ETffiCAL ISSUES IN ETHNIC SEGMENTATION AND TARGET MARKETING

Geng Cui, Howard University, USA

ABSTRACT

In light of increasing diversity in the marketplace, marketers more than ever are using ethnic segmentation and marketing
to reach various consumer groups. While some companies have become increasingly sophisticated in marketing to ethnic
consumers, others' attempts have misfired and created much controversy, calling for a closer examination of the validity
and potential pitfalls of ethnic segmentation and marketing. This research analyzes the ethical issues associated with
ethnic segmentation and marketing, and explores managerial implications for devising effective and socially
responsible marketing programs.

INTRODUCTION

The literature on marketing to ethnic minority consumers dates back to 1950s. Before then, the market
was divided by artificial barriers (Boyenton 1965). Since the early 60s, marketers faced a dilemma - trying to
satisfy minority consumers with integrated advertising, they risked alienating the white patrons or the white
"backlash." The Civil Rights Movement brought ethnic minorities many opportunities previously unavailable to
them, and led to increased integration of ethnic minorities in advertising and marketing. However, many marketers
were tom between the integrated approach and the separated approach to marketing to ethnic consumers, feeling
"damned if they do, and damned if they don't" (Barban 1969).

Recently, ethnic consumers' growing population and increasing purchasing power have made them
attractive market opportunities. Many researchers have studied the impact of ethnicity on minority consumers'
consumption patterns, media behaviors and promotion responses, and suggested market segmentation based on
ethnic background of consumers. Meanwhile, marketers have demonstrated increasing interest in ethnic
segmentation and marketing. Many firms have adopted ethnic marketing -- to treat ethnic consumers as distinctive
markets separate from the macro market and to reach them using differentiated marketing mix strategies.
Increased spending on ethnic media, growing number of ethnic minority models in advertising, and proliferation of
ethnic marketing agencies all reflect this trend. Targeted marketing based on ethnic segmentation has become
increasingly popular.

While some firms have become increasingly sophisticated in marketing to ethnic consumers, others'
attempts have misfired and created unpleasant surprises. Naive assumptions and lack of understanding of ethical
issues associated with ethnic segmentation and marketing have contributed to some of the misconceptions about
ethnic consumers and somewhat mystified ethnic marketing. Some marketers consider ethnic markets a
"minefield," where a minor faux pas can lead to a major setback and even controversy (Blanton 1993). Due to the
numerous factors that firms have to consider when targeting minority consumers, finding an adequate synergy
between ethnic segments and marketing strategies has been a tremendous challenge and led to the reluctance of
some marketers to reach these consumers. Despite of the increasing research effort in this area, many issues related
to ethnic marketing need further investigation and clarification. Most notably, the validity and potential pitfalls of
ethnic segmentation and marketing have not been properly examined. This paper analyzes the ethical issues
associated with ethnic segmentation and targeted marketing, and explores the managerial implications for devising
effective and socially responsible marketing programs.

ETHICAL ISSUES IN ETHNIC SEGMENTATION AND TARGET MARKETING

Segmentation is the process in which a consumer market is divided into smaller submarkets. Ethnic
segmentation is based on the general concept of ethnicity, which includes race, religion, language, nationality,
culture, and customs, etc. There are great advantages for using ethnic subcultures for market segmentation. First,
ethnic consumers demonstrate unique characteristics discrepant from those of the general population. Cultural
heritage partially explains many measurable differences in consumption among consumers of various ethnic
groups. Individuals because of a group membership often use similar information sources and patronize similar

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stores. These differences are easily identifiable and verifiable, thus making ethnic consumers well defined target
markets. Second, ethnic groups also have substantial and verifiable market potential. Many demographic studies of
ethnic consumers emphasize the size and growth rate of ethnic minorities in population and purchasing power. In
addition, due to the explosive growth of ethnic media, minority consumers are much more accessible today than in
the past.

Despite the growing support for ethnic segmentation and marketing, targeted marketing to ethnic
consumers is not without pitfalls. Ethnic marketing is essentially differentiated marketing towards an ethnic group.
Like any targeted marketing, ethnic marketing is targeted towards a particular segment -- a group of people with
common characteristics. Because ethnic segmentation and marketing rely on the most salient attributes of a group
and may imply inclusion or exclusion of certain consumer groups, they are susceptible to questions of stereotypes
and fairness. Therefore, there is no guarantee that even the best strategies translate into success in ethnic
marketing. Further research needs to address the ethical issues in ethnic segmentation and marketing, and to
provide meaningful guidelines for managers.

Ethnocentric Bias

Since most marketing knowledge and expertise have been based on research of the majority population, an
important question is whether the fundamental principles of marketing and previous research findings are
culturally universal and can be generalized to ethnic minorities. It is essential that marketers examine the
perspectives of ethnic cultures and the generalizability of their existing practices (Cui 1997). After the beginning of
the Civil Rights Movement, integrated advertising became very popular. Several studies found minorities desired to
emulate the white middle-class values and behaviors. There was some evidence that minorities perceived integrated
advertising more favorable (Bauer, Cunningham and Wortzel 1965). These findings led some to believe that the
use of separate promotional campaigns for white and minority markets was unwarranted, and integrating ethnic
minorities into existing marketing programs might be sufficient. However, integrated advertising and marketing
sometimes resulted in the "token minority," void of unique and cultural relevant characteristics.

As consumers' values and beliefs continue to diverge, minority consumers today have heightened ethnic
identity and consciousness. Many have pronounced the passe of the "melting pot" theory and now prefer the "salad
bowl" concept. Marketing strategies aimed at ethnic markets must go beyond simple replications of majority white
market appeals and product offerings, and ought to be based on values unique to ethnic consumers. Even if
minority consumers do not have special needs for certain products, they are more responsive to messages that
emphasize their unique values and cultural heritage. Several studies find that ethnic consumers are more receptive
to advertising focusing on aspirations and values that are salient to them, such as self-fulfillment, self-respect, and
accomplishment (Pitts, Whalen, O'Keefe and Murray 1989). Minority consumers also perceive that advertisements
using ethnic models project a higher quality image (Kerin 1979). Thus, it is essential that marketers use relevant
message, symbol, and imagery in communicating with ethnic consumers. Today, many researchers strongly
advocate the culture- and value-based approach to communicating to ethnic consumers.

Inadvertent Stereotypes

Many consumer needs and preferences are based on ethnic and cultural background. Various cultures are
known to have different color preferences, popular design patterns, and food preparation processes. Several studies
found substantial differences in consumption patterns between ethnic minorities and Anglos in product areas such
as food and clothing (Wallendorf and Reilly 1983). These observed behavioral variations are presumed to reflect
cultural differences. In this case, targeted marketing based on ethnic segmentation is a plausible step. In recent
years, traditional stereotypes of minorities have been abandoned or upgraded (Kern-Foxworth 1994). Minorities
today appear more often in advertising and in major roles as principals. However, many unexamined assumptions
and specific messages aimed at minority consumers are stereotypical and do not reflect the diversity among them.
Without the support of solid research, they are often based on superficial presumptions. Highly specialized ethnic
marketing has limited effectiveness and may alienate the middle class or the integrated ethnic consumers
(Boyenton 1965).

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 Meanwhile, there has been a continuous debate as to whether some of the seemingly unique product needs
and discrepant consumption behaviors can truly be attributed to racial or ethnic background, or actually due to
other socio-economic factors such as income, education, and social class. Confounding of ethnicity with income,
education or social class has been a common mistake (Moschis 1987). When income and social class are controlled
for, differences between ethnic consumers and white consumers are often less pronounced than originally thought
(Feldman and Star 1968). In addition to examining whether ethnic groups constitute distinct markets separate from
the macro market, it is also necessary to examine the diversity within each ethnic group. Even though an ethnic
group may be different from the macro market, ethnic markets have been found to be non-homogeneous and can be
further segmented into smaller submarkets (Deshpande, Hoyer and Donthu 1986). Situational and personal factors
such as strength of ethnic identification and acculturation help explain many subcultural variations (Hernandez
and Kaufman 1991; Webster 1992).

Biology and Genetics

Using human biology and genetics to segment ethnic markets is particularly controversial. Targeted
marketing using this approach may be meaningful in some product areas. People from various racial groups, for
instance, are known to have different skin tones and hair textures. Cosmetics companies have introduced new
products targeting ethnic women to satisfy their unique needs. Ethnic consumers, due to their body biology and
food habits, are also prone to certain illnesses. Targeting medical products or services to minority consumers based
on scientific concepts and research have benefited them. However, despite the scientific fact that our basic
biological and genetic differences are minimal, human perceptions of other cultures often rely on the archetypes
associated with people's physical attributes or genetic characteristics. For instance, although various cultures have
discrepant criteria on beauty and health, many traditional stereotypes of ethnic minorities play on the degrading
caricatures based on superficial or exaggerated physical or biological attributes of people. Marketers need to test
their commercial messages and to ascertain that such segmentation and targeted marketing do not suggest that
ethnic consumers are in any way inferior. Sometimes, even positive attributes such as the athletic prowess of
African American and the Asian whiz kid are considered stereotypical and do not truly reflect the diversity among
people (Taylor and Stem 1997).

Nature of the Product

Because ethnic consumers are often a minority group in the macro culture, they are particularly sensitive
to the portrayals of them in marketing programs and motives of marketers. If a product is benign or beneficial,
ethnic consumers have welcomed the attention from marketers. Ethnic consumers are particular responsive to
beneficial products such as cosmetics and medicines, other benign products such as fashion and apparel, and
commercial messages focusing on the positive and uplifting aspects of ethnic subcultures. Such targeted efforts,
which contribute to the well-being and pride of consumers, can help firms tap into the enormous market potential
among ethnic minorities and enhance marketers' competitive position. However, when the product itself is
negative, inferior or harmful, targeting ethnic markets has been very controversial. There have been several
incidents in which products and campaigns launched by companies to target ethnic consumers backfired, like
cigarette or alcoholic beverage (Sautter and Oretskin 1997). When a product is detrimental to consumer well-
being, targeted marketing is likely to be met with intense public scrutiny and consumer boycott.

Redlining

As a business's primary goal is to maximize profit, companies make investment and marketing decisions
based on pre-determined criteria for identifying market opportunities, such as market size, consumer purchasing
power, and potential sales. Segmentation and targeted marketing often mean inclusion of some groups in current
market programs and exclusion of others. When marketers launch new products or expand into other geographical
markets, they often make critical decisions about business locations based on established criteria such as
demographic statistics for store locations, rate districts for insurance policies, and locations for installing new
technologies. While many members of minority groups have moved up the social class ladder, there remain a large
percentage of lower class ethnic consumers, often concentrated in certain locations. Since marketers often attempt
to avoid doing business in low income and high risk areas, segmentation and targeted marketing based on income

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or location of residence may inadvertently result in selection or exclusion of markets based on racial lines. Due to
the lack of availability and competition, ethnic consumers in low income areas are often under-served in certain
areas such as housing, insurance, banking, and diffusion of new technologies. In this case, marketers need to
ensure that their market selection and marketing activities are solely based on valid business criteria and consumer
characteristics that are not related to ethnicity or race.

The Impact of Marketing

Traditionally, ethnic consumers suffered from feelings of alienation and powerlessness, and were
suspicious of marketing activities (Pruden and Longman 1972). Since many marketers have not focused on ethnic
consumers, it would be premature to conclude that ethnic consumers are not responsive to certain marketing
activities. For instance, minority consumers have been found to hold more positive attitudes towards advertising in
all media types (Durand, Teel, Jr. and Bearden 1979). This has led some marketers to believe that general
television advertising should be able to reach minority consumers and there is no need to create separate marketing
programs for them. In reality, consumer responses are often related to the intensity of marketing activities geared
towards them. For instance, while low coupon redemption by minority consumers has been attributed to their
attitude towards convenience and perceptions of coupon use, it may also be the result of other factors such as
subscription to newspapers and availability of coupons in stores (Green 1995). If marketers intensify their effort to
reach minority consumers, some of the observed differences may disappear. In addition to the race main effect,
media usage and perception are also susceptible to the effect of language differences and availability of ethnic
media. Separate advertising using ethnic media may be necessary to reach minority consumers. Understanding of
ethnic consumers' media usage and promotion responses can help firms improve media planning and marketing
effectiveness.

Issues of Methodology

Since most past studies of consumers were based on samples that did not include ethnic minorities,
marketers seeking guidelines from these studies may be operating under some invalid assumptions about ethnic
consumers. For instance, family structure and relationship, and gender roles vary greatly across cultures.
Variations in research design and treatments, "lack of discipline" in conceptualization and measurements of key
concepts, and different sampling methods have contributed to some of the discrepancies in research findings and
limited the generalizability of many studies. Marketing researchers should recognize these limitations and improve
their research methodologies. Causality is another major issue in ethnic consumer research. Many existing studies
only show observed or measured differences in dimensions deemed important by researchers, using such analytical
techniques such as t-tests and discriminant analysis. However, they often lack a mechanism to explore what factors
cause these differences. Higher level multivariate analytical techniques may help improving future studies of ethnic
consumers. With inferential statistics and possible moderating factors controlled for, claim of uniqueness can be
proven beyond observed differences.

DISCUSSION

In their continuous effort to focus on ethnic consumers, it is critical that marketers appreciate the ethical
complexities of ethnic marketing and explore the ethical implications of their decisions and marketing programs.
Companies should study the market place, industry structure, and consumer behavioral patterns, and develop
guidelines to ensure socially responsible marketing programs. Systematic self-monitoring and market research can
help detecting unethical and discriminatory practices. Ethical considerations should be integrated into and
coordinated throughout the process of marketing management from market selection, product development,
advertising and promotion to implementation, evaluation and control. Companies not only need unequivocal
policies on non-discrimination and ethical conduct, but also should ensure consistency at the operational levels. As
ethnic groups continue to grow in size and purchasing power, they will demand that marketers be responsive to
their needs and interests, and be culturally relevant and competent. Ethnic segmentation and marketing based on
ethical and valid business criteria can be effective tools for identifying market opportunities among diverse
consumer groups, enacting effective marketing strategies, and improving marketing performance.

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