Friday, December 30, 2011

One Step Forward ... Two Steps Back

By: Michael Steele, President and CEO 
Advantage Communications, Inc.

For years, I’ve been a proud innovator of multicultural marketing. In fact, I can remember when this discipline initially birthed itself upon the shoulders of consumer equality pioneers such as D. Parke Gibson, author of the legendary $30 Billion Negro and $70 Billion in the Black: America’s Black Consumers. Mr. Gibson was a revered pillar amongst African American and business communities as he was not shy about voicing his expertise on the need to diversify corporate America. As a result, he essentially revolutionized the art of marketing. 

Beyond Mr. Gibson, several advocates have spoken up on behalf of diverse audiences including Hispanics (now the largest ethnic consumer segment), Asians and the LGBT community – all in keeping with the need to adhere to diversity in the marketing arena. 

At its early inception, multicultural marketing was centered on speaking to the needs of diverse communities, which were at the time called “Special Markets” or “Market Development”. As time progressed, several organizations and corporations witnessed substantial growth within these consumer markets and began to realize that such growth could greatly affect their bottom line. 

Today, multicultural audiences represent billions of dollars in total consumer spending. According to The Buying Power of Black America, “In 2009, black households spent an estimated $507 Billion in 27 product and services categories.” (See chart to left.) 

As of 2010, black buying power equated to nearly $836 Billion. Hispanic consumers also hold significant spending power. According to a whitepaper published by Mercury Media entitled The Power of the Hispanic Consumer, “By 2017, the Hispanic consumer’s disposable income will have grown 76% to $1.83 trillion.” 

I would be remiss to not mention that the Asian market is also growing at a rapid pace in its current and forecasted purchasing power. According to a 2009 Selig Center report, “Asians’ buying power will reach nearly $700 billion in 2014, when their percentage of the population will only spill a little over 5 percent.” (See chart to right.)

Understanding this power of multicultural consumer spending, today’s marketers are more comfortable in the multicultural marketing space. I even applaud modern-age CEOs/CMOs as they appear to understand the importance of multicultural marketing to their respective businesses and brands. However, what they fail to understand and remain confused about is how to manage multicultural marketing as a successful, functional group within their organizations.

This confusion was further uncovered by a recent survey conducted by AdAge amongst chief marketing officers, senior VPs of marketing and other manager/directors from a variety of consumer-based disciplines. The high-level results were discussed in an article entitled “Marketers: We Don’t Get How to do Diversity.” And by the way, I can’t think of a more appropriate title!

The article noted, “While 84% of the marketers believe multicultural marketing is ‘critical to my business,’ almost 40% said they don’t know the financial value of multicultural groups to their companies.”


I interpret this statement to be a transparent void in understanding how to establish and maintain Return-On-Investments (ROIs). But, is this not the basic measurement for success for any and all marketers? Of course it is, and this responsibility lies with the CMOs. It’s nowhere near realistic to invest if executive leadership doesn’t understand ROIs. Herein lies a significant portion of the problem with multicultural marketing. While CEOs/CMOs may understand the percent of volume attributed to diverse consumers, they do not understand the ROI potential nor can they quantify the impact of targeted marketing campaigns.

During my career with The Coca-Cola Company, I oversaw the multicultural marketing group and worked on a series of consumer categories that held a disproportionate share of ethnic consumption. I took pride in establishing my department to the same level of value as the other departments. By this I mean we set measurable objectives, quantifiable strategies as well as ethnic profit & loss statements (P&Ls) – all of which were put in place to hold our department accountable for results. The same process that worked for me several years ago can work for today’s multicultural marketers.

Another significant portion of the problem with multicultural marketing is the fact that CEOs/CMOs struggle in understanding how to structure the multicultural marketing department to be most effective and generate optimum profits.

A recent demonstration of this struggle was the announcement that certain multinational organizations have pushed the responsibility of multicultural marketing down to the brand level in an attempt to force accountability or quantify the business. In reality, however, what this process has done is deemed multicultural marketing a lower priority– internally (particularly amongst executive leadership) and externally. This may not have been an intentional effect, but the truth is that these segments are now at risk of serious stalling or even complete demise.

These CEOs/CMOs have failed the multicultural community and their own companies in not understanding the economic impact these consumers have on shareholder equity. At my agency, Advantage Communications, we live and breathe the disciplines of successful multicultural marketing management.

Here are five “musts” we’ve coined for managing multicultural marketing for our clients: 
  • Multicultural marketing must require 100% commitment, 100% of the time. The same level of commitment that is dedicated to other disciplines within an organization should be exhibited for multicultural marketing. 
  • Multicultural marketing must be managed via executive leadership – not junior personnel. Let’s remember… key business decisions should be made from the top down, not the bottom up! 
  • Executive leadership must understand that relegating multicultural marketing is abdicating their responsibility for capturing every consumer dollar available for their respective businesses and brands. 
  • Multicultural marketing must not be viewed as a percent of a brand marketer’s compensation plan but rather a business segment. 
  • Multicultural marketing must be treated like profitable, consumer segments such as the youth, aging or gender-based markets. Just as business forecasting and analytical teams support these business segments, such should be the case for multicultural marketing. This is the avenue to demonstrate results. 

With all this said, I’m sure many of us have heard that one of the reasons these companies lack structure in multicultural marketing is because they cannot find qualified human capital to manage this discipline. Over the years, large corporations have hired highly assimilated minorities that have not done their due-diligence for these markets.

The minorities that are fortunate to enter into corporate America via multicultural marketing or similar ethnic disciplines only do so with the intention of moving up the corporate ladder. In other words, their “brown” positions are simply conduits for general market opportunities they seek to reach. As a result, no one is truly taking ownership of multicultural marketing.

What they fail to realize is that qualified talent can often be found right in the backyard of their own corporations or within their multicultural agency relationships. They must simply put forth the effort to secure talent and not wait for it to knock at their front door.

Over the years, my associates have had the opportunity to assist several of our clients in effectively structuring their multicultural marketing groups to optimize value, including the use of P&L statements by segments. We keenly understand that multicultural marketing is a discipline that can be applied not only across the country but internationally as well.

On this note, I must say I find it amazing that some CMOs appear to better understand multicultural marketing internationally but fail us domestically. Throughout my tenure with The Coca-Cola Company, I had the privilege of traveling to many countries. In these markets, CMOs spearheaded efforts to adopt culturally-relevant product offerings to meet the needs of diverse consumers. Why not do this in the states? The same basic philosophies apply no matter where you are! Marketing is marketing in the United States and abroad.

So, here’s a fact: Multicultural marketing is a complex discipline. However, knowledge is power. If you’re interested in learning how you may better structure your multicultural marketing group for success, we are the solution.