Survey Suggests There's Still a Good Deal of Confusion About Multicultural Market
By Beth Snyder Bulik

Published: February 25, 2008

YORK, Pa. (AdAge.com) -- Marketers are hiring more talent and spending more money than ever to chase multicultural consumers, yet they are divided on how to reach them -- and unsure they're getting good returns on their investments.

While 84% of the marketers believe multicultural marketing is "critical to my business," almost 40% said they don't know the financial value of multicultural groups to their companies, according to a study for executive search firm Heidrick & Struggles by Brandiosity.

They also had a variety of opinions on which agencies to hire to reach the Hispanic, African-American and Asian groups. Of the 60 companies that were surveyed on which shops they use for multicultural-marketing services, 58% said they tap general-market-research firms; 51% said they use multicultural agencies; 42% use general-market agencies; and 35% use multicultural-research firms.

'Same stuff' as 20 years ago
In fact the overall picture painted by the survey suggests there's still a good deal of confusion about the multicultural market. Pepper Miller, president of Miller Hunter Group, a market-research and planning group in Chicago, said marketers really don't understand it any better than they did 20 years ago. "I entered the business in 1985. The other day I found a paper I wrote back then, and I read it and I thought, 'Man, this is the same stuff we're saying now!'"

More than two-thirds of the respondents were chief marketing officers or senior VPs of marketing. Another 14% were VPs, managers or directors. They represented a wide variety of industries including retail, consumer package goods, telecom, financial services, fast food and apparel.

Carla Palazio, partner at Heidrick & Struggles, said the recruiting firm commissioned the study to discover what companies need -- particularly what sort of talent they're looking for -- to target multicultural segments, specifically through the eyes of the CMO. What it found was a disconnect: Multicultural marketing is perceived as very important -- but there are still a lot of companies that lack a real companywide strategy to address it. "The root of this is the lack of awareness at the organization. While the CMO understands it well, they almost have to evangelize [the value of multicultural marketing] to the rest of the company," Ms. Palazio said.

Indeed, among the 20 biggest challenges executives expressed, almost half could be categorized as problems proving merit inside the company. They listed roadblocks such as "explaining to management their importance," "getting buy-in and support from company leadership," and "getting senior level marketers to understand that the world is changing."

Mike Fasulo, CMO of Sony Electronics, said he has experienced some of the disparities the study uncovered. "I can respect some of those statistics, because it took us two years before we went to market because we wanted it to be comprehensive and sincere." Mr. Fasulo's group made multicultural marketing a priority about three years ago and today has an internal team dedicated to it, as well an outside multicultural agency, research and insight initiatives, and retail partnerships.

Undervalued worth
However, he was surprised that more companies didn't know the financial worth of multicultural segments, because the data are there. In electronics, for example, he said many product categories overindex for multicultural groups vs. the general population, including flat-panel TVs, satellite radio and video gaming. And though the economy has slowed, both disposable income and growth of multicultural segments "far exceed" the general market, Mr. Fasulo said.

Respondents also were asked which minority segment was most important to their businesses. The majority selected Hispanics first at 65%, followed by African-Americans at 30% and Asians at 24%.

However, the respondents were split over the idea that it "takes a Latino to market to a Latino." Some 35% agreed, while 39% disagreed.

"For myself, I believe I've had an easier time," said Alberto J. Ferrer, managing partner at the Vidal Partnership. "But I see many non-Hispanics do well. They tend to be open, willing to listen to the agency, and they don't live in the land of clichés -- or, as I wrote in one of my blogs, the land of sombreros and maracas."

As for using general-market researchers rather than multicultural agencies or researchers, Ms. Miller said: "That is such a big mistake. I'm still so frustrated with general-market research. So much of it is disrespectful, and it's just too vanilla -- and not just for African-Americans but for Latinos and for Asians, too."

Lack of structure
But why the disparity between increased efforts and lower perceived effectiveness? One reason may lie within the study, in that 44% of the executives said their companies were not effectively organized to handle multicultural marketing. So new hires and ad-budget increases become lost or marginalized in a system not structured to handle them.

Isaac Mizrahi, director of multicultural marketing at Sprint and one of the survey participants, agreed that the results seem contradictory. "When I see results like this, it makes me wonder what exactly is their definition of multicultural marketing," he said. The findings indicate "there is still a significant amount of education that needs to happen," he said. "There are a lot of preconceived ideas about multicultural markets. And to be honest, it's not an easy area. It takes a lot of time, a lot of insight and research, and truly understanding the marketplace before you even propose something."

Ms. Palazio said multicultural marketing will grow when other marketers see the results of companies such as Home Depot, Verizon, Bank of America and ING. "They're already seeing 10% to 12% of revenue coming from this segment," she said. "That's the easiest way for other companies to have a reality check."

Mr. Ferrer said: "There is a bona fide business opportunity here, and if you don't see that, you're not a smart businessperson. It's not about being a bigot; it's about being smart. ... I understand people not doing [multicultural marketing] because of tight budgets or [lack of] company support, but not knowing is just silly."

Labels: advertisement, African Americans, Latinos