It's the year of the rabbit and American Express Co. is feeling lucky. Though the financial crisis prompted many companies to slash budgets for multicultural marketing, Amex is continuing to target niches like Chinese-Americans and Indian-Americans-just in more cost-effective ways.
One of its tactics is to offer prepaid gift cards around holidays, such as the Chinese Lunar New Year on February 3. The company's limited-edition Year of the Rabbit card features a traditional paper-cut depiction of a rabbit on a red card, which is considered a lucky color in the Chinese culture.
This is the second consecutive year Amex has offered a card product tied to the Lunar New Year. Last year's card had a design appropriate for the Year of the Tiger.
"We were looking at the size of the Chinese-American market," says Kerrie Peraino, Amex's chief diversity officer. "It was the next logical move for our prepaid card."
The Lunar New Year card-sold in denominations of $25, $50, $100 and $200-could be purchased online for its face value plus a $3.95 fee. Amex mailed the cards to purchasers.
It marketed the cards online and in Chinese-American publications during the special promotion, which ended Feb. 28.
Amex used mostly the same strategy with another card promotion targeting Indian-Americans this past fall.
It introduced a gift card in the United States in October to coincide with Diwali, a holiday that is widely celebrated in India from Nov. 5 through 9. The holiday marks the victory of good over evil, and its name translates as "row of lights."
The Diwali gift card was also sold and marketed online-tactics that Dennis Moroney, director of research for bank cards at TowerGroup, recommends. Multi- cultural groups tend to be comfortable using the Internet and, as a marketing tool, it can help diffuse language barriers. People can take their time to understand the offer and, if necessary, have someone translate or explain anything confusing. "Often they may use a family member to help translate," Moroney says.
Amex also uses sophisticated analytics- a patent is pending on a system it calls Diverse Marketplace Intelligence-to identify cultural groups appropriate for marketing opportunities based on spending habits and other characteristics. But the numbers are only the starting point. Networks of employees with various ethnic backgrounds-from across all departments of the company-help Amex hone in on appropriate events to sponsor and tweak its marketing messages. For example, the company's South Asian Employee Network helped develop and market the Diwali card.
Another gift card targeted at Hispanic-Americans was developed with the help of the company's 600-member Ahora Employee Network. Its input on choosing the word "felicidades" for the card's name was critical, Peraino says. "The word has a broader meaning than just 'thank you,' and it resonated with the community."
Amex marketed the prepaid card online and sent letters to Hispanic organizations, including the National Society of Hispanic MBAs. Amex has attended the organization's annual conference for 10 years to promote its products.
Word-of-mouth advertising is important to this cultural group, Peraino says. "It was more impactful to hear about the product from us at the event than to get a postcard in the mail."
Understanding the nuances of multicultural groups is key, says TowerGroup's Moroney. "It's not a matter of taking collateral marketing materials and translating them. You have to be sensitive to the cultural differences in these communities and adjust the marketing accordingly."
The reward for getting it right, culturally speaking, is loyalty, he says. "Once you penetrate those markets, you find a great loyalty, including less sensitivity to pricing. So attrition is less of an issue."
And building loyalty initially through prepaid cards, as Amex is doing, is shrewd because it carries low risk, Moroney says. As credit profiles improve, the customers could be offered other products.
