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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 "Free Stuff" section. Readers of this article and visitors to our website are eligible for a free 20 minute consultation on your company's

 

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