and how an individuals’ culture is relevant to the marketing strategies, product/service development, and messages necessary to reach these particular groups.
Today, addressing the diverse cultural groups is becoming more a business imperative, one that a number of big and successful companies have begun to realize and successfully address. If AT&T is reaching to specific calling groups in their own languages, so are Vonage and other players. 95 percent or more of the banks in U.S. target Asian Americans today understanding the saving power and disposable income the consumers in this category possess. But this accounts to only about 5 percent of the companies. Many are yet to open their door towards the market.
Thanks to the rapidly growing affluence, the future is brimming with optimism, both for marketers and consumers alike. By targeting ethnic community with the help of specialists, marketers can get on the right and long-term growth path of capturing the wallets and loyalty of the South Asian American group, and the subgroups therein.