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Stirring America's melting pot: As the ethnic population rises in the United States, insurers are beginning to take a hard look at marketing strategies to target these growing populations. (Marketing Cover Story).

For Eric Cheng, coming to the United States meant more than just a new start. It also was an opportunity for him to give something back to his fellow Asian-Americans.

Twenty years ago, Cheng and his business partner came to America as exchange students at the College of Insurance in New York, where they had the opportunity to learn about insurance--something they had little exposure to in their native China. They took that knowledge and opened C&M First Services Inc. as a way to reach out to hundreds of Asian-Americans. Today, C&M has become one of the leading Asian-owned insurance agencies in New York City; writing more than $11 million in commercial and personal lines business to predominantly Asian-owned businesses in New York, New Jersey, Connecticut and Pennsylvania, including more than 1,400 Chinese take-out restaurants in New York City.

Like many minority agents, Cheng's interest in serving diverse populations was a direct result of his personal experience. "I was blind to insurance, like most new immigrants are when coming to this country," Cheng said. "Not only do they have to adapt to a new environment, but they must learn about a system-insurance--they have not been exposed to in the past." In addition, he felt that the insurance industry was not very interested in marketing to these groups.

But that is changing. Many insurers are paying closer attention to multicultural communities and strengthening their reach into these once-underserved markets. Internally, insurers are beginning to turn what was once thought of as a white, male-dominated industry into an American melting pot.

Growing Diversity

There are now millions of reasons to market to multicultural markets--nearly 80 million to be exact. According to the 2000 U.S. Census, minority groups, which account for more than 79 million of the 281 million Americans, are quickly on their way to becoming one of the largest-growing sectors of the nation's population. By 2010, one-third of the U.S. population is estimated to be composed of African-American, Hispanic-American, Asian-American and Native American populations.

In many states and major metropolitan areas, including Texas, California, Florida, New York City and Chicago, minority groups already have become the majority, said Jay Lenstrom, president of the Milwaukee-based event marketing firm, GMR Marketing. Sixty percent of the Hispanic population resides in major cities, including Los Angeles; New York; Miami; San Francisco; San Jose, Calif.; Chicago; Houston; San Antonio; Dallas; Fort Worth, Texas; Albuquerque, N.M.; and McAllen/Brownsville, Texas.

Disposable Income

For insurers, the surge of multicultural populations is creating massive business opportunities with greater spending power among the markets. According to an article in the Seattle-based Puget Sound Business Journal, disposable income of Hispanic-Americans is increasing three times faster than disposable income in the general market, while the approximately 7 million Asian-American consumers represent nearly $225 billion in purchasing power.

Datamonitor, a business information company specializing in industry analysis, recently took a close look at the financial-services industry's trends in ethnic marketing. According to its study, "Ethnic Marketing in Financial Services: 2001-2002," ethnic markets account for a significant proportion of the total market for insurance and banking products. For example, these markets comprise 18% of the market for asset-accumulation life insurance. In addition, the savings activity of these groups has increased dramatically, with 42% of multicultural households now actively saving, compared with 25% in 1989. This change is leading to a sizable increase in the purchase of savings and investment products, according to the study.

Reaching the Masses

Companies that fail to address ethnic markets will limit their customer base, according to the Datamonitor study. In addition, financial-services companies that take a holistic approach to ethnic marketing and create well-structured programs will have the greatest success, said Brendan Ford, a Datamonitor analyst.

The recipe for reaching deeply into America's melting pot boils down to two important ingredients--a strong commitment to the markets and an understanding of customers' cultures and languages. "If you address the cultural and language needs of customers, have a better understanding of the quality of business and have the capability to serve them, success in this market will follow," said Raymond Celaya, assistant vice president of emerging markets for Northbrook, Ill.-based Allstate Insurance Co. The company has been a major player in diverse markets since its experience with retailer Sears Roebuck & Co., which has dedicated more than a century to reaching out to multicultural and urban populations. After its initial public stock offering in 1995, Allstate launched an urban and Hispanic markets initiative, and its book of business with the Hispanic community has grown to $2 billion from $1 billion.

"It's not enough to say you're going to market to multicultural groups, but rather, you have to know which ones you want to go after--whether by subethnic groups, income level, geography or religion," said Jose Villasenor, vice president of the global public relations firm Ketchum U.S. Hispanic Markets Group in Dallas. Insurers risk wasting both time and money if they concentrate efforts only on broad sectors, rather than targeting more specific segments within a community, he said. For example insurers find greater success in marketing to first-generation Mexican-Americans living along the Mexican border than in targeting the Hispanic community as a whole. In the end, insurers that are more specific in their efforts will be able to better manage their marketing prospects.

Gwen Jones, ethnic marketing development director for American Family Insurance, Madison, Wis., agrees. "There is no magic bullet when dealing with multicultural markets." Companies can't view these groups as a monolithic body; they need to segment it further and be ware of the audiences that make up those broader bodies, she said.

Some companies have failed in their efforts to reach diverse markets because of their limited interest in learning the markets' cultural values, languages and needs or because they made false assumptions based on mainstream market thinking.

"Insurers must prove themselves to the communities they are targeting, be totally open-minded and show customers that they're there for the long haul," Jones said. "This includes being committed and dedicated to the markets they're serving."

Local Commitment

Commitment to the community is something Milton E. Moses, president and CEO of Community Insurance Center Inc. in Chicago, can relate to. As an African-American targeting insurance to both mainstream and multicultural groups, Moses believes the key to successful ethnic marketing lies with a continuous commitment to the communities being served.

"Getting into the community is an important first step," Moses said. When Community Insurance Center Inc. opened its doors 40 years ago, community was at the forefront of the company's mission. Located within two blocks of one of Chicago's predominantly African-American, low-income housing projects, the center gained an important presence in the community and learned much about its residents and their cultural values. Today, as a result, Community Insurance Center continues to primarily target African-Americans, in addition to several other multicultural populations.

Grass-roots marketing--marketing from within the community--is an important and effective way to introduce a company to multicultural market consumers, according to the Data-monitor study.

"Being involved in the community helps companies understand what the perceptions are of particular groups in the area," said Alan Lopez, manager of multicultural development for Columbus, Ga.-based Aflac. Through its field force and community activities, Aflac emphasizes wellness and prevention to customers, including high-blood-pressure and stroke prevention measures to African-Americans, who have greater risk for developing these diseases.

While learning about multicultural communities is an important first step in reaching out to these markets, making a long-term commitment to serving these sectors is just as vital. "This is not an in-and-out business," said GMR's Lenstrom. "You can't do something this year, get away from it and then return to it again in another few years." Insurers need to send continuous, consistent messages to communities bolstering their dedication to serving the needs of both individuals and businesses.

Diversifying Work Forces

"The lack of a diverse work force is one of the greatest challenges companies face when marketing to multicultural groups' Lenstrom said. "You can't just read about [it]--you have to live it."

Recruiting multicultural agents has become a primary issue in many insurers' multicultural marketing plans. Safeco Corp., based in Seattle, recently opened urban training centers in Seattle and Atlanta to assist with this effort. Through the centers, the company not only recruits multicultural and female producers, it also trains new prospects at a reduced cost and then puts them back into the agency, said Raphael Madison, assistant vice president of diverse marketing.

ING-Aetna Financial also relies heavily on its multicultural agents to serve diverse markets. "It's important that a lot of touchpoints reflect the groups we're targeting," said Keith Green, head of domestic emerging markets. If an agent is speaking to individuals within the African-American community, there is the need to have some members of that group serving those individuals as a way of gaining credibility in the community and developing trust, he said.

Allstate has continued to diversify its work force in the past six years. In 1996, Allstate had nearly 1,000 agencies with agents on staff that spoke Spanish. The company now has more than 2,500 Spanish-speaking agencies to reach out to its Hispanic customers.

Although there are definite advantages in having multicultural agents working within their own ethnic communities, it's not the only way to reach specific groups, Madison said. In a recent focus group of the company's Hispanic consumers, Safeco found that as long as there are agents who know their customers and are able to communicate with them in their language, customers don't think it's imperative for producers to be of a similar race or origin. "Some of our biggest successes have been Caucasian agents who have gone into areas and opened up satellite offices," said Madison. "Agents who reflect the community will have a stronghold, especially in the Asian- and African-American communities, and we do a little of both."

Recruiting Plan

Attracting diverse agents has sometimes proven challenging for insurers. Jerald Tillman, president and CEO of J.L. Tillman Insurance Agency in Cincinnati and the founder and board member of the National African-American Insurance Association, suggests that insurers reach multicultural students in high school or college and educate them about the advantages of the insurance industry. The InVest program already reaches out to more than 6,000 young people a year and introduces them to careers in the insurance industry. InVest, a nonprofit trust administered by the Independent Insurance Agents of America, educates high school and community college students in 25 states about insurance and the career opportunities in the industry. More than 60% of those it reaches are minorities, and two-thirds of its graduates enter the industry.

One way insurers are learning more about diverse markets is by partnering with national, local and ethnic business organizations. Developing relationships and sponsoring events with these organizations not only strengthen insurers' presence in the community but also allow them to gain positive branding exposure and increase recruiting opportunities and sales exposure to diverse audiences.

These groups are invaluable to any insurance agency or company looking to penetrate the market, said Data-monitor's Ford. "Insurers that know what they are doing are partnering with these organizations but are also trying to make these relationships as strong as they can, as fast as they can," he said.

Many insurers have embraced this strategy, including Chubb Group of Insurance Cos., Warren, N.J. Chubb has had long-standing partnerships with several national and community organizations, including Black Enterprise, an organization dedicated to unlocking profitable business opportunities in the African-American market.

"Black Enterprise has helped us build the Chubb brand in the African-American community and has been a real winner for our company," said James Hyatt, senior vice president in the North American field of marketing. For the past five years, Chubb has hosted a Black Enterprise 100 luncheon, which allows several top producers to network with members of the organization.

Hartford, Conn.-based Travelers is also an active partner with several organizations, including the National African-American Insurance Association, the Latin American Association of Insurance Agents, Neighborhood Reinvestment Corps' Neighborworks organization, the Urban League Affiliates and the Enterprise Foundation. "These organizations are critical as intermediaries, providing knowledge to staff and agents about community needs, so they can better address the community's specific issues," said Don Davis, director of personal lines urban and multicultural marketing.

Language is a major factor when marketing to multicultural communities, particularly immigrants, said C&M First's Cheng. Translating marketing materials and advertisements into various languages and hiring multilingual staff are some of the ways insurers are attempting to break down language barriers with customers.

To assist its predominantly Asian-American clientele, C&M First prints much of its marketing materials in both Chinese and English. In addition, its staff includes people who are fluent in five Chinese dialects to assist customers.

"It's also important to have multilingual foreign support at agency locations and in call centers to make support easy to use for customers," said Datamonitor's Ford. Most insurers have implemented language lines into their call centers and have hired multilingual employees to assist non-English-speaking customers.

In 1990, Safeco implemented an AT&T language line into its operations. The number of non-English calls coming into the company's call centers continues to grow nearly 50% each year, said Madison. In addition, the company has added bilingual representatives to its call center staff to assist Spanish-speaking callers, and it will launch its Spanish-language Web site early this year.

Aflac also has spent a great deal of time perfecting its language support to diverse markets. For the past decade, the company has relied on "Si Line," a dedicated toll-free phone number for Spanish-speaking or preferred-language customers, including payroll accounts and policyholders, and for its sales representatives. The company also employs bilingual employees throughout the company to assist front-line operations, including claims inquiries and support services.

Breaking down language barriers is often one of the greatest challenges companies face when marketing to diverse groups. But understanding when--or if--to rely on non-English translations can be even more difficult. "The common understanding is that it's best to target Hispanic markets in Spanish, but 66% of the Hispanic population is partially acculturated, meaning they have some working knowledge of English," said Villasenor of Ketchum Markets Group. Insurers have o be careful about who they are targeting and not offend individuals by assuming they prefer one language when they may instead wish to be communicated with in another, he said.

Melting Point

"In the future, we won't have multicultural marketing," said GMR's Lenstrom. "Rather, everything will be ethnic marketing--a market without color or language barriers."

Individual insurance sectors, particularly the property/casualty market, are likely to be the first to experience this transformation, said Datamonitor's Ford. The life insurance industry will likely follow on its heels. The question, however, is how many companies can these markets support. "Depending on the wealth band companies are targeting, some of these markets, particularly in the life area, will happen at a slower rate, and companies that commit to diversification internally and within their own agent forces will garner greater, faster success," Ford said.

RELATED ARTICLE: Reaching Diverse Groups Through the Internet

The Internet offers several opportunities for reaching consumers, and now insurers are banking on this communication medium to reach many untapped ethnic markets.

"The Net is definitely helping to reach these groups, particularly the Hispanic market," said Jose Villasenor, vice president of public relations firm Ketchum U.S. Hispanic Markets Group in Dallas. Hispanics are now getting wired onto the Web faster than the general market, he said.

Getting Wired

According to eMarketer.com, a provider of Internet and e-business statistics, Asian-Americans/Pacific Islanders had a 49.4% Internet penetration rate in 2000, up from 35.8% in 1998. More Hispanics also are getting wired, with 23.7% of the Hispanic population reported to have been online in 2000.

Web sites targeting the Hispanic community; such as Univision.com and Yahoo! En Espanol, are reporting a growing number of online hits by Hispanic consumers each year. And Columbus, Ga.-based insurer Aflac Inc. is hoping to take advantage of this increased Web usage. The company is working to identify the best online opportunities, announce job openings and position itself among various multicultural groups, such as Hispanics, said Alan Lopez, manager of multicultural development.

Many insurers already are translating portions of their Web sites into a variety of languages to attract and retain diverse audiences. New York Life recently set up a Chinese-language Web page on its Internet site to assist Chinese-Americans in accessing materials and links to other features of the corporate Web site. New York Life holds a leading share of the Chinese-American market, said Jane Conti, corporate vice president in agency.

Allstate Insurance Co., based in Northbrook, Ill., is another major player targeting multicultural markets through the Internet. In 2000, Datamonitor, a business information company specializing in industry analysis, named Allstate the second-best company in marketing financial services to ethnic groups. A key component for the high ranking was the company's comprehensive Web site. Hispanic customers can access product descriptions and locate Spanish-speaking agents in their community by logging on to www.allstate.com.

While the Internet is becoming an effective tool for most insurers, it does have some drawbacks. Underwriting considerations are difficult to express on screen, said Robert Willis, chief executive officer of New America Insurance Co., a Florida-based property and casualty insurer. "In addition, the role of independent agents and the value of one-on-one relationships they have with customers is something that can never be replaced."

Many insurers are optimistic, however, that the Internet will be used more frequently as a tool for reaching multicultural groups. "The Net spreads trends faster and will become an effective marketing vehicle for trend-to-market and trend setters to get the word out faster," said Jay Lenstrom, president of the Milwaukee-based event marketing firm, GMR Marketing.

Advertising to Multicultural Populations

Although multicultural markets make up nearly one-third of the U.S. population, AccuTips.com, a provider of direct-marketing resources, indicates that less than 1% of all money spent on consumer advertising targets these populations. Some insurers are bridging this gap by reaching out to these markets through a variety of media, including both multicultural and mainstream outlets.

American Family Insurance, based in Madison, Wis., relies heavily on multicultural media--including bilingual newspapers, Spanish-language radio stations and outdoor billboards--to target its diverse markets. The company also advertises on major metropolitan public transportation systems to reach its urban audiences.

"We have found success in incorporating values of cultural groups and the theme of family into our ads," said Gwen Jones, ethnic marketing development director for American Family Protecting nuclear and extended families is a priority in many multicultural groups, and insurers are designing advertisements that incorporate both family values and the benefits of offering protection to family members via insurance.

While most media outlets can be effective in marketing to multicultural groups, definite differences exist between groups when it comes to advertising. Many members of Hispanic, African-American and Asian-American markets consume different media and respond to different messages than the general market, according to "Ethnic Marketing in Financial Services: 2001-2002," a study by Datamonitor, a business information company specializing in industry analysis.

Northbrook, 111.-based Allstate Insurance Co. uses television as its predominant medium for reaching Hispanic communities, while American Family Insurance concentrates much of its advertising capital on radio ads for this audience.

"While TV is a tremendous outlet in the Hispanic market, radio is king," said Jose Vilasenor, vice president of global public relations firm Ketchum U.S. Hispanic Markets Group in Dallas. Research indicates that Hispanics listen to the radio more often than the mainstream population does, he said.

For the Asian-American community, advertising as a whole is very important, said Brendan Ford, an analyst at Datamonitor. "There's a trust factor in this community in which consumers want to know a company is stable and isn't going to fail; the amount of advertising a company participates in is often one way [Asian-Americans] judge that stability."

Direct mail also has become a growing outlet used to reach diverse markets, particularly Hispanics. "Hispanics' response rate on direct mail is better than that of the general market," Villasenor said. According to AccuTips.com, 70% of Hispanics read direct mail, and 35% would like to receive even more. Hispanics not only see direct mail as a novelty, but they also view it as a nonthreatening way to look at special offers in the comfort of their own homes, according to AccuTips.com.

Marketing through multicultural organizations and community groups is key to reaching diverse market audiences. Raphael Madison, assistant vice president of diversity marketing for Seattle-based Safeco Corp., said that advertising in these organizations' publications was one of the first strategies the company undertook to get its name and brand known within multicultural markets. Safeco continues to advertise in several of these publications, including Hispanic Business Magazine, Black Enterprise Magazine, A Magazine--which is targeted to Asian-Americans and Winds of Change, published by and for Native Americans.

"The key in advertising to ethnic markets is creating messages that are culturally relevant and hit the heartstrings of those communities," said Ford. Companies need to figure out not only what's going to resonate with audiences but also h to present these messages to each specific group. "For example, if you are targeting the Asian-American community, you need to address experiences of that community and how your product can help them achieve their goals," he said.

Location and language are also important factors that companies must consider when strategizing diverse marketing plans. While TV has a ore dominant role in southwestern states, radio is a more heavily used medium in the eastern market, said Raymond Celaya, assistant vice president of emerging markets for Allstate. "In addition, insurers need to pay careful attention to reaching both English-speaking customers and those who speak other languages." Allstate runs TV commercials on both general market and Spanish-focused stations, including Univision, Telemundo and local cable networks in predominantly Spanish-speaking communities.

While TV, radio, print and outdoor advertising have proven to be effective multicultural marketing venues for most insurers, targeting an entire community can be difficult, said Jay Lenstrom, president of GMR Marketing, a Milwaukee-based event marketing firm. He suggests that insurers focus on an all-inclusive multicultural advertising package. "If not, you're running the risk of alienating consumers and not reaching all potential customers," Lenstrom said.

Creating a Brand Presence

Many insurers are making a concerted effort to market their brand names to multicultural groups, particularly since group members often show great brand loyalty. Once a brand presence is established with a specific population, ties with its members often produce long-lasting relationships.

While brand typically has a universal meaning in the general market, some attributes may have different priorities from one group to another. "A high-order priority among Hispanics is a company's longevity in the market, whereas the general consumer is more concerned with the financial strength of the company," said Raymond Celaya, assistant vice president of emerging markets for Northbrook, Ill.-based Allstate Insurance Co. While keeping in mind each market's branding issues, Allstate delivers the same message across all groups and doesn't change brand emphasis when targeting different markets, he said.

"Branding should be targeted but consistent," said Brendan Ford, an analyst with Datamonitor, a business information company specializing in industry analysis. "It's important not to do ethnic branding that conflicts with general market branding." For example, companies that use different branding campaigns for English- and Spanish-speaking audiences run the risk of confusing Hispanics who speak both languages. Companies may reduce brand acceptance among members of this population by exposing them to conflicting branding messages.

Advertising can be different in these communities in terms of what types of advertisements increase brand awareness, create general good feelings about a company and drive consumers to call centers and branch locations, Ford said.

Increasing brand awareness has become a focal point for many insurers marketing to diverse groups. Aflac--which has established its brand name with a duck that quacks "Aflac"--recently debuted its first Spanish television commercial to its sales force leaders. The company plans to air the commercial to the Hispanic community in the coming months to establish a brand presence among Latino audiences.

Insurers also are relying on agents and community organizations to spread brand messages to multicultural populations. "Agents are the first piece in building a strong brand recognition, because they make themselves known in the community and bring the brand name to the table with customers," said Don Davis, director of personal lines urban and multicultural marketing for Travelers, based in Hartford, Conn. In addition, working with trusted partners, such as community and advocacy organizations, not only brings credibility to a company but opens the door to increasing brand recognition, Davis said.
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Comment:Stirring America's melting pot: As the ethnic population rises in the United States, insurers are beginning to take a hard look at marketing strategies to target these growing populations. (Marketing Cover Story).
Author:Chordas, Lori
Publication:Best's Review
Article Type:Statistical Data Included
Geographic Code:1USA
Date:Feb 1, 2002
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