The Invisible Market

BRANDWEEK
Sonia Reyes
February 01, 2006

Julia Huang believes that Asian Americans are an "invisible" market to U.S. packaged goods companies. As proof of her assertion, she recalled the researcher who once showed her videotape from a San Jose, Calif., supermarket in which two Chinese shoppers were seen opening packages of detergent, soap and salad dressing, touching and smelling the items before placing them back on shelves.

"That was their way of forming a connection with the product," observed Huang, a Taiwanese immigrant and founder of the multicultural marketing firm InterTrend Communications, Long Beach, Calif. "No CPG or food company has gone out of its way to form relationships with us. That's what branding is about, establishing connections with consumers."

Trying to foster more of those relationships, Huang established the agency's Knowledge Center research arm in 2004. This year, the Center will begin an intensive study to obtain qualitative and quantitative data on the Asian market, which it hopes to tailor to the packaged goods industry.

"We will be going into people's homes to see what brands they have in their refrigerators and how they use those brands, as well as [into] supermarkets and other venues," said Tanya Raukko, director of strategic planning at InterTrend. "This is the kind of research that is needed to demystify for marketers how Asians connect with brands."

In this day and age, it may seem odd that marketers would need help "demystifying" a well-represented ethnic group with familiar names in government (Norman Mineta), sports (Yao Ming, Michelle Kwan) and entertainment (Lucy Liu). However, the Asian demo remains largely untapped by a number of U.S. companies that stand to benefit from a greater understanding of the market.

"There is still a dearth of secondary research on the product and brand usage behavior of Asian Americans in many categories," said Saul Gitlin, evp of strategic marketing services at Kang & Lee, New York, a consultancy that specializes in the Asian market whose clients include the NBA, Western Union and The New York Times. "Many marketers therefore may be waiting for the advent of more research to validate their emerging interest in [the demo]."

InterTrend was part of the first wave of marketing firms in the '80s that began to target Asian consumers in the telecommunications, auto, retail and finance industries. It now counts Northwest Airlines, J.C. Penney, State Farm Insurance, Western Union, Toyota and Verizon among its clients. These companies were some of the first to target Asian immigrants with in-language advertising, sales promotions and outreach during holidays like the Vietnam Tet Festival and Chinese New Year.

Today, however, Asian Americans receive a tiny fraction of the resources earmarked for multicultural marketing in the U.S. The lion's share of spending is geared toward Hispanics and African Americans, with 2004 totals for the former ($3.9 billion) and latter ($1.7 billion) dwarfing the $100 million dedicated to Asian Americans, according to the Asian American Advertising Federation in Los Angeles.

In neglecting to speak directly to this audience, marketers risk ignoring a demo that boasts higher education and considerable spending power.

At 4% of the U.S. population, or 11.6 million, Asian Americans are one-third the size of the Hispanic population, which is growing at a faster rate. Still, their combined buying clout of $397 billion is well over half that of Hispanics ($686.3 billion) and is projected to quintuple to $579 billion by 2010, per The Multicultural Economy, a 2005 study by the Selig Center for Economic Growth at the University of Georgia. The near-400% gain from 1990 through 2010 is substantially greater than the increases projected for Caucasians (164%) and African Americans (222%), and nearly equal to the 413% leap predicted for Hispanics.

"By and large, CPG companies are missing the boat on this one," said Michelle Barry, vp of consumer insights at the Hartman Group, a Bellevue, Wash., consultancy with clients in the pharmaceutical and packaged goods industries. "The vast majority of [ethnic] research and consulting work we do is constrained to the African American and Hispanic groups. We are very rarely asked to consult on or provide insights into the Asian American segment."

Why not? Marketers may offer a list of reasons that include a reluctance to devote resources to a comparatively small segment, the lack of such efforts by competitors and the complex task of reaching a diverse audience with many frames of reference.

"Unlike Hispanics, who share a single language, marketers may find it difficult to communicate with them with one message," said Nick Hahn, managing director at branding consultancy Vivaldi Partners, New York. "What works for the Japanese is not so relevant to the Chinese and vice-versa." For example, while red connotes positivity in China, the color signifies bad luck for Koreans. And as opposed to Western culture, where black symbolizes grieving, Asians wear white, which represents sadness, to funerals.

U.S. companies are often daunted by the convoluted nature of the Asian market, which comprises 20 countries in six main sub-groups: Chinese, Filipino, Asian Indian, Vietnamese, Korean and Japanese (in order of population size). Still, Asians share core values like safety, education and reverence for family eldersóvalues to which many marketers could appeal.

"We would never recommend that a marketer attempt to address each of the Asian sub-segments," said Bill Imada, president of the AAAF and chairman/CEO of IW Group, a West Hollywood, Calif., marketing firm with clients including Merrill Lynch, Blue Cross of California, McDonald's and Wal-Mart. However, with two-thirds of the Asian population concentrated in 10 urban markets (the top three are Los Angeles, New York and San Francisco), that could make the group easier to target along geographic lines.

More marketers are beginning to tap multicultural agencies like Cultural Access (Chicago) and Ameredia (San Francisco) as well as advertising firms such as Admerasia (New York) and Kang & Lee that specialize in the Asian market. According to Imada, the number of such agencies rose from three in 1989 to more than 50 today. More than two-thirds of the Asian-American population prefers to speak their native language, he said, noting the current 625 Asian-language media outlets in the U.S.

"There are many ways to segment this market," said Sharmila Fowler, managing director of Cultural Access Group, whose clients include Universal Studios and Honda. "It all boils down to the marketers' key business objectives."

Food, Glorious Food

Food purveyors are among those most conspicuous packaged goods companies to lag behind in marketing to Asian Americans. While Asians took 10 fewer grocery shopping trips in 2004 and bought approximately one less item per visit compared to the general market, they spent a healthy $30 per trip, according to ACNielsen Homescan Panel.

The void is beginning to fill. Last fall, Kraft launched its first dedicated Asian marketing effort, an integrated campaign featuring in-language ads, in-store product demos/tastings and a Web site with recipes and tips for healthy living.

"Reaching multicultural consumers and speaking to them in culturally relevant ways will continue to be an important part of our overall growth strategy," said Kathy Nyquist, associate director for multicultural marketing at Kraft. "We see Asians as one of the fastest-growing segments. As they begin to adopt to a new culture, our goal is to provide them with the meal solutions, recipe ideas and nutritional information they need to make their lives easier."

Kraft began testing for some of its major brands in 2003 via a partnership with 99 Ranch, the largest Asian grocery chain in the U.S. Based in Buena Park, Calif., 99 Ranch offered customers samples of brands including Jell-O, Capri Sun, Ritz, Maxwell House and Kraft Pourable Dressings. "We wanted to know what they knew about Kraft, how familiar they were with our brands and how they were using them," Nyquist said.

Surprisingly enough, the shoppers did not want more Asian-style products from Kraft. "They were interested in learning how to prepare Western-style meals with our products," said Nyquist, adding that consumers wanted answers to questions, such as which brands were appropriate for kids' lunches, in their native language. Per Nyquist, there was high brand recognition for many brands, including Maxwell House and Jell-O, yet there was little awareness that these were marketed by Kraft.

From its experience marketing to Hispanics, Kraft knew it needed to avoid a one-size-fits-all approach. While most Hispanics speak Spanish, regional nuances can create very different meaningsóand potential pitfalls for marketers. A word that Argentines use for "insect," for example, is one that is used to describe the male reproductive organ in the Caribbean.

To ensure credibility with its Asian audience, Kraft tapped Admerasia, which launched print ads during the test phase in Chinese newspapers New York, Los Angeles, San Francisco and Boston. Given that there are hundreds of dialects in the Chinese language, it was no simple task.

"We went with Mandarin and Cantonese, which are two of the more commonly-spoken dialects spoken by immigrants," said Vincent Tam, director of client services at Admerasia, whose clients also include Mercedes-Benz, Delta, McDonald's and American Express. "We targeted immigrant moms who are seeking to strike a balance at home between Western and Eastern cultures. They are considered the cultural gatekeepers."

One print ad on a bright red background shows an array of Kraft products arranged on a platter. The headline, "Life has a hundred flavors," is based on a Chinese proverb, while the tagline translates to: "A fulfilling family of brands . . . from Kraft." The background color is an auspicious one not only in Chinese culture, but also for Kraft with its red, white and blue logo.

To further connect with shoppers, Kraft deployed Chinese-speaking representatives to supermarket chains including Ralph's and Albertsons. The reps conducted cooking demos of Western recipes using Kraft products, handed out product samples and offered suggestions for convenient kid-friendly school lunches. Kraft also launched a Web site (Krafthealthyliving.com) to promote tips for healthy eating, such as "sip your tea" for better health benefits. Recipes include Nutty Pineapple Tofu Fried Rice, which calls for Planters Peanut Oil and Planters Sliced Almonds, and Quick Veggie & Beef Noodle Bowl, made with Kraft Light Done Right reduced-fat dressing.

Kraft's foray into the Asian market may set the stage for a bigger push among food and beverage marketers. Asians are staunch consumers of staples such as peanut butter, rice, cooking oils, mayonnaise, flour and noodles, suggesting an opportunity for the likes of Skippy, Uncle Ben's, Crisco, Hellman's, Pillsbury and Barilla.

"Those who put in their dollars now in this market will realize the early benefits [and will establish] brand loyalty," said Pawan Mehra, partner at Ameridia. (Its clients include Citibank, Comcast and Dish Network.) "Often this does not involve big ad bucks. The proportional share of ad dollars in Asian [communities] is still less compared to other groups."

Beverage makers might also achieve greater returns among Asians, who index high for 7UP and Mountain Dew and "very" high for Coke, per Kang & Lee's Gitlin. Thus far, cola giants have engaged in only cursory marketing to the segment. Coca-Cola, for instance, is a longtime sponsor of the Chinese New Year Parade in San Francisco, while Pepsi dabbles in other holiday event promotions.

Fast food companies have more of a foothold in the market. Last year, for example, McDonald's highlighted its Chicken Selects stripsówhich proved quite popular among Asiansóin print ads in Chinese, Vietnamese and other English-dominant Asians.

Roads Already Traveled: Lessons from Retail, Auto And Telecom

Once they finally set their sights on the Asian demo, packaged goods marketers may take a page from those in the retail, telecommunications and auto industries. "Marketers like Washington Mutual, Toyota and AT&T were pioneers in recognizing the bottom-line potential of the Asian market," said Imada. "But food and other consumer packaged goods companies have barely made a dent."

J.C. Penney is a noteworthy case study. When the all-American retailer wanted to build its brand in the Asian market in 1996, it turned to Huang to create a compelling shopping destination for Chinese and Vietnamese females ages 25-49 in northern California, which boasts the highest Chinese population in the U.S.

J.C. Penney initially relied on price promotions and in-store displays to present itself as offering quality and value to Asian shoppers. To maximize its $500,000 budget, InterTrend focused on Chinese women, the largest Asian segment, and Vietnamese women, who responded positively to J.C. Penney merchandise in research studies.

"Women are usually the decision makers [and shoppers] in the Asian family. They are very price conscious," said Huang. "Sales, promotions and sweepstakes are the main forces that drive them to a store and make purchases."

In 2003, the efforts expanded with a national advertising campaign. J.C. Penney began marketing to Asians not only during the back-to-school or Thanksgiving selling seasons but also during cultural holidays and at family-oriented events. As the brand's marketing budget grew to $3 million, Huang laughed, "We now can afford to use real live Asian models!"

During a one-month Lunar New Year sales event (Dec. 2003-Jan. 2004), a J.C. Penney tagline ran across a wide mix of communications including tie-ins with fashion shows and credit card applications. The results: Sales grew 1.9% at J.C. Penney stores with high Asian penetration (versus overall sales growth of 0.5%) during the promotion period. Today, the retailer features the program as a signature annual event.

Toyota, with its Asian pedigree, is another successful InterTrend case study. In 2003, research identified four Toyota brandsóSienna, Camry, Corolla and Highlanderówhose quality and reliability resonated with the target. "They were looking to optimize both traditional and non-traditional media reach and at the same time grow their online platform to target tech savvy Asians," explained Huang.

The campaign targeted Chinese, Vietnamese and Koreans with a spate of programs that included the auto industry's first language-specific Web site. Corolla TV and print ads stressed freedom and independence to 20-ish immigrant females who needed their car to be a "reliable partner" in their new homeland. Tag: "Corolla gives you a sense of freedom." Other Toyota brands told young professional males to "Advance in life with your Camry," while families with kids who value safety and versatility were assured that Sienna is the safest way to drive. Per InterTrend, sales of Camry and Sienna were up 10% among the Asian targets in 2004.

Spam and Other Specialities of the House

In supermarket aisles, one opportunity comes from the fact that 72-90% of Asians are lactose intolerant. (During its focus groups, Kraft learned that Asian moms were feeding cheese to their kids as a substitute for milk.) Does McNeil Nutritionals, the maker of Lactaid, thus have a cash cow on its hands? "If ever there was a product that should go after the Asian market, it's Lactaid," said Gitlin. "Asians are the biggest sufferers of this condition, but the company does zero advertising in this community."

In fact, McNeil, a Johnson & Johnson company, has been marketing Lactaid to just about everyone but Asians. "We focus our efforts on Hispanics and African Americans," said a McNeil rep. "There are nascent efforts with regard to targeting Asian Americans. We have some robust plans for next year."

Hormel's Spam hasn't allocated a single dedicated Asian marketing dollar, yet has tremendous appeal in the community since it was offered as a fresh meat substitute to soldiers during World War II. Today, Asians practically deify the brand. In South Korea, wedding couples are said to have a long and prosperous life if they receive a wedding pack of Spam. In Hawaii, Spam is sold at McDonald's restaurants, and travel agents send tours packed with Hawaiian residents on annual pilgrimages to the Spam Museum in Austin, Minn.

So why not actively reach out to this loyal market? "We simply don't have to. It's a part of their culture," said Shaun Radford, archive manager at the Spam museum.

Beyond food, there are categories such as household goods in which marketers could benefit from a more targeted approach to the Asian market. Consultants were quick to suggest how Procter & Gamble, for instance, could make inroads with a brand like Tide.

"If you're an immigrant who doesn't speak English or doesn't own a washing machine, you must show them how Tide meshes into their lives," advised Imada. "Allow consumers to see, touch, smell and use the product with in-store demos or at community events. They love to test products. Offer them coupons . . . Don't describe to them how to use it in an instruction book or print ad."

Cosmetics marketers, meanwhile, have expanded multicultural efforts in recent years, but continue to gear most of their products toward Caucasian women. P&G, for example, has a loyal Asian following behind its SK-II high-end cosmetics line, which originated in Asia, though is formulated for the general market. Still, the company advertises SK-II with print ads in Chinese and Korean newspapers in major metro areas.

If marketers are looking for a clear sign that the race is on for the Asian dollar, it came last spring when Wal-Mart launched its first Asian-targeted effort in the U.S. A multipronged campaign for Wal-Mart via Imada's IW Group ran through January in languages and dialects including Mandarin, Cantonese and Vietnamese. TV ads featuring Asian shoppers extolled the merits of shopping at Wal-Mart, and print touted holiday electronics sales.

"Here's a company that is leveraging its global clout [with 1,600 stores outside the U.S.; 16 in South Korea and 44 in China] to tell us about their brand," said Imada. "They weren't daunted by the segmentation litany."

Now, other retailers and manufacturers may be forced to respond. "Some marketers are waiting to see who jumps in first," said Gary Stibel, principal/founder of New England Consulting Group, Westport, Conn. "Once a major player like Wal-Mart moves in, others are sure to follow."

For those who still cast a wary eye on the demo, Gitlin has some advice.

"Start small with a single Asian group in a limited geography, test and learn," he recommended. "And grow the programs as you go."