SESSION:8 Marketing in a Diverse Marketplace8.2 Diversity and Inclusion Marketing

Session:8 Marketing in a Diverse Marketplace

8.2 Diversity and Inclusion Marketing

Principles of Marketing | Leadership Development – Micro-Learning Session

Rice University 2020 | Michael Laverty, Colorado State University Global Chris Littel, North Carolina State University| https://openstax.org/details/books/principles-marketing

LEARNING OUTCOMES

By the end of this section, you will be able to:

1 Define diversity marketing, multicultural marketing, and sociodemographic marketing.
2 Explain why diversity marketing is needed in today’s marketplace.
3 Explain the importance of diversity in market research.
4 List the factors that impact diversity marketing.

Diversity Marketing Defined

As you read in the previous section, diversity marketing is a strategic approach that involves identifying diverse subsegments of the population within a market and creating intentional marketing efforts to reach wider audiences. This last piece is key. It has an element of inclusion because it purposefully incorporates identity-specific consumers that have been overlooked or pushed to the margins of society such as some ethnic minorities, people with disabilities, elderly adults, low-income persons, and other groups. Marginalized consumers are often excluded in mainstream advertising, translating into missed business opportunities. Diversity marketing is a strategy for marketers to include them.

Diversity marketing is more than just an awareness of minority identities, underrepresented communities, or racial distinctions. It is about being culturally responsive, meaning having an actionable understanding of diverse consumers’ interests and preferences based on shared cultural and sociodemographic characteristics. Consider the five key parameters most often used to describe diversity: cultural, racial, and ethnic; gender and sexual identity; generational; religion; and disability.⁶ Culture, race, and ethnicity are part of the cultural aspect, while the others are part of the sociodemographic aspect. Because of the broad scope of diversity marketing, as seen in Figure 8.4, this strategy can help marketers reach larger market audiences. Diversity marketing can also influence consumers’ mindsets and generate positive attention.

Diversity marketing dimensions are divided into two categories: culture and demographics. Included in culture are race, ethnicity, nationality, language, subculture, acculturation, traditions, celebrations, beliefs, values, attitudes, and relationships. Included within demographics are age, gender, sexual orientation, marital status, education, occupation, income, socioeconomic status, religion, spiritual views, lifestyle, health, body type, and mental health.

Figure 8.4 Diversity Marketing Dimensions (attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Importance of Diversity Marketing

The idea of marketing driven by consumer diversity is very relevant and meaningful, because today’s marketplace is changing dramatically. This evolution is happening not only in the United States but also around the globe. For marketers, this means that generalizing buyers, households, or communities anywhere in the world is a shortsighted perspective, because it limits business growth and commercial possibilities. Plus, oversimplifying population segments can also adversely affect a company’s reputation by shifting the public’s opinion in a negative way. The consequences can hurt sales, lead to missed opportunities, and undermine competitive status. This makes it essential to align markets and diversity marketing goals.

Even though “one size fits all consumers” type of tactics worked in past decades, that is no longer the case. Failure to recognize diversity marketing as an essential component of any marketing plan in these changing times is definitely a business blunder. In a study conducted by Adobe in 2019 among 2,000+ consumers, results showed that 61 percent of participants believed that diversity in marketing campaigns was important, and at least 38 percent were also said to be more inclined to trust brands that showed good diversity in advertisements.⁷ Inclusion and diversity marketing are vital to a company’s success in any market.

What It Means to Businesses

Leading the marketing strategy with a diversity-driven intention can increase customer satisfaction and build stronger brand loyalty. Top Design Firms surveyed hundreds of consumers in late 2020 and found that 67 percent would consider making repeat purchases from companies committed to diversity in marketing campaigns.⁸

Another report confirmed that these observations are not restricted to specific populations. Market analysis by Heat agency found that high diversity scores for brands translated into a whopping 83 percent higher preference by consumers.⁹ Besides improving brand sentiment overall, studies show that companies that build emotional ties through diversity marketing programs generate more revenue, increase stock price performance, and enhance brand perceptions.¹⁰

What It Means to Consumers

Diversity marketing is important on a personal level because of what it implies. Companies that prioritize this strategy clearly demonstrate a higher level of understanding, value, and respect for all individuals in society. The conscientious inclusion of racially, ethnically, culturally, and socially distinct groups in marketing efforts suggests a genuine desire to communicate and engage with everyone.

Acknowledging consumers’ differences and adopting tactics to meet each group’s needs and preferences also validates individuals’ importance in the market. From a consumer standpoint, the application of diversity and inclusion measures in a company’s marketing practices shows a universal recognition and appreciation for people.

Factors Impacting Diversity Marketing

As shown in Figure 8.4, diversity marketing is based on a variety of cultural and sociodemographic consumer characteristics. Marketers have to be mindful of these distinctions so marketing communication campaigns launched are sensitive to the audiences they are attempting to serve. After all, cultural and sociodemographic factors can greatly influence consumers’ motivations, reactions, and decisions. Other related variables, such as behavioral and personal, can shape buyers’ consumption levels and their receptiveness to marketing messages. Given the impact of these factors, for companies to be successful in any market, the focus of diversity marketing has to be customer centric rather than company centric. Being customer centric is when a company targets customers first regarding any decisions about its goods, services, or experiences, while company centric is when a company focuses decisions from the perspective of the organization. Building a proper sociocultural conscience in marketing starts with good research.

Market Research

Market research is essential for developing successful marketing strategies because it leads to consumer insights. It also identifies potential communication gaps. This means that diversity must be treated as a market research factor to learn about multidimensional audiences. Leveraging consumer diversity in the research process has several benefits. For instance, it provides the information needed to better understand people’s cultural or social differences. This is useful for companies to avoid wrong assumptions and avert public mishaps.

To do good research, marketers do not have to belong to or identify with a specific consumer group. However, understanding how ethnic and sociocultural differences impact buyers’ decisions and actions requires diversity marketing intelligence (DMiQ). Diversity marketing intelligence refers to the capability of identifying, accepting, and valuing the diversity of consumers within a market and using this knowledge to tailor the marketing mix accordingly.

In early 2018, Tarte Cosmetics introduced to the market its highly anticipated Shape Tape Foundation. The launch featured 15 shades of makeup, almost all light tones. However, the product was not well received. Loyal customers were furious because of the lack of shades for people with darker skin. Tarte Cosmetics was accused of being a whitewashed brand and even making deeper skin-toned people feel inadequate.¹¹ The company quickly apologized for alienating customers and changed its product and marketing communication.

LINK TO LEARNING

Fenty Beauty

Rihanna did more than just lend her name to the brand Fenty Beauty—she also developed products that increased diversity in the beauty business with its 40-shade foundation range and a wide range of sizes, making $100 million in sales the first 40 days! The company has been criticized for use of child labor by some of its suppliers, and has made what its founder described as careless choices during a fashion show. But it remains known for continuing to reflect a more inclusive approach to beauty and clothing products. Read more about Fenty Beauty from this Latana article or this article from Newsweek.

When diversity marketing efforts fall short, as the Tarte Cosmetics case shows, it is often the result of racially or socially charged insensitivities and missteps. The outcome can have costly repercussions for companies. In 2017, PepsiCo (see Figure 8.5) received heavy backlash for its “Live for Now Moments Anthem” campaign featuring Kendall Jenner. The commercial was criticized for trivializing the Black Lives Matter (BLM) movement and undermining protesters’ real-life hardships in pursuit of peace and justice.¹² It was described as insensitive and offensive.

LINK TO LEARNING

Live for Now Moments Anthem

Evaluating successful campaigns and failures is important in the learning process. Find as many opportunities as you can to learn from failures. Start by watching Live for Now Moments for an example of a campaign that failed because it was offensive and missed the mark.

PepsiCo defended its position as not intending to be socially disrespectful. However, PepsiCo withdrew the commercial, estimated to have cost $5 million to produce, and widely apologized to the market and to Jenner.¹³ A final lesson here is that when diversity marketing efforts are done correctly—as Fenty Beauty did—it can boost brand awareness, consumer engagement, and sales.

Figure 8.5 The PepsiCo commercial “Live for Now Moments Anthem” was an expensive lesson for the company—a failed campaign that was criticized for making light of a culture’s real-life hardships. (credit: “Pepsi” by Mike Mozart, JeepersMedia/flickr, CC BY 2.0)

Race and Ethnicity

Two out of every five individuals in the United States—over 40 percent of the population—identify racially or ethnically as other than non-Hispanic White.¹⁴ Researchers expect this trend to keep growing in the coming decades, and as consumer diversity increases, cultural identification becomes even more important. Race, ethnicity, and culture give meaning to one another. This makes it critical for marketers to pay attention to how multiracial or multiethnic consumers identify culturally. Having a multicultural identity means that a person has been exposed to various cultures and self-identifies as being part of more than one racial or ethnic community or various social groups.¹⁵ We will focus on four key multicultural identity segments of the American population: Hispanic, Black, Asian, and Native American/Alaska Native.

Being multicultural can take many forms. Multicultural individuals may speak multiple languages or have different sets of friends in each culture. From a marketing perspective, multicultural consumers may have different responses to brands or products depending on their multicultural affiliation.¹⁶ Why is this significant? Because marketers must consider the effects of multiculturalism on the marketplace when developing the marketing mix. Race and ethnicity are clearly linked to diversity marketing.

Modelo Especial is a good example. Modelo Especial is a Mexican beer that has successfully capitalized on its heritage to target the Hispanic population while also appealing to the general market. Marketed by Constellation Brands, the beer has had strong sales in the United States since the 1990s.¹⁷ In 2019, Hispanic consumers captured close to 70 percent of the brand’s national sales, but Hispanic people are only about half of the customer base.¹⁸ Over the course of several decades, various aspects of Hispanic culture have been widely embraced in the United States. Have you heard of artists like Jennifer Lopez, Pitbull, Bad Bunny, and J Balvin? The marketing team at Constellations Brands attributes the brand’s mainstream appeal not only to connecting well with Hispanic consumers but also to the openness of millennial and Gen Z consumers to different cultures and lifestyles.

Sociodemographics

In marketing, sociodemographics describes the combination of social and demographic factors that characterize specific consumer groups in the market. These factors are mostly quantifiable, meaning they can be measured or verified to a certain extent. Though race and ethnicity are cultural factors, sometimes they are included in market research as sociodemographic parameters. This is done to increase the generalization of consumer findings and to uncover potential areas of concern linked to social issues.¹⁹

Sociodemographic variables typically consist of gender and sexual orientation, age or generation, family structure, religion, education level, and income. The latter two are also frequently associated with socioeconomic status. Disability is another variable that can be treated as a demographic factor. Figure 8.4 offers a more comprehensive list of diversity marketing’s sociodemographic factors.

Just like with multicultural consumers, segmenting buyers based on shared sociodemographic factors allows companies to tailor goods or services to match the needs and preferences of this diverse group. This enables marketers to develop the right marketing mix—as well as create effective advertising content—to influence distinct consumers. Here is how Disney uses family structure as a sociodemographic factor to segment and target social media users. Disney on Ice is a music and skating show that brings the magic of Disney to ice rinks around the country. People with small children are more likely to consider family entertainment activities, so Disney on Ice targets these consumers on Facebook with tailored family-oriented ads.

Multicultural Marketing Defined

Multicultural marketing is a strategic approach to intentionally target audiences based on different racial, ethnic, and cultural identities and backgrounds. It focuses on relevant, value-rich, and culturally authentic communication tailored to multicultural consumers.

You are probably asking, Is multicultural marketing the same thing as diversity marketing? After all, both are often used interchangeably. The answer is no; they are not the same thing. Diversity marketing is an inclusive approach that results in reaching a wider portion of the entire market. Multicultural marketing is a subcategory of diversity marketing that is aimed at multicultural individuals.

Multicultural Populations

Racial and ethnic diversity continue to grow every day around the world. In the United States, in particular, demographers predict a majority–minority population shift by the mid-2040s, as Figure 8.6 shows. In other words, the bulk of American consumers will identify as multicultural, meaning racially and ethnically diverse people of color.

This projection has enormous marketing implications for companies and nonprofit organizations. As the marketplace becomes even more racially and ethnically diverse, marketing efforts must be aligned to the needs and expectations of multicultural groups to be effective.

Let’s take a closer look at these key multicultural segments of the American population:

The Hispanic population is the largest multicultural group in the nation and makes up about 19 percent of the total population. According to data-driven marketing company Claritas, the Hispanic population is one of the fastest-growing groups, with over 63 million individuals, and is also responsible for 59 percent of the country’s population growth between 2010 and 2021.²⁰ Plus, by 2026, business strategists believe that nearly two out of every three consumers in the United States will belong to this ethnic group.²¹ With a median age of 29, this group also has the youngest population in the country.
The Black population is also a growing segment with 46.9 million individuals—or 14.2 percent of the total population—according to the 2020 US Census. This group is made up of three different subethnicities: individuals who identify as Black alone (single race), or as Black Hispanic, or as Black with another race such as White or Native American (multiracial). The Black population in general has the second youngest median age. In fact, almost 60 percent of this group were millennials or younger (under the age of 38) in 2019 based on findings from the American Community Survey.²²
The Asian population accounts for 7.2 percent of the American population with 24 million individuals from combined subethnicities as reported by the 2020 Census. Like Black people, Asian people also self-classify as either single race, Asian Hispanic, or multiracial individuals. Communities often included as part of the Asian multiracial composition are Native Hawaiians and Pacific Islanders. Asians’ three classifications combined experienced the fastest population growth of all multicultural segments in the nation between 2000 and 2019.²³ The Asian population has a median age of 34 and is expected to reach around 35 million individuals by 2040.²⁴
The Native American/Alaska Native population represents 1.1 percent of the population in the United States with 3.7 million individuals identifying as single race Native people. During the 2020 Census, these Native groups were combined with other races and ethnicities, boosting the number to 9.7 million people, or about 2.9 percent of the total population.²⁵

A bar graph shows the projected population by race between 2016-2060. The trend shows the white, non-Hispanic population decreasing during this time, with Hispanics increasing the most during this time. The populations of the Asian and Black races grow only modestly during this time. In 2016, 60% of the population is white, about 16% of the population is Black, about 4% of the population is Asian, and 19% of the population is Hispanic. By 2060, 42% of the population is White, about 18% of the population is Black, about 5% of the population is Asian, and about 34% of the population is Hispanic.

Figure 8.6 US Population Projections from 2016 to 2060 by Race and Ethnicity (data source: US Census Bureau; attribution: Copyright Rice University, OpenStax, under CC BY 4.0 license)

Sociodemographic Marketing Defined

Sociodemographic marketing is a strategic approach to intentionally target audiences based on shared social and demographic characteristics. Sounds familiar? Like multicultural marketing, sociodemographic marketing also focuses on relevant and authentic communications with consumers. Both strategies help business and organizations align their products and services with audiences’ needs, preferences, and expectations.

In a 2019 study, nearly 3,000 consumers were asked to consider ads with sociodemographic attributes like gender identity, sexual orientation, age, socioeconomic status, and physical ability. Results showed 64 percent of consumers taking some sort of action after seeing an ad with sociodemographic diversity.²⁶

You might be wondering, Is sociodemographic marketing the same thing as diversity marketing then? The answer is no. Again, as with multicultural marketing, sociodemographic marketing includes underrepresented and overlooked consumers in a large population. Sociodemographic marketing is another subcategory of diversity marketing.

Sociodemographic Populations

While all sociodemographic consumer groups are important, the following are essential segments of sociodemographic marketing:

LGBTQIA+ population. LGBTQIA+ stands for lesbian, gay, bisexual, transsexual, queer/questioning, intersex, asexual, and other sexual identities. About 5.6 percent of American adults—roughly 14.4 million individuals—identify as LGBTQIA+ according to a 2020 survey.²⁷ In general, LGBTQIA+ consumers spend more at retail stores than other groups and have a higher percentage of online purchases compared to non-LGBTQIA+ households. Not only is this segment part of diversity marketing, but the LGBTQIA+ community is very diverse too.
Generational population. Consumers are grouped into age clusters based on birth year. These populations include 21.7 million Traditionalist or Silent Generation (born between 1928 and 1945), 70.6 million baby boomers (born between 1946 and 1964), 65 million Generation X (born between 1965 and 1980), 72.2 million Generation Y or millennials (born between 1981 and1996), 67 million Generation Z or Zoomers (born between 1997 and 2009), and 27.6 million Generation Alpha (born between 2010 and 2025) according to 2020 US Census data.²⁸ Every generation is unique and has different historical references, challenges, interests, and technological experiences that impact these consumers’ preferences and appeals.
Socioeconomically disadvantaged population. These individuals tend to come from low-income households, experience financial insecurity, and have less access to education. In the United States, the estimated number of people living in poverty was over 34 million individuals in 2019.²⁹ The majority of disadvantaged consumers are located either in poor rural areas or inner-city communities that lack social resources and infrastructure to reduce poverty.³⁰ Marketers must be careful targeting these consumers to avoid negative repercussions from the market.
Consumers with disabilities. This group represents an estimated 61 million Americans. About one in four adults lives with some type of disability.³¹ Disability is a classification derived from an impairment related to mobility, learning, intellectual, or other types of functions. This group is also considered very diverse because disabilities span cultural, social, and demographic factors. Consumers with disabilities have been traditionally underrepresented in marketing efforts, though studies show they are one of the largest sociodemographic market opportunities after baby boomers and other segments.³²

CAREERS IN MARKETING

Multicultural Marketing Director

With the growing opportunities for multicultural marketing, demand is growing for multicultural marketing directors. If this job opportunity interests you, do your research on what type of skills are desired by hiring managers. To get you started, read this article about the 7 Must Have Qualities in a Multicultural Marketing Director. You can also learn directly from marketing executives in this article about how marketers can foster diverse cultures and who is getting hired and promoted in this area. The best way to learn is to follow others doing the work. Expand your network to include diverse and inclusive leaders. Start by checking out this list of 59 female marketing and growth influencers.

As you’re building a portfolio of skills for the job market, remember to continue to develop your soft skills. Why, you might ask? Read this article: 7 Soft Skills You Need to Achieve Career Growth.

Knowledge Check

It’s time to check your knowledge on the concepts presented in this section. Refer to the Answer Key at the end of the book for feedback.

1. Diversity marketing is a strategic approach that includes ________.

identifying different subsegments of consumers
creating advertisements to connect with specific consumers
consumers that share cultural and sociodemographic characteristics
All of these statements are true.

2. Which of the following is true regarding why diversity marketing is important?

Today’s marketplace is changing dramatically everywhere.
Buyers, households, and communities are staying the same.
Consumers don’t believe that diversity in advertising is important.
Diversity marketing has no impact on brand loyalty.

3. For companies to be successful in any market, the focus of diversity marketing should be ________.

company centric
brand centric
consumer centric
industry centric

4. Diversity in market research is a good idea because it can ________.

help companies win over people from different population segments
provide information to better understand cultural and social differences
reduce wrong assumptions and avert public relations missteps
All of these statements are true.

5. Which is not an example of a diversity marketing consumer segment?

Multicultural segments like Hispanic, Black, and Asian people
Sociodemographic segments like tech-savvy and digital natives
Multicultural segments like American Indian and Alaskan Native people
Sociodemographic segments like Gen Xers, Zoomers, and consumers wit