August 20, 2014
The Changing U.S. Market: A $4 Trillion Opportunity
by DSN Staff
It’s every marketer’s dream—a growing market, consumers ready to buy, with money in hand. Trillions of dollars, in fact. But are all direct selling companies aware of this growing, ready and willing group? Even more, are their executive teams and salesforces knowledgeable about how to reach them to influence those trillions of dollars they are willing to spend?
Perhaps, the most startling numbers on these graphics are those representing the jump in buying power between 1990 and 2017 among all four of these minority groups. The Asian-American percentage change in buying power shows an increase of nearly 800 percent between 1990 and 2017, increasing from $115 billion to $1 trillion.
Close behind these staggering numbers is the Latino buying power, increasing almost 700 percent in the same years, from $210 billion to $1.7 trillion. Also breaching the trillion-dollar mark, the African-American buying power will climb to $1.3 trillion by 2017. And beyond that? The U.S. Department of Commerce projects steady increases in these numbers, expecting minority purchasing power to exceed $4 trillion in a few short years.
Emergence of the Total Market
America has long been called the melting pot of the world—a term referring to the various ethnic and racial heritages of over 300 million individuals who live here. The truth is that unless one is a Native American, every U.S. citizen has ancestors that have come here from somewhere else.
For the last five or six decades, the term General Market has referred to the group that makes up the largest percentage of customers in the U.S. marketplace. This group has been mostly represented by what the U.S. Census Bureau refers to as “non-Hispanic whites,” also commonly called Caucasians or “Anglos.” This General Market has been mostly constructed of descendants of Eastern, Western and Southern Europeans.
Entire sales and marketing structures have been built over the generations geared toward this General Market. Other segments of the population—large Chinese and other Asian communities, Hispanic families, and African-American populations—in commercial terms have long been considered sub-groups to the General Market. These sub-groups might have been completely overlooked in the construction of sales and marketing budgets, or more likely, allocated dollars in accordance with their population percentage. In other words, a company might have determined a specific amount for their sales and marketing budget and, having checked the U.S. Census Bureau data, had specific percentages of that budget allocated toward Hispanic, African-American, or Asian-targeted marketing. From a company standpoint, this has worked fairly well; however, it won’t for much longer.
This approach is becoming increasingly outdated because the face of America is literally changing. Through marriage and family building across ethnic and racial lines, as well as continued immigration, the General Market and its sub-groups no longer fit into distinct categories. This is evidenced by the fact that Americans are finding it more difficult to identify themselves within one single category.
In 1977, the U.S. Census form had only five categories of race: Indian, Asian, Black, White or Hispanic. Only one box could be checked. According to an article by Jens Manuel Krogstad and D’Vera Cohn published by the Pew Research Center in March 2014, U.S. Census official Nicholas Jones is quoted as saying, “Increasingly, Americans are saying they cannot find themselves on census forms.”
The Bureau is attempting to address this issue, and its complexity is plainly visible on the form, as there are now 15 options that make up five race categories—white, black, American Indian/Alaska Native, Asian, or Native Hawaiian/Other Pacific Islander. A separate question asks whether individuals are of Hispanic, Latino or Spanish origin.
The Census Bureau statistics simply indicate we have moved into a time in which multi-culturalism isn’t just an idea, or a marketing plan, but the reality of most Americans. And this reality is changing the way companies do business.
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The substantial changes in demographic makeup have led many in the marketing world to talk about shifting the language that describes customers. The idea of a dominant General Market with a few sub-segments is no longer a viable marketing description of consumers. Marketers are increasingly looking for new and better ways to reach consumers, and are embracing new labels to more accurately describe the buying public.
In the graphic below, you can see the changing face of the U.S. market by age segment, most clearly indicated by those in the under-40 and youngest categories. These young people will be the customers, consultants and corporate employees of tomorrow. Marketers are increasingly aware that their messaging needs to match up with what these populations consider to be important in order to best leverage their strategic plans. The largest contributing group to the multicultural expansion is the Latino population, which will triple in size and account for most of the U.S. population growth through 2050.
The transition from viewing the consumer landscape in segments to viewing the total landscape as one made up of varied cultures is now so marked that some believe the time has come to dismiss race altogether as a useful social indicator. Instead, companies should focus on strategies that will appeal across the multiple cultures, and layer on strong, engaging and connective ethnic values. In other words, focus on the human elements and find commonalities across all segments, thus delivering marketing content that is engaging and appropriate.
New marketing terms—such as Total Market, New Mainstream and others—are working their way into the lexicon of business executives who are attempting to manage these ideas into workable strategies.
Capturing Market Share through Content
Here at DSN, we’ve been writing about the importance of content marketing for some time. Marketing entrepreneur and blogger Seth Godin, along with author and social media guru Gary Vaynerchuk and others, has convinced us that outreach to customers in the social network and digital age is all about content, content, content.
But now, the message of that content is ever more important because the audience that is receiving it is changing as well. Joe Pulizzi, founder of The Content Marketing Institute, says, according to his website, that the content of your message delivers “information that makes your buyer more intelligent. The essence of this content strategy is the belief that if we, as businesses, deliver consistent, ongoing valuable information to buyers, they ultimately reward us with their business and loyalty.”
It will not do a company any good to produce marketing messages and advertising content for their goods and services that do not connect with the intended audience. Even if those messages have connected in the past, the profile of the customer is changing so much that even that success may no longer count. So what does matter?
According to Cuban-American entrepreneur and author Glenn Llopis, who heads up the Glenn Llopis Group business consultancy, culture is the new universal language of marketing. In a Forbes article on capturing the Hispanic Market segment, Llopis writes, “Cultural intelligence must replace the misguided notion that simply translating English copy into someone’s native language is all you need to do to reach them. Embracing cultural sensitivity has become critically important to the design of new business models, leadership development and the relationships that brands earn with their consumers.” Llopis makes the point that brands don’t necessarily need to communicate in a language to reach ethnic consumers, but they do need to communicate in the language of the group’s culture.
Translating existing English copy into various languages has been a common business practice in the past. That practice may never have been the best solution for the targeted market, but the expansion of cultural practices across the broader market is making it more and more outdated, not to mention embarrassing.
Take for example, the translation of the California Dairy Board’s very popular “Got Milk?” campaign into Spanish. Because they didn’t take the time to consider cultural nuances, the Dairy Board created a campaign that asked, “Are you lactating?”
Similarly, General Motors wanted to market the Chevy Nova to Latin American customers. They didn’t pay attention to the fact that “no va” in Spanish means “no go.” After much wasted time and effort, they renamed the car for that market.
Mistakes as blatant as these are not happening every day; however, any misfire created by a lack of understanding is wasted effort. How exactly will all this affect your company’s bottom line in recruiting, sales, and even hiring employees? Well, it’s difficult to draw dramatic conclusions, but it does seem clear that companies seeking to understand the market changes that are occurring will benefit more in the acquisition of customers, consultants, and general brand approvals.
Some of the cultural messages that are moving to the forefront of the total market might seem simple, but including them in your marketing messages can create a deep resonance in the market. For example, the number of households containing extended family—whether that is two or more generations living together, or includes cousins and aunts and uncles—is growing rapidly. Those companies whose marketing messages value these family relationships are more likely to engage these consumers.
Securing a place among these multiple trillions is, or should be, the goal of any modern marketer. Though the cultural messages and nuances are vital to any successful campaign, it is useful to remember that everyone, regardless of background or heritage, seeks quality and authenticity in the goods and services they utilize. With that as the starting point, those companies who strategically plan to reach the total market and all of its diversity will certainly gain a competitive edge.