If you live in the United States and speak Chinese, you may have been insured by the "Everlasting Health and Happiness Mutual Life Investment Company." Or perhaps you're investing with "Trustworthy, Well-Established Asset Management." Or maybe you'd rather your broker be from "Beautiful Forest." These pithy names carry more significance when they're written in Chinese, but they belong to companies more commonly known by their English names-respectively, John Hancock Mutual Life. Insurance Company, Charles Schwab & Co. and Merrill Lynch & Co. More and more, financial services companies are adopting Chinese monikers and advertising slogans with an eye for the ever-growing wallets of the Asian-American community. Metropolitan Life Insurance has gone so far as to garb its mascot Snoopy in traditional Chinese apparel.This move to serve the Asian-American population is part of a wider ethnic marketing push to reap the increasing wealth of minority populations. Only last month, Merrill Lynch announced a program in which it said it would make available $159 million in loans and outreach services to companies and individuals in Asian, Latino and African-American regions of California. In response to skyrocketing ethnic populations and financial institutions scrambling to meet the marketing challenge, London-based research company Datamonitor released a study earlier this year that charts the best practices in ethnic marketing among major financial companies.Minority populations are growing rapidly, accounting for 25% of the total population, yet only slightly more than a quarter of all major financial companies have adopted ethnic marketing campaigns, says Justin Megson, a Datamonitor analyst and author of the study. Minorities are a largely under-served, untapped population with an estimated $1 trillion in purchasing power, according to Datamonitor.Ethnic marketing has been around for some time, says Noel Capon, professor of marketing at Columbia Business School, and predicts that it's likely to "gather steam" as competition for the consumer dollar toughens.But marketing specifically to ethnic groups is not easy, and some companies that had aggressive programs have pulled back because they found the resources required were greater than the profits they produced.John Hancock Mutual Life Insurance Company has found it more cost-effective not to specifically target ethnic groups and early last year dropped its adopted Chinese name, "Everlasting Health and Happiness Mutual Life Company," as well as its effort to target the Chinese-American community. John Hancock's retailing management found it preferable to provide its sales people with sales materials designed for the general population, which includes ethnic minorities, says Melissa Simon, a spokesman. "Fundamental financial needs don't vary that much for each ethnic group."Yet, banks and other financial institutions are coming under growing regulatory as well as financial pressures to aggressively go after ethnic populations. A key issue is the need to meet the tough minority lending requirements of the Gramm-Leach-Bliley Act that impacts banking companies and the new financial holding companies.Despite negative conclusions drawn by companies such as John Hancock, others are confident that substantial profits could be made by courting minority groups. In fact, Asian-Americans are a particularly appealing segment of the population for investment firms and banks largely because they possess the highest median income in the United States, Datamonitor reports. As a group, Asian-Americans also are the best-educated group in the country and are one-and-a-half times more likely to have a bachelors' degree than whites, according to the report. And, like other minorities, Asian-Americans have a younger and rapidly growing population than do whites.
"Given their higher socioeconomic status, Asian-Americans should be among the most sought-after customers. Yet financial services companies are routinely misrepresenting themselves to this market, because of a failure to match their products to the cultural preferences within different ethnic groups," the report says.At the helm of Asian-American ethnic marketing is Charles Schwab & Co. Schwab was among the first companies to specifically target the Asian population. Schwab's Asia Pacific Services group in San Francisco was opened in the late 1980s and has since become the company's fastest-growing unit. The group, according to the Datamonitor report, is increasing at 50% per year and accounting for 4% to 5% of the nation's overall business.Bank of America Corp., which Datamonitor ranked highest in its efforts to cater to minorities, seeks to reach African-Americans and Hispanics as well as Asians. In addition to providing services in formal Spanish for its customers, B of A also offers support for Spanish-speakers who wish to conduct business in a more conversational and less formal tone.The bank's "Account Fit" advertisements, its first large-scale ethnic advertising effort launched last July, included messages in Spanish, Korean, Chinese and Vietnamese. The ads were not simply converted versions of an English original, they were thoroughly rewritten by outside ethnic advertising agencies, conforming not only to the language but to the nuances embedded within each culture. MetLife and Prudential Insurance Co. of America have used similar agencies for their own ethnic marketing campaigns, Datamonitor reports.Much more than vaulting the language barrier, negotiating relations with a minority community can be a delicate, detailed matter. "With ethnic marketing, it's not enough to put a picture of someone of a certain ethnic background on an advertisement or even go so far as to translate it," Megson says. The difference is in the details. "A member of an ethnic group can easily misconstrue marketing targeted towards the general population," Megson's report states. "Cultural sensitivity can mean all the difference when marketing to an ethnic group." Insurance companies, for example, must deal with the difficult task of discussing life insurance policies with Asian families that traditionally avoid such frank conversations about death. And banks would do well to offer platinum credit cards in a gold hue for Chinese customers, who traditionally revere gold as a good color, the report suggests.Family size is an important consideration as well, Megson says. Hispanic and Asian households are typically larger than white households, with grandmothers and grandsons living together under one roof. While the mainstream tends to be rather individualistic, both Hispanic and Asian communities tend to be more family-oriented, with usually the head of the household handling all of the family's financial responsibilities. Who should an insurance salesman speak to when he calls an Asian-American home? According to the report, it usually should be the grandfather.Part of Datamonitor's solution is customer segmentation. The more accurately financial companies define their consumers the more likely they are to provide better services. "The first thing companies need to do is address which particular segment of the population they want to market to," Megson says. When segmenting ethnic consumers, Megson suggests that financial companies consider the person's level of acculturation-the degree to which he or she has adapted to mainstream America. "The more acculturated, the less effort is going to be needed to market to them, they're more apt to respond to mainstream media," Megson says. Second generation ethnic individuals, for example, usually are fluent in English and absorb American media with ease. Non-acculturated individuals, on the other hand, usually have just immigrated to the States and are usually still adapting to the surrounding culture with some difficulty. Datamonitor says solving all the cultural conundrums is only a part of the larger solution for effective ethnic marketing-in fact, it's only the first criteria in the research company's suggested five-part model for success. Datamonitor offers a series of benchmarks for companies looking to firm up their ethnic marketing efforts. Datamonitor suggests companies benchmark their cultural sensitivity to different minority populations, their efforts to educate and service minority consumers, their minority employee recruitment efforts, the length of time within the company has been part of the community, and the future outlook for their ethnic marketing strategies.Datamonitor reports that in addition to adapting to the cultural needs of consumers, companies should also seek to educate non-acculturated minorities about financial services, which were in all likelihood very different in the individual's homeland. Megson says that credit is often a murky concept for recent immigrants, especially for Mexicans, who in most cases found they could not trust financial services companies in their homeland. Datamonitor gives Allstate Insurance Company high marks in this regard, citing the company's extra efforts to cater to Hispanic clients' needs. According to the report, a separate phone line quickly connects Hispanic customers with Spanish-speaking agents. The company also has a separate Spanish web site to address customer quandaries.Of course, a company needs a diverse group of employees who can accommodate ethnic customers' needs. The Datamonitor report ranked Chase Manhattan as "very strong" in its efforts to hire and retain minority employees. Diversity councils within the bank help create an ethnically diverse and comfortable workplace for the employees that in turn provide the language and cultural know-how that Chase needs. Programs like "interactive theater workshops" and cash-rewards for employees who work to advance workplace diversity help maintain the company's dedication to minority needs, according to the report.Datamonitor also cites the length of time a company has involved itself in the minority community as the mark of a successful campaign. Megson says companies need to establish themselves in a community early. "There are prolific examples of companies inheriting business from later generations of immigrants who were satisfied with the service and products they received upon first arriving in the United States," the report says.