Friday, August 27, 2010

Companies Take Note of Growing LGBT Buying Power

Thought this was a nice chart and article from Traci McMillan:

Awareness of the LGBT community is growing due to its rising image in the mainstream media, whether in the hit TV show Modern Family, or in the news headlines on California’s Proposition 8 banning gay marriage.
Now, large corporations are taking notice and jumping on the bandwagon to tap into the $743 billion lesbian, gay, bisexual and transgender consumer market.
Bob Witeck, CEO of Witeck-Combs Communications, an early marketer in the LGBT space, said the largest companies “are the biggest change agents.”  The big brands pay more attention to trends and “are more adept at moving.”
MillerCoors is a case in point. After the merger two years ago of SABMiller Plc and Molson Coors Brewing Co., the combined company’s number one objective was to market to “a complete consumer base,” a euphemism for minorities, including lesbian and gay consumers, said Doug Sanborn, head of multicultural and LGBT marketing and community relations. 
The company's market research revealed that between 4 percent and 7 percent of consumers belonged to the gay and lesbian community, and in metropolitan areas this subsection was even higher --10 percent to 12 percent. More importantly, MillerCoors' research showed that 85 percent of LGBT consumers were likely to make purchasing decisions based on which companies market to them.
In 2009, the company won the Essential Piece Award from the Matthew Shepard Foundation, for being a business leader in inclusion and support of gay and lesbian employees.
Other businesses not yet reaching out to the gay community risk missing out on a lucrative market. The gay and lesbian population is expected to grow to more than 16 million adults by 2014, according to a report from Packaged Facts. That's an increase from the estimated 10.5 million gay and lesbian adults following the 2000 Census, according to research by David Smith and Gary Gates. 
Over the next several years the LGBT segment is projected to see an increase in buying power, visibility and “influence on America’s marketing landscape,” the report said.
Progressive Corp. decided to make its way into the LGBT market early in 2009. Progressive advertising director Miriam Deitcher said the company realized that few insurance companies had made any moves in the LGBT community.
“Given this segment includes an estimated 15 million plus adults, we saw a great opportunity to connect with a large number of people that, to date, have rarely felt supported by the industry,” Deitcher said.
So the auto insurance company went to work.  It began to advertise in LGBT media and sponsoring events.  It also created a “Faces of Pride” Facebook page, which has 18,500 fans.
Since the onset of Progressive’s outreach, it has seen an “increase in brand awareness from the LGBT demographic,” Deitcher said.
The company said its strategy was “not designed to make a political or social statement or to endorse or advance any political agenda or lifestyle,” it just wants to be “consumers’ number one choice for car insurance,” according to Deitcher.
Packaged Facts reports that 58 percent of LGBT consumers are more likely to buy everyday products and services that market directly to their community, a figure lower than MillerCoors estimates, yet still substantial.  Among other things important to these consumers is the “perceived ‘gay friendliness’ of companies that choose to support causes that benefit the LGBT community,” the report said.
Ken Hunt, owner of Steel Gym in New York City, said the LGBT community is a market that should be sought after because it has “a lot of disposable income despite the recession.” Hunt and his gym have blazed the trail for other gay-owned businesses.
“It is more than a gym, it is a community,” Hunt said.  The owner believes it’s important to promote safe activities, to educate the community and to give back to causes, which is why his company has taken an active role on the board of Gay & Lesbian Advocates & Defenders, or GLAD.
“We are not afraid to reach out, we are not afraid to advertise,” Hunt said.
The “everyone is welcome here” gym has had such strong success- it was voted No. 6 gym in the country by Muscle and Fitness magazine- that it is looking to expand to Chicago, Los Angeles and Miami. 
Michael Murphy, senior vice president of Fleishman-Hillard, said the LGBT community is both influential and affluent.  That is why the international public relations company started its Out Front practice group that focuses on LGBT communications and outreach.
Murphy said the group's brand loyalty is highly coveted.  According to the LGBT consumer index by Community Marketing Inc., 53 percent of the LGBT population admits brand loyalty.
Witeck said the key to this brand loyalty is knowing that the “company is authentic” and can be trusted.
Though the community does not have higher earnings than other racial and ethnic groups, it does have greater buying power through large amounts of disposable income.  This power is mostly due to more two-earner households and fewer children, Murphy said.
But in order to really tap into the market, Murphy said a company must start by looking inward.  “You have to practice what you preach,” he said.  Murphy suggests looking at human relations and corporate responsibility to see how LGBT employees are treated within a company.  Fair policies and employee work groups supporting LGBT are key.
Murphy sees employees within a company as the best “brand ambassadors in the community.”
In making the move outward, Murphy warns against stereotypes and cliches, such as rainbow flags in advertising and marketing campaigns.  He advises businesses to complete their market research and to test the campaign to make sure it is respectful through use of employee focus groups.
“The return on investment can be exponential if [the company] does it right,” Murphy said.  The market is not only untapped over all, but Murphy pointed out that each letter within the acronym ‘LGBT’ signifies a different untouched segment.
Another segment of the LGBT population is the aging community, the boomers who are the adults that have been "out" the longest.
Murphy said it's not just corporate America that stands to benefit by getting into the LGBT space.  Fleishman-Hillard expanded its public relations skills to assist in the 2006 Gay Games in Chicago; to help market for the LGBT community center in Chicago, the Center on Halsted; and to start a public health campaign via the Ohio Department of Health. 
The Ohio Department of Health noticed that the LGBT community had specific health concerns.  They were alarmed that the LGBT smoking rate was twice the rate of that of heterosexuals, so they worked with Fleishman-Hillard to launch a prevention campaign aimed at the group.
Despite the potential rewards, many companies still fail to reach out to the group. Witeck believes the reason is an underlying homophobia. 
A few companies worry that if “they take on a gay customer, they lose a homophobic customer,” he said.  “Some haven’t gotten past the equation.”

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