Multicultural Marketing and a Changing Mainstream

Marketers and CEOs differ on importance of multicultural engagement strategies 

by Mike Hunter

Multicultural-MarketingWithout doubt, the multicultural market in the United States is an increasingly powerful consumer. Research by Geoscape, the leader in business intelligence across the multicultural market, shows Hispanics currently represent 18 percent of American households but were responsible for nearly half of the growth in consumer spending from 2013 to 2014. Between Asian-American and Hispanic markets, the groups accounted for two-thirds of the total economic spending growth.

According to Geoscape, the Asian-American, African-American and Hispanic groups, combined, will grow to nearly 130 million by the year 2020. Furthermore, the non-Hispanic white population will become the minority, dropping below 50 percent of the population by 2042.

So multicultural marketing strategies will become increasingly important to brands looking to engage in a more culturally relevant and personalized manner. But a new Chief Marketing Officer Council study reveals that, despite rapid population growth and strong support for initiatives within marketing circles, CEO and board support falls far short, failing to assist marketers’ ability to prioritize and fully fund their efforts.

A new poll from the CMO Council and Geoscape entitled “Activating the New American Mainstream” reveals that half of the 150 North America-based senior marketing executives surveyed feel there is some level of support for multicultural engagement strategies from the senior levels of the organization. While 67 percent of these executives admit the CMO has a high level of buy-in and support for multicultural efforts, 55 percent admit that the CEO does not share that opinion, failing to fully support initiatives.

This lack of top-level support translates into a de-prioritization of multicultural engagement programs as more than half (51 percent) of marketers admit that there are simply too many competing priorities.

For those marketers who have deployed multicultural marketing strategies, the operational approach is one that fails to separate initiatives into significant segments. Only 16 percent of marketers are separating marketing initiatives for specific ethnic groups, a practice that would allow for a deeper level of engagement thanks to relevant communications based on cultural behavioral patterns and insights.

“By understanding cultural nuances and marketing in a proactive and data-driven manner, marketers are positioned to grow ROI … however, none of this happens overnight,” observes César M. Melgoza, founder and CEO of Geoscape. “Targeting consumers without understanding their unique cultural behaviors and preferences risks growth optimization among the consumer groups that quarterly and annual budgets and success can hinge.”

Notes Liz Miller, senior vice president of marketing with the CMO Council, “Multicultural marketing strategies must move away from the niche campaign mindset and become an engrained part of any personalized customer experience strategy.” Pointing out it is no longer a scenario of replacing images or localizing content into a different language, she says, “This is about truly understanding the nuances of the customer, including any culturally distinct behaviors and buying patterns that can and must alter the way our brands reach and engage.”

Budgeting for Multicultural Marketing

Approximate percentage of marketing budget allocated to multicultural marketing initiatives:

Percent of Respondents Percent of Budget
27% 5%
27% 5–10%
22% 11–15%
9% 16–25%
14% 26%

 

How the company determines the amount of marketing budget to allocate to multicultural marketing initiatives:

Percent of
Respondents
Basis
53% What is required to reach the company’s growth goals
49% ROI
48% Percentage of multicultural consumers considered a fit for the company’s products or services
23% Percentage of anticipated future growth for the company
6% Competitor spending on multicultural
8% Other

 

The manner of the company’s operational approach to the new mainstream consumer:

Percent of Respondents Characterization of Deployment Efforts
54% Total market approach, where all cultures are integrated with pooled resources
17% One multicultural marketing initiative that combines Hispanic, Asian-American and African-American, with resources and staff separate from general marketing efforts
9% Separate marketing initiatives for Hispanic, Asian-American and African-American, with separate resources and staff for each
7% Hispanic marketing initiative with separate
6% Competitor spending on multicultural
8% Other resources and staff
13% Other

Online poll of 150 senior marketing executives — approximately 36 percent hail from B2B organizations, 29 percent are from strictly B2C organization, and 36 percent are from hybrid organizations; 43 percent hail from organizations with revenues in excess of U.S. $1 billion.

Multicultural Budget

Specific to investments into multicultural programs, marketers indicate that:

• Twenty percent invest in excess of 15 percent of overall marketing budgets to engaging with multicultural markets; 28 percent spend less than 5 percent.

• Fifty-three percent of marketers believe their investment into the multicultural market will increase going forward; 15 percent believe this increase will be significant; only 2 percent anticipate a decrease in investment.

• Twenty percent of marketers felt that multicultural strategies were mandatory and unanimously embraced across the organization, and just over one in four believed that the multicultural market was mission critical for the organization.

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