Have you ever visited a foreign country and made an accidental “faux pas” when misreading its language, cultural or societal cues?
That’s how a business can feel when their multicultural marketing efforts miss the mark — but the impact of these mistakes can be quite severe. This is why some retailers hesitate when placing a significant investment on attracting multicultural consumers.
The other common excuse is the misconception about the multicultural segment’s business value. This can be quickly discredited by the facts: Hispanics comprise 18% of the current U.S. population, yet represent more than half of the growth in consumer spending. Asian American households outspend average American households in every major category. So if it’s not a money issue, it must be a cultural issue.
If you’re a retailer that’s looking to better attract the multicultural market, have no fear. There are a number of successful companies doing some very innovative things on the pricing, targeting, segmenting and promotional fronts. Here are some common mistakes to avoid based on those retailing success stories:
Stopping At Language
Perhaps the greatest mistake a business can make is to over-simplify the multicultural population. Of course, it’s important to segment every population — we all know that — but it becomes especially important when it comes to emerging ethnicities.
Consider the Hispanic market, for example. It’s more than just Mexicans or Puerto Ricans. It’s a mix of hundreds of potential attributes, comprised of country of origin, financial status, language preference, shopping behavior, media habits and level of acculturation. There are five distinct Hispanic personas, based on multiple variables including language usage, generations since immigrating and local demographics. The most pervasive at 28% (what we at Geoscape call “HA2 or Nueva Latina”) consist of second- or third-generation Hispanic Americans, bilingual, enjoying both American culture and the culture of their home country. Other segments run from those who are recent Americans (HA 5 or Latinoamericanos) — up to those who have been in this country for generations.
Not Linking Loyalty Programs
There’s a wide variation in how programs are structured and incentivized. But when it comes to the multicultural market, we’ve found a loyalty program to be a key data collecting tool when it comes to understanding the specific cultural nuances and buying habits of a multicultural customer base. But few companies are taking a closer look at cultural attributes within their customer file.
Take one of our large grocery store clients. Their loyalty program provides the bedrock of its multicultural marketing strategy, as they were able to discover the impact of promotional campaigns across their multicultural constituents. They found that while a multicultural campaign was designed to attract all Hispanics, those who were buying were only the acculturated. Based off that insight, they were able to tailor their next round of touch points much more effectively.
The end result was a highly targeted and sophisticated way to match promotions to interested shoppers. Their promotion redemption rate among multicultural consumers was an amazing 66%! All due to the power of the program to collect enough data to test and develop campaigns effectively.
Not Reporting Accurately
We’ve often found that initial multicultural efforts need to have champions at a high level within an organization. For better or worse, there are many people at large retailers averse to changing their overall marketing strategies.
Most multicultural campaigns are grounded in an initial test case. It’s essential that this strategy be benchmarked and grounded in data. Once relevant stakeholders are able to see the facts, they can be persuaded to make a more significant multicultural investment.
This may seem obvious, but many in retail often put the cart before the horse. They know that something must be done, but they don’t invest in the infrastructure to monitor the campaign before testing the waters. It’s essential to have the right analytical tools in place before entering the multicultural market, in order to give it the best chance for success.
The economics are abundantly clear: Multicultural populations provide any retailer, of any size and shape, their next greatest opportunity for growth. But marketers must understand how sophisticated and diverse these consumers are. In order to avoid common mistakes, they should be approached with the right balance of data analytics and insights, in order to be reached effectively.
If a multicultural misfire is what’s stopping you, it shouldn’t be. Let these populations lead you on your next great period of growth.
César Melgoza has been a leading innovator in the development of market intelligence data, systems and analytic services geared toward multicultural consumers and businesses. César founded Geoscape International, Inc. in 1995. His career blends unique experiences in information technology, marketing and market research.