At the end of this August or in early September, the Home Mortgage Disclosure Act (HMDA) data for 2006 will be released by the Federal Financial Institutions Examination Council (FFIEC), detailing much of the home mortgage lending activity conducted in the United States. These are the most frequently used data for analyzing lending patterns in various ethnic and racial communities.
Shortly thereafter, various consumer advocacy groups will likely release their own analyses of the data--probably criticizing mortgage lenders about the disparity in home mortgage lending between whites and minorities. Mortgage industry spokespersons will then counter these accusations and question their methodology, contending that after accounting for important factors such as income and credit, there is no significant disparity.
Maybe 2007 is the year for the various parties to take a different approach. After all, the predictable pattern of attack and counterattack is a marketing communications nightmare. And given the recent problems in the subprime market and its portrayal in the media, a shift in the overall marketing communications strategy--specifically in its public relations--is certainly in order.
To begin the shift, let's quickly review emerging-markets marketing and history. In marketing, the four P's (product, price, place and promotion) are widely accepted as the marketing mix for positioning any given product or service. The mortgage industry to date seems to have given most consideration to product as the best way to market to emerging-markets customers. Products will always be important. But the industry needs to start investing more resources and efforts in promotion, or in how it communicates with emerging markets.
Promotion represents all the marketing communications a company uses to get consumers to buy its product. The four commonly recognized marketing communications strategies of promotions are:
* personal selling (one-to-one efforts to achieve sales);
* sales promotions (short-term efforts to immediately impact sales);
* advertising (non-personal efforts commonly used to build awareness);
* public relations (media efforts to create a positive image).
In the world of emerging markets, mortgage lenders initially emphasized public relations in their marketing communications. This most likely was due in part as a response to the negative press coverage the industry has received and continues to receive around the issue of fair lending. A lot of negative coverage began in 1988 with a series of Pulitzer Prize-winning articles in the Atlanta Journal Constitution titled "The Color of Money," which detailed the illegal practice, then and now, of redlining.
During that same year, the first documented use of the term "emerging markets" was made by Lawrence H. Summers, then deputy secretary of the Treasury, to describe revitalization efforts in America's inner cities. Defined as home lending efforts to minority, immigrant, first-time and low- to moderate-income customers, the term soon caught hold in the mortgage industry. Retail lenders began to form emerging-markets departments, which early on put an emphasis on public relations endeavors, but later evolved to include personal selling marketing communication strategies (sales teams).
Examples of some of the public relations efforts conducted by emerging-markets departments are press releases, public service announcements, news conferences, interviews, participation in homebuyers' fairs and homebuyer workshops, financial support of housing nonprofit organizations, participation in homeownership forums, financial support of financial literacy efforts and partnerships with community leaders and politicians to publicize concerns with lending in emerging markets.
Lately, these public relations efforts in emerging markets have been overshadowed by the subprime lending woes and instances of predatory lending. …