The Ethnic Market You Aren't Seeing

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In the past 10 to 15 years, U.S. marketers finally have realized the importance of the nation's diversity, and informed companies have responded with targeted niche marketing programs to capitalize on burgeoning ethnic markets. These markets are identified mainly through race, as race has been the simplest sign of a distinct market.


However, by using race as the sole criterion to define "ethnic" markets, direct marketers miss a huge opportunity to address the third-largest U.S. ethnic market, commanding $410 billion in spending power: Central and Eastern European Americans.


Central and Eastern European Americans, because of their largely Caucasian makeup, have been virtually invisible even to experienced ethnic marketers. This is ridiculous when you look at the numbers.


The breakdown of socialism led to a huge influx of immigrants from Central and Eastern Europe, creating a population that is now 20 million strong and growing at a faster rate than the general U.S. population. This group is projected to reach 26 million in six years. Even more astonishing for an ignored market is that besides being relatively well off, sophisticated, educated and brand conscious, their economic influence trails that of Hispanic-Americans by less than 10 percent.


So where are the headlines? Where are the industry conferences and the corporate strategies to help marketers reach this group? Even more importantly, why aren't companies creating direct campaigns to reach this market?


Even companies with awareness of the market potential may be intimidated or dismiss Central and Eastern Europeans as unaddressable because they fear the unknown: i.e., the cultural diversity of this market, which consists of Russians, Poles, Bulgarians, Romanians and Czechs, among others. With the correct understanding, the Central and Eastern European market not only is addressable, but it can be incredibly profitable.


The relatively late explosion of Central and Eastern European Americans to the United States creates differences from previous ethnic markets, notably the accelerated market maturity. The invisible market consists of a much more sophisticated consumer base at this stage in its development than we have seen with other ethnic markets.


The first generation often enters the United States with greater financial prospects, is welcomed into a supportive community and has a greater awareness of the consumer culture of the West. As a result, they are demanding value and quality today and are prime consumers of much-higher-value goods and services.


This is not to say that this group should or even can be addressed through mainstream marketing. The fundamental principles of marketing -- aligning market, product and tactics -- still apply, but these must be addressed in the context of the cultural nuances that distinguish these consumers.


Indeed, marketing to African-Americans has shown that even fully assimilated ethnic markets require a customized approach. A marketer's success in reaching Central and Eastern European Americans will depend largely on understanding these nuances, and promotional and all advertising decisions must be based on this knowledge.


Our research has shown, for example, that at least half of Central and Eastern European U.S. consumers have a strong preference for in-language direct marketing materials. But translating the language of a direct mail piece is only half the battle. Too often, marketers don't realize that the very idea or concept they try to convey must be "translated" as well for it to resonate with this group. Relying on a word-for-word translation is a huge mistake.


Another key to understanding this market is that though it is very brand loyal, branding is a tougher task at the market entry point because Central and Eastern European Americans follow a certain code of social and consumer behavior inherited from their native countries. They are descendants of autocratic regimes where they always were lied to by their governments and others in the social value chain, so an inherent distrust of institutions handicaps more traditional marketing tactics.


Consequently, it is critical for brands first to establish personal trust based on word of mouth and community relations so that friends and family endorse the product or company. For this reason, direct marketing is more effective as a follow-up to previous efforts rather than as the initial form of contact.


Financial services are one industry that should capitalize on this invisible market, especially given that thousands of Central and Eastern Europeans come to the United States yearly to achieve the American dream. Financial institutions seeking new customers and new Americans looking for opportunities to build a financial foundation in the country are a perfect match.


Central and Eastern European Americans exhibit heavy financial savings behavior, and their investments in stocks, mutual funds and real estate are growing steadily. But as financial products and services become virtually identical, multicultural consumers tend to bypass major financial institutions and turn instead to the provider offering in-language customer service and personal attention. Financial institutions will seize this opportunity or watch their market share dwindle.


The lesson here is that race is merely one indicator of the cultural differences -- ranging from language to psychographics and a shared history -- that create a distinct ethnic group.


Now that Hispanics finally have gotten the respect from marketers they deserve, looking at race alone has turned businesses' attention to Asian-Americans as the next hot market. But don't miss the enormous potential held by Central and Eastern European Americans, a market that is right under one's nose and eagerly awaiting the right message.


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