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Target Market News has introduced Black Business Chicago, a new monthly which will spotlight news and features on Chicago's African-American businesses, corporate executives and local economic issues. The publication will also be supplemented by a Web site, blackbusinesschicago.com, that will provide updated coverage of relevant business news on a daily and weekly basis between issues of the monthly print publication. Click for more
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Buying Power report: Blacks spend as economy grows
New 16th edition shows $507 bil in spending



The finding comes from the 16th annual edition of "The Buying Power of Black America" report. In 2009, black households spent an estimated $507 billion in 27 product and services categories. ...

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Volkswagen's new marketing chief: Black consumers 'important' to sales goal

By Ken Smikle
Target Market News

(October 19, 2011) Rainbow PUSH held its 12th Annual Global Automotive Summit recently in Detroit, and there was an increased focus at the two-day gathering on how auto manufacturers spend millions in advertising dollars with African-American marketing and media companies. At a panel entitled, "Raising Our Voices on Advertising in the Marketplace," a panel of executives discussed the issue.

Following that discussion, Tim Mahoney, who just four months ago assumed the new position EVP and Chief Product & Marketing Officer for Volkswagen of America, talked with Target Market News in greater detail about the subject of marketing to African-American consumers. Volkswagen is one of the few auto companies that have yet to hire an African-American ad agency.

TMN: Prior to your arrival, Volkswagen issued an RFP to African-American advertising agencies and to Hispanic agencies. An assignment was ultimately made to a Hispanic agency, but there was never an African-American agency chosen. What can you say about where that process is today and how it fits into your objectives?

TM: The brand has laid out some pretty ambitious growth goals. They're talking about reaching 800,000 units per year. Last year we were at about 280,000. So we're talking about three times growth over five years. I do think it's within the reach of the brand. Certainly the product portfolio is coming into place and we're up 22 percent this month.

So the product's there, the commitment's there to grow in this market, and the thing that I've really been focused on these first four months is getting this brand positioned around a place where we can grow overall. For me it's about sustainable growth for the brand.

Can you reach those goals without ethnic marketing?

That's what I was going to say. We have to be inclusive. We are a niche marketer in many ways...

How so?

With 200,000, two percent market share, [Volkswagen has] a very defined following. When I say niche, it's in terms of scale. But to support what you said, we can't get there by being exclusive. We can only get there by being inclusive. So we made a step in the Hispanic market. I'm quite proud of what the brand has done there. And to a certain extent I've enhanced it because now we have this transparency between our Hispanic agency in Miami and the lead agency. And we have an event agency that is heavily soccer focused.

We're growing and learning how to do that, and African-American is an important part of that too. We're really a color blind kind of brand. Does that mean that we work with disparate agencies and we have a whole plan figured out specifically for African-American? No, not yet, but it's something that I think we have to take a serious look at, and not just lip service, but that's going to help us grow.

When you look at competitors domestically, who comes close to how you envision the brand relating to the ethnic consumer? Without giving anyone else too much credit, is there a model out there?

Well, certainly the Big Three have the resources and the footprint to do that. They just have the mass. As I said on the panel, I was the David among the Goliaths. We do things with the community. We gave a million dollars to the Martin  Luther King Memorial in Washington. But GM gave $10 million. In that scale of 10-to-1, they're bigger than we are. Proportionally we gave probably more at 200,000 units versus a million units...

Well, that's the issue isn't it? How to be effective with the proportionality that you have to work with...

That's exactly it...but when you get up into 800,000 units a year, or 600,000, 500,000 or, say, double what we're doing now, you're not going to get there by saying we're only going to participate there, or participate here. We've defined our target customer. We've been working with Nielsen and really coming up with brand segmentation. [The plan] has demographics and ethnicity as part of that. It has psychographics, behavioral, all of those types of things. So we're pretty clear, and we're starting to build the system to track our progress against various segments.

By doing, at this juncture, mostly events?

Probably. In African-American, it crosses a bit between giving back to the community and pure marketing. We support a series of historically black colleges and universities...

Are you doing ad support there to gain goodwill?

We don't, not at this juncture.

Rev. Jackson had an interesting observation during one of the panels, and that is a part of the problem is that every company is doing more to be involved with the community than the community knows about. Do you see that as a potential liability going forward?

The challenge with marketing is that there are so many channels, and so much to keep up with. The days of let's make a nice little ad and show it are over. You've got measure the impact, you have to measure the medium. Sometimes I find that marketers are the worst communicators about what they're really doing. And part of it is we're not structured that way...

But given the passion, to use that word, around this topic, does it become increasingly possible that if you're not touting what you're doing it becomes a liability.

It could, because I think people, by their nature, will fill in the blanks. So if they don't know, they just come to the conclusion we're not doing anything. So there needs to be a little higher visibility about what we are doing in terms of marketing.

In so much as Volkswagen has already pitched to the black agencies, all other things being equal, do you see yourself getting to that point again any time soon?

Right now we're refining the model with the Hispanic market...and I think we'll get there but at this point I can't say when. My guess is probably next year, maybe 12 months from now.


 
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