Ethnic Marketing Pioneer Pulls Out

Article excerpt


When Coca-Cola USA, the world's largest soft-drink company, disbanded its ethnic marketing division last year, Ken Smikle saw it as a slap in the face of the black consumer.

Atlanta-based Coke was one of the first corporations to establish a division focused exclusively on minority consumers.

So it troubled Mr. Smikle, publisher of Chicago-based newsletter Target Market News, that Coke would dissolve the division at a time when companies such as USAir Group Inc. were finally beginning to follow its lead.

"This has to be one of the biggest disappointments in ethnic marketing in years," Mr. Smikle said. "We're talking about destroying something that took the better part of 20 years to build."

Among marketers, Coke's move raises the delicate question of what's the best way to reach and woo minority shoppers, who wield considerable buying power.

The Coke move also has a number of ethnic-marketing specialists worried that it's the beginning of a trend that would steer ad dollars away from minority media outlets.

Coke executives see things differently. They maintain that "ethnic marketing" is just a phrase and that the company, which transferred the duties to the marketing divisions of individual brands, such as Coca-Cola Classic, Diet Coke and Sprite, can reach minority consumers without a special division.

"The overarching objective is to stay true to the strategy of the brand, not to do marketing for a specific consumer segment," said Diana Garza, a Coca-Cola spokeswoman.

The dollars involved aren't trivial: Coke in 1995 spent more than $433 million on advertising, more than any other soft-drink company, according to Advertising Age magazine. Coke's ad budget is exceeded by only 31 U.S. corporations.

The U.S. minority population is not one that Coke - or any advertiser - wants to ignore. According to Target Market News, blacks spent an estimated $324 billion on consumer goods and services, including $2.2 billion on soft drinks and other nonalcoholic beverages, in 1995. Hispanics spent $292 billion in 1994, according to a separate report prepared by DRI/McGraw-Hill Inc.

Hispanics are more likely to buy products and services from companies that speak directly to them, said Luis Vasquez-Ajmac, president of Maya Advertising and Communications, a Washington agency specializing in Hispanic marketing. The effort must embrace more than ads, he said, including special events and an effort to hire Hispanics.

"Effectively reaching a Latino consumer is more than the translation of an ad," Mr. Vasquez-Ajmac said. "It's about hiring Latinos, working with Latino vendors, offering internships."

But many corporations - including New York-based Pepsico Inc., Coke's chief rival - have not felt the urge to reach out to those consumers by setting up separate marketing divisions.

Among local companies, Landover-based Giant Food Inc. …