As the population and purchasing power of ethnic minority consumers in the USA continue to grow, more marketers are using subcultural segmentation and targeted marketing to reach these consumers. Meanwhile, some marketers have grown increasingly concerned with the cost-effectiveness of ethnic segmentation and differentiated marketing. This research reviews various methods for segmenting the ethnic markets and suggests the nested approach and cost-benefit optimization for analyzing the cost-effectiveness of ethnic segmentation and marketing. Furthermore, this research proposes four alternative strategies for marketing in a multicultural environment. Directions for future research and managerial implications are explored. Rationale and objectivesThe growing population and increasing purchasing power of minority consumers in the USA represent significant market opportunities. Ethnic minorities today comprise nearly 25 percent of the US population and are predicted to reach 47.2 percent around 2,050 (Patterson, 2001). The combined purchasing power of African Americans, Hispanic Americans, and Asian Americans has already reached $1 trillion (Adweek, 2001). Together, they have been referred to as America's``emerging markets.'' Many firms today treat ethnic minorities as distinctive market segments apart from the overall population. It is estimated that over half of Fortune 500 companies have some forms of ethnic marketing programs (McDermott, 1994). These companies have attempted to reach these consumers with differentiated marketing strategies, including new product lines, tailored advertising, and customized promotion programs.While ethnic marketing programs have become immensely popular, some marketers have shown a growing concern with the impact of ethnic segmentation and differentiated marketing on organizational efficiency (Faura, 1999). Several major consumer goods manufacturers created much controversy by modifying their ethnic marketing strategies. Coca-Cola dismantled its ethnic marketing division and integrated it into its various brand divisions. Despite criticism from ethnic marketing experts and minority advertising agencies, Coca-Cola believed that this new integrated approach would improve operational efficiency (Rousch, 1997). Miller Brewing Co., after years of heavy spending on ethnic marketing, has adopted cross-cultural advertising to appeal to a wider market (Melcher, 1997).

The impact of assimilation on a consumer's susceptibility to interpersonal influence is assessed in samples of first-generation Armenian and Chinese immigrants to the US. We find that: (a) Chinese immigrants are more susceptible to interpersonal influence than are Anglo-Americans who in turn are more susceptible to this influence than are Armenian immigrants, (b) Chinese immigrants are especially susceptible to the normative type of interpersonal influence and (c) Chinese immigrants' susceptibility to both types of interpersonal influence decreases significantly as they identificationallyassimilate, whereas Armenian immigrants' susceptibility to both types of interpersonal influence decreases significantly as they structurally-assimilate into the Anglo-American macro-culture.

The increasing efforts by marketers to target diverse groups of consumers call for a closer examination of the ethical implications of market segmentation and differentiated marketing. Previous research suggests that marketers and consumers often differ in their perceptions of marketing ethics. Based on contingency theory, this research proposes an integrated framework—which includes the nature of the product, consumer characteristics, and market selection—to analyze the ethical complexities of the marketing exchange. Interactions among these factors lead to various contingencies with different ethical implications for marketing managers and public policy makers. Marketers should assess consumer interests and the ethics of marketing programs before their implementation

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Many marlreters have attempted to garner the market potential among ethnic minorities in the US, who have experienced tremendous growth in population and purchasing power. While more marlreters are using ethnic segmentation and targeted marketing to reach these consumers, some have grown increasingly concerned with the impact of differentiated marketing on orgailind:ional efficiency and marketing performance. This research examines the costs and benefits associated with ethnic segmentation and marketing mix differentiation, and discusses managerial implications for improving marketing performance.