The Ethnic Market Offers Many Opportunities

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Ethnic marketing has long been the domain of a handful of black- and Hispanic- owned companies, especially in health and beauty aids, publishing and food. Arguable, these companies are still ethnic marketing’s star performers. But increasingly companies such as Soft Sheen Products and Goya Foods find themselves rubbing shoulders not only with the likes of Procter & Gamble and Sara Lee, but also with a wide array of entrepreneurial start-ups looking to tap this lucrative market.

The reason is a simple one: demographics. Lafayette Jones, executive vice president of Segmented Marketing Services Inc. (SMSI), a Winston-Salem, N.C.-based consulting firm that specializes in ethnic marketing, calls the data from the most recent U.S. Census report a “wake-up call for marketers.”

Already, people of African, Asian, Hispanic and Native American ancestry account for 25% of the total U.S. population. By the end of this century, they will comprise a third of all consumers in this country. By the year 2010, non-whites are projected to make up the majority of the populations of California and Texas.

Ethnic markets are growing at a rate twice as fast as the overall population. While the buying power of most minority groups still trails that of whites, discretionary income among non-whites is growing at a faster pace than that of the overall population.

In some of the nation’s biggest markets–New York, Washington, Atlanta–more than half the residents are non-whites, and in some cases up to 70% of those populations are minorities, points out Jones.

The most recent U.S. Census report is a “wake-up call for marketers.”‘

That trend has been accelerated by the arrival of almost 10 million immigrants during the 1980s, mostly from Asia and Latin America. Minorities now make up the majority of the residents in about half of the 90 California cities with populations of 50,000 or more. “Minority majorities” are the norm in one of every six such cities across the U.S.

It should come as no surprise, then, that at least half of all Fortune 500 companies have launched some ethnic marketing initiatives, says Gary Berman, president of Market Segment Research, a Coral Gables, Fla.-based firm specializing in ethnic market research.

In fact, while Berman projects ethnic marketing expenditures will double to more than $1 billion by the end of this decade, what is more surprising is that mainline marketers have been so slow in tapping this market, given its huge growth potential. That means the potential for small entrepreneurs, who can react quickly to market changes, is even greater.

Part of the problem has been that non-ethnic marketers simply did not know how to go about it. “Ethnic consumers are not simply white consumers with different colored skin,” says Geri Duncan Jones, executive director of the American Health and Beauty Aids Institute, a Chicago-based trade association of ethnic beauty care products companies.