Courting ethnic consumers

Prepared Foods, Jan, 2002 by William A. Jr. Roberts

Reaching ethnic consumers requires more than translating packaging. Non-traditional programs, such as those that increase a company's visibility through church functions or other cultural efforts, are required in order to build loyalty with customers whose product knowledge may be limited. Concerted efforts by Burger King meant an increase in market share from four to 14%.

Finally, food companies have realized the importance of focusing on ethnic consumers, as these groups currently hold a significant amount of buying power--it's expected to grow dramatically in coming years. The International Dairy Deli Bakery Association (IDDBA) says the Hispanic population in the U.S. will grow to 56.3 million by 2025. Already, that group has a purchasing power of $300 billion, a rate that has grown at twice the pace of the general population, according to the IDDBA.

Those numbers are just for the Hispanic population. The University of Georgia's Selig Center for Economic Growth says the combined buying power of ethnic consumers in the U.S. tops $1 trillion. By 2030, one third of the U.S. population will be Hispanic (19%), African-American (13%) or Asian American/Indian (7%), according to data gathered by the U.S. Census Bureau. Such statistics are impossible to ignore, says Jill A. Rahman, director of ethnic marketing with Kraft Foods, Northfield, Ill. "Understanding and marketing to ethnic consumers is a strategic imperative if food manufacturers and retailers want to thrive."

According to data Kraft presented at the FMI show, Hispanics spend 12.3% of their income on food prepared in the home, while African-Americans allocate 10.1%. Each of these is significantly greater than the 8.3% the general market devotes to in-home food purchases. Those statistics equate to an average yearly household expenditure of $5,300 for Hispanics, compared with $4,305 for the general market.

Loyalty Defined

"These ethnic groups are especially important for the supermarket industry, beyond just their financial muscle," Rahman observed. "They tend to be younger and have larger families, and the meals are larger and require more ingredients. Kraft's research shows they spend more time on meal preparation and rely on their 'mental cookbook' of tried-and-true recipes well over half the time at dinner."

The notion of "tried and true" is a brand of loyalty often attributed to ethnic consumers for a variety of reasons. The Hispanic population is often regarded as particularly brand loyal, says Felipe Korzenny, Ph.D., president and co-founder of Cheskin, a market research and consulting company based in Redwood Shores, Calif.

"Loyalty is a funny concept," Korzenny explains, "because it has many dimensions. Traditionally, the Hispanic consumer has loyalty as a cultural attribute. That means they are loyal to family, to country, their culture, their religion, their elders.

"However, there are other elements, such as a lack of awareness of opportunities (due to lack of language skills or understanding of what the product is all about) that narrow the product choices. Many Hispanic consumers say that once they enjoy a brand they prefer to stay with that brand, because it is safe for them and because they say the brand has been good to them.

"Being good means many things. It means the brand has delivered a good product. It means the brand has done things for the community." Building brand loyalty among ethnic consumers will hinge on establishing a rapport, a relationship, with these groups.

More Than A Brand

As Bill Imada, president and CEO of Los Angeles-based Imada Wong Communications Group, explains, companies must "make some type of outreach. Build some kind of a relationship with the consumer, building customer loyalty. Or get other people to serve as marketing channels, people trusted in the community. Those relationships might be churches or temples, though a lot of American companies might be afraid to market in such locations.

"Nevertheless, in ethnic communities, temples and churches are more than just religious centers. They are social centers where people congregate, get together for lunch, talk about life issues, recommend products, services, supermarkets, grocery stores, restaurants, what they have tried, what they like, what they hate. It's a different paradigm than a lot of American companies are used to trying."

Exploring a variety of channels proved particularly successful for Burger King. A 1999 survey by Los Angeles' KSCI-TV found only 4% of Chinese consumers said they visit Burger King most often among all fast food restaurants.

To address this, Burger King implemented an Asian marketing campaign that focused on the Chinese community. It sponsored the local Chinese New Year Parade, aired Asian-special promotions such as "Dragonball Z" and "Pokemon" (campaigns based on popular Japanese cartoon characters) and also developed a special promotion called "Red Envelope," based on the Chinese tradition of giving gifts in rod envelopes.

Eight months later, as a part of KSCI-TV's annual survey conducted during May/June 2000, the same questions about patronage to Burger King were asked. The results showed a significant increase in Burger King's market share (14% vs. 4% in 1999) among the target Chinese consumers.