The Age Of The Millennials: Is Multicultural Marketing Dead?

The Pew Research Center recently announced that Millennials will surpass Boomers as the largest living generation in 2015. Millennials are currently 75.3 million strong and account for $1.3 trillion in direct annual spending, of which $430 billion is considered discretionary, non-essential spending.

Success in marketing to this generation of people now 18 to 34 years old is critical to the future of many companies. Beyond the impact of this cohort’s size, they are also influencing the purchase habits of other age segments through the opinions that they share about brands both offline and online.

Marketing to Millennials is challenging because this group exhibits significantly different attitudes about life, choices, and the role of brands when compared to their predecessors. To make matters more complex, Millennials are more multicultural and place a higher value on diversity than older segments. Whether by choice or omission, marketers are evolving their marketing strategies to engage Millennials as one cross-cultural group with common expectations. But is this the best approach? Is there value in tapping unique ethnic needs and aspirations to win with this culturally diverse generation?

Unfortunately, including the cultural variable in upfront planning can be daunting for many teams. Brands generally focus on establishing the “general market” strategy first and then assess its fit with each ethnic group. This approach in turn leads firms to allocate a majority of their resources to the overall strategy, hence leaving a small portion of their resources (if any) to address gaps with ethnic specific tactics. As a result, organizations either leave money on the table or, even worse, miss the fact that poor brand performance among multicultural customers is dragging down their overall sales. Also, firms rely on a few multicultural experts instead of equipping every employee to meet ethnic needs, which diminishes their ability to fully optimize strategies to win among the more diverse Millennials.

The answer to whether there is value in ethnic specific Millennial marketing strategies will come as brands clarify the overall business problem that they are trying to solve and then quantify to what degree it is driven by multicultural groups. Approaching ethnic marketing as an affirmative action cause, because “Millennials are now multicultural,” is not only not sustainable long-term but also makes figuring out its ROI more challenging. Below are four areas that any brand leader can look at to determine how Millennial diversity is impacting a brand and its go-to-market strategies:

1. General Business Factors. To what extent is the brand being sold in highly ethnic geographies? Do ethnic consumers over-index on spending in its category? How much is competition spending on ethnic initiatives? Is the brand distributed internationally and/or does it have global brand equity? Click here to take an 8-minute quiz to learn to what extent your brand needs to consider Hispanics in upfront planning (if a B2C brand, choose Millennials when asked about Age Group targeted).

2. Brand Data. Compare sales per capita and year over year (YOY) trends in highly ethnic vs. nonethnic markets (total brand and by product/service). Look into research with “representative” samples to see if ethnic data can be broken out, and use it for directional purposes only since ethnic sample sizes are probably not robust enough to be statistically significant and research in English does not capture data from the Spanish dominant (31 percent of Hispanic Millennials). One of my clients was equipped to improve display performance once we found out that although 80% of their items sold better in highly Hispanic stores, most of the items on displays did not include those bestsellers. Making changes to their display strategy would significantly impact their overall sales since the business was highly concentrated on one retailer where Hispanic stores were 40 percent of the total.

3. Approach to Personalization. One of the biggest mistakes made when considering ethnic targeted programs is to think about them only in terms of marketing communication. Brands can meet the needs of multicultural consumers at the same time that they cater to Millennial’s desire for customization. And in a world of Big Data where Millennials also freely share their personal information, companies can even deliver individualized experiences (ex: Amazon). It’s just a matter of confirming whether the personalization strategy is leading a brand to win equally among ethnic vs. nonethnic customers.

4. Social Engagement. Aided by mobile technology and social media, Millennials rely more on peer recommendations (primarily from friends, spouses and parents) than on traditional advertising when making brand choices. However, their peer networks are not as diverse as one might think. While the incidence of interracial couples among Millennials is significantly greater than for older groups, over 2/3 of Americans under 30 have a partner or spouse of the same race or ethnicity. Among Americans 18-39, 28 percent have no close friends of another race or ethnicity. In general, people’s networks are quite segregated—the percentage of people in each racial/ethnic segment’s personal network that identify as being of the same race or ethnicity is 91 percent for White Americans, 83 percent for Black Americans and 64 percent for Hispanic Americans. Therefore, it is important to assess the degree to which each ethnic group is engaging with the brand’s social media and providing customer reviews.

Teams that probe the relationship between multiculturalism and brands’ general factors, performance data, approach to personalization, and social engagement before developing overall strategies will be better equipped to determine when to tap into the cultural/racial uniqueness of Millennials and when to engage them as one group with common needs. By optimizing their marketing mix with this approach brands will achieve a greater ROI today and build the foundation to thrive among future generations.

Are there any other areas that you have looked at or would look at to determine how Millennial multiculturalism is impacting your business?