Multicultural marketing is culturally accurate and culturally competent marketing. It's the process by which companies increase market share and branding among vertical ethnic or cultural groups by a direct approach that is sensitive to the group's likes and dislikes, history and perceptions.

Companies have grappled with the cost-to-benefit ratio of narrow and vertical targeting versus including segmented groups in mass marketing. Most successful consumer-facing organizations have recognized the benefits of specific multicultural marketing as a direct means of sales to fast-growing demographics and as a deterrent to costly multicultural missteps that alienate customers.

The Business Case for Multicultural Marketing

Data on individual-group buying power supports corporate efforts to have specific multicultural-marketing efforts. Buying power, or disposable income, is defined as the total personal income available after taxes. The most accurate source of information on buying power is the Selig Center for Economic Growth at the University of Georgia.

The Selig Center reports that total annual buying power in the United States exceeded $10 trillion for the first time in 2007 and is projected to be $13 trillion by 2012. What's particularly relevant here is that multicultural markets will account for the lion's share of that growth.

A few key diversity findings from the Selig Center in the multicultural economy:

• In 2008, the combined buying power of Asians, Blacks and American Indians was $1.5 trillion, a 227 percent increase over its 1990 level of $454 billion.
• In 2007, the buying power of Blacks and Latinos was $913 billion and $951 billion, respectively—larger than the entire economies of all but 13 countries in the world.
• Latino buying power demonstrates the aggressive growth of this demographic. In 2008, U.S. Latino buying power exceeded the 1990 value by 349 percent, compared with 151 percent for all U.S. consumers and 337 percent growth for Asians, 213 percent for American Indians and 187 percent for Blacks.
• Marketing efforts for different racial/ethnic communities must address different geographical aspects. For example, the Latino and Asian markets are heavily concentrated in a few states, while the Black market is widespread throughout much of the United States.

Effective multicultural marketing also enables companies to understand the opportunities for vertical groups. For example, a Witeck-Combs/Harris Interactive 2009 survey of 3,000 consumers, with 404 openly identifying as gay and lesbian, found 55 percent read blogs compared with 38 percent of the heterosexual population. And 14 percent of the gay and lesbian consumers read travel blogs, compared with 8 percent of the heterosexual population.

Best Practices: Multicultural-Marketing Campaigns

There have been many successful cases of corporations using their employee-resource groups (also known as affinity groups and employee networks) to reach community members and for insights into the cultural nuances/buying habits of those companies.

Consultations with community leaders, in-language web sites and marketing material, and the use of marketing experts and media aimed directly at these multicultural groups all contribute to marketing campaigns that yield higher returns in these targeted markets.

As an example, Procter & Gamble's Gain laundry detergent was created with scents and marketing that was specifically aimed at the Black and Latino communities. The company consulted extensively with its Black and Latino employee-resource groups before marketing the product. The result? Gain became the second-largest-selling laundry detergent in the United States, which the company primarily attributed to these two markets, and it became the fastest-growing brand among Black consumers.

Avoiding Multicultural Missteps

A lack of cultural competency in multicultural marketing can land a company in hot water, leading to consumer withdrawal, boycotts, and overall lack of public support. There have been numerous instances of multicultural missteps, such as the "Got Milk" campaign that translated in Spanish into "Are You Lactating?" or more recently, McDonald's use of a General Custer Happy Meal toy, which offended many American Indians.