white paper Marketing to gays and lesbians: niche marketing and segmentation
OVERVIEW WHY MARKET TO THE LGBT SEGMENT? DEVELOPING THE STRATEGY RESEARCH AND MARKET EVALUATION PRODUCT AND CATEGORY
roadly speaking, marketing to LGBT communities in North America has been unsophisticated. While there have been some notable exceptions, among them the Subaru campaign, which started in the mid-1990s, and Absolut, which in 1981 placed the first of many ads in gay publications, for the most part gay and lesbian marketing has been more about art than science. This paper shows how new thinking—driven by market data and segment focused marketing theories—can change the gay and lesbian marketing paradigm. The contents of this article were originally developed in conjunction with Stephanie Blackwood, Partner, Double Platinum LLC.
CONSUMER INSIGHTS BRAND POSITION ACTIVATION ARE YOU READY? THREE QUESTIONS TO ANSWER
APPENDIX: LGBT PRODUCT MATRIX
WHY MARKET TO THE LGBT SEGMENT? There are the obvious reasons: • It is an under-served market segment. • The segment has latent spending power, both in terms of consumer brand loyalty and higher discretionary income than other segments. • A perfect storm of social, legal and environmental factors has colluded to make this
the most propitious time to connect with this market segment All of these are true and valid, but any effective niche marketing strategy needs to be founded on a strategic understanding of why the niche is appropriate for your business and how it can be profitable. In fact, when all is said and done, there is only one determining factor in a successful marketing campaign, and it is
While being “gay friendly” is nice, it’s not enough. Companies need to deliver relevant, differentiated and beneficial experiences
the same for any segment: There must be a meaningful and valuable link between the product or service and the niche consumer. If there is no specific reason why the product or service will be of unique value to gay or lesbian consumers, then what would be the point? On the other hand, if there is or can be a meaningful and unique position for a brand in the gay and lesbian space – a real added value that the consumer will experience by interacting with the product or brand -then the outcome is likely to be profitable. In this paper we will discuss how to evaluate your product or service – or the brand that expresses it – from the standpoint of gay or lesbian customers and how to develop an effective positioning and marketing communications strategy. FIG 1
INITIAL ASSUMPTIONS We start from the understanding that society—both mainstream as well as gay, lesbian, bisexual and transgender social, political and economic structures--have undergone a radical evolution since 1990, the end of the first era of gay marketing. Today, while being “gay friendly” is nice, it’s not enough. Within this evolving and diversifying marketplace, companies marketing to the gay segment now need to demonstrate that they understand their target consumers and deliver relevant, differentiated and beneficial experiences that integrate their brands into the real-world lives of gay men and lesbians.
DEVELOPING THE STRATEGY The process of developing an effective gay marketing strategy is the same as that for any other market segment – a function of inputs, outputs and activation. (See fig 1) The critical difference in a gay marketing strategy is one of context, which is the reality of gay and lesbian lives. Understanding this reality is critical. It requires a thorough understanding of LGBT people, who they are and how they relate to the Page 2
Nothing in gay and lesbian marketing is more important than an upfront, comprehensive understanding of the gay context of their lives
world-- specifically in relation to their sexual orientation– in demographic, cultural and psychological terms. This understanding stems from the work undertaken in the first stage—input--of the model. The three components of input– company, product and category, and consumer insights--are probably the most complicated to understand from the LGBT perspective but they provide the critical LGBT context. The second or output stage—in which the learnings accumulated in input are crystallized into position, promise and personality—is possibly more intensive from a work point of view. And the third stage—activation-when individual tactics are executed might be the most visible and sensitive stage. But nothing in gay and lesbian marketing is more important than an upfront, comprehensive understanding of the gay context of the lives of the consumers being targeted.
INPUTS: RESEARCH AND MARKET EVALUATION The very first thing that must be taken into consideration is the corporation, its values and its culture. When reaching out to the general market, it is often enough to clarify the vision and sift through the heritage of the company or brand in order to uncover hidden gems and at-
traction. In LGBT marketing this exercise is more searching and invasive. Entering the LGBT marketplace with the belief that it can be templated (i.e., a simplistic business case) will lead to certain disaster. Even the most robust gay business case will not gain traction in an inhospitable corporate environment. Before expending resources to build the case for doing business with gay and lesbian consumers, it is essential to ensure that the idea of a gay marketing program will be welcomed as a genuine opportunity to increase company profits. It is imperative to ensure that the company as an organism is willing to celebrate its gay marketing successes with enthusiasm; the same enthusiasm it might demonstrate with any other diverse segment campaign. No less important is an assessment of the company’s preparedness to be involved with the gay market and the LGBT community. A diversity audit— administered throughout the corporation—will identify the level of commitment, the issues that represent risk, the policies that need to change, barriers to success and strategies that should be put in place. LGBT communities are particularly sensitive to doing business with companies or organizations Page 3
Understanding how your product or service fits into the universe of a gay or lesbian consumer demands that you investigate the product category from the consumer point of view
that demonstrate even a hint of discrimination in their hiring and management policies. In this regard, the audit must be thorough and have sign-off from human resources. Getting into the LGBT space only to find out that a regional manager is a pathological homophobe could be disastrous with the potential to damage the brand’s equity, not just in the LGBT community but also the general market, where fewer and fewer people are interested in supporting brands that discriminate.
PRODUCT AND CATEGORY INSIGHTS
Understanding how your product or service fits into the universe of a gay or lesbian consumer demands that you investigate the product category from the consumer point of view. For example, let’s look at oral care products. While some products in the category, e.g. toothpaste and mouthwash, are experienced in the same way by LGBT people as straight people, athome tooth whiteners are another story. In the lives of the two groups, they play an entirely different role, are used differently and even shopped for differently. When Procter & Gamble launched its Crest Whitestrips brand in Canada, it had considerable success in both the general market and the gay market, because the brand team took time to activate insights coming
from both market segments. Understanding the specifics of your product or service in relation to the way in which it is anticipated, bought and consumed are equally important. For instance, the experience of using an electric toothbrush may be the same for gay men and straight men, but the way the brush is purchased may be very different. Straight men may rely on their wives to make the choice for them at Wal-Mart, while gay men might spend time discussing the pros and cons of various brands with a pharmacist. These insights help determine where a product fits in the LGBT Product Matrix (See Appendix); they will also identify the ways in which reframing or recontextualizing your product might move it to a more profitable quadrant in the matrix.
CONSUMER INSIGHTS Much is made of consumer insights in the marketing business, but very often a crucial point is missed: consumer insights are inert snapshots of what might interest a consumer at one moment in time. In order to work effectively, marketing strategies must be based on a deep understanding of consumers and their lives – a vibrant 360° picture of the context and dynamics, who they are, how they use a product or service, how they inPage 4
tegrate the category – and subsequently your brand – into their lives. A true Experience can be made unique and powerfully relevant on a personal basis
OUTPUTS A gay marketing strategy is developed by synthesizing the learnings accumulated in the “input” phase and expressing this in usable language Brand Position Target It is absolutely critical to have a clear understanding of the target, remembering that the LGBT community is not one homogenous group but a mosaic of numerous sub-segments which may be similar in some areas but are definitely not similar in others. The strategy must clearly define the target in terms of gender (male, female, trans), sexual orientation (gay, lesbian, bisexual, etc.), age, income and attitudinal segment. Frame of reference Frame of reference is the category or the competitive set around which the strategy will flow: a clear, focused idea of what the product or service does from the consumer’s point of view is essential. No assumptions should be made about what a product means to a LGBT consumer, whose attitudes may be wildly variant or very similar to the mainstream. This determination will have a major impact on how, or even whether the brand goes to mar-
ket. Relevant Differentiating Experience® Ultimately, the only way to build sustainable differentiation into products or services is to deliver a uniquely relevant experience. Features can be copied. Value propositions can be undercut. Benefits or emotional connections are ethereal and can be matched. A true experience, which is derived from every aspect of the pre-purchase, purchase and post-purchase actions and emotions, can be made unique and powerfully relevant on a personal basis. In the case of the gay or lesbian consumer, a culturally relevant approach is critical. Doing this transcends the advertising department and encompasses an entire organization with engagement from human resources, public relations, product development, promotions and sales. It requires using every possible resource to understand what the gay or lesbian target feels, believes and does. Most brands with successful marketing programs come from companies that undertake this kind of understanding — both externally and internally -- and look very different in terms of diversity, innovation, corporate culture and, in most cases, profitability. Promise, reward and personality These attributes are the brains, Page 5
It is possible in every case to articulate the general market brand strategy in terms that make it appealing, likeable and rewarding for the target segment
muscles and cosmetics that make a strategy work: successful marketers define a promise that directly rewards the customer for doing business with the brand and wraps it in a likeable, appealing personality. One of the most notable examples of this strategy well executed is Abercrombie &Fitch where the brand successfully repositioned from a high end catalogue and retail provider of accessories to complement the â€œoutdoor lifestyleâ€? of upper middle class Americans, to the hottest brand of trendy, preppy gear aimed at the coolest, urban American college kids from 18 to 22. They did this by radically redesigning everything, from the look of the store, the merchandise they sold, the staff they hired, the retail locations they selected and the prices they charged. They built a persona that focused on a gay edginess, while straddling the line between gay and straight. While it is not always possible to design an entire brand around a gay market strategy, it is possible in every case to articulate the general market brand strategy in terms that make it appealing, likeable and rewarding for the target segment. ACTIVATION LGBT strategies are activated through three sub-strategies: 1. Business Strategy
This is the business plan: how much to invest, what return is required and the means of evaluating success or failure. 1. Communications Strategy Historically the communications strategy has focused on placing ads in gay publications or organizational sponsorships. While both of these channels are important and have contributed to the success of many of the LGBTfocused campaigns over the years, the maturing community/ market demands more enlightened tactics, such as out-ofhome , print (especially vertical publications such as travel magazines, health and fitness publications), and of course all variations on digital media. Furthermore, as many larger firms are finding out, LGBT communication strategies may be most effectively presented as gayfocused messaging in media that serve the general market. Conversely, mass advertising may not be as effective as culturally sensitive point of sale materials or a pure publicity-driven word-of-mouth campaign. In this third era of gay marketing, the options from a communications standpoint are almost limitless. 3. Operations Strategy As we have suggested previously, the only real way of building sustained differentiation in the marketplace is by consistently delivering a relevant, difPage 6
In both product and service-based businesses, it is essential that the differentiating experience occurs at every direct and indirect touch point
ferentiated experience. In both product and service-based businesses, it is essential that the differentiating experience occurs at every direct and indirect touch point. Effective marketers are spending increasing portions of traditional and virtual resources to develop and implement programs that surround consumers with messages. From experience, we know that the more often a gay consumer hears an exciting message, the more often that message will be passed along. Measurement It is as important to measure the success of the program, in terms of both bottom-line impact and relevance to brand or corporate diversity objectives. This is simply a good marketing practice, and any LGBT marketing program should be subjected to the same scrutiny and standards as any other diverse marketing program. Conclusion The LGBT sector presents a large and potentially profitable opportunity for the marketers of many, although not all, products and services. However it is essential to answer three fundamental questions before investing: 1. Is your company ready in every respect?
equally? Does management understand all potential risks? Is there a communications plan in place? Is management prepared? Is there an unequivocal commitment to the bottom line? 2. Does the gay/lesbian business case compare satisfactorily with other diversity marketing programs? Does the product or service fit well in the context of the consumer’s life? Is the capital available and commitment strong enough to sustain a gay marketing program or a reasonable amount of time? 3. Has an investment been made to define the experience of your product in a way that is uniquely relevant to gay and lesbian customers? If the answer to these three questions is an unqualified “yes,” then the gay and lesbian market segment is an opportunity for building business, profits and a relevant connection with a loyal consumer segment. A better understanding of how a product fits within gay and lesbian consumers’ lives can help marketers understand the potential for their segment-focused
Are all employees treated Page 7
white paper Appendix: LGBT Product Matrix marketing program. The top-left quadrant is where it is least likely that a LGBT-focused marketing effort will increase sales more than an existing general market approach. Here, there is no doubt that a gay specific advertising message will capture attention and build awareness, but it is unlikely that products in this quadrant would be able to command a price premium from gay and lesbian consumers, who would also eas-
Meets a different need or delivers a different experience
Meets the same need or delivers the same experience
Same product or service
Toothpaste Toilet paper Minivans Airlines Daily newspapers Retail banking Home and Auto Insurance
White T-Shirts Condoms Luxury cars
ily be distracted by price and promotions. In this quadrant, there is no real advantage to the traditional tenets of consumer marketing.
The bottom left quadrant is interesting because, while the product may be the same, successful marketers can add LGBT value by focusing on the different experience or need fulfillment. A white T-Shirt can command a higher margin when sold in a trendy store as a body accessory (which it is for Different product or service some gay men) than it can at Wal -Mart where it is Dance clubs Theatre just a T-shirt. ConLifestyle Magazines text makes the Skin care products (Male) Adventure travel difference! As a Life insurance Retirement products result of underInvestment products standing what the product means and how it is used by gay consumers, a product can be Bars marketed in very Pharmaceutical products Gender transformation products different ways at Foundations and charities the same time. The top right quadrant con-
In it’s most fundamental form, luxury can be defined as “waste.”
tains products that meet identical consumer needs for straight consumers as for gay consumers, but will be more successful if designed specifically for gay and lesbian consumers. Gay dance clubs are different from straight dance clubs in enough ways that gay people tend not to go to straight clubs, although straight people do go to gay clubs. Lifestyle magazines are of interest to all segments but gay lifestyle magazines make a lot more sense to members of the LGBT community. The top-right quadrant is the most interesting for brands entering the segment because here it is easiest to restructure an existing product into a gayfocused product. Obviously this demands caution because cosmetic changes can be easily misinterpreted as a patronizing effort to “fool” the segment. Tonality of messaging becomes very important. In this space marketers can add the most real value by becoming uniquely appropriate to the segment market. Products from the top left quadrant can be customized to fit into the top right based on insightful understanding. For instance, insurance products can be tailored to the specific legal and social needs of gay and lesbian couples without necessarily impacting core components or core markets. Financial products – other than
retail banking which will never be differentiated by sexual orientation – are obvious candidates for this shift. In the lower right (and pinkest) quadrant are the products and services that are exclusively for LGBT consumers, i.e., travel and leisure experiences, which play a different role and are structured differently. Unless a specific product or service has been thoroughly tested , this is not a viable quadrant for brands just entering the LGBT marketplace. In summary, products fit naturally into one of the quadrants based on how they are being used, by whom, right now. The secret of gay marketing is to understand the dynamics of the category, the nature of the consumers and the essence of the culture in order to recontextualize (communicate in a specific, relevant way) or tailor (adjust the components of the product or service to meet LGBT needs more directly) your products so that they are experienced in a uniquely, relevant and beneficial way.
Call or email us today for more information on our suite of LGBT consulting services Protean Strategies 80 Cumberland Street, Suite 1503 Toronto M5R 3V1 Canada 416.967.3337 Bernstein@proteanstrategies.com www.proteanstrategies.com
Laurence Bernstein is the founder and managing partner of Protean Strategies. He has been a leading proponent of the “new order of differentiation” and has written and lectured on the subject of experiential branding and intrinsic/extrinsic research methodologies in Canada, the US and China. In partnership with Double Platinum Inc, Protean Strategies has been responsible for developing niche marketing strategies in the LGBT space for major global corporations including IBM, ING, Allstate, Lexus, etc. Laurence has presented workshops and semi‐ nars on gay marketing in North America, Europe and Africa. As a consultant to the International Gaya and Lesbian Chamber of Commerce Protean developed the first global study of LGBT eco‐ nomic impact in all countries IGLCC has members in, and authored the analysis and report on the second annual International Busi‐ ness Equality Index. Laurence is the author of numerous articles and papers on LGBT marketing and writes a monthly column for the IGLCC newsletter.
Published on Jun 24, 2010
Published on Jun 24, 2010
Gay, Lesbian and Trans people are a potentially powerful market niche that can be addressed by understanding the segment, takinga strategic...