The move toward ethnic marketing - includes related articles on marketing to minorities and sources of marketing data

At pleasant Co. in Middleton, Wis., designers and marketers are busy developing the first black doll in the company's popular American Girls Collection.

In Los Angeles, fashionable women stream into the Kayla Beverly Hills salon for makeup tips and cosmetics. Most are Asian-Americans, drawn by cosmetics specifically formulated for them.

Ten Miles away, on the 14th floor of a Los Angeles skyscraper, the eight staff members of the Gulf Atlantic Life Insurance Co. talk strategy--slipping from English to Spanish and back. The Hispanic-owned company targets the insurance needs of Southern California's Spanish-speaking residents.

At Prince Georges Plaza, in suburban Prince George's County, Md., near Washington, D.C., shoppers may choose among national chain stores and several small shops catering to the county's large, upscale black population. African Eye offers designer women's fashions from Africa, and Pyramid Books stocks its shelves with a wide range of titles dealing with African and African-American themes.

Across America, small businesses increasingly are seeking opportunities like these to serve the tastes and needs of the nation's burgeoning minority groups.

From 1982 to 1987, for example" the number of small, minority-owned firm--many of which serve their own ethnic communities--shot up. The total number of Asian-owned firms increased 89 percent, to 355,331; Hispanic-owned firms were up 81 percent, to 422,373; and African-American firms were up 38 percent, to 424,165.

The computer revolution, along with the increasingly sophisticated use of demographic information on racial and ethnic groups, is making the task of marketing to specific groups easier. Indeed, the growing availability of such information is propelling the move toward ethnic marketing.

"We've moved into an age of micromarketing and away from macromarketing," says Peter Doherty, an analyst for Impact Resources Inc., a marketing research firm in Columbus, Ohio. "What marketers are trying to do is identify segments within the marketplace where they can position their products."

Ethnic marketing isn't a fad. The underlying demographics, detailed in the 1990 Census, indicate that marketing to targeted minority groups is a sound business strategy.

The U.S. population grew from 226.6 million in 1980 to 248.7 million in 1990 This 9.8 percent increase in the past decade is the second-slowest growth rate in 200 years. But 30 percent of the growth that did occur came from immigration, and over 7o percent of the immigrants were Asian or Hispanic.

Asians are the nation's fastest-growing minority group, increasing 108 percent in the 1980s, to 7.3 million from 3.5 million. The Hispanic population grew 53 percent; its 7.7 million growth--to 22.3 million-was the biggest numerical gain of any minority group.

Blacks, who remain the largest minority, saw their numbers increase during the decade by 13 percent, to 30 million from 26.5 million. In contrast, the number of non-Hispanic whites grew by 4.4 percent, to 188.1 million from 180.3 million.

By 1990, 24.4 percent of the 248.7 million people in the U.S. were members of minority groups. This compares with 20.4 percent in 1980. The minority population could increase to almost 33 percent by 2030, according to a 1989 study by the Population Reference Bureau, a demographics-research organization in Washington, D.C. Although the income levels of the various groups vary greatly, Census Bureau figures show that all have significant market clout. Asian-Americans have the nation's highest household income and educational attainment--not just among minorities. In 1990, the median household income of Asian-Americans stood at $38,450, compared with the national median of $29,943 and the median $31,231 for white households, according to the Census Bureau.

Even though poverty rates for blacks and Hispanics remain troublingly high, Particularly when compared with the rates for whites and other minority groups, the black and the Hispanic middle classes have grown dramatically over the past two decades.

The Bureau of Labor Statistics calculates that in 1989-90 the typical black household spent $18,586, which included $6,257 for housing and utilities. With 9.3 million households, that adds up to a $172 billion market. Hispanic households that year spent an average of $23,432, including $8,001 for housing and utilities, making their 6 million households a $141 billion market.

Ethnic marketing generally refers to one of three strategies or to combinations of these strategies:

* Developing a particular product for a specific group.

* Stocking and marketing existing products of special interest to particular groups.

* Adjusting promotional and sales efforts to target a specific group.

Kayla, the Beverly Hills cosmetics company, and Pleasant Co., the Wisconsin doll manufacturer, have each designed and manufactured new products aimed at specific ethnic or racial groups.

"In my travels, I realized that Asians buy a tremendous amount of cosmetic products," says Michael Ghafouri, 39, a former Max Factor executive who launched Kayla in 1990. Within two years, Kayla's sales reached $8 million.

"We are no different from any other company, with one exception. We identified these gaps, and we came up with the solution," says Ghafouri. "It was bound to happen. And, when it happens, people usually say; |Whoa, how come I didn't think of it?' And I always say, "Why didn't I think of Hula-Hoops?'"

Pleasant Co. spokeswoman Andrea Ernst says the firm's development of its first black doll "is a recognition of the fact that America is a diversified country. We wanted to reflect that for the children and their parents."

The new black doll will be the first nonwhite doll in the company's historical collection, which includes four dolls from eras ranging from Colonial times in Williamsburg, Va., to the 1940s. Pleasant's New Baby Collection, introduced in 1990, includes a black doll, an Asian one, and a white doll. The company has been manufacturing dolls for seven years. The dolls clearly are targeted at an upscale audience; they sell for $88 apiece, and each comes with a hardcover book about the doll. Company sales topped $65 million last year.

Another firm tapping into a minority market is Pyramid Books. Like many other types of specialty stores, Pyramid takes the hassle out of tracking down products not routinely stocked in a mass-market store.

"We're a specialty store. That's our niche," says Hodari Abdul-Ali, 37, founder of Pyramid Books. "There is enough room for us to grow even within that niche." Because Pyramid doesn't have the resources that the major chains have, Abdul-Ali says, his competitive edge is his company's service. "That means that we have to do that little bit extra to keep our customers happy."

A big part of that is detective work--knowing where to track down elusive books and how to obtain them quickly.

"The African-American community is a market that is crying out for attention," Abdul-Ali contends. Offer attention and a good product, he says, and the customers will flock to your door.

Following that advice, African Eye recently attracted a thousand women to a fashion show at Prince Georges Plaza. The show featured the latest creations by Alfadi, a high-fashion Nigerian designer, who also hosted the show.

African Eye offers dresses and outfits that blend African and Western influences and are priced at $50 to $600. Says Mozella Perry Ademiluyi, the 38-year-old president and co-founder of African Eye: "Our customer is professional, 30 to 65, has an income level of $30,000-plus, and often is well-traveled. They don't just want to wear something that is African. They want something that is well-tailored, unique, and creative as well." She opened the Prince Georges Plaza store last December.

Less than three miles from Prince Georges Plaza is the bustling Asian Village International Supermarket, a 2-year-old grocery store. Its principal edge over large chain-store competitors is that it sells "all kinds of vegetables and meats you wouldn't find in a regular supermarket," says the manager, Jesse Tanchanco, a 34-year-old Philippine immigrant.

Among his best customers are Asian students--particularly Chinese--from the nearby University of Maryland who long for their favorite dishes. Vegetables at the market include Shanghai bok choy, mustard greens, rau moung, lemon grass, jute leaves, and Chinese broccoli grown by entrepreneurial Asian immigrant farmers in Florida and California.

"It reminds our customers of home. Plus, for them, this is like one-stop shopping," says Tanchanco, pointing across the narrow parking lot to a restaurant, a delicatessen, a bakery, an optician, and a jewelry shop--all mom-and-pop operations run by Asians and targeting primarily Asians.

Regardless of the goods or services they're marketing, all businesses going after minority consumers must fit the message to the specific target group. "I think tailoring a message is more important than anything else," says Doherty, of Impact Resources.

There are several related elements to successful minority marketing/advertising: finding the appropriate advertising message and messenger, the media best-suited to deliver the message, strategically located sales outlets where customers can conveniently go for the goods and services, and a helpful sales staff drawn at least in part from the target community.

Frank Cruz, 52, who quit a network TV job in 1990 to launch Gulf Atlantic Life Insurance Co. with a friend, says the company's ads are geared to Hispanics' strong family orientation. "Our pitch to them is to start saving for your kids while you're here. We know you're hard-working; we know you're educating your children. We want you to start thinking about saving for the future of those kids through insurance products and commodities."

Unlike corporations with expensive national ad campaigns, small ethnically oriented businesses are more apt to run low-cost ads in community newspapers, on cable television, or on local radio programs serving specific audiences.

For most mom-and-pop shops, advertising is even more modest than that--typically no more than fliers and word of mouth. Says Ademiluyi of African Eye: "Word of mouth has been fantastic for us. It's one of the best forms of advertising."

Cruz, of Gulf Atlantic Life Insurance, says that Hispanics who have not been in the United States long enough to become proficient in English do not turn to network television or major, nationally distributed newspapers for information. Thus, to use those media to advertise to them, he says, "is ludicrous. You go to the Hispanic media to reach them. If you're in the Los Angeles area, you have eight or nine AM and FM radio stations--all Spanish-speaking."

Pyramid Books advertises in such publications as the Washington Afro-American & Tribune, the Baltimore Afro-American, and the student newspaper of Howard University, in Washington, D.C., as well as in fliers and by direct mail.

While Pleasant Co. does some magazine advertising, it promotes its dolls and accessories primarily through its catalog, which is sent to households that have made previous purchases and to people who--often after being referred by friends--call a toll-free phone number. Pleasant books are also available through bookstores.

To establish contacts and understand the members of the ethnic or racial group that is being targeted, it may be a plus if the entrepreneur is a member of that group, but it's not essential. Pleasant Rowland, the 51-year-old founder of Pleasant Co., is white. Her firm, with multiracial dolls and books designed to be educational and fun, aims to appeal to all girls.

Rowland has assembled an advisory board of six African-American educators, curators, and historians to help with the concept, story development, and authenticity of the black doll from the Civil War period. Six books will chronicle her life. "Her stories will deal with her moving from slavery into freedom at the end of the Civil War," explains company spokeswoman Andrea Ernst.

"We are looking into the possibility of developing a relationship with a black advertising agency so that we can explore and develop all the proper channels and make sure that we are doing things correctly and appropriately for the minority community," Ernst adds.

Kayla's Michael Ghafouri is an immigrant from Iran, yet he has gone to the trouble of learning the tastes and preferences of other Asians by listening to his customers and giving them what they want. He also employs Asian-Americans as sales representatives and salon operators to serve the customers.

As minority groups grow in numbers, so do the opportunities for businesses wanting to serve this diverse market.

"Quiet as it's kept, the United States is becoming increasingly populated by people of color," says Abdul-Ali of Pyramid Books. "Any smart business person is going to look at the trends and make adjustments."

Tips On Marketing To Minorities

When they see advertising for a product or service aimed at their particular minority group, consumers "want to see a representation of their people in the message," says Peter Doherty, an analyst with Impact Resources Inc., a Columbus, Ohio, consulting firm.

He stresses sensitivity to cultural and language differences. "When you're trying to send a message to, say, the Cuban consumer in Miami, don't have a [non-Cuban] Hispanic that the Cubans cannot relate to," Doherty says. "You have to do your homework."

If you don't do your homework, you can be sure that competing marketers will.

Here are some other tips aimed at helping firms target ethnic markets:

* Never assume anything about your target audience; verify through research and interviews.

* Avoid stereotypes in profiling your target market and advetising to it.

* Just as all whites certainly don't act or think alike, neither do all African-Americans, Asians, or Hispanics. Each group is diverse, which creates challenges, but it also creates opportunities for marketers who spot the differences.

* Advertise locally. Advertisers trying to reach ethnic groups often achieve better results through community newspapers, radio stations, and cable TV than by using mainstream media.

* Keep the advertising message simple and friendly. Many minority consumers are immigrants who are not fully assimilated or conversant with American ways of commerce and consumerism.

Sources of Marketing Data

Census data can help businesses locate potential ethnic markets. Printed results of the 1990 Census provide population counts down to the local level, according to race and Hispanic origin.

More-detailed Census data, in some eases down to the block level, are also available by computer in several formats. The Census Catalog & Guide 1991, available at many public libraries or directly from the Census Bureau, lists all Census reports, computer products, approximate date of availability, and cost.

Printed reports, many of them on file at libraries, are for sale, usually for several dollars from the Census Bureau Computer products can cost hundreds of dollars.

Also listed are the addresses of State Data Centers and Business and Industry Data Centers, which are local repositories of Census reports and computer products. The Census Bureau also maintains regional offices in a dozen major cities, including Atlanta, Chicago, Dallas, Los Angeles, and New York. They are listed in the phone directory under federal government.

For more information, call the Census Bureau's Public Information Office, (301) 763-4040; or its Data User Services Division, (301) 763-4100.

In recent years, a whole new computer industry, called geographic information system (GIS), has sprung up. GIS uses Census and other important demographic, economic, and sales data to create digitized, colored maps that illustrate market conditions and identify areas of opportunity or saturation.

GIS software creates color maps that could, for example, spotlight areas where specific racial and ethnic groups are concentrated by neighborhood. Other variables can be added, such as household size and education levels, as well as the locations of a company's stores and those of its competitors within a given radius.

The 1991-92 International GIS Sourcebook, published by GIS World Inc., Fort Collins, Colo., is a 604-page directory of marketers of GIS hardware and software, with descriptions of their products. The directory costs $49.95 and can be ordered from GIS at 1-800-GIS-WRLD.

William Dunn a free-lance writer in Chevy Chase, Md, is the author of Selling The Story: The Layman's Guide to Collecting and Communicating Demographic Information (American Demographics Press Ithaca, N.Y.).

COPYRIGHT 1992 U.S. Chamber of Commerce
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