June 27, 2006

Excerpts: Maximum Marketing, Minimum Dollars by Kim T. Gordon

By: 800-CEO-READ @ 6:59 PM – Filed under: Management & Workplace Culture

All those tried and true marketing efforts are given a new twist in this book. It's for anyone (especially entrepreneurs and small business owners) seeking new ways to market their company while saving a penny or two. This particular excerpt from Maximum Marketing, Minimum Dollars is on multicultural marketing.
---------- #40 SAVE WITH MULTICULTURAL MARKETING If youre looking for a smart, low-cost way to expand your business,consider taking on ethnic markets. With the general affordability of ethnic media and the tremendous escalation in the buying power of ethnic groups, it may be the brightest way to take your product or service to new niche markets. Lets take a closer look at the buying power of ethnic and minority populations, including Asian-Americans, African-Americans, and Latinos. By 2008, nearly 5 percent of the U.S. population will claim Asian ancestry, according to the Selig Center for Economic Growth at the University of Georgia, when Asian buying power will reach $526 billion.1 Asian buying power is driven by the fact that Asians are better educated than the average American and hold many top-level jobs in management or professional specialties. For dramatic growth, look at African-American buying power,which is increasing by a compound annual rate of more than 6 percent. Meanwhile, a new U.S. Census report states that 41.3 million Hispanics now reside in the United States, and the Selig Center projects Hispanic buying power ($926 billion) will exceed even that of African-Americans ($921 billion) in 2007. Latinos are now not only the nations fastest-growing minority group, but also its largest, accounting for one in every seven people in the United States. Latino households are more likely to be made up of couples with children under 18, and often include extended families with three wage earners. As a whole, the Latino population is young60 percent of Latinos in the United States are younger than 28 years old. This tendency toward larger families with young children means they buy more household goods, and will drive nearly a fifth of growth in apparel and shoe sales and about one-third of the growth in food sales through the mid-2000s. Right now, Latinos spend, on average, $300 more per year on food and $250 more on apparel products and services than the general market does. So whether youre marketing anything from baby care and health and beauty products to home furnishings and entertainment, you can benefit from targeting this group. One of the most outstanding characteristics of this market niche is Latinos strong tendency toward higher-than-average brand loyalty, making them prized, long-term customers. Latino women, who make many of the purchasing decisions for their families, are most concerned with buying the best quality, and are not easily swayed by price point. However, a product or service representing a true improvement or technological advance will tempt this group, since sampling something new may be seen as a progressive and positive thing to do. Even within the lower-income segments of the Hispanic market, brand name, quality, and good customer service sway the purchase more than price. One survey by Research Data Design (RDD) revealed that 85 percent are willing to pay more for quality and prefer to buy a more expensive but trusted brand rather than a less expensive but unfamiliar one.2 The postsale customer experience is also an important selling point, as 94 percent of Latinos are likely to buy the brand that provides the best customer service. And according to the latest People en Espanol Hispanic Opinion Tracker Survey, 56 percent of the U.S. Hispanics polled said, I love to shop, compared with 39 percent of the general population.3 What makes targeting ethnic and minority markets so affordable? The high number of quality media outletsthere are more than 1,100 black-formatted radio stations around the country targeting African-Americans, according to Arbitronand the surprising cost-efficiency of ethnic media.4 For example, the average black-and-white, full-page ethnic magazine ad may cost six to nine times less than an ad in other national magazines with smaller circulations. Cost-per-thousand (CPM) rates for ethnic radio and television stations are generally lower as well. This is true even in cases where Spanish-language stations are tops in their time periods, which often occurs in Miami, Los Angeles, and New York. If your business is based in a market with a large ethnic population, or if you have a product or service with the right appeal, its a smart move to add ethnic media to your mix. Thats certainly been the case for the venerable Miami-based company, Farreys Lighting and Bath. Family-owned since 1924, the company and its marketing have evolved along with this hot metro area, which has become home to a large population of Cuban-Americans and a business gateway to Latin America. Four generations of the Farrey family have guided this business through many transitions. Founded as a small general store in 1924 by John and Emily Farrey, it was their son Francis who, during the housing boom of the 1950s, focused the company on lighting and bathroom fixtures. The next generation of the family, Bud Farrey (chairman and president) and Frank Farrey (vice president and CFO) have continued to grow the business while facing outside hardships, including the 1980 Miami riots, which temporarily wiped out the business, and Hurricane Andrew in 1992. They were joined in the 1990s by the familys fourth generation, Paige and Kevin Farrey. Today, the company has about 120 employees, two elegantly beautiful showrooms, and projected 2005 sales of $39 million, according to Vice President of Lighting Andy Gato, who has himself been with the company a remarkable 38 years. As Miamis population and its business focus has changed, Farreys has added marketing tactics that target Miamis Latino residents and South and Central Americans. The campaign strives to reach upscale Latinos who are either bilingual or Spanish-speaking only. The company used to export extensively to North and South America in the past five to eight years, but the political and economic situations there have changed. Now, Gato says, these Spanish speaking customers come to the United States to buy property and need to furnish their Miami apartments or buy merchandise to take back to Latin America, and are reached by the companys ads in the Spanish-language edition of the Miami Herald, the Nuevo Herald. Other publications Farreys uses to target its market may reach both bilingual and Spanish-speaking-only prospects, including upscale magazine Selecta Magazine, interior design publication Casa & Estilo, and the Spanish edition of the chic Ocean Drive magazine. According to Gato, when it comes to sales generated by this market niche, those he terms bilinguals make up 40 percent, and Spanish-speaking customers account for 15 percent to 20 percent. All customers, including those in Central and South America, also regularly receive direct mail from Farreys. Another important aspect of Farreys campaign targeting the Hispanic market is its participation in functions within the Hispanic community, ranging from fashion shows to active membership in the Latin Builders Association. This well-rounded mix of tactics has created name recognition for the business over the years and now, Gato says, We have second- and third-generation customers coming to buy from Farreys. Tips for Creating an Ethnic Marketing Campaign If this success story motivates you to plan your own ethnic marketing campaign, follow these six tips:

  • Speak the right language. English-language proficiency does affect the extent to which ethnic populations rely on advertising that reaches them in their own languages. Among Latinos in particular, however, Spanish is a key marker of personal, social, and political identity. This makes Spanish-language media important even to fluent English speakers who regularly utilize other media, and advertising in Spanish is an essential component of an effective ad campaign. A poll by Bendixen & Associates for New California Media found that 66 percent of ethnic Californians agreed that businesses that advertise in the ethnic media seem to understand my needs and desires better than other companies, and 63 percent agreed that they are more likely to buy a product or service advertised in an ethnic-oriented publication or program.5 Hispanics exhibited the strongest advertising loyalty characteristics, followed closely by Asian-Americans. A study by the Roslow Research Group showed commercials in Spanish were three times more persuasive among bilingual Hispanics and six times more persuasive among Spanish-dominant segments.6 Among Hispanic teens, ads in Spanish were twice as persuasive as ads in English. Clearly, a strong reason that ethnic media often produce superior response rates is that loyal readers, viewers, or listeners appreciate receiving communication in their own languagesand support the companies that make the effort.
  • Recognize ethnic group diversity. When addressing multicultural markets, you must remember that even among Spanish speakers, regional language and cultural differences exist. Take the word truck, for example. West of the Mississippi, its troca, and east of the Mississippi, its camion. For Cubans, beans are frijoles, while for Puerto Ricans, theyre habichuelas. Its also a mistake to treat Cuban, Puerto Rican, Mexican, and Central and South American immigrants alike because factors such as family size and education, as well as income levels, differ. Cubans, for instance, tend to have the smallest families and Mexicans the largest.
  • Choose media wisely. Ethnic media often carry information for and about their local communities thats virtually ignored by other press. In California, for example, where the Asian-American, African-American, and Hispanic communities make up about half the states population, the New California Media poll showed that nearly half of these and other ethnic groups prefer to get their news and information from ethnic media outlets.7 While major ethnic media outlets are plentiful, from Ebony magazine and La Opinin to the Telemundo television network, many Web sites also are available, plus excellent, community-based ethnic media that represent extremely cost-efficient media buys. In Charlotte, North Carolina, for example, the weekly Hispanic newspaper, La Noticia, is well read and involved in the community through special events. With a circulation of 30,000 in 13 counties, its advertisers are both Latino and Anglo businesses targeting the Hispanic community. Your local ethnic radio stations may also offer real value, particularly if youre targeting Hispanic consumers. According to the Arbitrons Power of Hispanic Consumers Study 20042005, Hispanic consumers listen more to the radio than read newspapers or watch television, averaging more than 22 hours per week and spending half their radio time listening to Spanish-language formats, from tropical to talk.8
  • Buy frequency first, then reach. As with any media buy, you must reach your core target audience and advertise with enough frequency for your message to penetrate. Dont spread your ethnic media dollars too thin by choosing many outlets. Instead, focus on the ones that seem the most central to the lives of your prospects and provide relevant content. You probably noted that Farreys Lighting and Bath, for example, advertises in an upscale Spanish language interior design magazinean intelligent, well-targeted media buy. Once youve achieved sufficient frequency with your core target audience in select media outlets, you can expand your campaign by purchasing additional reach using more print, broadcast, or online media.
  • Tailor your campaign themes. For your ethnic marketing campaign to succeed, its themes must be in sync with the cultural and ethical mind-set of the targeted community. A humorous campaign targeting young Hispanics, for instance, that pokes fun at parental authority or family unity will be deeply frowned upon, even if that same campaign plays well with the general population. Thats because, as a group, Hispanics have been shown to value family, religion, and the ethics of hard work to a greater degree than the general population. Before you take the plunge into ethnic media, familiarize yourself with the cultural hot buttons of your target group, and dont hesitate to ask the media for help in tailoring your initial ads.
  • Participate in the community. Ethnic marketing is a lot more than just placing ads. You must become involved in the community to build clear affiliations that translate to sales. Look for ethnicbased community festivals, committees, fund-raisers, and awards programs, and become a recognized participant or supporter. Doris Cevallos, president of Alianza Mortgage and Alianza Realty Group, knows the value of community involvement, and her Charlotte, North Carolina, businesses are thriving. Cevallos derives 96 percent of her business from Hispanic clients and advertises in La Noticia as well as participates in the papers community events. A well-rounded set of additional activities includes sponsoring soccer pay-per-view at a large sports bar, including handing out f lyers, putting up a banner, and displaying the company logo and information on the big screen during breaks. Alianza is part of the Latin American coalition and the company sponsors a booth at the groups major event, attended by 15,000 people, at the Mint Museum. Cevallos also participates in the Latin American Womens Association, and at its gala party and carnival, Alianza is featured in the event program and on the projection screen. Whats really fascinating about Cevalloss story is that she actually created her business to meet the needs of an untapped market niche. She started in the Charlotte area in real estate, and discovered it was very difficult to find people who would handle mortgages for her clients because, she says, A lot of them dont have the money in the bank, they dont always know about credit, and a lot are bad recordkeepers. So she had a difficult time placing the mortgages and often they would fall through. Thats when Cevallos started learning about the mortgage business by working as a processor and loan officer while continuing with real estate until she was ready to start Alianza Mortgage in 2001. Now the company has a total of nine on staff, including agents, and projected 2005 gross fees of $25 million, or about $1 million in income. According to Cevallos, there has been a 600 percent growth of Hispanics in just the past decade in the Charlotte area because of job opportunities and new businesses. She was in the right place at the right time, and when she started ten years ago, the Hispanic community was just starting to arrive in the area. Today, theres a lot more competition, yet Alianza Mortgage is the only Hispanicowned company in the area and remains the only one that focuses primarily on the Hispanic community. One of Cevalloss loan officers contributes an article each month to La Noticia covering topics that include refinancing, how to build and fix your credit, and, she says, how the Hispanic community ends up paying more for mortgages. As a result of her companys positive work and efforts in the community, Cevallos was honored as the Business Woman of the Year in 2004 at La Noticias Excellente awards. In addition to Alianza Mortgage and Alianza Realty Groups consistent ad campaign, community public relations, and networking campaign, they also send a direct-mail newsletter to clients. Its no wonder that 75 percent of their sales comes from repeat business and referrals.