The UK ethnic community is forecast to double to 6 million within the next 30 years. But many UK companies ignore, or, even worse, patronise ethnic groups, and exclude them from their marketing programmes.
This is surprising as more than 60 per cent of, for example, the 476,000-strong Pakistani community in the UK are under 25, and over half the ethnic minority population are managers and professionals in self-employment.
The Office of National Statistics published figures last week on the financial situation of different ethnic communities in the UK. Based on the 1991 Census, it found that Asian communities are more affluent and “white collar”, while the black population – the majority of whom are now born in the UK – is more working class. Implicit in the report was the notion that ethnic minorities are financially more powerful than ever before.
Marketing to ethnic groups in the US is big business, but in the UK companies are still “dancing around the issue”, according to Todd Merry, senior consultant at Ogilvy & Mather Dataconsult, among others.
Brand owners approach ethnic marketing with trepidation. Some observers suggest it smacks of racism – it is, after all, classification by race. Others argue that it accentuates racial divisions, while even more believe it is an issue all UK companies marketing products will have to address.
A Business in the Community initiative, Race for Opportunity, has just secured approval – although it is still seeking finance – to conduct the first research into marketing to ethnic communities. It hopes to complete its study by October.
“If you want to attract minority groups, you bring them into your advertisements, you don’t have to talk to them differently,” argues Donald Hamilton, sales director at CMT Direct Marketing. He sees ethnicity as a distraction which is more likely to impede than improve relationship marketing.
“Marketing is a very powerful tool which influences the way in which we perceive the world. If we are to have a truly integrated society, we cannot use marketing to focus attention on so-called racial differences between people.”
The situation is confused by a lack of a clear definition of the concept. In the US, major corporations, such as AT&T, Coca-Cola, Nabisco and Sears, run dedicated marketing programmes that target up to ten ethnic minority groups. Customer communications are often produced “in language”, and advertising and loyalty schemes use images and incentives adapted to reflect the cultural aspirations of the chosen market.
In the UK the term is often used to embrace initiatives which are less about deliberately targeting people from ethnic minorities than not excluding them.
Depicting black families in mainstream consumer advertising would be an example – if one still very much in its infancy. The first washing-up liquid ad with a West Indian woman did not appear in the UK until 1993 (see box).
Ethnic minorities constitute over a quarter of the population in the US, where Spanish is the first language in large parts of the country. Ethnicity is too big an issue to be overlooked.
In Britain minorities comprise just over five per cent of the population – around 3 million people – and there is a great deal more integration than in the US. Getting fixated on a consumer’s ethnic origin risks some crass assumptions about their behaviour as a consumer.
Within each so-called ethnic community there exists a raft of cultural, religious and linguistic sub-divisions. The Indian community, Britain’s largest ethnic group, represents a target market of over 800,000 consumers. But this relatively small population is fragmented across groups speaking at least five different languages.
JoÃ&£o Baptista, vice president of Mercer Management Consulting, argues that ethnic marketing only succeeds where the target market is economically affluent.
He questions whether this is the case in Britain, claiming that, “the racial divides are not as sharply defined in Europe as they are in the US, where marketing along explicitly ethnic lines has been strongly influenced by the demands of civil liberty groups”.
He might also have added the evolution and empowerment of a black middle-class, which is not the case in the UK.
Contradicting Baptista is the example of Procter & Gamble in the US. It realised in the Seventies that it made sense to promote its Pampers brand in poor inner city areas – having previously ignored the black population – because fewer people could afford washing machines.
P&G put its lack of understanding of ethnic communities in the US down to the fact that very few members of those communities were actually employed in decision-making roles within the company. It took measures to redress the balance.
But many companies in the UK are only now waking up to the spending power of ethnic groups. The lack of members of ethnic minorities in senior marketing positions within big brand owners is a significant factor contributing to that myopia.
NatWest Bank conducted re-search into the business demands of companies run by people from ethnic minorities last year. But the Business in the Community research is the first time anybody has asked consumers their opinion.
“If we are to encourage companies to take dealings with ethnic communities seriously we have to prove that there are benefits from the communities’ spending power,” says Graham Bann, executive director of the Race for Opportunity initiative. “To get companies on board we have to prove what is in it for them. Long gone are the days when black equalled poor.
“Many ethnic communities are aware that they are not part of marketing programmes. The Business in the Community research is to identify and assess ethnic marketing, est-ablish levels of disposable income and discover the demands of the communities.”
Companies are having to decide whether ethnically tailored programmes foster greater brand loyalty or whether any advantage is outweighed by the risks of misreading the target market and causing greater offence. Apart from obvious gaffs, such as using the same marketing messages to target a 17-year-old Afro-Caribbean youth from Brixton, and a 45-year-old Afro-Caribbean barrister from St John’s Wood, pitfalls arise from the limitations of the available data. The 1991 Census contained – for the first time – a question on ethnic origin.
Matthew Masters, marketing manager at Capscan, offers CD-Rom-based tools for analysing Census information, but cautions clients against reading too much into ethnic variables, because of the low density of relevant data.
“Even when ethnic factors show a very strong significance, the results should be treated with caution. It only takes a very small change to present values that appear to be very strong,” he says.
One client wanted to know whether there were any consistent factors associated with bad-debt customers. A statistical analysis of local variables showed a strong correlation with ethnicity. The firm took no action on the finding, but the risks were plain to see.
Peaches Golding, a marketing and communications consultant and one of the architects of the Race for Opportunity marketing initiative, believes that changing demographics will force companies to pay more attention to ethnicity. “Many people do not realise that the proportion of ethnic minority peoples resident in Britain is forecast to virtually double by the year 2025.”
In some markets ethnic needs are explicit. In other sectors individual consumers have the same needs as buyers from the general population, but their collective spending power is disproportionately significant due to demographic factors.
But the major players are responding slowly to these developments. Terry Macko, vice-president of International Marketing at MCI, the second largest telephone company in the US, adds a cautionary note. “Getting it right takes dedication and commitment, you cannot go in and out of a community and expect to make a big hit.”
Telecommunications offers one of the most obvious opportunities for ethnic marketing. In the US, AT&T was forced to bite the bullet when it experienced a rapid loss of market share on its highly profitable Far Eastern market. BT’s international business is now under similar attack from companies such as Mercury.
The US experience suggests that ethnic marketing will first get underway in sectors that exhibit ethnically defined product needs, before spreading to the general market.
But doubts remain as to whether ethnic origin is a justifiable targeting criterion for mainstream consumer products. Perhaps the question is academic. If a profitable opportunity exists someone will come in to exploit it. Once that happens the major players will respond.
Tetteh Kofi, head of development for The Voice newspaper, believes that the future scope for ethnic marketing is influenced by psychology as much as need. He says: “Black kids’ experience of life in Britain is highly different from the mainstream. They are not different at the outset, but their experience of life forces them to evolve different attitudes and behaviour.” And brand owners need to develop marketing strategies accordingly.
Appealing to differences in values and interests is the stock of many targeted marketing programmes. And it could be argued that at the moment mainstream corporations are actually marginalising people from ethnic minority backgrounds by ignoring their values and interests in consumer marketing.
The reluctance of mainstream marketers to grasp opportunities – or perhaps their belief that marketing to ethnic communities is not cost effective – has allowed smaller companies to dominate and develop different niche markets.
Mainstream brand owners have generally been slow to recognise even the most obvious opportunities for marketing to ethnic consumers. No one really understands how big an influence ethnic origin has on consumer behaviour. Ethnic marketing is a legitimate tool but only as part of an overall marketing strategy – not if it is just a cynical attempt to boost sales.