April/May, 2006

From the Editor

Ethnic Marketing Lessons

Whenever businesses look to capitalize on specific market segments, they run the risk of emphasizing differences rather than the similarities.

There are significant differences between the food tastes of different ethnic groups and those of the general population. For the most part, retailers located in areas of dramatic differences are acutely aware of the situation. They usually confront specialized retailers pursuing these groups and face customer demand for specific brands and products.

But as you read this month’s fascinating cover story, note how author Joe Albonetti, a noted consultant on marketing to Hispanics, points in so many ways to the similarities between Hispanics and the general consumer population. He quotes an FMI study that breaks the Hispanic market down into four categories: Loyalists, very brand conscious shoppers; Budgeters, for whom money is tight; Impulsives, who buy spontaneously and respond heavily to promotions; and Inquirers, who look for consumer information and consider purchases carefully.

Let us accept this division of Hispanic shoppers as correct but ask whether these classifications are just as apt for consumers in general. Even the specific products we might want to promote beg the same question: Success marketing to Hispanics might be achieved by promoting such products as Kraft Miracle Whip, cream cheese, sour cream, yogurt, Swiss cheese, Cheddar cheese and American processed singles!

One of the most valuable sections emphasizes the Latino population is not monolithic. Puerto Ricans in New York, Cubans in Miami, and Mexicans in LA — the tip of the iceberg when it comes to the diversity of the Latino community.

The diversity goes well beyond country of origin. For example, some marketers think putting signage in Spanish is a great way to appeal to Latinos. Perhaps. But take a look at the table below to see how diverse the language practices of the U.S. Latino community are based on how long they have been in the country.

In 72 percent of households of first-generation immigrants, Spanish is the dominant language. By third generation, 78 percent of these households are English-dominant. The remaining households are bi-lingual; the Spanish dominant category actually disappears.

If you are in an area that justifies stores geared toward one ethnic group, then you can develop those concepts. Typically, though, specialty market niches are served by independents specializing in that area.

Most chains will do better by focusing on four key ethnic marketing lessons:

1. Play to your strength. By far the biggest marketer to Hispanic immigrants is Wal-Mart. Why? It emphasizes low prices. Very important to first-generation immigrants who tend to have large families and lower incomes without multi-generational capital built up.

Obviously, Wal-Mart tries to carry the products its customers want. But there is a common misunderstanding here. Mexican immigrants probably drink a lot more fruit nectars than do the general population, but they spend a lot on Coca-Cola, too. And you can bet second generation consumption is heavily weighted to conventional products.

Your store needs to offer a compelling proposition on its own terms. Grafting a hundred SKUs of Latino products and a bunch of Spanish language signs to a store doing poorly is not likely to be a recipe for success.

2. Don’t patronize. You may offer kosher-for-Passover products but probably don’t write the signs in Yiddish on the assumption that the people are ignorant of English.

All too often, people think Hispanic and leap to stereotypical assumptions. In some places at some times, a Spanish language sign can be an indication of welcome. In other places at other times, it is an offensive way of segregating a group and making assumptions about their English fluency.

Make sure you’ve thoroughly researched your client base and determined what will facilitate their enjoyment of your store. Research, don’t assume.

3. Micro-market. Most supermarkets draw their clientele from a small radius — maybe two miles; virtually no chain of any size is going to have a homogenous client base.

If your stores are geographically compact enough, you may decide to always have certain ethnic products. Larger chains will have to change the offer based on the community to a maximize sales. Wal-Mart focuses on this with its “Store of the Community” concept.

This means the whole notion of carrying “ethnic” products is irrelevant. Each store has to carry the products — ethnic or not — its clientele will value.

It means trading a little bit of the operating efficiency strict planogram conformity could bring about for higher sales and profits from carrying a more optimal product mix.

4. Leverage the product. This is America: egg rolls, pizza and bagels are now part of our cuisine. If an ethnic group enjoys a product, it is highly likely that with promotion, recipes, sampling, etc., a far broader clientele can be built up.

The biggest profit from selling ethnic foods can come from turning your broader base on to the product. Think Costco: its snack bars sell only kosher all-beef franks. That is not because they are trying to attract a Jewish clientele.  DB