Posts Tagged ‘Segmentation’

Wealthy Ethnic Consumer: Purchasing Power Insight for Luxury Marketers

Saturday, April 11th, 2009

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The United States will be experiencing a significant change in the racial and ethnic makeup of its citizens over the next 10 years. Economic experts have made these projections in the past, yet there seems to be a slow response in mainstream marketing to reach these groups with products and services that will target their income levels. The fact that there are wealthy minorities in the country is not a secret; the desire or will to target this consumer market has had a slow response. However, the company that is willing to begin targeting its products and/or services to this market segment will find that they have an advantage over their competitors.

 

One tool that will help companies focus their efforts on wealthy minorities is the Diversity Affluence 2009 Economist Report. This report provides research and data on population estimates, income levels and the purchasing power of minority groups such as African-Americans, Asian-Americans, and Hispanic-Americans. Marketing departments can use this report as the ground work for developing a marketing plan. The affluent market is defined as those with a household annual income of $75,000 or more. A program developed to reach affluent customers must consider the different levels of wealth, and how to target each group. This is why clearly identifying each group and knowing how they think is important, and the Diversity Affluence 2009 Economist Report will assist your marketing department with this process.

 

The purchasing power of wealthy minorities is unbelievable, which makes it hard to imagine why they have been invisible to mainstream marketing for so long. From 1991 to 2000, the buying power for affluent African-Americans increased by 150 percent and 126 percent for Hispanics during the same period. Even though economists and marketers define affluence based on a person’s income level, many affluent consumers do not identify themselves as being rich. They consider their lives comfortable, and shop for value with a good price. Many affluent minorities will pay extra for convenience; however, they are happier if they can get a bargain.

 

Learning the size and scope of the market is part of the goal of the Diversity Affluence 2009 Economist Report. Marketers would be wise to purchase this report ($495) in order to start planning their 2010 strategies. Their numbers will continue to increase, even as the country is going through an economic downturn. This is the group that retailers want to see shopping more. Motivating these wealthy prospects will help sales to flourish again.

DMNews: Marketers look closer at black consumers and find segmentation opportunities within

Monday, April 6th, 2009

President Obama is making his mark with large spending bills and a unique approach to leadership, but he’s also creating subtler effects in the world of marketing by bring­ing African-Americans into the spotlight as a consumer segment. Lexus, for example, has started targeting black women with ads for its luxury hybrids, and Amtrak recently launched an Acela Express campaign aimed at blacks and Latinos.

“Since the election of President Obama, there is more curiosity about the African American consumer and their behavior on behalf of marketers,” says Esther Franklin, EVP, director of cultural identities for Star­com MediaVest Group (SMG)’s multicul­tural unit, SMG Multicultural.

“The whole Obama phenomenon should make it easier for marketers to embrace multicultural and diversity in advertising,” adds Sonya Grier, associate professor of marketing at American University.

Of course, Obama can’t be held solely responsible for this renewed interest in marketing specifically to black consum­ers. The tight economy — which is driving marketers to target more tightly — combined with improvements in the data and analyt­ics space also may be playing a role in this increased focus on a particular segment of the population.

“It is part of the trend towards segmented targeted marketing to all identifiable con­sumer groups,” explains Sid Liebenson, EVP, director of marketing, Draftfcb. “The Afri­can-American market is not a small or insig­nificant market in most product categories, so it behooves marketers to understand the marketplace better and look at more relevant ways to connect with the community.”

Even with more data coming in, getting to know African-Americans as a consumer group is a difficult process. The group, which makes up approximately 14% of the US population, is certainly not homogenous. To reach diverse groups within the community, marketers need to research carefully.

“One of the biggest things is to under­stand the consumer and make sure that the value proposition is relevant,” Grier points out. “Marketers may use stereotypes based on what they believe these consumers want, but it’s not a monolithic market. Segmenting within the group may prove to be more suc­cessful. Hip hop [might appeal to] a certain age group or psychographic group, but it’s not all African-Americans.”

In-depth segmentation of African-Ameri­cans is sprouting up, like with SMG’s Beyond Demographics initiative. Launched in 2007, Beyond Demographics has done extensive research into the black population, segment­ing the group into 12 psychographic divisions with names like “buppies,” “nomads” and “activists.” Lattimer Communications, too, has created six psychographic profiles for black women, including “achievers,” “tra­ditionals” and “cynics.”

However, Lattimer also released a study in February revealing that 86% of African-American women still feel that advertisers do not know how to speak to them.

“A majority of blacks fall within the middle class, and we often forget them, and they often feel that advertisers are not talking to them,” says Leylha Ahuile, senior multicultural expert for research company Mintel. “Targeting advertising to blacks is not about using black people in your ad, it’s about the cultural understanding. What is the message or trigger point?”

As African-American and other minority populations grow, it is essential for mar­keters to understand these cultural trigger points and build relationships with diverse consumer groups. Ahuile says that in 2050 about half the US population will be “mul­ticultural,” and the buying power of African American consumers is projected to reach $1.2 trillion by the year 2012.

“There’s a lot more understanding that needs to happen,” Franklin said. “The power of the African American consumer dollar is only growing, and we all know our country is growing more multicultural as we speak. Multicultural influences have huge impacts on society in general, and for that reason it’s important for advertisers to have a more complete understanding of what the implications are for their brands and services.”

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