Research

Top Products for Multicultural Marketing – Can You Sell To The Ethnic Markets?

Prior to starting up Joinville the team here worked in multicultural marketing and web development for multinationals and as self-employed people. During those years we saw and heard many people asking the same type of question - Which product(s) are suitable to market to multicultural groups? Aren't all products suitable or are certain product categories more commonly used in ethnic groups in their new country?

Products Suitable For Multicultural Sales

The answer to this question is that, yes, certain product categories are more used and bought buy ethnic groups and therefore has a higher probability of succeeding if being sold and promoted towards ethnic segments of the market. Meaning, you'd probably not have to work as hard as if you were trying to sell other products that are not as sought for as the below mentioned. In this post, we'll run through some of the products we've seen succeed in catering to the multicultural markets.

Telecom

In the US, by 2012 an estimated 1 out of every 3 dollars spent on residential telephony is said to come from ethnic groups (USD 56.6 billion).(Source: Insight Research Corporation - 2009) Chat, email and Internet telephony has probably taken quite a chunk of the residential telephony share of wallet but ethnic people will always have a need for communicating with their loved ones in their home country. Makers of similar products, such as mobile phones, calling cards and mobile phone calling cards with discounted international calling rates are targeting ethnic customers as these groups are heavy users in these segments. As price sensitivity matures among ethnic telecom clients and brand loyalty becomes more important, more and more emphasis will be placed on bundling the communication with add-ons such as partnerships with money transfer companies, ethnic food retailers or travel service operators.

Financial Services

Equity Trading

Risk adversity is lower in ethnic groups and our guess is that this is due to the fact that many in an ethnic group has left the home country and taken quite a risk already. If you talk to someone at a trading firm, they can most likely tell you about many multicultural clients being heavy traders and prominent clients of theirs.

Loans

Due to the recent entrance of many multicultural groups and the fact that payment history, salary levels and credit rank is difficult to get a hold of, the possibility to get a loan or credit at a bank has been difficult. Other obstacles have been (for muslims) that their religion prohibits interest on loans ("riba") thus making it difficult for a muslimg to take out a loan from a bank. Islamic banking is a fast growing sector for banks where alternative methods for lending money and investing is proposed. Industry size is currently estimated at more than USD 400 billion, with a projected growth of 15% per annum.

Money Transfers

The grand old lady among ethnic marketing products and one that equal to telecom has a direct link to ethnic customers as the very essence of what the product do (sends money) is for many ethnic groups a desire and obligation after leaving the home country. The family back home must be supported and one very common way of doing this is sending money back on a monthly or quarterly basis. The estimated global yearly volume of money transfers was USD 305 billion in 2008 (Source: World Bank 2008) which makes it a huge ethnic market for banks and financial companies to compete in. Not to mention the cross-sale opportunity of introducing other financial products to the money transfer clients such as mortgages, investment funds, credit cards and consumer loans.

Food

Retailers are beginning to understand that ethnic groups consume and buy different kinds of groceries. Walmart opened up Hispanic supermarkets in the US, European supermarkets places their ethnic food shelves at better locations to promote sales and UK power-brand Tesco launched a range of halal chocolate in order to target Islamic consumers. With the different holiday celebrations occurring during the year (Ramadan/Bayram, Nowruz, Cinco de Mayo, Easter, Chinese New Year, Diwali and more) category managers can see sales peak for specific food products related to the ethnic holidays at certain dates and are better prepared for these sales peaks than before. Just the halal food market is estimated at USD 500 billion globally and is outgrowing many other food segments.

Betting & Gambling

Online betting worldwideVarious ethnic groups are huge clients of betting, poker and other forms of online gambling. Many times, this can be disastrous for the client, as shown here, here and here, but for the gambling providers ethnic groups mean big business. We've seen market studies on online gambling behavior where ethnic groups over-index several times the general population when it comes to gambling and betting online. Asians seem to be the groups with the fastest growth rate during the years to come. Hispanics, for instance, has not so high tendency to gamble as Asians.

Automotive

We've seen example on this blog on automotive brands showing high brand awareness among ethnic markets and cars are traditionally an important feature for certain groups. Luxury or high-end brands like Mercedes, Audi and BMW the top brands for many ethnic groups coming from the Middle East, South Eastern or Eastern Europe.

Travel

Heading overseasAirline travel for holidays or business to home country, group travel with tourist guides in the right language or bus passengers inbetween European countries (Northern Europe to Southeastern Europe) - the amount of money spent by ethnic groups on travel to the home country is huge. Instead of trying to reach the "business passenger" going once every 6 month to a destination, airlines should target the larger groups looking for cheap tickets during all months of the year. Continental and Lufthansa are some of the airlines who've discovered ethnic market revenue channels for their flights from the US. Emotional ties means that little deters people's trips to their home country — not terrorism concerns or higher fares.

Cosmetic Products

Scandinavian women use less make up than Eastern European women. African-American women use different tones and colours than Asian Americans. Depending on culture and skin tone different brands and product categories are preferred by different ethnic groups. If you're a cosmetics company one or several of your products probably has a high market penetration in an ethnic market segment. Avon in 2002 had 5% of their USD 6.2 billion in worldwide sales coming from US Hispanic customer segments. In the US alone, this niche segment is said to be over USD 1.9 billion. Sales are expected to reach USD 3.3 billion in 2012 despite the current financial crisis. We can also turn the table around and look at the ethnic opportunity where certain products have a very low market share today (insurance, health care etc) and look at future revenue opportunities, but that's for a future post.
Written by Niklas Nikolaidis

Niklas Nikolaidis is the founder of Joinville; a trading desk and SaaS ad platform that powers digital multicultural campaigns via direct and programmatic media buying.