When It Comes To Multicultural Marketing, Doing Nothing Has A Cost


As a marketer focused on multicultural marketing in America for the past two decades, I am still surprised when I see a brand that has the potential to capture substantial sales and profits by connecting with the Hispanic segment doing very little or nothing at all to seize this opportunity.

A few months ago I spoke with a CMO at a large retail company, one that historically hasn’t leveraged the Hispanic segment, and asked him about the reasons his organization was not focusing on this segment. His answer was very straightforward, ‘We are doing relatively well in our industry, and to be honest with all the budget cuts pressure we have been facing, I don’t have the resources to do it properly”.

That’s the typical answer of most CMOs when asked the same question. He continued with a compelling narrative, ‘If you add up the amount of media, production, research and agency fees associated with a Hispanic marketing program, a company my size would be investing at least $30 million a year’.

Naturally, as an experienced CMO, he had the numbers on his mind, all itemized, detailed and precise, and he was probably right. However, I replied with a question he wasn’t expecting. ‘I see you have the cost of doing Hispanic marketing all figured out, but have you ever calculated the opportunity cost?’

He gave me a puzzled look, so I continued my rationale. ‘I looked at Simmons data on consumers who shopped at your stores in the past four weeks, and I noticed that at the national level you had approximately 20.6 million shoppers in 2018. That is impressive! That’s a growing performance over the past two years, I said.’, “well, I told you we were doing well’, he replied with a proud smile.

‘Yes, you are indeed, but I also noticed that your share of shoppers coming from the Hispanic segment was meager, at 9%, while the national average for all retailers was at 16%. This is almost half of the national average’, I said. ‘Moreover, I looked at your market share among shoppers these past four weeks, and you were at a 5% level, way below some of your competitors who have a double-digit share’.

At that point, his smile was gone, and a curious look was the incentive I needed to keep talking. ‘Imagine you can close this gap of Hispanic shoppers and get to the national average your competitors already have. This could represent almost 1.3 million incremental shoppers on a given period. That’s the opportunity cost or, in other words, your cost of not actively executing a Hispanic marketing strategy’.

When I was ready to continue, he interrupted me by saying ‘Seventy-five million dollars.’ And I said ‘What?’ He then added ‘1.3 million incremental shoppers would bring approximately seventy-five million dollars in incremental revenue, without counting the repeat visits these incremental shoppers could have within a year. This amount could be doubled, even tripled on a given fiscal year.’ Bingo! He was starting to realize what the cost of doing nothing really is, simply put, how much the company was leaving on the table by just ignoring this important segment.

The Hispanic population grew by more than 26% in the past decade alone while the non-Hispanic white population actually declined during the same period. Likewise, more and more studies have demonstrated that reaching Hispanics with an Anglo-driven message is not effective to drive strong ROI. You can reach Hispanics with your existing plans, but you may not be connecting with them without a strong culture-driven approach led by experts in this segment.

Furthermore, beyond companies that are paying the ‘cost of doing nothing’ every year, there are also the companies that while historically invest on the segment, may not be fully capturing their fair share within the segment.

For example, we looked at a different national retail brand, one with a consistent track record of Hispanic marketing investments and we noticed that while their gap to fair share was smaller than the previous example, they were still below the 16% benchmark. For them, the monetary benefit of closing the gap to fair share was estimated at 3.7 million incremental Hispanic shoppers, which could bring more than US$200 million in incremental sales per year in the most pessimistic assumption.

Investing in multicultural marketing shouldn’t be looked at as a pure cost since when properly executed its benefits may outweigh the investments. Moreover, it’s important to start comparing the returns of implementing a multicultural marketing program with the correct benchmark, compared to the cost of doing nothing or worse, seeing your competitor reaping the sales that otherwise should be yours. When it comes to multicultural marketing, a company’s victory is another company’s loss. Since this is truly a zero-sum game, inertia to act may give your competitor not only a short-term sales edge but also a chance to create a loyal customer that will cost you more to convert in the future.

It’s time to start calculating the cost of sitting out and observing other companies capturing a disproportional share of one of the only sources of growth in our current marketplace. Doing nothing has a cost.

This article was written by Isaac Mizrahi and appeared originally at Forbes.

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