Companies need to do a better job in marketing their products to a more diverse customer base.
That’s the conclusion of a study entitled, “Activating the New American Mainstream,” from Geoscape and the CMO Council, which found that over half of the 150 senior marketing executives surveyed believe their company CEO doesn’t support the kind of initiatives necessary to reach different ethnic groups.
This attitude can hurt the bottom line, according to the two organizations, as various ethnic groups are likely to respond differently to how products are pitched.
So if a company isn’t considering the wants and needs of particular groups, they might be leaving out a lot of potential customers. And companies are learning the hard way that "old segmentation models and behavioral assumptions are doing little to move the needle," the research concluded.
Essential Marketing Strategy
According to Liz Miller, Senior Vice President of Marketing with the CMO Council, companies must make such marketing moves a key part of all campaigns for their products.
“Multicultural marketing strategies must move away from the niche campaign mindset and become an ingrained part of any personalized customer experience strategy,” she said.
“This is no longer a scenario of replacing images or localizing content into a different language.
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.”
Additionally, companies should take into account that Hispanics were responsible for nearly half of the growth in consumer spending between 2013 and 2014, according to the Geoscape research.
When factoring in Asian American and Hispanics together, the two groups accounted for two-thirds of total economic spending growth.
Multicultural consumers are no longer part of specialty segments or niche markets. "They're part of 'new American mainstream,' complete with buying power and influence," the report noted.
Understanding Your Customers
Learning how to market to various groups is a process that takes time, according to César M. Melgoza, Founder and CEO of Geoscape.
He said that companies must put forth the effort to study who their product is going to be marketed towards and why different groups may have various reactions or specific wants when considering a new product.
“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,” he said.
“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.”
The Nuts and Bolts
The full survey results and further analysis are available for download from the CMO Council (registration required).
Included with the package is a 12-page white paper that goes into more depth about how a company could use the information.
From there you’re also able to get the specific questions that were used in the survey and a more detailed breakdown of the results data.
The CMO Council and Geoscape sought to balance who they were targeting for the survey.
According to the CMO Council, 36 percent of the respondents are from B2B organizations, 29 percent were from B2C companies, while 36 percent were from some type of hybrid. A total of 43 percent are from organizations with revenue in excess of $1 billion.
Among the B2B businesses, 80 percent of the survey respondents said their marketing does not include any type of multicultural initiative. The number was only slightly lower for hybrid organizations, with 67 percent of them listing some type of plan in place.