Diversity Marketing. The fine line between tapping new customer segments and compromising brand image

Table of Contents

List of Figures

List of Tables

List of Abbreviations

1. Introduction

2. Theoretical Foundations
2.1. The Roles of Customer Segments, Reach and Brand Image
2.2. What is Diversity?
2.3. Diversity Marketing: No more “one size fits all”

3. Method

4. Analysis
4.1. The Influence of Company-Related Variables
4.1.1. Internal Actions
4.1.2. External Actions
4.2. The Influence of Consumer-Related Variables
4.2.1. Identity
4.2.2. Integration into Society

5. Discussion
5.1. Theoretical Implications
5.2. Managerial Implications
5.3. Limitations

6. Conclusion

References

Executive Summary

Diversity marketing is a marketing strategy targeting diversity-based customer segments and deviating from the “traditional” target market (e.g. caucasian and heterosexual individuals) to gain a competitive advantage on the market. Compa­nies trying to tap those new segments oftentimes face the challenges of negative reactions regarding incorrect representation from the individuals targeted or even from the usual target-market because of non-identification. These negative reac­tions can lead to a compromised brand image and impair the company's competi­tive ability. For companies to achieve an advantage on the market and not the op­posite, the consumers' behavior concerning different diversity marketing variables has to be studied and analysed. This work focuses on company- and consumer- related variables and their effect on a diversity marketing strategy's reach and the company's brand image. With regard to the still scarce amount of research con­cerning this particular research issue, I have compiled 16 relevant studies that re­viewed consumers' reactions to different types of diversity marketing. The studies already conducted mainly focus on the effects of diversity-based advertisements and how they - if executed properly - result in positive customer reactions. Other variables like the support of social causes (e.g. pride festivals), social media as a communication tool and even the human resource-related topic of employment policies show positive effects for companies as well but are very rarely discussed, if at all. This work's purpose and contribution is therefore not only to display the positive and negative effects of various diversity marketing strategies but also to point out other ways to tap diversity-based customer segments which have been mostly neglected by researchers. The main results that can be taken from this lit­erature review are that diversity-based costumer segments (a) cannot be handled with a “one size fits all” approach, (b) are looking for representation and equal treatment in the commercial world and are positively influenced by the possibility of identification and (c) show negative reactions when it comes to inauthenticity and negative stereotyping.

List of Figures

Figure 1: Four Layers of Diversity

Figure 2: Conceptual Framework

Figure 3: Age and race-ethnic distributions of U.S. population

Figure 4: Gay window and mainstream ads' effects based on the recipient's sexu­ ality

Figure 5: Perception of Gay-Friendliness

Figure 6: Perception Model

List of Table

Table 1: A brand's perceived gay-friendliness through gay-oriented activities

Table 2: African American Participants' Mean Responses to Ethnically Primed Ads

Table 3: Participants' Mean Responses to Ethnic Priming

Table 4: Literatur Table 1

Table 5: Literature Table 2

List of Abbreviations

Abbildung in dieser Leseprobe nicht enthalten

1. Introduction

In the recent years, diversity marketing has found its way into the marketing strategies of many well-known brands and companies. The popularity of that strategy is first and foremost a sign of changing social structures and mindsets as we enter a time where peoples' identities and their differences call for presentation and representation. Our society is moving from “traditional” views in many areas of life (e.g., sexuality, family structure, gender, body image) towards a broader spectrum of “diversity”. This opens up new customer segments to every company willing to reach them. Many times companies have tried to do so, it led to a lot of controversy. One prime example is Nike 's 30th anniversary campaign¹ featuring Colin Kaepernick who - two years earlier - kneeled during the national anthem played at a football game in protest of racial oppression which created both out­rage and support in the USA. The famous campaign with the slogan “Believe in something. Even if it means sacrificing everything” shows not only Kaepernick but various athletes with mostly diverse backgrounds. With that, Nike did not only show its support of Kaepernick but became an important player in brand activism while at the same time targeting a more racially diverse customer segment and increasing sales by $6 billion.² On the other hand, Nike was the target of a cus­tomer boycott involving trends like #BurnYourNikes and #NikeBoycott on twitter and even negative backlash from former president Donald Trump.³ With that ex­ample in mind, we have to ask ourselves: How do we reach those new diversity­based customer segments without impairing brand image? Since there are few studies concerning this research question, it is important to give an insightful overview of what has already been investigated. This work focuses on analysing the influence of various company- and consumer-related variables on a diversity marketing strategy's reach and the brand image through a review of 16 relevant studies. Due to the restrictions of this thesis, I will solely be analysing diversity strategies involving ethnicity and sexuality. With my literature review, I intend to present that even in the case of few analysed experiences with diversity market­ing, those respective customer segments are indeed of interest for companies and their managers. Furthermore, I will be addressing the gaps found in previous re­search. These gaps are most obvious when it comes to the use of a company's ex­ternal communication with consumers which mostly consists of advertising. Al­though advertising plays an important role in the company-customer relationship, there are many different channels diversity segments can be efficiently reached by, like social media and the support of social causes (e.g., pride parades).

2. Theoretical Foundations

Before diving into the analysis of how different company- and customer-related variables influence a diversity marketing strategy's reach and effect on brand im­age, one has to be clear on the theoretical foundations.

2.1. The Roles of Customer Segments, Reach and Brand Image

“Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”⁴

Marketing in itself is a broad, multifaceted concept that is difficult to define be­cause it overlaps with various other areas of business. As we can see above, the American Marketing Association gives a very broad definition of it. A very crucial takeaway from the definition is that marketing deals with the relation between a business and every external entity effected by it. To communicate with these enti­ties, various marketing strategies can be used.

One strategy could be to define and target certain costumer segments⁵ in the mar­ket and analyse the company's competitive position in that area.⁶ But what do we mean when we talk about costumer segments or market segmentation in general and why would we use that strategy? Market segmentation is a tool that results from the “heterogeneity in demand”⁷ that forms through the customers' individu­ality. Naturally, not all costumers have the same preferences and therefore behave differently in the market. As a supplier it is important to understand those behav­ioral differences and gain benefit from catering to the costumers' preferences. Since businesses cannot do that for each consumer individually, a differentiation based on various variables can be used to disaggregate the market into multiple segments.⁸ With the information gathered about customers, one can extract vari­ables to analyse a segment. Customer segments can be formed by analysing one variable (unidimensional) or multiple variables at once (multidimensional), for example age or benefits sought (value for money, convenience, etc.).

After disaggregating the market into those customer segments, a business has a better overview of the groups' shared preferences and can align its marketing strategy according to them. One of the main issues while doing so is to find out how to reach that customer segment. To find a solution, we first need to define what we mean by “reach”. The MASB⁹ in collaboration with the AMA¹⁰ gives us the definition that reach is “the number of different persons or households ex­posed to a particular advertising media vehicle or a media schedule during a spec­ified period of time”¹¹. This means we are simply looking at how many individu­als could have seen that part of the company's external communication. In this work I want to extend the definition of reach. I will use the word “reach” to com­bine the AMA's definition with the variables that show us how many individuals have actually been reached in a sense that they perceive the marketing strategy as effective. This can be by eliciting a purchase intention, willingness to engage in communication or generally a perception of e.g., ad effectiveness, self-identifica­tion or persuasion. Expanding this term is important in order to see how we can actually “tap” a new customer segment without solely looking at how many indi- viduals have been exposed to it. What is crucial, is eliciting a reaction from the customer. The “how” of reaching a customer segment depends on the respective customer segment's characterization and can therefore be specifically adjusted to cater to that segment's preferences.¹²

Another area that is heavily influenced by the way a business communicates with their real and potential customers is brand image. Keller gives us the following broad definition: “brandimage is defined [...] as perceptions about a brand as re­flected by the brand associations held in consumer memory”¹³. To specify those perceptions, Low and Lamb categorize them as resulting from reason or emotions.¹⁴ Particularly, brand image can be utilized in highly competitive mar­kets with very similar offers - whether it is a product or a service - to stand out to customers and therefore gain an advantage from a positive brand image.¹⁵

2.2. What is Diversity?

“Diversity” is a word that we hear more and more every day. Hardly any other topic is currently discussed so intensely; it seems to penetrate all areas of every­day social life. Whether it is TV shows like Germany's Next Topmodel trying to set an example by officially declaring this year's motto to be “diversity” and elect­ing a transgender model as their winner¹⁶, Nike launching multiple Diversity, Eq­uity & Inclusion (DE&I) campaigns in the past few years¹⁷ or old 80s shows like She-Ra: Princess of Power receiving a reboot as a very diverse cartoon¹⁸, there is undoubtably a great and increasing exposure to diversity in society. But what ex­actly is diversity?

Defining diversity is not an easy thing to do since it can be used in various con­texts. Are we talking about product diversity? Biodiversity? Cultural diversity? Because this work deals with new customer segments and examines their prefer­ences, reactions and perceptions of a company's communication with them, I will focus on diversity in the sociological sense which deals with social heterogeneity in various dimensions.¹⁹ Working with “social diversity” gives us the opportunity to categorize customers based on different aspects of their individuality and react accordingly to them.

Giving an insight into what dimensions of diversity there are, might clarify the broad definition. There are many different approaches to explaining the dimen­sions of diversity. The “Four Layers of Diversity”²⁰ model by Gardenswartz and Rowe - as shown in Figure 1 - is one of the most significant in sociology and is still widely used today. The model divides diversity into the following four layers: personality at the core, internal dimensions next, external dimensions third and organizational dimensions as the outer layer. All of these layers are made up of different variables that make up a person's individuality. These variables are cru­cial for the model's explanation of human differences, their group membership and the effects of society on them.²¹ Within the scope of this work I will solely focus on the two variables ethnicity and sexuality of the internal dimensions; not only because of the limitations regarding the extent of this work but especially because the internal dimensions contain variables largely involved in systematic discrimination and are therefore also known as core dimensions.²²

Figure 1: Four Layers of Diversity

Abbildung in dieser Leseprobe nicht enthalten

2.3. Diversity Marketing: No more “one size fits all”

As seen in 2.2., diversity is a growing topic in society. A growing diversity in so­ciety also means that a “one size fits all” approach's effectiveness focusing on the mass market, which is usually perceived as white and heterosexual, has decreased and diverse - especially LGBT²³ - consumers are looking for marketplace incorpo­ration to find their way into social legitimization.²⁴ Diversity marketing as a strat­egy recognizes that individuals differ in their preferences and perceptions due to differences in culture, values, identity, personality, lifestyles, etc. which results in the need for customized marketing approaches.²⁵ The purpose of diversity market­ing is to cater to the diversity-based customer segments' preferences and commer­cial needs and thus differ from a mass marketing approach. While there are many different subcategories of diversity marketing, such as LGBT marketing and eth- nicity marketing, it is important to identify the various segments' backgrounds and the reasons for why they should be distinguished from each other before imple­menting a marketing approach. That identification decreases the risk of falling back into an “one size fits all” approach and thereby devaluing the targeted con­sumers' identities.

3. Method

After defining the theoretical foundations carrying this topic, we have to consider the options we have in actually diving into the analysis of this work's central takeaway: How to tap new diversity customer segments without impairing the brand image. To do that, I have collected a number of studies that have analysed the effects of diversity marketing actions on their study subjects. For the collec­tion of these studies, I have used the EbscoHost data base with the provided WWU²⁶ access. With a filter provided by the MCM²⁷, I was able to find articles from high-ranking journals. Unfortunately, there is very little material available in journals ranked A or higher regarding this work's topic. I will amplify this limita­tion later on. After extending my search to not only A+ and A journal articles but also to B-ranked journals, I was able to find more literature concerning my analy­sis. Furthermore, I examined the reference lists of the articles I had already accu­mulated to find other relevant studies. Moreover, I searched data bases like JS- TOR and ResearchGate. After compiling 16 relevant studies, I constructed two literature tables (see Tables 4 and 5) for a better overview. The tables consist of the studies' context variables (diversity type, analysis, region, brand industry and subject information), independent variables, which are divided into company-re­lated (internal and external actions) and consumer-related (integration and identi­ty), and lastly the dependent variables reach and brand image. The context vari­ables show the most important information regarding the method of the respective study while the independent variables are those entailed in the diversity marketing action that either influence the inspected action's reach and/or brand image. Both the independent as well as the dependent variables evaluated in the respective study are marked with an X in the table, therefore showing the number of studies that have analysed that specific variable or the lack of it. On the basis of those ta­bles, I will give an overview of the studies' main methods and key takeaways in my analysis and discuss the theoretical and managerial implications those findings provide regarding this work's key issue.

4. Analysis

In this chapter I will analyse the 16 studies I have compiled to give an overview of how the independent variables, which are divided into company- and con­sumer-related, influence the dependent variables reach and brand image.

4.1. The Influence of Company-Related Variables

Company-related variables that influence the marketing strategy's reach and shap­ing of brand image can be categorized in various ways. I have decided to divide them into the company's internal and external actions. When talking about inter­nal actions, we will take a look at employee policies. After that, we will evaluate the external actions of advertising, supporting social causes and social media. Those are oftentimes the more obvious influencing factors for the consumers since they are openly communicated to them and therefore very important in this analysis.

4.1.1. Internal Actions

The internal actions of a company analysed are restricted to the employee policies because they are crucial when it comes to equal treatment in diverse workplaces especially since we have already found that the diversity types I will focus on - ethnicity and sexuality - are largely involved in systematic discrimination.²⁸ Un­fortunately, due to the lack of research in this area, I will merely be able to elabo­rate on the effect of LGBT employee policies on brand image.

Investigating the effect of corporate policies regarding LGBT employees leads to the question of why such policies are needed in the first place. Sears et al. report that 45.5% out of 935 US-American LGBT adults, that were object of their work

[...]

¹ C.f. Nike 2018 (campaign video unfortunately removed).

² C.f. Kim et al. 2020, p. 8.

³ C.f. Abad-Santos 2018.

⁴ S. American Marketing Association 2017.

⁵ In the following “customer segments” is synonymous with “consumer segments” since I will focus on the analysis of both potential costumers and consumers that are already the respective business' customer.

⁶ Cf. Webster 1992, p. 10.

⁷ S. Dickson and Ginter 1987, p. 4.

⁸ Here and in the following, cf. Dolnicar, Grün and Leisch (2018, pp. 14-15).

⁹ Marketing Accountability Standards Board.

¹⁰ American Marketing Association.

¹¹ S. MASB and AMA 2018.

¹² C.f. Blattberg and Sen 1974, p. 1.

¹³ S. Keller 1993, p. 3.

¹⁴ C.f. Low and Lamb 2000, p. 352.

¹⁵ C.f. Cretu and Brodie 2007, p. 232.

¹⁶ C.f. Melcher 2021.

¹⁷ C.f. Nike 2021.

¹⁸ C.f. Scherer 2020.

¹⁹ C.f. Ramos et al. 2016, p. 794.

²⁰ S. Gardenswartz and Rowe 2003, 33; adapted from Loden and Rosener 1991.

²¹ C.f. Steinböck 2010, p. 23.

²² C.f. Pandey, Kumar and Thapa 2019, p. 5.

²³ Lesbian, Gay, Bisexual and Transgender.

²⁴ C.f. Penaloza 1996, pp. 15 and 33; Petty et al. 2003, p. 344.

²⁵ C.f. DeWitt and Dahlin 2009, p. 71.

²⁶ Westfälische Wilhelms-Universität Münster.

²⁷ Marketing Center Münster.

²⁸ C.f. Pandey, Kumar and Thapa 2019, p. 5.