How To Gain Monopoly-Like Profits Through Ethnic Marketing
Introduction
In today's U.S. marketplace, marketing to various ethnic
audiences is vital to consumer-oriented product and service
companies. Latinos and African Americans already have a critical
mass of buying power of over $1 trillion combined and this total
is increasing rapidly. The growth of the Hispanic and African
American affluent and middle class is occurring faster than the
majority of Caucasian Americans. These ethnic audiences are
becoming so large and lucrative that even sub-groups of them
command substantial buying power. Becoming the dominate player
within a sub-group such as affluent and middle class 2nd
generation Latinos would allow a company to make substantial
revenue and develop a strong loyal customer base. To "own" an
ethnic market space would enable a company to obtain
monopoly-like profits!
The 4 Benefits of Owning Ethnic Spaces
Tapping into and creating ethnic space monopolies is at the
heart of this article and should be the goal of every ethnic
marketing plan. Owning an ethnic market space yields the
following 4 critical benefits:
1. High Monopoly-Like Profits 2. Loyal Customer Base 3. High
Lifetime Value of Customers 4. Low Competitive Dynamics
(Competition Blind Spots)
It is for this reason that ethnic marketing and owning market
space in the Hispanic and African American audiences is not a
"side" item, but a vital strategy which affects the whole
enterprise and will only increase in importance as this century
progresses. This kind of marketing can turn a marginally
profitable company into a revenue generating "powerhouse" and an
unprofitable company into a firm that operates solidly in the
"black" - no pun intended.
Importance of Perceived Needs
The first step to finding "ownable" ethnic market spaces is to
discover which groups of ethnic consumers are underserved or are
not actively targeted by an industry's product or service
offerings. An executive, manager, or business owner must find an
ethnic market space with a differing set of values, and
different perceived needs than mainstream consumers. For
example, Hispanics believe that family life and the home are
very important, so products and services by a company geared
toward key aspects of domestic home life have a chance to
dominate niches within that space.
The most powerful driver of finding an untapped market space of
ethnic customers is perceived need - whether that is for basic
functionality or additional comfort or luxury. One may say that
this is also true for the general market but a good marketer
will understand that this perception of need differs from
mainstream consumers. Latinos and African Americans view the
world and products & services from a completely different
paradigm than Caucasian Americans. Their values, lifestyle,
cultural and taste are all different from the mainstream and
this phenomenon translates into unique selection, buying, and
usage habits for a given set of goods and services. For example,
the urban African American 'middle class' higher desire for
stylish and designer brand items and the raised threshold for
luxury should be a driving factor in developing products and
services for this market space.
Capitalize on Heterogeneous View by Competitors
An additional key factor for locating potential monopoly spaces
is to examine ethnic spaces overlooked by the competition. In
the multicultural marketing of even the most progressive
companies, often whole ethnic groups are viewed heterogeneously.
Especially for Latinos, this could not be a bigger mistake.
Latinos have a multitude of sub-groups that are the result of
the following major factors:
1. Country of Origin 2. Acculturation 3. Generation 4. Spanish
Language Usage 5. Level of Affluence
A company cannot expect to use mainstream marketing to
effectively reach Latinos and African Americans. For Blacks, the
"they speak English too" syndrome pervades throughout industry
and is used as an excuse for not trying to understand the
various segments within the African American consumer audience.
For astute executives and marketers, "broad brush" marketing by
the competition to ethnic audiences represents huge
opportunities to own a substantial set of key niche spaces
within the Latino and African American audiences. To many
marketers, these ethnic niches are invisible. This creates the
perfect opportunity in many industries for companies to choose
and capture valuable niche spaces within Hispanic and African
American consumer audiences.
Important Relationship Strategy
Strategically, it is important for an executive or marketer to
develop deep relationships with a particular ethnic audience.
This relationship is particularly important for companies
offering a service or providing a product that differentiates
itself in the marketplace. This means not just having marketing
featuring Latinos and African American characters and themes but
targeting specific groups within this audience. This type of
marketing will really speak to the target group and develop deep
ties with them that will be hard to break by competitors. It is
important to concentrate on a key set of sub-groups to maximize
penetration and effectiveness, and to create a strong base. A
company's product or service should not try to be all things to
all members of the larger general ethnic group - this is a
recipe for a weak market.
Conclusion
Owning ethnic market space is very profitable and in the near
future for the U.S. market, it will become essential to ensure
business growth. Companies are now looking to ethnic minority
groups as a source to fuel their growth as the mainstream market
continues to be over-saturated. To own a space, it is vital to
let the perceived need of a targeted group drive the product or
service offering, and to understand the nuances in reaching
sub-groups within the greater minority audience. This creates
markets within the U.S. which are equally or more attractive
than China or India, due to their easier accessibility and huge
buying power. In most consumer industries, these ethnic
sub-space pockets are huge gold ores just waiting to be mined!
(c) 2005, Michael Bolden. All rights reserved. Reprints welcome
so long as the article and by-line are published intact and all
links are made live.
About the author:
Author Michael Bolden is a Managing Partner of the Chatham
Consulting Group. To learn more about ethnic marketing visit
Chatham Consulting's website at http://www.chathamchicago.co
m and also obtain a full report based on this article in the
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Written By: Michael Bolden