by Chang-Hoan Cho, Ph.D. Assistant Professor, John Holcombe & Daniel Murphy of Insights Marketing Group

Cultural background affects how consumers process advertising messages, and advertisers recognize the purchasing power of the diverse ethnic groups in the U.S. In this white paper, Insights Marketing Group delves into market research strategies that are effective at segmenting these markets and creating products and services that resonate with them.

Executive Summary
Contemporary U.S. markets are becoming more ethnically diverse with more distinctive cultural values and customs among various ethnic groups. According to 2002 Census Briefs, ethnic consumers comprise nearly 30 percent of the U.S. population. This surge of ethnic population is creating enormous marketing opportunities with greater purchasing power among the ethnic markets. Accordingly, U.S. marketers are making every effort to entice these lucrative ethnic markets by developing effective marketing strategies. People tend to live within their cultural boundaries, and cultural diversity in the U.S. significantly affects how ethnic consumers perceive and process advertising messages. According to key cultural theories (distinctiveness theory and accommodation theory), ethnic audiences feel more affinity for culturally accommodating messages and respond more favorably to culturally targeted ads. In this vein, U.S. marketers are trying to develop the most effective marketing strategies to appeal to these emerging ethnic consumers. To prepare for the complex multicultural marketplace, U.S. marketers should build cultural adaptability and understanding and establish insights about the cultural factors they use in comparative marketing analysis for these ethnic groups. This analysis tool can be termed “diagnostic multicultural analysis,” which utilizes four key cultural marketing elements: cultural affinity, acculturation, cultural sensitivity and cultural acceptability. This paper addresses these concepts in terms of their operationalization and practical applications to multicultural marketing.

Introduction
Due to continuous immigration and growth of minority population, the U.S. bears a resemblance to a microcosm of the world, characterized by diverse ethnic subcultures (Doka 1996). Therefore, many people believe America is no longer a “melting pot,” but is a “salad bowl” with distinctive subcultures within the nation. America will continue to become more ethnically diverse, with more distinctive cultural values, norms, and behaviors.  Accordingly, marketing in the U.S. is becoming more complex and requires sophisticated tools of cultural analysis. To survive in this competitive marketplace, marketers should be able to target many lucrative subcultures with effective cross-cultural or culture-specific advertising campaigns. The successful development of an effective communication campaign should begin with an in-depth understanding of cross-cultural differences in socio-cultural values and behaviors. This in-depth understanding of subcultural differences will help marketers understand how these differences affect marketing activities and communication patterns, and it will help identify important attitudinal and behavioral characteristics that constitute distinctive subcultural markets. In this sense, multicultural advertising planning is similar to global advertising planning where marketers should decide to what extent global campaigns should be adjusted to meet cultural differences in local markets.

This paper addresses the following research inquiries:

1. What is the status quo of ethnic markets in the U.S.?
2. What is the relationship between culture and advertising?
3. How does culture play-out in U.S. multicultural markets?  How does culture influence consumer marketing responses?
4. Which theories can explain the cultural aspects of marketing?  What are the applications of these theories to a multicultural marketing approach?
5. How has the industry dealt with subcultures in the U.S.?
6. How should U.S. marketers approach multicultural markets?  How should they prepare themselves to be successful in a complex multicultural marketplace?
7. How can we segment multicultural markets?  Is using cultural divisions as market segmentation tools good enough?
8. How do acculturation and cultural affinity play-out in cultural acceptability and sensitivity of marketing stimuli?
9. How can we measure cultural sensitivity and cultural acceptability of advertising messages?

Status quo information on ethnic markets
The U.S. is experiencing a growing number of ethnic consumers who express their unique cultural identities. This trend is reinforced by changing demographics, technological, social, cultural and media environments.  Ethnic consumers comprise nearly 30 percent of the U.S. population (Briefs on 2002 Census), and are estimated to reach 47.2 percent by 2050 (Patterson, 2001).  Eventually, they could become the majority. According to the U.S. Census Bureau (2002), Non-Hispanic Whites comprise 70.6% of the U.S. population, followed by 12.4% for Hispanic Americans, 12.2% for African Americans, and 4.1% for Asian Americans. The population growth rates of ethnic groups in the U.S. from 2000 and 2002 were significantly higher than those of the general U.S. population; e.g., 9.8% for Hispanic Americans, 9% for Asian Americans, 3.1% for African Americans, and 2.5% for the general population. This surge of ethnic population is creating enormous marketing opportunities with greater purchasing power among the ethnic markets. The purchasing power of three emerging subcultures in the U.S. (African Americans, Hispanic Americans, and Asian Americans) has already hit $1 trillion (Adweek, 2001).  Hispanic Americans have especially become a significant ethnic minority group in terms of marketing. According to USA Today’s most recent report, the largest minority group has changed from African Americans to Hispanic Americans for the first time in 200 years. The EconomyResearchCenter at the University of Georgia, estimates that the purchasing power of Hispanic Americans reached $500 billion in 2002, and will reach $900 billion by 2010.  Eight percent of new car buyers in 2002 were Hispanic Americans, 15% of movie tickets sales came from this group, and 7 to 8% of U.S. radio programs target Latinos.

Recognizing this explosive growth of ethnic markets in the U.S., marketers are making every effort to entice these lucrative ethnic markets and to develop the most effective marketing strategies to appeal to ethnic consumers.

Relationship between Culture and Advertising
Advertising is believed to act as a mirror reflecting culture by transferring current cultural meanings (McCracken 1986). In other words, advertisements are considered a form of social communication that resonate the cultural values of a society (Khairullah 1995). At the same time, advertising creates and produces new cultural values and meanings by influencing group identities and reinforcing stereotypes. So advertising is not only influenced by cultural values but also acts as an agent influencing cultural values. From a marketing perspective, advertisers have been more interested in the effects of culture on consumers’ response to advertising.

People tend to live within their cultural boundaries; i.e., people have their own cultural values and norms, which influence the way they think, feel and act. People in the same ethnic groups tend to share the language, customs, values, and social views. These shared values (i.e., culture) influence people’s cognitive (beliefs and motives), affective (emotion and attitude) and behavioral (purchase and consumption) processes. Based on this notion of “advertising as a mirror,” cultural values and standards are implanted in ads in such a way that consumers can “see themselves” and identify with the characters in the ads and feel affinity with the brands (Hong, Muderrissoglu and Zinkhan 1987). Thus, cultural diversity in the U.S. affects how ethnic consumers perceive and accept advertising messages.

To read the rest of this white paper on the Insights Marketing Group website, click here.

Chang-Hoan Cho, Ph.D. is Assistant Professor at University of Florida. John Holcombe & Daniel Murphy are Vice Presidents at Insights Marketing Group.

http://www.greenbook.org/marketing-research.cfm/multicultural-marketing