A Focus on Multicultural Marketing8/25/2002 8:00 PM Eastern
Ethnic Americans, primarily Latinos, African-Americans and Asian-Americans, comprise about 30 percent of the population, according to current U.S. Census Bureau statistics. The number of ethnic Americans is also growing at a much faster rate than the general market and will represent the majority of the U.S. population by 2050. Their spending power is more than $1 trillion.
Despite this fact, many companies continue to use a homogeneous marketing approach based on general marketing messages and tactics while overlooking the opportunities that exist in this largely untapped market.
It is simply good business to market to these segments using uniquely targeted messages, packages and tactics. It is naïve to believe that the tactics that work in the general market will also work in ethnic markets. Traditional marketing techniques are not always effective at reaching consumers who exhibit a distinctive demographic and psycho-graphic profile.
Simply put, the cable industry will lose by ignoring multicultural markets. That's why the overall goal of the Multicultural Marketing Committee of the Cable & Telecommunications Association for Marketing is to help the industry gain market share by demonstrating the tremendous revenue potential of ethnic markets and by providing concrete marketing information on attracting these segments. The CTAM committee has been working to gather strategic and tactical information and create resources that industry professionals can use to build their multicultural marketing efforts.
By presenting case studies and models of multicultural marketing excellence via a variety of venues, such as CTAM Summit sessions and Master Courses, the Multicultural Marketing Committee is providing useful marketing insight on getting and keeping these target groups.
The Phoenix Example
Cox Communications Inc. stands as a multicultural marketing example worth examining. As a leading provider of video, voice and data services, Cox recognizes the importance of serving all key ethnic groups in our service areas, both in the products we offer and through the advertising and communications we employ.
In Phoenix, the Latino consumer segment continues to be of paramount importance as it is about 25 percent of the market. This is specifically a Mexican-American Latino profile and represents the fastest growing ethnic segment in the DMA.
But cable penetration levels for Latinos are lower than the penetration levels of the general market. Within the Latino population in Phoenix there is also a significant sub-segment with a low level of assimilation. In fact, about 76 percent of Latinos in the desert Southwest (Arizona and Nevada) are unassimilated. This group shares the following characteristics, all of which present marketing challenges as well as opportunities:
Are new to cable as a category;
Prefer cash transactions (cash economy);
Live in multi-generational households (i.e., grandparents, parents and children under one roof);
Speak Spanish only or are Spanish dominant;
Index low vs. the general market in annual household income;
And index low vs. general market in education levels.
All of this information was used to form our marketing approach to the Latino segment with the goal of increasing penetration levels in this market to a commensurate level with that of the general market over a three year period. We believe results will be maximized through an on-going effort over several years as opposed to sporadic campaigns.
The research clearly indicated that our Spanish-language offering was at odds with the market segment. Initially, the Spanish-language cable package in Phoenix included expanded basic, digital and a tier with 14 Spanish-language networks for $48.95 per month. That was a difficult sell in a target market that has a relatively low household income, is generally new to cable, and has not established a price value relationship with the product. With that in mind, we developed a sampling strategy and launched an entry-level package with broadcast basic, digital and the Spanish-language tier for $28.45 per month in March 2001.
Our strategy was to bring customers into the category and sample the product. Once the Cox TeleLatina product was in the home, our remarketing efforts along with the varying levels of in-home assimilation would help drive the consumer to upgrade to a higher level of service or additional products.
A strong response rate to the lower priced offering was not deemed a success in and of itself. We also tracked and analyzed the household response rate, revenue-generating unit (RGU) weighted response rate, cost per lead, cost per sale and churn.
Some in the industry would argue that marketing to specific ethnic populations is too expensive. To date, we have achieved tactical efficiency in our Spanish-language integrated campaigns as well as shown strong growth of the Cox TeleLatina offering. Our average cost per lead by tactic (i.e., TV, radio, print, direct mail, etc.) is as efficient, and in some cases is more efficient, than they are in the general market, as illustrated in the accompanying chart.
Furthermore, the TeleLatina product has grown by about 230 percent over the five quarters since launching this new strategy.
WHAT'S NEXT IN PHOENIX
In order to achieve our long-term goal of migrating customers to an expanded level of service over time, we are focused on addressing the following important items:
Complete the infrastructure needed to offer a total Spanish-language customer experience from start to finish (sales, installation, service calls, billing, etc.);
Recruitment and hiring of more bilingual technicians and customer service representatives;
Spanish language bill presentation;
Enhanced Spanish-language installation materials that emphasize items of significance to Latino customers;
Cash payment locations;
How to read the monthly bill;
Digital cable user guide (remote control, pay-per-view ordering, Spanish language Interactive programming guide);
Spanish language option for Cox Phoenix Web site;
And enhancing a key Latino retail partner relationship (i.e., a prominent local grocery store focused on Spanish-language consumers) including developing them into payment locations as well as a sales agent.
Initial results from the Phoenix case study are encouraging. It is too early to determine whether this specific sampling approach is the best long-term strategy. But it is clear that the tactical marketing approach is successful. It is essential to realize the importance of taking chances, measuring the results and not being afraid to fail. The analysis needs to be honest and accurate in order to make adjustments accordingly and maximize the return.
We will need to complete all the elements outlined herein before we draw a conclusion regarding this specific packaging approach. What's most notable is that we have demonstrated our ability to effectively market to this segment and are committed to doing so on an on-going basis with a product offering strategy that yields a strong return.
To continue to develop synergies in our efforts to acquire ethnic consumers, Cox has recently formed a multicultural marketing task force. This cross-functional team will allow Cox systems to share resources, stretch our marketing dollars, and share best practices across the company.
The Cox marketing approach also recognizes that it is essential to field an orchestrated effort among all Cox functional areas like public affairs and human resources to effectively reach this market. Our involvement in schools, civic groups and local charities, plus the provision of local employment opportunities will allow us to better serve these audiences.