Cultural Marketing: Grabbing a Bigger Slice of the Pie

Retailers who ignore demographics are headed for a reckoning. The U.S. Census Bureau expects minorities to represent 33 percent of the U.S. population by 2010 and 50 percent by 2040, compared with about 30 percent today. In 1980, minorities made up less than 20 percent of the population.

Hispanics, African-Americans, and Asians account for the vast majority of the non-White population in the United States—and 20 percent of the spending power, estimated at about $2 trillion. Yet in 2003, only 2 percent of the more than $200 billion spent on U.S. advertising was allocated to culturally diverse media, according to Ethnic Marketing Associates, a marketing and consulting firm in Bernardsville, N.J.

According to recent figures published by Ethnics.com, the projected spending power by ethnicity for 2007 compared with 2002 is $927.1 billion, up from $580.5 billion for Hispanics; $852.8 billion, up from $645.9 billion for African-Americans; and $454.9 billion, up from $296.4 billion for Asian Americans.

“For retailers, cultivating ethnic customers will mean the difference between staying in business and going out of business,” predicts Maria Albarracin, vice president of marketing for Ethnic Marketing Associates. “The size and power of the ethnic market is just too big to disregard.”

To be effective community marketers, Albarracin says jewelers need a plan that includes researching the group it makes the most sense to target first; an advertising strategy targeted to the needs and tastes of a particular group in a particular market; hiring from within the community; bilingual staff; sensitivity training for staff; an active role for the retailer in the community; and products and services that appeal to the targeted group.

In 2002, Crescent Jewelers hired David Norman to launch a Hispanic division for the Oakland, Calif.–based chain. Norman, head of Retail Jewelry Consultants in Grand Rapids, Mich., shopped Hispanic-oriented jewelry stores in the region, hired a Hispanic marketing firm, and did extensive research to learn what drives the Hispanic jewelry market. “One of the things we learned was that the Hispanic customer loves jewelry and has many religious and milestone events they celebrate with gold, silver, and diamonds,” Norman says. “They love big-look jewelry, especially in sterling silver, and jewelry is a major part of their culture.”

Norman and Crescent selected El Paso, Texas—whose population of nearly 1 million is 75 percent Hispanic—to launch the new division, to be called Itza Hoyariea, based on an old Mayan name.

The company built five stores, with plans to roll out the concept in Tucson, Ariz.; Phoenix; and other Hispanic-oriented locations. The interiors had a certain Mayan look—lots of curves, yellows, and oranges—while the cases told “stories” about significant religious Latin milestones like Quinceañera, the coming-of-age celebration on a girl’s 15th birthday. Each store had a fully bilingual staff trained to be sensitive to the needs and tastes of the Hispanic market. The stores primarily carried bridal-diamond, anniversary, religious, and yellow-gold fashion jewelry. Crescent added platinum after discovering that Hispanic customers liked its exclusive qualities.

Initially, Crescent did a lot of advertising and in-store signage in Spanish, also utilizing Hispanic models. However, Norman says they learned that second and third-generation Hispanic Americans are so assimilated into American culture, they prefer to see advertising in English. “So we changed our advertising mix from 90 percent Spanish, 10 percent English to 50–50,” Norman recalls.

Although the test stores did well, Crescent became embroiled in ongoing financial and legal problems in 2003. After a new executive team came in, the company’s priorities shifted away from the new division.

Despite the setback, Norman learned some valuable lessons about marketing to a specific segment. “For one thing, do your research—and choose areas that have a high population of that ethnic group,” he says. “Also, get involved in the community to gain credibility with the market. We got involved with the Hispanic Chamber of Commerce in El Paso and it made a big difference.”

Albarracin notes that this type of community involvement is a key strategy of any ethnic marketing campaign, and one she constantly advises her clients to undertake. “You need to demonstrate your store’s commitment to the ethnic community beyond the sale of your product or service,” she says. “A media splash alone will not do it. If you just move in and dash out, that’s how these customers will treat you, too.”

R.F. Moeller, a prestigious three-store jewelry chain based in St. Paul, Minn., actively markets to a culturally diverse clientele. According to owner Mark Moeller, a recognized industry expert on customer demographics and ethnic target marketing, the area is home to one of the highest populations of Somalians in the country and also has sizable groups of people from Cambodia and Thailand.

Moeller estimates that approximately 5 percent of his business comes from non-White customers. That represents $500,000 of the store’s $10 million in annual sales.

“We have changed our ethnic marketing dramatically,” Moeller says. “We used to seek out neighborhood newspapers and flyers. Now, we try to sponsor and participate in community events. The face-to-face element with people works so much better—you are seen as an organization that cares about the community.”

In addition to participating in cultural festivals and other events, Moeller’s sponsors fund-raisers called “Champagne on Ice” six to eight times per year. A community group sells glasses of champagne with a chance for a participant to find a diamond—donated by Moeller’s—in their glass. Proceeds benefit a group or charity.

Moeller’s involvement with the local Chamber of Commerce lets him make connections with many community leaders. Some have served as mentors, introducing Moeller to others in the ethnic community and informing him about the group’s culture.

“If you’re going to be successful in business, you have to be able to sell in your own back yard,” Moeller says. “By letting the ethnic groups in the community know you care and are willing to get involved, you can develop a very diverse, fiercely loyal customer base. It also can have a snowball effect where they refer you to their larger circle of family and friends. When this happens, you will draw customers in that particular ethnic group from all over the region, not just the local community.”

Moeller says the biggest mistake jewelers can make is failing to understand the demographics of their market—or even worse, ignoring certain segments of the population and not extending the same courtesies to those customers as are given to Anglo-Saxon customers.

“We teach our staff that everyone who walks into one of our stores, regardless of ethnic background, should be treated special and with respect,” he says. “We want to make everyone comfortable, and we’ll do things to a fault to ensure that. We also teach our people to be aware of cultural things that may make a difference to certain groups we serve. The bottom line is this: White people will soon make up less than 50 percent of the population. Ignore the other 50 percent at your own peril.”

Albarracin echoes those sentiments. “If Hispanic customers come into your store, and your salesperson sees they may be hesitant because they don’t speak English clearly or read English that well, they should be directed to someone in the store who speaks Spanish,” she says. “If you go out of your way for them, it will really pay off. Hispanics are extremely brand loyal; they remember companies that provide them with a pleasant, comfortable shopping experience, and they are very grassroots in that they will refer their family and friends to you as well.”

With 14 stores in 14 of the largest cities in the United States, Goldenwest Diamond Corp.—also known as The Jewelry Exchange—is no stranger to targeting diverse customers. Some of the Tustin, Calif.–based company’s largest cultural markets include Hispanic, African-American, Asian, and Native American.

The jewelry chain, one of the largest in the country in terms of volume, uses a range of TV and radio marketing to target these ethnicities, says Randy Huff, director of marketing. Some of this marketing includes ethnic models, the company notes. “In every city, there are radio and TV stations that target urban customers, and we make full use of all of them,” Huff says. “Many of these urban stations are particularly geared toward African-Americans.”

The company also employs a culturally diverse staff, especially in its larger stores such as the Los Angeles flagship location. “Los Angeles is 50 percent Hispanic, so we obviously have Hispanic staff people who speak Spanish,” he says. “But we also have people who speak Arabic and various Asian languages. We have a large contingent of Chinese customers that frequent our San Francisco store, so it’s important to have Chinese-speaking staff on hand. We also try to hire from the community whenever possible, to give our ethnic customers a familiar face and someone who really understands their culture. When you walk into our stores, you see a real cross section of what the surrounding community looks like.”

Huff says the retailer devotes approximately 30 percent of its marketing budget to cultural marketing. Because The Jewelry Exchange has single, large locations in each city, the company tries to include a wide range of merchandise that appeals to everyone. The company does offer some products oriented in specific markets, for example, hip-hop jewelry for its urban customers.

About half of Rosenthal Jewelers Supply’s business is Latin-based. The Miami company serves Latin customers in the United States as well as in Central and South America.

According to company president Raphael Adouth, making its Latin customers feel comfortable doing business with the supplier is a major consideration. Hence, the majority of Rosenthal’s staff is bilingual. Also, the company’s Web site and product catalog are in both English and Spanish. The company also employs staffers that speak Portuguese, the language of Brazil, where Rosenthal has a significant customer base.

“People always feel more comfortable speaking their own language,” Adouth says. “We sell a lot of technology products with lots of directions and support materials. If I can make it easier for our Latin customers by communicating with them in Spanish, they will be more inclined to do business with us instead of our competitors.”

Rosenthal does carry some supplies geared toward the Latin community. But he stresses that the Latin community is diverse, and there’s no “one size fits all” solution for the entire Latin population.

Adouth notes that Latin jewelers favor certain packaging and showcases different from the non-Latin population. Also, because of the popularity of “Cuban” chain with the Cuban community (which, incidentally, doesn’t appeal to Mexican or Puerto Rican customers), Rosenthal needs to sell machines and products specifically for that style. Furthermore, many Latin jewelers favor yellower, richer gold alloys than non-Latin jewelers, so Rosenthal needs to carry alloys and related products specifically for higher-karatage-gold jewelry.

However, when it comes to technology (like the company’s advanced Eyeson digital surveillance system), Adouth finds that Latin retailers and wholesalers operating in this country tend to become “Americanized” quickly. But offering Spanish-speaking staff for installation, customer service, and repair work can make a huge difference with many Latin jewelers and help build long-term business relationships with them, Adouth adds.

For Na Hoku (formerly known as The Sultan Co.), a Honolulu-based retail jewelry chain with about half of its 64 stores in Hawaii and the rest on the mainland, business is evenly split between tourists and local clientele, depending on the season. The local market is a diverse mix of many ethnicities ranging from Polynesians to Asians to mainland-born Caucasians and other groups.

The company’s stock in trade is island-lifestyle jewelry and traditional Hawaiian jewelry, also known as “Hawaiian heirloom jewelry.” Traditional Hawaiian jewelry is heavy on gold in 14k to 18k, with an emphasis on bangle bracelets and “vertical products” like stackable bracelets and necklaces. Enameling and engraving are other hallmarks of this category. Much of the styling hearkens back to the Hawaiian monarchs of the 19th century. The company also has a group of stores that sells only pearl jewelry, which caters mainly to tourists. According to Steve Bookatz, executive vice president and chief operating officer, Na Hoku is experimenting with a jewelry line made from koa, a wood indigenous to Hawaii, inlaid into gold and other precious metals.

To target local groups, the company hires from within the community and advertises in newspapers and regional publications such as Honolulu magazine, Bookatz says. In some instances, models of Polynesian and Asian descent are used, particularly in print advertising. Inside, the stores’ walls feature “true scenes of Hawaii” from countertop height to ceiling. This imagery also has been incorporated into the store’s catalog. In terms of local product, the chain features some 300 different pieces of Tahitian pearl jewelry.

Japanese tourists represent Na Hoku’s largest “non- local” customer base, Bookatz notes, and the company targets this group. He estimates that Japanese customers represent 20 percent of the retailer’s tourist market—and in Na Hoku’s flagship store in Honolulu’s Ala Moana Center, one of the highest-grossing shopping centers in the United States, Japanese customers account for some 10 percent of total revenues.

“We target our advertising to Japanese customers primarily in airline magazines, both for main airlines and for local Hawaiian airlines,” Bookatz says. “We also do target marketing to the Japanese through other visitor publications.”