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Segmenting by Demographics: Ethnicity

Marketers appeal to people of different ethnicities with different marketing mix strategies. Today more companies are taking an ethnicity-inclusive approach to marketing by presenting messages that are welcoming to everyone.

Nicky J. Sims/Getty Images

Marketers believe that people’s ethnic backgrounds have a big impact on what they buy. If you’ve visited a grocery store that caters to a different ethnic group than your own, you were probably surprised to see the types of products sold there. It’s no secret that the United States is becoming—and will continue to become—more diverse. Hispanic Americans are the largest and the fastest growing minority in the United States, and they tend to be very brand loyal. Companies are going to great lengths to court this group. In California, the health care provider Kaiser Permanente runs television ads letting members of this segment know that they can request Spanish speaking physicians and that Spanish speaking nurses, telephone operators, and translators are available at all of its clinics.16

African Americans are the second largest minority group in America with the second highest buying power of any ethnic minority group in America.

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Many people of Asian descent are known to be early adopters of new technology and have above average incomes. As a result, companies that sell electronic products, such as AT&T, spend more money segmenting and targeting the Asian community.17

Major U.S. Ethnic Segments and Their Spending Group Percentage of U.S. PopulationAnnual Spending Power

Hispanic 17.4 $1.3 trillion

African American 13.2 $1.1 trillion

Asian / native populations 6.8 $870 billion

U.S. Census Bureau, 2014; Selig Center for Economic Growth, 2014.

MULTIPLE-CHOICE QUESTION

As you can guess, even within various ethnic groups there are many differences in terms of the goods and services buyers choose. Consequently, painting each group with a broad brush would leave you with an incomplete picture of your buyers. For example, although the common ancestral language among the Hispanic segment is Spanish, Hispanic people trace their lineages to different countries. Nearly 70 percent of Hispanic people in the United States trace their lineage to Mexico; others trace theirs to Central America, South America, and the Caribbean.

Chinese, Japanese, and Korean immigrants do not share the same language.18 Moreover, both the Asian and Hispanic market segments include new immigrants, people who immigrated to the United States years ago, and native-born Americans. So what language will you use to communicate your offerings to these people, and where?

Subsegmenting the markets could potentially help you. New American Dimension, a multicultural research firm, has further divided the Hispanic market into the following subsegments:

• Just moved in’rs. Recent arrivals, Spanish dependent, struggling but optimistic.

Which of the following ethnic groups has the highest buying power of any ethnic minority group in the United States?

Correct. With an annual spending power of $1.3 trillion, Hispanic Americans have the highest

buying power of any ethnic minority group in the United States.

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Asian Americans

Hispanic Americans

African Americans

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• FOBrs (fashionistas on a budget). Spanish dominant, traditional, but striving for trendy. • Accidental explorers. Spanish preferred, not in a rush to embrace U.S. culture. • The enlightened. Bilingual, technology savvy, driven, educated, modern. • Doubting Tomáses. Bilingual, independent, skeptical, inactive, shopping uninvolved. • Latin flavored. English preferred, reconnecting with Hispanic traditions. • SYLrs (single, young Latinos). English dominant, free thinkers, multicultural.

You could go so far as to break down segments to the individual level, which is the goal behind one-to-one marketing. However, doing so would be dreadfully expensive, notes Juan Guillermo Tornoe, a marketing expert who specializes in Hispanic marketing issues. After all, are you really going to develop different products and marketing campaigns and communications for each group? Probably not, but “you need to perform your due diligence and understand where the majority of the people you are trying to reach land on this matrix, modifying your message according to this insight,” Tornoe explains.19

SHORT-ANSWER QUESTION

16 Eric N. Berkowitz (2006), The Essentials of Health Care Marketing, 2nd ed. Sudbury, MA: Jones & Bartlett Publishers, 13.

17 (2003), “Telecommunications Marketing Opportunities to Ethnic Groups: Segmenting Consumer Markets by Ethnicity, Age, Income and Household Buying Patterns, 1998–2003,” The Insight Research Corporation, http://www.insight-corp.com/reports/ethnic.asp.

18 (2003), “Telecommunications Marketing Opportunities to Ethnic Groups: Segmenting Consumer Markets by Ethnicity, Age, Income and Household Buying Patterns, 1998–2003,” The Insight Research Corporation, http://www.insight-corp.com/reports/ethnic.asp.

19 Juan Guillermo Tornoe (January 18, 2008), “Hispanic Marketing Basics: Segmentation of the Hispanic Market,” http://learn.latpro.com /segmentation-of-the-hispanic-market/. Accessed December 2, 2009.

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Briefly describe why it is valuable and sometimes necessary to break down ethnic groups into subsegments for marketing purposes.

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