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Twelve years ago, Charles Schwab & Co. quietly launched one of its most ambitious ethnic marketing initiatives in an attempt to attract business from Asian Americans. Spurred by 1990 census figures showing the Asian community becoming wealthier and growing at a faster pace than any other ethnic group in the U.S., the San Francisco-based brokerage firm assigned three full-time employees to reach out to the market.

A decade later, that step has proven prescient. Schwab now employs more than 300 people who speak Chinese, Korean and Vietnamese at call centers dedicated to Asian American customers who want to communicate in their own languages. Those who are Chinese can access a Chinese-language Web site for trading, and a Chinese online news service delivers real-time information and research about the U.S. financial markets. Asians also have access to over 14 Schwab branches in predominantly Asian neighborhoods on the East and West Coasts. And the company's name is plastered on Asian TV channels, in newspapers and across billboards. The result: Thanks to its early entry and its long-term focus, the discount broker is now one of the leading financial services firms serving Asians, laying claim to millions of their dollars. “To really be able to capture this market, you need a continuous, long-term investment in building brand and awareness. It's not just an investment from quarter to quarter,� says Christin Chan, director of marketing for Schwab's Asia Pacific Services Division. “Understanding how to make the [Asian] investor comfortable is the most critical part of the whole process.�

Many other companies are taking note of such lessons to learn how to gain a share of Asians' buying power, estimated at $253 billion annually, according to the Selig Center for International Growth at the University of Georgia in Atlanta. Indeed, many big businesses are waking up to the strength of the Asian market, exploring the best ways to tap these consumers. Carmakers, retailers, health-care providers, vacation resorts, drug companies and others have begun rolling out campaigns to attract a demographic known for brand loyalty and quality consciousness — one that has the potential for significant growth in the future.

Emboldened by their success in targeting other ethnic and racial groups, businesses hope to use the experience gained from their campaigns in the Latino and African American communities when appealing to Asians. Some are hoping to enter this emerging market while it's still early enough and cheap enough to capture a sizable piece of the pie. And others have homed in on this long-ignored demographic as they search for bright spots in a slow economy. “We're finally being invited to sit at the adults' table now,� says Julia Huang, president of Torrance, Calif.-based Asian marketing firm Intertrend Communications, noting that large brands and major corporations have been calling and taking the market seriously.

When it came to Asian Americans, not long ago even the proverbial kids' table was considered unworthy of marketing dollars. Skeptics insisted that the small size of the Asian American population, its fragmented nature and the cost of reaching it outweighed the investment required. However, financial services firms such as Schwab, and long-distance providers like AT&T and MCI, bet that demographic trends would make marketing to Asians pay off over the long term. And that's precisely what has happened during the past decade. The Asian population in the U.S. — including those of mixed race — grew 72 percent over the period, reaching almost 11.9 million in 2000. Asians now make up 4.2 percent of the total U.S. population and the group is expected to continue growing at a healthy clip, thanks to continued immigration, higher than average birthrates and intermarriage.

Asians have also become a far wealthier group. Fully one-third of Asians earn $75,000 or more annually, many holding managerial or key positions in technical sales. “We call the Asian American segment a segment of superlatives,� quips Wanla Cheng, a principal of New York-based Asia Link Consulting Group. “From the last wave of immigration, there are more Asians who have been in this country longer, and their accumulated wealth has increased over time.�

For businesses, such growth is hard to ignore. And as they've grown comfortable with the dynamics, sensitivities and special requirements of marketing to Hispanics and African Americans, companies have been encouraged to go after the more complex Asian market. (See sidebar, page 41.) “Corporations now are better geared for the smaller niche marketing that it takes to reach Asians,� says Larry Moskowitz, director of strategic marketing services at Kang & Lee Advertising in New York.

Take American Honda Motor Co., which in 2001 launched a multimillion- dollar plan to reach Asian car buyers, after making successful appeals to Latino and African American consumers for several years. The company took note of the Asian market several years ago, says Barbara Ponce, manager of emerging markets for Honda's advertising division, but waited to dedicate full-time staff to the sales effort. Thanks to its experience in the Latino market, she notes, Honda was able to move into the Asian marketplace quickly and launch an ambitious campaign.

Most critical for Honda was to “earn the right� to market to the ethnic group, Ponce says. The car company needed to get out into the community, support events and institutions and show its commitment to Asian culture in America before sending out its sales message, says Ponce. Honda started by launching a syndicated marketing study to suss out its position among Chinese car buyers. It found that it was ranked third, after BMW and Toyota. The automotive giant also caught on to some critical aspects of the community during the survey process: an overwhelming preference for in-language marketing, high consumption of print media and high Internet usage (driven by computer penetration of upward of 70 percent in Asian homes). Next, Ponce and her team focused on community service efforts aimed at the Chinese population, a choice based on the group's size, spending patterns and propensity to buy new cars.

Only after Honda made a “connection� with the group did it roll out its campaign, an integrated marketing effort. The team opted to use Chinese calligraphy — a potent cultural and linguistic symbol — in its ads as a means of defining the strength and precision handling of Honda vehicles. In TV spots, Honda cars write out the character meaning “life,� appealing to yet another cultural value of hope and perseverance. Ponce says that the carmaker will direct its marketing efforts at the two segments it understands best — the Chinese and Korean markets — for several years before it branches out to target other Asian subgroups.

In much the same way, Ford carefully launched its Asian marketing plan some three years ago, building on its experience with Latinos. It has since been expanding its presence in Asian media, advertising in key print and TV markets. “At the end of the day, it's just good business,� says Peter Christofer, multicultural marketing manager at Ford. While he is mum about the size of the marketing investment, Christofer underscores that it is a notable but tiny share of the general marketing budget. “This is not about what [the competition] is going to do. It's about our own interest in the market and the future of the busines,� he says.


Automakers enamored of Asians' car purchasing habits exemplify the new interest in the Asian market. Asian consumers are far more likely to buy multiple cars than other ethnic groups and are more likely to buy cars in either the $40,000 luxury range or in the $20,000 family sedan category, says Michael Sherman, general manager of San Francisco-based Asian televion broadcaster KTSF. In research commissioned by the TV station, some 20 percent of its audience reported that they intended to purchase a new car in the next 12 months.

It only makes sense that the demographic willing to buy a new car would also be interested in pricey vacations and activities. So for almost five years, Boothcreek Resorts has been reaching out to Asian Americans, especially in the Bay Area, a three-hour drive from two of its ski resorts in Lake Tahoe, Nev. The company's marketing team looked at the growth of the demographic and caught on to a major opportunity, says Julie Maurer, vice president of marketing and sales. “Looking down the line at our business, it made sense to begin appealing to different Asian American markets,� says Maurer. “I saw how quickly the demographic was changing, and there were a lot of similarities between Asians and the typical skier, in terms of education, family and such.�

With the help of San Francisco-based DAE Advertising, Boothcreek launched a series of seven Chinese advertorials promoting skiing, all published in prominent Chinese media. The team set up photo shoots at the resorts, using its Asian customers as models, and went after young Asian professionals — also known as “Yappies� — with special deals for lift tickets and more. Much effort was also focused on ski schools, where teachers were trained to accommodate Asian culture. For example, traditionally teachers tended to praise students a lot and make eye contact often, but Boothcreek's instructors found Asians less comfortable with the attention. The company also made a point of having festivities on the Chinese New Year. Such efforts seem to have paid off handsomely, according to Boothcreek's surveys of its clients. When the company began its Asian marketing push, some 3 percent of its clients were Asian; today Asians account for 10 percent to 12 percent of its business. Maurer notes that part of that growth is due to the general growth of the ethnic group, but a notable portion of it has come from the firm's marketing tactics.

Despite all the interest, however, analysts stress that the Asian market will “arrive� only when more corporate giants start to court Asians. Marketers note that while several major players have been making inquiries in recent months, and select brands have done tests, support from the big corporations is still lacking. That was clear at a recent meeting of the Asian American Advertising Foundation to discuss the future of Asian marketing, where most blue-chip companies were noticeably absent. “Traditionally, corporate America has not done much [Asian marketing],� says Wei Tai Kwok, a principal at DAE Advertising. “I don't necessarily blame them. It's just an aspect of America that we've been monocultural and monolingual.� Nonetheless, an awareness of this market is growing, Kwok says.


Awareness, however, is only the first step. The business of reaching Asians is a complex balance of language, lexicon and message. Asian core values — family, education and work ethic — may be universal, but each subgroup is tied to its particular cultural heritage and dialect.

Language is one of the most critical factors in tapping this community. Some 80 percent of Asians are reachable in-language, says Sarah White, account services manager at the Interviewing Service of America, a multicultural research service based in Los Angeles. In fact, even when Asians conduct their day-to-day affairs in English, they are far more receptive to marketing communications in their mother tongue, she notes. “The biggest aspect of this is cultural rapport,� says White. “There is a way of being, an openness that you can't achieve unless you speak their language.�

That doesn't entail simply getting a good translator, either. Advertising copy must be written specifically for that market, taking into account the mores and taboos of each ethnic subgroup, says Natalie Rouse, assistant marketing manager for AT&T Broadband in the Bay area. Flippant or whimsical copy in English, for one thing, can easily backfire and come off as immature in Chinese. For another, banks seeking to convince clients to trust them with their money must prove that they are worthy of it by showing the right amount of respect. Even when the copy is in English, as when reaching out to the South Asian community, the style of writing is important, Rouse adds. “They tend to use the Queen's English rather than American English,� she says.

Representations of Asians in advertisements are also critical. Many firms reaching out to the group have grasped the need for separate ads for Chinese and Koreans, for example, with models reflecting the face of each segment. “The most common mistake many advertisers make is to put the same photos in all their Asian creative,� says Dmitri Maglalang, marketing associate at Bloomington, Ill.-based State Farm Insurance. “But now we're making sure we use Korean models for Korean creative and Chinese models for our Chinese marketing.� Even the colors used can influence whether a message is acceptable. Whereas in the general market white could represent cleanliness or simplicity, it signifies mourning to the Chinese, Rouse says. A postcard or a direct mailer with a bright yellow background could have negative connotations in some Asian cultures.

Even the timing of campaigns may need to be measured differently, according to Rouse. For instance, she notes that in many of her direct response campaigns targeting Asian Americans, responses can vary by subgroup. Chinese Americans usually take far longer to respond, while South Asians are far more spontaneous and respond more quickly. In some cases, responses continue pouring in for up to six months. “This just means that each cultural group responds differently, and you must take that into account,� Rouse emphasizes.

Most daunting for advertisers new to the market is the lack of standardized research on Asian Americans. While in-language polls and research — by organizations such as the Interviewing Service of America and various marketing firms — provide glimpses of the group, marketers argue that research tells only part of the story. For example, the heart of any campaign must be community involvement, marketers stress — a difficult metric to measure. In Schwab's case, although the firm launched print, TV and Internet advertisements, the core of its marketing efforts has been educational outreach to teach clients how to invest prudently. Asian investors tend to be short-term investors who trade frequently, says Schwab's Chan. So Schwab has focused on teaching them the importance of diversification and long-term planning. That can require some handholding, Chan admits, but it's work that has earned Schwab a loyal customer base. The brokerage firm even goes as far as to open some of its Asian-neighborhood branches on Saturdays to accommodate Asians' tendency to handle money matters on weekends.

Despite all the challenges, however, reaching Asian Americans is relatively inexpensive and, when it comes to geography, downright simple. The concentration of Asians in gateway cities makes them far easier to target through community events as well as traditional and specialty media. And Asian media, unlike its counterparts in the Latino and African American markets, is far cheaper to buy. “The fact is that Asian media is inexpensive, but the people it reaches have a much higher consumer profile than many other demographics,� says Moskowitz of Kang & Lee. “Where it gets expensive is in customer service and distribution.�

While Latino media campaigns can cost millions, Asian marketing campaigns typically run in the hundreds of thousands or less. Boothcreek, for example, has spent about $30,000 per year on Asian marketing. What's more, many Asian media outlets, especially those reaching South Asian audiences, are stepping up efforts to work together and deliver more integrated advertising campaigns.

“The fact is, everyone can have a piece of the pie as long as they meet the demands of the market,� says Moskowitz. AT&T's Rouse agrees: “This is where the growth is coming from, and this is where the future lies. A lot of marketers are realizing that if they don't get into the market now, it will be a lot harder and more expensive to get into it later.�



Cultural and language differences among this growing population present formidable challenges to marketers.

The term “Asian� encompasses a broad swath of cultures and traditions, many unrelated save for their roots in the Far East, in Southeast Asia and on the Indian subcontinent. Not surprisingly, then, knowing who you're talking to can be half the battle in reaching this growing demographic.

Marketers are finding that today's Asian Americans are more diverse, more suburban and better educated. By far the largest segment of the Asian population is the Chinese American group, which grew 48 percent, to 2.4 million, between 1990 and 2000, according to Census 2000. Filipinos follow, growing 31 percent, to almost 1.9 million, in the decade. Indians grew a whopping 105 percent, to 1.9 million. Vietnamese, too, experienced a growth spurt, increasing 83 percent, to 1.2 million — almost the same as the Korean segment, which has about 1.2 million.

Asians have been gradually moving out of cities and into the suburbs. Almost half of Asians in the U.S. are concentrated in three states — California, with 4.8 million, or 12 percent of that state's population; New York, with 1.2 million, or 6.2 percent of its population; and Hawaii, with 0.7 million, or 58 percent its population.

Asians are also concentrated near colleges and universities, reflecting their interest in higher education. For example, in Ithaca, N.Y., home to Cornell University and Ithaca College, among others, Asians account for 13.7 percent of the population, almost triple their state average of 5.5 percent. In a report released last year, the Census Bureau found that 44 percent of Asian Americans ages 25 and over have a bachelor's degree or higher, while 86 percent have at least a high school diploma. Meanwhile, almost a third of the Asian population is under age 18, compared with about a quarter of whites of the same age; only 7 percent of Asians are over 65, half the number of whites in the same age group.

Significant changes have also begun to occur among the two-thirds of Asians who are immigrants. Skilled workers entering the country on H-1B visas have added another dimension to this already complex community. Most noteworthy has been the gradual shift to Mandarin from Cantonese in Chinese communications. An influx of skilled workers from Mandarin-speaking regions on the mainland has reversed a longstanding language divide, marketers say.

Census 2000 reflected this growing diversity by acknowledging Asians of mixed race. The results show a clear picture of the intermarrying occurring between Asians and non-Asians. Almost 1.7 million Asian Americans reported being of mixed race. Of the six largest groups, Japanese Americans were most likely to report descent from one or more races or Asian groups, with almost a third of the 1.1 million Japanese reporting a combination of Japanese and some other ancestry. Meanwhile, some 400,000 respondents said they were Chinese mixed with another race or Asian group. Half a million Filipinos said the same, and about 200,000 Indians reported mixed heritage. The overwhelming majority of all intermarriages was with whites, accounting for about 860,000 of those of mixed ancestry, while about 100,000 reported they were of Asian and African American heritage.

With those numbers in hand, many demographers have begun to describe the rise of an Asian American identity divorced from nationality and centered on life as minorities in America. Madhulika S. Khandelwal, assistant professor in Asian American studies at the University of Massachusetts in Boston, believes that more Asian Americans see themselves as an integrated, inclusive demographic than ever before. The rise of South Asians into the Asian mainstream has helped reinforce such thinking, she says. “You can begin to see a transition or a process where community leaders are not only immigrants for whom nationality is important,� Khandelwal says. “The whole framework now is, ‘What is my identity here in the U.S. compared with other Americans?’ It's a process of different groups coming together to create a new identity.�

— HF


For Honda, the secret to gaining the attention of second-generation Asians lay in a popular beverage.

For years, marketers have debated how best to reach second-generation kids who are connected to their roots but tied equally tied to mainstream American life. Some argue that mainstream media efforts are enough, while others insist that targeted marketing is more effective. Honda Motor Co. chose to piggyback on Boba, a beverage developed in Taiwan that is all the rage in Asian youth circles.

The beverage, also known as bubble tea, consists of “pearls� of black, gummy, tapioca balls that float in a mixture of sweetened iced tea. It has quickly caught on as the soft drink of Asian youth. Honda's idea was to develop drink sleeves, much like the sleeves that surround hot beverages in the U.S., to promote its youth-oriented cars, like the Civic and Acura RSX, says Barbara Ponce, manager of emerging markets for Honda's advertising division. Ponce got the idea from one of her young Asian co-workers who frequents Boba stores and noticed the number of young Asians who pulled up in Hondas. The Civic has long been a favorite of young adults seeking to soup up their cars with sexy wheels and sports accessories, and Ponce and her team sought to build on that popularity to push the Honda brand to more 18- to 25-year-olds.

In January 2002, Honda negotiated a deal with Boba ingredients distributor Bright Vision to distribute the sleeves, which direct tea drinkers to Web sites that offer further information about Honda and ideas on souping up cars. The company also sponsored events centered on Boba at various Asian cultural festivals. “In order to compete, you need to be at the spots where [young] Asians work and play,� Ponce notes. “Coffee sleeves have done quite a bit in the past, but what's unique here is the application to reach a market that's particularly hard to reach.� It's too soon to know the results of this marketing push, Ponce says, though execs are pleased with the buzz. In fact, other carmakers are said to be trying to get into the same game, hoping to get sleeves with their marketing messages into the hands of other Boba distributors.

— HF

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