Marketplace diversity and cost‐effective marketing strategies

Abstract

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).

Revisiting the substantiality criterion: From ethnic marketing to market segmentation

“…Hence, methods starting from broad demographic conceptualisations of a minority ethnic group may fail the robustness assessments proposed by Wind (1978) and Thomas (1980), by overstating potential segment substance and remain open to the noted reservations. In contrast, Cui and Choudhury (2002) prescribe the need to drill down to a community level. A difficulty is that the onus of conducting primary market research to inform ethnic group profiles may combine with preconceptions about unattractive group substantiality to deter investing in profiling, effectively hindering ethnicity based market segmentation.…”

“…This is particularly so if groups are narrowly defined and become 'invisible' when lumped in some 'Other' classification in official statistics, compared with aggregations of groups based on single indicators such as language or country of origin. Invisible groups tend to accommodate inferences of excessive smallness or lack of importance that can combine with managerial preconceptions that ethnicity based segmentation is dangerous, prone to social retaliation (Pires and Stanton, 2005) and too costly (Cui and Choudhury, 2002).…”

“…Another is to commence from a broad demographic definition of ethnicity and proceed to derive a group homogeneous in terms of personal factors, including acculturation, taking costs and benefits at each step into account (Cui and Choudhury, 2002).…”

Advancing the 5E's in festival experience for the Gen Y framework in the context of eWOM

“…That is, music festivals are among the most competitive marketplaces for events: festival promotions are thus critical in establishing a market position (Moeran & Pedersen, 2011;Pegg & Patterson, 2010). This makes the selection of an appropriate promotional mix for a music festival a daunting task for organizers particularly due to challenges such as: escalating costs for advertising and promotions, decreasing promotional efficiency in reaching target audiences, and crowded event marketplaces (Ashworth & Kavaratzis, 2010;Cui & Choudhury, 2002). The current study works from the assumption that eWOM may assist SID managers with a means by which to assist in mitigating the aforementioned challenges.…”

Exploring the characteristics, attitudes to targeting and relationship marketing of small ethnic minority businesses

“…While an older generation cling to the memories and cultures of their homeland, their children and grandchildren adopt very different habits and styles. 20 Targeting individual or business customers within ethnic minorities requires awareness of such a process and appreciation of the variations within a given ethnic group. Here ethnic businesses may have an advantage since non-ethnic business approaches may result in insensitivity and patronising communications.…”