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By Donald DePalma

Reprinted with permission from e-BUSINESS ADVISOR

Answer truthfully: How would you react if your staff told you they're ignoring a big chunk of the online population in their marketing efforts? You'd probably find some new sales directors, right?

The reality is that few U.S. businesses meet the unique needs of Hispanic, Asian, and other ethnic groups online. Instead, many businesses have ceded such markets to a raft of Web upstarts like quepasa.com and click2asia.com, the newly minted masters of cultural marketing.

This article explores the question of marketing to culturally diverse Americans-that is, marketing to culturally diverse groups in the United States-and discusses how companies must target these markets differently than their average online targets of 33-year-old, college educated Caucasian males (according to PC Data Online's Net Portrait, April 27, 2000). This article also describes the best practices of early movers and what return they saw on their investment.

Just what is cultural marketing?
First, let's define two terms: Cultural (often called "ethnic") marketing means you explicitly target a national or linguistic group for promotion or sales. For example, you might market to immigrants from a single country like Vietnam or to a multinational group speaking Latin American Spanish. Such efforts might appeal to larger regions like the southwestern United States and Mexico. However, after you cross a national border, appeals to language or culture aren't enough. You must deal with more complex issues like currency conversion, export-import compliance, and shipping.

"Dom-ethnic" marketing refers to domestic marketing to ethnic populations inside a given country. The appeal isn't to language alone, but to the range of cultural nuances, such as religion, values, and buying behaviors, that distinguishes multicultural consumer populations. Culturally diverse Americans often have unique preferences.

Why cultural marketing matters
You can't ignore the numbers. According to U.S. Census Bureau estimates for July 2000, there are nearly 32 million people of Hispanic origin in the United States-almost 12 percent of the total population. Forty-seven percent of Hispanic people are online, a tad higher than the majority Caucasian population, according to the Forrester Research report, "The Truth About the Digital Divide". Beyond sheer numbers, though, consider what the growing ethnic groups mean to the economy and political landscape.

Ethnic consumers have money, and they're buying online. This year Hispanic consumers in the United States will spend US$422 billion, according to the Standard & Poor DRI, "The Hispanic Consumer Market in 1997 and Forecasts to 2010." In its November 1999 report on Internet use by Hispanics in the United States, Nacza Saatchi & Saatchi noted that online Hispanics, on average, spend US$547 per year-each purchasing at least six items.

Asian-Americans, while a much smaller percentage of the population, have a higher Internet usage rate and median household income. Sixty-nine percent are online and the median household income is US$65,000 versus US$40,000 for Caucasians and Hispanics, according to Forrester.

Even lower-income people can go online. A National Public Radio study showed that 31 percent of households with incomes less than US$20,000 have a home computer. Combined with free online e-mail and access, such lower-income families represent future opportunity for retailers and other Internet merchants.

Ethnic groups are a nascent political force. While the Internet can aggregate content, buyers, and sellers, it can also create a political force by consolidating geographically disparate concentrations of ethnic groups. Politicians are starting to recognize this power: Both U.S. presidential candidates Gore and Bush have explicitly targeted the Hispanic voter, and no one should dismiss the galvanizing force of Elián or the U.S. Navy's confrontation with Puerto Ricans over the bombing range on Vieques.

The purchasing power of culturally diverse Americans, combined with their growing political clout, presages significant changes in the American economic and political scene. Just do the math. If Census Bureau estimates play out, Hispanics and Asians will represent more than 30 percent of the U.S. population by 2050. That means today's majority Caucasians will comprise a much smaller majority than they currently do. Failing to address this new multicultural dynamic will condemn current new-economy superstars to tomorrow's has-beens.

Your target audience for dom-ethnic marketing
Marketing to domestic ethnic markets isn't about doing business in one language versus another. It's a far more nuanced choice that involves such factors as language and cultural values. Today, you encounter at least three kinds of ethnic preference on the Web. Consider each of these groups, the opportunities they represent, and how you can serve them better:

1. Individuals who prefer to interact in their native language and culture
2. Bilingual, bicultural users who interact in their natal culture or in the anglophone in which they work or study
   
3. Fully assimilated ethnic Americans who prefer to interact in the English-speaking culture, some of whom are rediscovering their ethnic roots
   

Natal culture-preferent
Some new-and many older-immigrants prefer to interact culturally and linguistically according to the ethnic group into which they were born. This group often favors online access in their own language, and may likely be more sensitive to cultural distinctions involving life values, religion, off-color language, salutations, and so on. Last November, A.C. Nielsen DJC Research conducted a study among Canada's one million plus Chinese residents. In this community of less assimilated immigrants, 86 percent own a PC. Three-quarters of the PC owners have Internet access, and 70 percent prefer to interact online in their native language.

Travel companies and telecommunications firms often target this subgroup for its penchant to maintain close relationships with family and friends back home.

Bicultural
Some of your online audience will be fully bicultural, equally at home in ethnic and mainstream American society. For example, they might interact in English at work and school, but switch to their natal language when they're at home or with family members. This might carry over to other elements of their cultural heritage, such as food and music, as this group strives to preserve elements of its cultural integrity.

Earlier this year the Hispanic e-tailing site español.com surveyed 2,000 Hispanic users. Only eight percent of those interviewed expressed a preference for interacting in Spanish. But did that mean their native or home-schooled Spanish didn't matter? Not at all. Although biculturalists can easily participate in anglophone society, they're attracted to a culture-sensitive site where they can buy goods that have a strong ethnic flavor, like music from Ricky Martin or the Buena Vista Social Club.

Retro-culturized
Many "nth-generation" Americans have been fully assimilated into the English-speaking culture. They no longer speak their ancestors' languages and might even eschew all elements of their inherited culture-save the occasional ethnic dish or religious holiday. Nonetheless, while 60 percent of U.S. Hispanics are native-born Americans who speak English fluently, many still want to preserve their cultural heritage. This can translate into a cultural awareness that drives online buying behavior or establishes values. Some people develop an interest in finding their roots. Such retro-culturized and assimilated citizens might be encouraged by their cultural heritage to buy language lessons, travel, and ethnic products like music, food, and clothing.

Tailor the right marketing message
There's really no secret to marketing to culturally diverse Americans. Kotler's 4 "Ps" of traditional marketing-product, price, promotion, and place-apply just as much to ethnic markets as they do to other target audiences. Early adopters note the following best practices for ethnic marketing.

Commit to a strategy. Treat your online marketing and sales efforts as you would any other strategic channel. This enduring commitment will serve you well as ethnic groups increase in size, purchasing power, and influence. Choose markets carefully. Don't tackle all U.S. ethnic groups immediately. Instead, start where your products or services offer a credible, sustainable value proposition. Recognize, too, that each ethnic group has benefits and downsides, based on demographics.

From an execution standpoint, the following tactics help you more effectively address ethnic needs.

Get the right expertise. Look for resources that know a lot about the markets you've targeted. Cultural marketing agencies, Internet site builders focused on ethnic markets, and software vendors that offer localization and globalization products and services are already there to help. Enlist their assistance to help you offer what's appropriate in terms of the overall experience of language, culture, and products.

Offer equivalent sites. In the interest of time-to-market or lower costs, many firms succumb to the temptation to offer ethnic users a small subset of what they offer on their mainstream sites. Say your dot-com site offers English speakers a sweepstakes, free shipping for orders more than US$50, and easy credit terms. If your U.S. Hispanic site for non-English speaking visitors offers an inferior experience, visitors might view this as "Weblining," the online equivalent of the banking industry's notorious practice of redlining low-income neighborhoods.

Personalize the experience. Just as you strive for one-to-one marketing at your dot-com site, remember that your visitors are individuals. Use personalization and customer relationship management (CRM) tools to manage the combination of ethnicity, language, and the cultural motivators unique to each audience. For example, some bicultural users might appreciate cultural nuance, but opt for transacting in English. Give appropriate choices. Personalization and CRM technologies also help you target linguistic differences, ethnic preferences, and the national distinctions among your Mexican, Puerto Rican, and Cuban visitors, or between Cantonese and Mandarin visitors, for example.

Automate the process. Don't rely on your Webmaster's memory to keep sites, content, promotions, and products synchronized among your various sites. Use software tools to manage content, workflow processes, translation tasks, and the business rules that determine dependencies among your sites.

Reap the benefits of cultural marketing
Companies that have targeted domestic groups can point to both bottom- and top-line returns, as well as enhanced good will from better servicing the needs of multicultural customers.

Decreased customer service costs. Simple actions like translating instructions into the buyer's language can substantially decrease product support costs. For example, the average cost to execute a phone transaction for U.S. banks is more than US$.50, but the same transaction online costs less than a nickel, according to Jupiter Communications. Thus, each visit to a translated or culturally diverse frequently asked questions page can replace a telephone conversation, resulting in huge savings.

Sale of more goods and services. Pitching your products or services to the language, experience, and buying motivators of a culturally diverse audience can mean more sales to people who previously might not have bought your product if it was only offered in English. For example, forward-thinking financial services firms are just now translating retirement plans and mutual fund prospectuses to the Hispanic and Asian markets. The next step is to tailor future offerings to culturally diverse groups.

As you gain experience with multicultural consumer groups, you can apply your newfound expertise to reach further into longer-term e-business and globalization efforts.

Culturally diverse intranets support employee needs. Wherever there's a culturally diverse population, native language systems can help companies improve the effectiveness of operational, enterprise resource planning (ERP), and decision-support systems. Multilingual human resource systems help employees know their rights, understand their benefits, and work safely.

Cultural marketing is a big step toward globalization. You can use your experience in marketing in Québécois French or Texan Spanish as a training ground for more complex efforts to sell into other countries, such as France and Latin America. Conducting business in non-U.S. markets requires companies to move beyond language and culture to more complex issues, such as taxation, privacy policies, and logistics. But much of the translation, marketing expertise, and software technology developed for domestic cultural marketing efforts can smooth the path to global e-commerce.

Get started
Domestic cultural marketing offers a major opportunity to find new home-country audiences for your products and services. However, appeals to these new audiences will take more than simply translating your American site into Spanish or Cantonese. Instead, you must personalize your service, message, and supporting interactions to your multicultural audiences, devoting as much energy and creativity to them as you do to your English-speaking visitors. And whatever you do to increase your corporate presence in such markets will streamline future globalization efforts in both internal and customer-facing e-business applications.

Donald DePalma is the Vice President of Corporate Strategy at Idiom, Inc. He can be reached at ddepalma@idiominc.com.

This article appeared in the August 2000 issue of e-BUSINESS ADVISOR, a publication by ADVISOR MEDIA, Inc. (http://www.advisor.com). Each month, e-BUSINESS ADVISOR provides expert advice on the best management strategies, business practices and technology solutions to compete and succeed in the e-business world. In each issue of e-BUSINESS ADVISOR, top experts tell you what is working (and not) in the New Economy, and what to do to gain and retain the competitive edge you need.

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