Diversify your market share

Editor's note: Nancy Lang is principal of Cultural Horizons, a Kansas City, Mo., research firm.

The United States is rapidly becoming a diverse nation. Between 1990 and 2000, the number of Asian-Americans, Latino-Americans, and African-Americans grew at a rapid pace - 42 percent, 39 percent, and 14 percent, respectively. In comparison, the U.S. white population grew a paltry 7.3 percent during the same period. Fifty years from now, the United States is projected to look like this: one-half whites; one-fourth Latinos; and one-fourth Asian, African-American, and other minorities. Residents currently considered minorities will become the "emerging majority." In California, New Mexico, Hawaii, and Washington, D.C., nonwhites have already gained majority status. More importantly, however, is that the largest metropolitan areas in the U.S. - those found in states like California, Texas, Florida, Illinois, New Jersey, and New York - are home to 67 percent of all immigrants. Market research analysts who scan the environment to uncover the needs of these emerging majority populations uncover opportunities to develop added value and differentiated tactics to the organization's business plans.

Increasing buying power of the emerging majority

As these "emerging majority" populations grow, they play an increasingly important role in the U.S. economy. Today, ethnic minorities have an impressive $1.1 trillion in personal buying power. Recent research indicates that Asian-, Latino-, and African-Americans are increasing their household incomes at a rate three times faster than whites while simultaneously obtaining mortgages, becoming owners of small businesses, and gaining higher levels of education and professional opportunities.

A quick glance at available data shows:

  • African-Americans are outspending their white counterparts in key purchases such as new cars, mortgages, and groceries.
  • Between 1994 and 2000, the number of Latino residents in the U.S. earning more than $50,000 grew by 128.6 percent, placing their purchasing power between $450 billion and $650 billion. By the year 2020, it is expected to top $2 trillion.
  • The disproportionately large Latino youth population - 25 percent of all four- and five-year-olds in the U.S. are Latino - is certain to fuel future buying power even further.

As the buying power of emerging majority populations rises, so too will their access to a variety of products. One untapped area which will be the focus of the remainder of this article is the health care industry. As their numbers and economic influence grow it follows that these groups stand to offer significant opportunities to the health care industry in general - and the pharmaceutical industry in particular.

These emerging ethnic groups have many unique needs and concerns. A few leaders in the pharmaceutical industry have begun to establish dialogues with these groups in order to initiate culturally sensitive strategies that address these unique needs. This exploration is limited as the pharmaceutical industry must first surmount perceived barriers to culturally-targeted marketing.

Perceived barriers to culturally-targeted marketing

When asked whether they budget for strategies and tactics directed at ethnic markets, pharmaceutical marketing managers seldom reply yes. Some of the common concerns include:

  • Consumers still have to get a prescription from the doctor and general market campaigns probably reach bilingual patients who already have insurance.
  • The product/brand does not have a budget for ethnic marketing.
  • It is difficult to measure return of investment among the ethnic markets because actual prescription data is currently not segmented by ethnicity.
  • "Our strategy does not include a direct-to-consumer campaign."
  • "We are concerned that culturally sensitive marketing strategies may cost too much."

What is not acknowledged is the fact that very modest changes in marketing strategy can have a large impact on these populations.

Employing a diverse workforce

Given the global economy and our "international" domestic market, companies that incorporate cultural sensitivity to products and services as part of their overall business strategies will achieve a sustained competitive advantage. The companies that most effectively incorporate cultural sensitivity into their products are those that recruit, employ, and train a culturally diverse workforce. It makes sense that the marketing professionals who are best able to produce strategies that will resonate with ethnic consumers are those who think like them. For example, IBM has employed this strategy, with strong results. "Global companies like IBM won't do very well for very long if their employees all look alike. Diversity of thought and culture and geography and race and gender enables us to bring the best solutions to our customers," says Ted Childs, vice president of global workforce diversity for IBM.

Training employees in cultural competence to leverage diversity

In addition to hiring culturally diverse employees, companies can train employees to successfully implement culturally relevant strategies and tactics. For instance, one leading U.S. pharmaceutical company had its sales representatives provide targeted physicians - those with a high percentage of Latino patients with diabetes - with information on a drug used to treat diabetes. In addition, these sales reps gave the targeted physicians, nurses, and diabetes educators culturally relevant tools to pass on to their Latino diabetic patients: a cookbook offering traditional Latino recipes prepared in a health-conscious manner; a Spanish-language videotape about how to control diabetes; and a Spanish-language brochure detailing the effects of the prescribed drug.

The initiative proved favorable. The attitudes and behavior of those physicians who were detailed on the Hispanic initiative (based on their recall of the visits) were much more favorable towards the company and product prescribing than their non-detailed counterparts. Detailed physicians reported higher company and product level scores in relation to manufacturer awareness, product prescribing, attribute ratings, and program awareness. Sales representatives gave the company positive marks for providing culturally relevant tools to share with targeted physicians.

Seeking culturally competent business partners

Pharmaceutical companies looking to partner with managed care organizations (MCOs) will be interested in the following example of a successful initiative aimed at strengthening the relationship between primary care providers and their patients in a Latino community.

White Memorial Medical Center (WMMC), serving a California community that's 90 percent Latino-American, established a family practice residency program which trained residents in how to care for their patients in a culturally competent manner, specifically as it applied to their Latino patients. Since its inauguration in July 1988, the WMMC Family Practice Residency Program has developed and strengthened ties with the greater East Los Angeles community.

The Residency Program is the centerpiece of the Southern California Minority Medical Education and Training (MINMET) Program, located in the heart of East Los Angeles. The Residency Program's first priority is to train young physicians to practice in any setting. The second is to create a residency responsive to the needs of a multi-cultural, predominantly Latino community. Many of the residents trained in cultural competence stayed with WMMC after completing their residency, joining the hospital's primary care group, the Family Care Specialists Medical Group. WMMC credits the infusion of cultural competence into residency training with the fact that 20 percent of the hospital's patient care revenue now comes from that recently established program and its graduates who have elected to establish practices in the hospital's service area.

Bridging language barriers

Reaching patients through their native language and with their cultural assumptions in mind can go a long way toward winning their confidence. Recent research across several therapeutic areas has shown that:

  • The culture and language of the health care professional play an important part in making patients feel comfortable and confident. A cultural or language barrier can affect patients' acceptance of care and their willingness to comply with medication requirements.
  • Cultural beliefs can influence patients' understanding of the causes of their illnesses. This, in turn, has an impact on their final health outcomes.
  • More complications and higher mortality rates for certain diseases within certain populations might be due to how those cultures view the diseases and what behavior is acceptable in dealing with the illnesses. It is important to find out how knowledgeable patients are about a disease and to understand cultural myths connected with it.
  • Groups that speak little or no English have trouble understanding medical information presented in English. Increasingly savvy consumers, however, wish to be well-informed and are often frustrated by the lack of information available to them in their language of preference. Also, information that is translated literally into the target language might not be understood by patients due to regional language differences, and might, in fact, be inaccurate or even offensive.

In order to understand and address all of these issues, pharmaceutical companies and managed care organizations should strive to explore patients' cultural attitudes in depth. Reaching patients within their culture and language will facilitate discussion and promote understanding of their unique concerns. Addressing those concerns can then make a difference in how a condition is managed, and can motivate patients to change their behavior to improve their health.

Integrating multicultural marketing on an ongoing basis

Pharmaceutical companies, or any company wanting to reach out to ethnic markets, should incorporate cultural sensitivity to products and services by evaluating multicultural issues in a continuous and integrated manner. Rather than viewing the multicultural market as a standalone opportunity, the most successful - and responsive - players in the arena will integrate multicultural marketing principles into their ongoing dialogue with patients, physicians, managed care organizations, and employer coalitions. There are specific approaches to explore issues that address the growing needs of the diverse patient population and the challenges they represent to physicians and managed care organizations that serve them.

Ethnic marketing opens up a whole new set of opportunities for pharmaceutical companies that take the time to understand the implications of the undeniable market trends reshaping the nation. Seizing these opportunities will, however, require an overall shift in how marketing staffs think about their markets. That process starts with including "emerging majority" populations in the company's marketing plan.


ARTICLE SIDEBAR

An ethnic marketing action plan for pharmaceutical firms

When conducting situation analysis and a SWOT (strengths, weaknesses, opportunities, and threats) analysis of your business plan, remember to do the following:

  • Explore implications of demographic changes (regional and national).
  • Segment patient population by ethnicity.
  • Identify differences in disease incidence.

Determine if your product treats a condition in which a "health disparity exists between ethnic and general populations. For example, is mortality different among ethnic groups in your disease category? Are there more complications compared to the general market?

  • Examine the growth patterns of your customer base.
  • Find out from physicians and managed care organizations what issues they encounter in an increasingly diverse population. Then, identify challenges and opportunities your company can pursue.
  • Keep abreast of cultural competence accreditation requirements with NCQA and HICFA.
  • Determine the role of employer organizations in leveraging competence requirements.
  • Learn ethnic patients' preferences and determine their level of understanding of their condition.
  • Find out what your competition is doing to serve the needs of the "emerging majority."

After identifying areas of opportunities, conduct exploratory research to validate the SWOT and develop further ethnic and cultural opportunities.