Ethnic Marketing in the United States

Table of Contents

Introduction . 2

I - The meaning of ethnic marketing 4

A-Définition of ethnic marketing 4

B-The origin of ethnic marketing in the United States 5

C-From the melting pot to the salad bowl concept 6

II - The economic weight of the new market 7

A-Who is the new America ? 7

B-The ethinc people pay raise 8

C-The increase in the ethnic community buying power 8

D-The ethnic people values and purchasing behavior 9

III- The ethnic marketing strategies 11

A-The strategy of integration 11

B-The micro marketing strategy 12

C- The multicultural marketing strategy 12

D-The grassroot marketing strategy 13

E-The ethnic marketing producers 13

F-The limits of ethnic markekting 18

IV- The means to reach the new America 19

A-The history of ethnic adverising 19

B-The television 21

C-The magazines 23

V - The comparison with France 25

Conclusion 27

Bibliography 29

Table of Annexes 31

Introduction

B

ack in time, appealing to people from minority groups was not a major interest to marketers in most companies. In the United States, the ethnic populations were expected to fit in with the white population. But time has proven this reasoning false. As a result of many economic and social factors, people are beginning to discover that America is no longer the melting pot it once was. Instead of looking to assimilate, certain ethnic groups such as Afro-Americans, Asians and Hispanics have fought to maintain their own cultural integrity. From that moment has started the ethnic marketing phenomenon which consisted in segmenting the market by creating products adapted to each ethnic group and by respecting these differences. This trend which started in the United States is now seducing more and more countries but it has more impact in the United States because the most recent census made it clear that the United States are fast becoming more ethnically diverse. We can observe an exception in France because despite the important number of immigrants, the French companies don't adopt the ethnic marketing because of republican principles. Ethnic Marketing in the United States is no longer a trend but a necessity if companies want to succeed because by 2050, the ethnic minorities will represent half the population of the United States. Ethnic Americans are increasing in size seven times as fast as northern Americans and are on their way to becoming the majority. Marketers want to have a good conscious thanks to a good integration policy but above all they are worried about «business» as the 21^st century is experiencing profound demographic changes. As a consequence, many companies have been caught unaware by the resulting major shifts taking place in the American market place today. In today's marketplace, does selling effectively to this new America is a key to the long-term survival and success of any company?

In a first part, I will explain what ethnic marketing is by giving its definition, its origin with the beautician CJ Walker, the Immigration Reform Bill and Pepsi Cola, by explaining the notion of melting pot and salad bowl. In a second part, I will talk about the economic weight of the ethnic people and present the new America with their pay raise, the increase in their buying power, their values and buying behavior. In a third part, I will give the different ethnic marketing strategies, the case of some companies that follow the ethnic marketing and give their limits as well. In a fourth part, I will show how the ethnic people are represented in the Medias and finally I will draw a small comparison with France because as the United States, France has an important rate of immigrants, however the French companies don't find an interest in wooing the ethnic people and prefer to borrow the American word melting pot to describe the French society.

Once upon a time in a country where reigned only one god: the dollar...

I- THE MEANING OF ETHNIC MARKETING

A- Definition of Ethnic Marketing

First of all, what does an ethnic group means? «An ethnic group (also called a people or an ethnicity) is a group of human beings whose members identify with each other, usually on the basis of a presumed common genealogy or ancestry. Ethnic identity is also marked by the recognition from others of a group's distinctiveness and by common cultural, linguistic, religious, behavioral or biological traits.»1(*)

Then, let's explain what marketing is. «Marketing is an ongoing process of planning and executing of the marketing mix (Product, Price, Place, and Promotion) of products, services or ideas to create exchange between individuals and organizations. Marketing tends to be seen as a creative industry, which includes advertising, distribution and selling. It is also concerned with anticipating the customers' future needs and wants, which are often discovered through market research. Essentially, marketing is the process of creating or directing an organization to be successful in selling a product or service that people not only desire, but are willing to buy.»2(*)

So, the ethnic marketing considers that nowadays there exists a market parallel to the mass market: a market for the communities. It consists in accepting a society made of different communities which distinguish themselves by their life style, their language, their way of dressing, their leisure etc. The ethnic marketing accepts that each ethnic group has a different way of consuming and capitalizes on that by launching products and advertising campaigns supposed to reflect their desires and needs.

The ethnic marketing is also called multicultural marketing. Putting a Black, an Asian, and a Hispanic in advertising in order to reflect the demographic reality of a country doesn't mean ethnic marketing like Benetton who considers that we are all the same despite our different skin color.

B- The origin of ethnic marketing in the United States

? CJ Walker

Ethnic Marketing was born in the United States in 1900 with CJ Walker, a black beautician. She noticed at that time that black women wanted to integrate in the American society, mainly white, and resorted to all sorts of amazing methods in order to straighten their hair as using a flatiron and it resulted in many deceptions (accidents, burns, hair loss...). She had the idea to launch a heating brush which was able to straighten frizzy hair without any danger. Without any marketing plan, she succeeded in inventing a revolutionary product among black women. But can we talk about ethnic marketing as women wanted to assimilate into the white community instead of keeping their difference apart? Her face appeared on the packing of the products to prove that she was herself black. The product was not only cheap in order to be available for the poor majority but it was enough high to prove its good quality as well. Mrs. Walker provided the product to the beauty institutes and thanks to door-to-door selling as well. She seduced the black celebrities like Josephine Baker 3(*) and when CJ Walker met with success, she supported many associations and organizations for black people. At her death in 1919, she let a fortune of 1 million dollars, a significant amount at that time. She was the first self-educated millionaire woman in the United States.

? The Immigration Reform Bill

Besides, according to the historian Marilyn Halter, the Immigration Reform Bill of 1965 is at the origin of this new America and of course at the origin of ethnic marketing, under the President Lyndon Johnson. This bill put an end to the precedence given to white immigrants contrary to minorities who were prone to restrictive quotas with an annual limitation of 170 000 visas. This bill had been put into effect by the President Calvin Coolidge in 1924 who wished that America would remain white and was heavily supported by Senator Ted Kennedy. In 1900, 90 % of the newly arrived immigrants were white Europeans, whereas in the eighties they were only11%.

? Pepsi Cola

The pioneer in ethnic marketing is Pepsi Cola. Indeed Pepsi Cola was the only brand to water the Afro Americans during the Second World War at a time where the army was still segregated. In 1946, the brand claims its strong intentions to conquer the black community market and hires black people. A few years later, black people are part of Pepsi's advertising campaigns and the brand sponsors black universities and TV programs and confronts the boycott launched by the Klu Klux Klan.

C- From the « melting pot » to the « salad bowl » concept

The first generations of immigrants in the United States were part of the famous social phenomenon called the melting pot. This term was used for the first time in 1964 by Gordon, a researcher in sociology. Melting pot means ingredients mixed, smashed and cooked together, a sort of meal made of different foods which like a puree change into a whole with a uniform taste.

Up to a recent period, all the newly arrived on the American territory used to fit in with the white population in order to accede to the American dream as soon as possible. One should not forget that the new immigrants fled from poverty, war, exclusion...so their wish was to adopt the American way of life to forget their dramatic situation and become a full-fledged American citizen. The immigrants did their best during decades to be accepted in the white society. That's why they didn't want to differ in their culture, education or food. The ethnic marketing was used only in order to help them to integrate better into the standards of the main population. That was the case of CJ Walker. But this trend has changed with the fast increasing of the non white population. Thus, ethnic groups were unable to preserve their cultures.

Then, a new concept emerged called the salad bowl. In this salad bowl different ingredients are going to get mixed (such as pepper, tomato, lettuce, corn...) but each is going to keep its taste and color. This means that the new immigrants want no longer to assimilate but to keep their origin language and values. Everybody brings its contribution to the culture. Nowadays the immigrants don't have to get rid of their mother tongue or culture to find a job, watch television or succeed in school... these different cultures don't merge together into a single homogeneous culture. We can talk of a cultural mosaic.

II- THE ECONOMIC WEIGHT OF THE ETHNIC MARKET

A- Who is the new America?

Statistics show that from 2050, the minorities will represent half the population of the USA so it sounds inappropriate to use the word minority.4(*)

Today, the Afro Americans represent 36.2 million people out of a total of 300 million people in the United States.5(*)

The Hispanics are « the ethnic minority » the most represented in the United States. They are 37 millions so it is essential for marketers not to neglect this community 6(*). Today, 20.6 millions of Mexicans, 3.4 millions of Porto Ricans and 1.2 millions of Cubans are part of this community. By 2010, one person out of six will be Hispanic in America. According to demographic expectations, the Hispanic community will represent 53 million people by 2020. One Californian out of three is Hispanic. There annual growth rate is seven times as high as that of the rest of the population. This population is the most important economic potential.

The Asians constitute 4% of the American population. Indeed they are about 10 millions but their number should double by 2020. It is very difficult to reach the Asian market because of the different languages and because of their cultural differences. There are six main groups: Chinese (2.4 million), Filipino (1.8 million), Indians (1.6 million), Vietnamese (1.1 million), Korean (1.07 million), Japanese (796 000).

B- The pay raise for ethnic people

According to Alfred Shreiber 7(*), Asians, Hispanics and Afro Americans «are accessing the means to prosperity». A survey found that these consumers are increasing their household incomes, obtaining mortgages, owning small business and earning higher education degrees. They are no longer the poor they used to be but middle-class citizens.

The Afro American's income is more important than that of the other groups: 485 billion dollars in 2000. It has doubled since 1998 and should reach 705 billion dollars in 2005. The Afro Americans spend almost all their income and don't save money.

The Hispanics average income enhanced by 20% between 1991 and 2001, whereas the global average income increased by only 6%.

C- The increase in the ethnic community buying power

According to Alfred Schreiber, the buying power of ethnic groups has doubled during this decade.8(*)

The Asians buying power has increased by 124 %, from 110 billion dollars to 255 billion dollars in 2001.

The Afro Americans buying power has increased by 85 %. It went from 307.8 billion dollars to 572.1 billion in only ten years.

The Hispanic buying power has increased by 118%. Their buying power should increase from 686 billion dollars in 2004 to 992 billion dollars in 2009.

Asians and Hispanics spending power is growing between 8% and 10% annually, much faster than the general population. But their use of financial services products still lags behind the general population. The Native Americans buying power has hardly increased since 2000 whereas the Hispanics buying power has boomed since 20002. From 2000 to 2004, the African Americans had the biggest buying power but they have been beaten by the Hispanics.

All the minorities saw their buying power increase in 2002 with a slow take-off between 2000 and 2002 probably because of the stock exchange crash due to the internet crisis between 2000 and 2002.

D- The ethnic people values and purchasing behavior

? The Blacks

The black population purchasing power is booming. This huge increase gives a glimpse to the economic potential that represents the Afro Americans.

The black community helps marketers to buy music, clothes and sport items thanks to their position of trend makers. Some brands like Nike have the chance to find through Afro Americans «human hoardings». The popularity of street marketing is linked to the fact that marketers noticed that the trends appear in the downtown area with a high concentration of black people. The best way to do is to conduct the young white community to buy and to make sure that the black people buy these items foremost. However, figures show that the biggest consumers of hip hop are white people-for example two-thirds of hip-hop records are bought by white people. Big brands like Nike, Tommy Hilfiger woo the Black community counting on the success of the Hip Hop movement. Tommy Hilfiger was at the beginning destined to the white «BCBG». A rumor on the net according to which Tommy Hilfiger declared on Oprah Winfrey's talk show that if he had known that his clothes would have so much success among the Black, he wouldn't have made them so beautiful, offended the black community. The company rejected of course this rumor.

Anne Sengès defines Afro Americans in her book Ethink!9(*) as «trend designers». Marketers noticed that Blacks want no longer to look like whites whereas Whites want to look like Blacks.

Afro Americans spend 98% of their income. In order to understand what separates Afro Americans from other ethnic groups, we have to go back in the past. Indeed, contrary to Asians or Hispanics who came to America at their own free will, Blacks have been forced. Thus, according to Ken Smikle who wrote Target Market News, Afro Americans tend to spend more in luxury goods in order to show that they are as important as the others among the Americans and that they have power as well.

The Black community is very attracted by hair products, make up, body cares, jewels, women accessories and electronic equipments. They are ready to spend more to have the best products available on the market. However, they spend less in insurance, in fitment or home appliances.

The Afro Americans consumed for 491 billion dollars of products and services in 1999 which explains why the companies target more and more this community because they are conscious that they are a real source of return.

? The Hispanics

Hispano-Americans tend more and more to integrate Latino cultures in the American culture rather than leaving their original culture and traditions because being Latino is trendy. This feeling rose among the young people thanks to Jennifer Lopez, Ricky Martin or Shakira who are not only seen as ambassadors of the Latino culture among Hispanics but among white Americans as well because they are famous. Latinos care about religion, family and care about their look as well-thus many companies like Procter & Gamble, Johnson & Johnson, household appliances company and cosmetics company charmed more this community fond of cosmetics.

? The Asians

The image that marketers have about them is that they are richer than the other communities, with strong family values. They accord a great importance to Asian traditions which impose the respect of the eldest. For example the buying decisions are made with all the family and are carefully thought-out. Higher education is really important for this community because it as a social and professional passport. They carry out everything like denying themselves from material goods in order to offer their children a high level of education in order to insure a good wage in the future.. Asians are perceived as good investors. They are more likely to save money rather than spend it. As a consequence there are good targets for banks. This group is the favorite one for banks, insurance companies or telecommunication companies. Even car builders are seduced by them and try to change their habits for Asian cars because Asians prefer upscale cars and 70 % buy new cars rather than secondhand cars. No matter how difficult it is to reach them because of all the difference nationalities, they live in the same towns like Honolulu or San Francisco that counts more Asians than Whites.

III- THE ETHNIC MARKETING STRATEGIES

A- The strategy of integration

This method doesn't consist in changing the marketing strategy by creating products adapted to each ethnic group. Its strategy is to include people with different skin color (Africans, Asians, and Hispanics) beside white people in advertising. The best example is illustrated with United Colors of Benetton. The goal is to create a product adapted to everyone no matter what your skin color is.

B- The micro-marketing strategy

The popularized strategy micro-marketing has been named by Procter & Gamble 10(*). It consists in changing subtly certain elements of the marketing-mix 11(*) for a given range of products or services that the company decides to present in a more attractive way to a specific ethnic group: different types of point of sale promotion, adaptation of the advertisings according to the language of each ethnic group we want to reach, a specific choice for the distribution network and the use of the ethnic medias beside the mass market medias. Beyond Procter & Gamble, many companies resort to this strategy like many cosmetic groups as Avon or Mary Kay.

C- The multicultural marketing strategy

A multicultural marketing strategy has become the ultimate solution adopted by the biggest American corporations. Since the beginning of the nineties, many specialists in ethnic marketing have emerged. There are today almost 250 agencies specialized in ethnic marketing, in the United States. The advertisers resort to them in order to implant a strong multicultural know-how within the companies. In many marketing departments, we find a division that makes sure that the general marketing strategy incorporates well the different ethnic segments. At Procter & Gamble, there is a vice president for ethnic markets. The first agency targeting Hispanics was created in 1962 by Luis Albertini.

D- The grassroot marketing strategy

The grassroot marketing consists in using cultural events, like the Chinese New Year, to put a product on the market and many companies resort to this strategy to attract consumers.

El Cinco de Mayo celebrates the victory of Mexico over France in 1862 and became a huge celebration in the United States among the Latinos. What is funny is that it is more celebrated in the United States than in Mexico. The companies don't miss this kind of opportunity to spread their brand. Another example, the US Portal edited in 1998 commemorative stamps. Besides, the Coca Cola brand got associated with a biscuit brand and proposed to consumers to organize its own commemoration of the fifth of May. Moreover, Kwanzaa is a week-long festival celebrated primarily in the United States, honoring African-American heritage from December 26^th to January 1^st. It was created on the 26^th of December of 1967. Its aim was to «give a Black alternative to the existing holiday and give Blacks an opportunity to celebrate themselves and history, rather than simply imitate the practice of the dominant society.»12(*) This festivity was supposed to be a non-profit alternative to the commercial outburst of Christmas. Of course many companies took advantage of this celebration to make profit with the black community.

E- The ethnic marketing producers

? The case of Pepsi Cola and Coca Cola

The beginning of the competition between the Pepsi-Cola and Coca-Cola companies in the 1940s is a legend in business.13(*) But what people ignore is that their biggest battle was the struggle of Afro-Americans to gain access to white Corporate America. Underdog Pepsi-Cola, under the leadership of a smart businessman, joined forces with a group of striving African-American professionals. Their union made history, and taught American businesses a lesson.

Pepsi has been the first to be interested in the communities. The story says that the first person who took a swig of the famous Pepsi was a Black. Caleb Bradham invented Pepsi Cola in 1898 and assigned to his assistant, a young Afro-American called James Henry King, the task to taste the drink that he had just concocted.

The Pepsi-Cola experiment began in 1940 when the company hired the first black man, Herman T. Smith, a 28-year-old newspaper adman «to launch a campaign to pump up sales of Pepsi in black communities,»14(*)/15(*) and was followed by the addition of two young business interns, Allen L. McKellar and Jeanette Maund during the pre civil rights era. Their task was to be the first black Americans to work at professional jobs in Corporate America and to target black consumers as a distinct market.

During the Second World War, Pepsi was the unique soda to water the Afro-American regiments at a time when the American army was still segregated. From 1946, the company, hired a team if 10 Afro-Americans, leaded by Edward Boyd, in order to promote the product among «their brothers». It is the beginning of the ethnic marketing. Three years later, Pepsi made its first advertising campaign for the Black Community featuring Ron Brown, seven years old, who will be under President Bill Clinton the trading state secretary. In the fifties, the company sent scholarships to the United Negro College Fund. A few years later, despite the threats of the Klu Klux Klan, Pepsi appointed a Black at the vice presidency. It sponsors many TV programs which pay tribute to the black culture and sponsors as well Lionel Richie, Tina Turner on their tour in the eighties. Michael Jackson becomes Pepsi's spokesman. At the same time, appeared the first advertising on television in Spanish on a big channel. «Joy of Pepsi» becomes «Goza el Sabor» in order to seduce the baby boomers who weren't born on the American territory and who conserved their traditions. Now we can find Shakira, Ricky Martin, Beyonce, Britney Spears in Pepsi campaigns... however Pepsi Cola prefers to feature celebrities from ethnic groups.

The war of colas is in its full swing on the ethnic markets. Coca and Pepsi target the same public with as much aggressiveness. In order to seduce the young people, the soda giants organize many events in the communities by distributing free t-shirts and cans. For example, conscious of the Latinos' love for football, Coca had organized a small World Cup in some schools in Texas because there is a high Hispanic population, giving drinks to the participants. The Fanta soda (Coca Cola's property) appeared in the United States after an absence of twenty years only because the Latinos love this drink in Latin America.

? The case of Mattel

The case of Mattel with its famous «Barbie» created in 1959, is particularly interesting. From the beginning of the eighties, Black Barbies, Asians or Latinos were already on the market but it was still at the basis the White Barbie which body had been colored. The advertising campaigns accorded no place at that time for minority dolls. Mattel introduced Christie, the first ethnic doll created in 1968 which was African and which had been followed by Theresa, the Latino in 1988 and Kira, the Asian in 1990 16(*). It is only since the beginning of the nineties that a real strategy has been put in place and that the dolls adopted the body type of the different ethnic groups, put on the market and supported by advertising campaigns appearing in ethnic magazines or TV programs. It is called «go ethnic» by Mattel. The results have been amazing. In only one year, the sale of Black Barbies (Asha, Nichelle, Jamal...) has been doubled. A multiethnic Barbie was created in 2002 as well and reflects the racial mixture, called Kayla 17(*). She has slightly a darker skin than Caucasian Barbie and vaguely Asian facial features, but she still has the same body measurements and can wear the same clothes as her blonde counterpart. A Shakira Barbie doll has been recently created at the effigy of the Colombian singer.

In 2000, Mattel decided to launch the first Barbie running for President, «Barbie for president 2000», three candidates were represented in order to reflect the multicultural nature of the country: a caucasian Barbie, an African American Barbie and a Hispanic Barbie. «This snub from Mattel Inc., the nation's largest toymaker, has angered many Asian Americans, who already feel overlooked in many spheres of U.S. life despite being the nation's third largest minority.»18(*) Concerned with the politically correct, the next year, Mattel launched Lea, an Asian doll, prettier than Kira, the first Asian doll.

? The case of L'Oreal with Softsheen-Carson

The French world leader in cosmetics, L'Oreal, is among the best experts in ethnic marketing. Indeed, the company purchased Softsheen Products Inc. in 1998, leader in ethnic hair products, and two years later, Carson Inc., world leader in ethnic cosmetics. SoftSheen-Carson realized 200 million dollars turnover in 2003. Today, the company's market share in the United States is 28 %. The success was so high that the cosmetic world leader put in place a research center in Chicago in order to develop its offer by studying more the black hair and skin. Today, SoftSheen-Carson represents 12% of the world market for hair products made for black women. Softsheen-Carson devotes time and money to familiarize the consumers with the products by using the sampling technique which consists in distributing free samples. Based on its success, L'Oreal recently took over Mizani, a company specialized in professional hair products for Black women as well.

L'Oreal noticed that black women spend three times more than Caucasian women. They use nine times more hair products, seven times more makeup and five times more cares than white women in the same conditions. There exist in the USA about 6500 beauty shops for ethnic products and black women are less faithful to a brand than Latinas because of the huge choice of products.

The huge advertising campaigns where appear one Asian woman, one Caucasian woman and one Black woman shows L'Oreal high interest for ethnic communities because L'Oreal adapts to the nature of each woman. The two Latino actresses, Penelope Cruz and Eva Longoria are the ambassadors of L'Oreal's campaign.

According to estimations, ethnic women spend 1.6 billion dollars on beauty products in big stores and 3.5 billion dollars in beauty shops. The president of Softsheen-Carson said that 80 % of the world populations present a certain degree of ethnicity through the multiple crossbreeding.

? The case of Nestlé

* 1 http://en.wikipedia.org/wiki/Ethnic_group

* 2 http://en.wikipedia.org/wiki/Marketing

* 3 Josephine Baker (1906/1975) was an American-born French expatriate entertainer and singer.

* 4 See annex 1

* 5 See annex 2

* 6 Ibid.

* 7 Schreiber, Alfred L., Multicultural Marketing: Selling to the New America, McGraw Hill, 2000

* 8 See annex 3

* 9 Senges, Anne, Ethnik! Le marketing de la différence, Autrement, 2003

* 10 Procter & Gamble Co. is an American corporation based in Cincinnati, that manufactures a wide range of consumer goods.

* 11 The marketing mix is generally accepted as the use and specification of the four Ps (product, price, place, promotion) describing the strategic position of a product in the marketplace.

* 12 Morrow, Carlotta, What is Kwanzaa? http://www.believersweb.org/view.cfm?ID=917? 29/11/2003

* 13 See annex 4

* 14 Capparell, Stephanie, The real Pepsi Challenge: The inspirational story of breaking the color barrier in American business, free press, 2007

* 15 See annex 5

* 16 http://www.mattel.com/about_us/history/default.asp

* 17 See annex 6

* 18 Wen, Patricia, The Boston Globe, Three faces of Barbie a snub to Asians, May 27, 2000