Multicultural Consumers Gaining Economic Clout, Growing Influence

Multicultural Consumers Gaining Economic Clout, Growing Influence

shutterstock_335673068

(Article content as published online in the Boston Business Journal May 16, 2016)

Marketers are not the only ones paying attention to the changing demographics. Anyone remotely following the 2016 presidential media coverage is learning about our country’s demographics. Regardless of one’s political leaning, it is clear that demography is having a major impact on the current presidential election cycle. According to the Pew Research Center, the 2016 electorate will be the most diverse in U.S. history in terms of race and ethnicity. In fact, nearly one-third of eligible voters on election day (31 percent) will be Hispanic, Black, Asian or another racial or ethnic minority. This growth in the minority population is the continuation of a trend that demographers have predicted and is now coming to fruition.

This trend has major implications for businesses. Collectively, minorities are the fastest growing segments of the U.S. population. According to 2015 U.S. Census population estimates, there are 118 million minorities or 37 percent of the total population. In Boston, minorities are 53 percent of the population.

BUYING POWER

As the numeric size of minorities grows, so does the group’s buying power. The Selig Center for Economic Growth at the University of Georgia reports that the buying power of minorities as of 2015 was $3.3 trillion, a 409 percent increase since 1990. This growth rate is more than double that of the white population’s. While numerous social challenges remain, minorities are gaining economic clout and growing influence.

Furthermore, with the proliferation of technology and increased social and digital mobility, the reach of minority consumers is no longer limited to the geographic footprints where they reside.

ENGAGEMENT

Effectively engaging minority consumers requires an understanding of sometimes complex, often nuanced cultural experiences. These include race, language, religion and historical experiences that can sometimes influence purchasing and other decisions. Successful brands know that they must take the long view and demonstrate commitment to minority consumers. Loyalty is earned by building trust. This is accomplished by demonstrating respect for unique cultural differences early in the business relationship and continually engaging minority consumers.

Establishing authentic community connections and relationships is a proven way in which trust can be built. To the extent that members of the community can have a voice and are visibly represented in leadership positions and in advertising, the speed of cultivating trust can sometimes be accelerated.

PARTNERSHIPS, DIRECT INVOLVEMENT HELP

Partnering with trusted sources is another way for brands to accelerate the speed-to-trust. This could take the form of internal affinity groups or employee resource groups (ERGs) that can provide context for research findings. External collaborations such as those with minority business groups, respected leaders and key stakeholders can also prove helpful. Two organizations who are using this approach are Eastern Bank and Blue Cross Blue Shield of Massachusetts. (Full disclosure, I’m on the board of corporators for Eastern Bank and am a former employee of Blue Cross Blue Shield, one of my clients.)

Andrew Dreyfus, CEO of Blue Cross Blue Shield of Mass. (BCBSMA) has a long-standing commitment to diversity inclusion. This is reflected in the diversity of its board, executive leadership and numerous community partnerships and sponsorships. BCBSMA is also taking steps to address the critical issue of racial disparities in health care. By gaining insights from its employee resource groups and by reaching out to multicultural audiences, the company is making a concerted effort to embrace multicultural employees and members.

In the case of Eastern Bank, Bob Rivers, president and chief operating officer, and Rich Holbrook, CEO, continue to diversify their board and executive leadership, including the appointment of Quincy Miller, vice chairman and chief banking officer. Eastern Bank executives are also personally active in diverse communities and are supporters of multicultural communities and networks.

Some of the organizations supported by BCBSMA and/or Eastern are ALPFA (Association of Latino Professionals For America, Boston chapter), the Asian American Civic Association, GetKonnected, The Partnership Inc., the NAACP and the Middlesex Links, to name a few.

LEVERAGE CULTURAL INSIGHTS

In a 2014 survey conducted by Scarborough USA, 78 percent of African-Americans and 71 percent of Hispanics expressed the importance of culture by agreeing with the statement, “My cultural/ethnic heritage is an important part of who I am.” The percentage of people who identified with this statement was 60 percent for whites and 61 percent of Asians. Leveraging cultural-research insights is important and so, too, are relationships within the respective groups that can provide context on research insights. For many organizations, employee resource groups play a critical role in translating data about cultural nuances into information that may be relevant to the design of products and services for minorities. I recommend balancing internal perspectives with actual market research and insights.

The trend of high population growth among minority groups is projected to continue. The U.S. Census predicts that by 2044 minority groups will represent 50.2 percent of the U.S. population. Engaging consumers early and often in the community, through social and digital channels, and through trusted partnerships will help to position brands for long-term success.

Beyond partnerships and external engagement, I’d like to see more large companies diversity the C-Suite, include board members who are culturally diverse and by utilizing the products and services of diverse suppliers.

Juliette C. Mayers is founder and CEO of Inspiration Zone LLC in Quincy, MA and author of “The Guide to Strategic Networking.” Follow @juliettemayers