If marketers are not focused on finding consumer segments that offer the highest growth, they are doing something wrong. These segments offer not only the chance to increase profits, but also the opportunity to develop long-term relationships with customers whose value is rapidly increasing. Truth be told, it can be hard to find these fast-growing segments. What do you look for? How do you know that they are the right group? Are they worth the investment?
Today’s fastest growing consumer segment is the New American Mainstream. It is a group that contributed to 89 percent of the country’s population growth between 2000 and 2016. This segment includes multicultural groups as well as LGBT community members and millennials. Asian, Black, Pacific Islander and Hispanic consumers account for more than 36 percent of the 2016 U.S. population – a 4.5 percent increase since the 2010 Census.
These groups have shown tremendous growth in recent years in population size, income level, and annual spending. All of this growth should serve as an alert to marketers that their focus must be on these segments if they hope to lead the market and develop long-term, valuable customer relationships.
Taking on the challenge of reaching these groups may be a bit daunting, but the risk is well worth the reward. Developing detailed buyer personas by exploring the data that competitors are not, deeply analyzing that data and recognizing the differences between consumers to ultimately use this intelligence to sharpen marketing campaigns are the essential steps to finding the highest growth consumers.
Be Different: Go Where Your Competitors Are Not
Many marketers are putting too much effort into a single group, which also happens to be the largest in the U.S. This group, White non-Hispanics, also happens to be growing the slowest. White non-Hispanics has grown by 10 percent since 1990; however, Hispanics have doubled in size since then and are now 60 million in population. Based on research, within each of the next five years, there will be an average of 1.6 million new Hispanics in the United States each year. The average currently active Hispanic household will spend an average of $2.17 million in their lifetime, far more than their White non-Hispanic counterparts. No marketer can argue that this group doesn’t offer serious potential.
That said, there are other groups that are quickly emerging and showing serious potential. To ensure that your marketing team is ahead of the curve, start investigating these consumers sooner than later. One of these groups is the LGBT community. For counties with 100,000 or greater total population, the community ranges from 1.3 percent to 9.1 percent of the county’s 18+ population. In 2013, this group’s buying power was estimated to be $830 billion; in 2012, it was estimated to be $790 billion. Marketers have historically been hesitant to target this group, viewing it as a grey area. Today, with the data at our fingertips to help us develop informed marketing campaigns, there is no reason why marketers shouldn’t work to reach the LGBT population.
Be Thorough: Analyze More Deeply Than Everyone Else
Big data provides marketers with a solid start for their campaigns, but it’s the data that is relevant to a study and the most in-depth that leads to success, especially when marketing to the new mainstream. For example, the average currently active Asian household will spend an average of $2.56 million during their lifetimes. This indicates Asian buying power, but it’s without context and does not point marketers in the right direction. What does a marketer do with that number alone?
Imagine if they knew that African-American spending is higher relative to other groups in health care, personal care, and utilities, a reflection of their age, lower household income, and their presence in cooler climates. Now picture yourself working in the marketing department of a national health insurance provider. With deep insights about African-American spending, you can design your marketing campaigns so that they advertise the right health insurance plans to the right consumers in the right geographical areas. This leads to higher profits, and longer, deeper relationships with consumers who feel understood by your brand.
Be Thoughtful: See the Differences Between Consumers to Sharpen Marketing Campaigns
A popular approach to reaching new audiences is known as the total market, which involves a blended approach between multicultural and non-multicultural consumers. The problem with total market advertising is that it often doesn’t sufficiently differentiate between consumers. Some marketers claim that it’s inclusive, but it tends to treat all consumers the same and doesn’t recognize sufficiently their differences. To not “see color” may sound noble, but it can also exclude important nuances that mean the difference between engaging and alienating key consumer groups. After all, consider all of the marketing technology companies that are developing technologies to help brands better target consumers. They are gathering data to more succinctly define buyer personas. Given how much money is spent to do this, brands should be using this data to their advantage.
Today’s multiculturals, and millennial multiculturals in particular, are blending their new American heritages with their cultural traditions. They want their cultures to be recognized and their differences to be respected. Marketers have the resources to do this at their fingertips, thus there is no reason why they shouldn’t be used.
Finding the fastest growing consumer segments shouldn’t be a secret; brands should have the data that allows them to target consumers in a more thoughtful way. New mainstream consumers are influential, connected, and loyal lifetime consumers. They demand respect from the marketing campaigns targeted at them. Marketers must understand these feelings and realize that not all consumers are identical. They should use the insights that differentiate consumers to develop targeted marketing strategies. By doing this, they will not only find high-growth consumers, but develop long-term relationships with them and ensure their companies’ growth in the near- and long-term.
Edited by Alicia Young