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The Multicultural Market Opportunity for the Auto Industry

Date: Feb 14, 2012

By 2016, the Multicultural consumer segment will contribute $14.0 Billion to the auto industry. The companies that will win the market are those that understand diverse consumers’ beliefs, practices, intentions, consumption patterns and spending capabilities. Multicultural Marketing Resources, Inc. asked experts in marketing to Hispanic, American Muslim, Asian American, African American and LGBT consumers to share market insights that auto makers should consider when targeting these groups.

Hispanic: Car companies must understand the role culture plays in how multicultural consumers interact with a brand and shouldn’t be afraid of co-creating brand value with their customers. But they must identify key dominant cultural attributes and influencing factors, which enable them to engage and connect-be it reviews and word-of-mouth recommendations from friends and family, or live interface with a product and/or recollections of past experiences. This way, it’s possible to weave the brand into the cultural fiber of each diverse community in a manner that effectively resonates.  According to Polk, for the first nine months of 2010, Hispanic purchases accounted for 8.7 percent of the total U.S., outpacing the overall U.S. auto market, which grew just four percent in the same time period. Companies like Chrysler and GM have long focused on using strong sales incentives and in-dealer programs to win customers, and this strategy has not been effective. A more enticing value-proposition for Hispanic consumers has been Hyundai’s offerings. It adopted a marketing campaign built around protecting consumers financially by allowing them to return their vehicles, without penalties, if they lost their jobs or faced economic hardship. This marketing message resonates with Hispanics who have larger families and have been faced with a similar circumstance in this down economy.  Secondly, they tend to travel longer distances to their places of employment.  Other successful messages center on fuel efficiency, comfort, quality and affordability. Hyundai as well as other Asian manufacturers have experienced more than 25 percent growth in their sales to the Hispanic market according to Polk. Companies paying attention to these segments’ specific needs have experienced growth. Jose Velez-Silva, Partner, Director of Client Services, GlobalWorks Group LLC

American Muslim: When zero-financing car promotions began popping up, my American Muslim friends started to jump on those offers.  Why? For Muslims there is a religious prohibition on Interest.   So inadvertently, auto retailers were catering to a unique need of a growing and affluent American Muslim market.  This Muslim lifestyle market is a huge global market representing $2+ trillion in purchasing power that is being tapped into by American companies worldwide.  In the US, the size and affluence of the local American Muslim market has reached a critical mass with a purchasing power of $105+ billion in 2010 (our conservative estimate of 6 million population,) and automotive and auto services as the second highest spending category.  This niche market has above national average education level, and has a very appealing young demographic.  At varying degrees, American Muslims have needs, motivations and behaviors that are faith-driven that include: unique celebrations, dietary requirements, family values, ethical and equitable investment/ financing needs, balanced education, and more.  In the US, companies have just begun targeting this audience with food, finance, and retail sectors taking the lead.  While thousands of small businesses are catering to this market, major brands such as Best Buy, Western Union, Wal-Mart, Whole Foods have also begun engaging with this niche market as part of their multi-cultural marketing mix. Successful American Muslim Market strategies range from low-risk targeted Muslim media marketing campaigns, to custom messaging and communication to this audience, to product customizations.   Some key considerations include understanding the diversity (African American, South Asian, Arab,) the immigrant and native American Muslim dynamic, as well as their geographic fragmentation. Rafi-uddin Shikoh, Managing Director, DinarStandard
Asian American: Asian consumers in the US are uniquely attractive for automotive marketers due to a long list of demographic superlatives. Comprising 5% of the US population, and both easily and efficiently reachable due to their geographic concentration in just a handful of states and cities, Asians are the fastest growing racial group in the US, they have the highest level of educational attainment, and they boast the highest median household incomes of all consumers, including Caucasians. In the late 1990’s, the automotive industry ‘woke up’ to such demographic benchmarks, as well as research from a variety of sources including syndicated omnibus studies and Polk data which highlighted that Asian Americans are the most likely of all groups to buy new (versus used) cars, the most likely to spend more on a car, and the most likely to buy luxury makes. This knowledge has propelled a wide range of Japanese, US-domestic, and European car brands to develop Asian-targeted marketing and media programs to compete for share-of-garage but the market is by no mean over-saturated and there is plenty of room for new players. Clearly, the ‘sweet spot’ for the automotive industry lies with the 5 largest Asian ethnic populations in our country. In rank order by national population size, these are the Chinese, Asian Indian, Filipino, Vietnamese, and Korean segments. Each of these segments can be addressed by an ever-expanding landscape of both offline and online in-culture media that offers high quality content and extremely cost-efficient reach. Additionally, geo-demographic analysis of target Asian populations can pave the way for relevant out-of-home, grassroots, and retail targeting in dealerships. Saul Gitlin, EVP, Strategic Services, Kang & Lee Advertising

African American: Anyone who has been in marketing knows how important relationships are. That is why Black and Hispanic urban networks like churches, beauty salons and barbershops can play a key role. Custom publications coupled with community events are also tools that reach multicultural audiences. “Feet on the Street” understand the fabric of the community. Hosting beauty salon operators at a luncheon sponsored by a car company or other enterprise and highlighting the multicultural management in the company resonates with that target audience. Black community newspapers and radio and the Internet are also key vehicles.  Affluent black households have grown; There are 2.4 million households with incomes of $75,000 or more. These account for 45% of total black buying power.  Companies that offer luxury items, including cars, should know that African-Americans have a propensity for purchasing high ticket and high margin items.   There are nearly 40 million black consumers approaching 14 percent of the U.S. population.  By 2014 they will have over a trillion dollars in buying power. Census data show that the percentage of blacks over age 25 who have completed high school or college rose from 66.2 percent in 1990 to 78.5 percent in 2000 and to 83 percent in 2008. As the percentage of black Americans who have college degrees has risen, so has their income. Like the general market, the number of baby boomers is growing.  According to author Aaron W. Smith (“In the Black:  Live Faithfully, Prosper Financially”) there are 9 million black boomers set to retire by 2029. The take away is that even in target marketing to African-Americans, there are markets within markets and one size does not fit all. Lafayette Jones, CEO, SMSi-Urban Call Marketing, Inc.

Gay and Lesbian (LGBT) consumers, estimated at 5% to 10% of the total population, have long been a prized target population for marketers, not just for having higher discretionary income, but more discretionary time. This bodes well for leisure time products and services such as entertainment and travel, including travel by car, and often translates to a demand for more performance features and luxury comforts from cars. Nearly half of LGBT adults are more likely to consider purchasing a company’s product or service when they receive ads tailored to them.  Consistently higher auto sales have been achieved by makes and models known for advertising with LGBT-specific campaigns: Subaru is probably the best example of an auto marketer that has reaped the benefits of building its brand with this target audience. Keep in mind the following insights:  One size doesn’t fit all:  Consider your auto portfolio to tailor offerings and messages to specific high-value groups within the LGBT community.  The 2010 Census reported over 900,000 same sex couples.  Sixty percent of these are female couples.  Twenty-two percent are raising children.  Consider these demographics in your advertising when offering car features, casting and developing specific messages to improve relevance. Seek a deeper connection to the community:  LGBT consumers are more likely to consider brands that support values and causes that are important to them.  Strategic alliances or sponsorships that support anti-bullying, the environment or marriage equality can help build credibility for your brand among consumers. Welcome your LGBT customers:  Car dealerships can be seen as fairly macho environments. Gay and lesbian couples need specific messaging that tells them they are welcome and can comfortably shop for a car as a couple.  Seeing at least one gay salesperson on the lot sends a strong message. Building a reputation as a brand whose dealers are LGBT-friendly is a powerful strategic positioning. Howard Buford, President & CEO, Prime Access

Lisa Skriloff is president of consulting firm, Multicultural Marketing Resources, Inc. and publisher of The Source Book of Multicultural Experts and Multicultural Marketing News,

A version of this article was featured in the December 8, 2011 edition of The Detroit News