When an entrepreneur wanted to attract American Muslims' $124 billion in spending power, he found the next big marketing strategy.
When serial entrepreneur Adnan Durrani decided to invest in another natural foods company following successes at Stonyfield Farms, Vermont Pure, and Delicious Brands, he looked to the United States’ shifting demographics to find the next wave of consumers.
He learned that the more than 2.35 million American Muslims represent one of the fastest-growing demographics in the U.S., according to the Pew Research Center’s most recent research. Many live in a few concentrated markets like New York City, and they are better-educated and more affluent than other emerging demographic groups.
Perhaps more important to an entrepreneur is American Muslims’ spending power, estimated at about $124 billion a year, according to DinarStandard, a research firm that advises companies on the American Muslim market. Though companies like Best Buy and Wal-Mart had made some overtures at courting them, Durrani thought the number of products geared specifically toward American Muslims was surprisingly low.
American Muslims are the latest demographic group being courted by so-called multicultural advertisers and marketers, following Latinos and African Americans. But rather than simply targeting a specific niche, companies are taking a bicultural approach, courting two groups simultaneously and with different messages in the hope of selling to both.
That was certainly the strategy Durrani had in mind in July 2010, when he launched Saffron Road, a line of frozen-food dinners that adheres to halal, the Islamic guidelines for diet and meat preparation. Whole Foods agreed to sell the initial four entrees nationwide before Saffron Road even finished developing its packaging. The grocer first put the product in the freezer in time for the Muslim holiday of Ramadan. “It’s been among the most successful product launches,” says Errol Schweizer, the senior global grocery coordinator for Whole Foods. “Obviously, the halal customer base is really passionate.”
The ingenious part of Saffron Road’s marketing strategy is that its products appeal to both under-served American Muslims with specific dietary needs and the larger base of well-heeled, health-conscious customers eager to shell out more than $5 for what amounts to a frozen dinner.
Saffron Road certainly isn’t the only company trying to reach American Muslims alongside a broader base. A halal food company called Crescent Foods sells its products in select Walmarts, and advertising giant Ogilvy & Mather has started an offshoot called Ogilvy Noor to offer marketing and communications advice to companies hoping to appeal to Muslims around the world.
In the financial sector, Amana Mutual Funds has grown significantly over the last few years on the strength of investors who are drawn to the company’s insistence on investing according to Islamic law, which prohibits collecting or paying interest. This less-risky approach forbids stock holdings in financial institutions or companies with too much debt—moves that seem prudent regardless of religious motivation in the wake of the 2008 global financial crisis. Only about 20 percent of investors in the FDIC-approved fund are Muslim, says Monem Salam, the deputy portfolio manager.
This strategy of speaking to different audiences simultaneously is one other companies can learn from, especially as the demographics of the country shift. By 2042, Census Bureau demographers predict that racial and ethnic minorities will make up more than half the population of the U.S.
Marketers see a divergence between the aging, majority white population and a younger generation that values cultural diversity and a sense of authenticity. "It's a bit of a Catch-22," says Ken Muench, a senior vice president and director of strategic planning at Draftfcb, a marketing and communications firm. "If you advertise to a niche group like American Muslims, or leverage their culture in your advertising, you score points with the younger crowd for being open, modern, cool." But, he adds, you also risk alienating the older, whiter generation. The changing cultural feel of the U.S. population will force companies to recalibrate their marketing strategies, to decide if their base is with the baby boomers or the next wave of consumers, who Muench calls “a generation of Americans frankly more interested in other cultures than their own culture.”
A few big brands have managed to shift their messages to serve two groups well. Mexican beer company Tecate initially marketed its flagship brand to Hispanics. Now, consumers can't escape the recognizable red and gold can at hipster bars across the country.
But marketing to different constituencies is never easy, especially when companies take on sensitive issues of ethnicity, race, or culture. In mid-December, Lowe’s pulled its advertising from the TLC reality show All-American Muslim—which documents the lives of five Muslim families in Dearborn, Michigan—after a conservative Christian group complained, calling the reality show “propaganda” that threatened American liberties. The backlash against Lowe’s was swift. Protestors picketed a Lowe’s store in Michigan, while Muslim advocacy groups and politicians across the country called for boycotts of the store to express their anger over what they saw as bigotry. The electronics chain Best Buy caught similar flak in 2009 after it distributed a Black Friday flier that wished its consumers happy Eid Al-Adha, a Muslim holiday that coincided with Thanksgiving.
For every consumer freaked out by different or seemingly strange ideas, there’s another person just waiting to buy a new product. Durrani says he has been overwhelmed by the success of Saffron Road. Though the privately held company is not yet profitable, its line of products has grown from four frozen dinner options in 2010 to 19 products on the shelves of roughly 6,000 stores today. The company now sells soup broths, chicken nuggets, and frozen entrees with Thai, Indian, and Middle Eastern flavors, ranging in price from just under $4 to $7. The company plans to offer more items that help people cook meals at home alongside additional vegan and vegetarian options.
Durrani believes that strategy will resonate with health-conscious, foodie consumers, regardless of their religion. "Whole Foods, contrary to popular belief, is not a bunch of Birkenstock hippies," he says. "They’re very quick to drop brands that don’t perform. Our success speaks for itself."
One of the key takeaways for Durrani is that “being inclusive doesn’t mean being everything to everyone,” he says. Instead of throwing a wide net to woo a huge general audience, his latest business venture aggressively goes after two specific groups. Ten years ago, Muench says, this two-pronged approach would have been unusual. But for anything related to multicultural marketing—be it advertising to American Muslims, Hispanics, or African Americans—companies increasingly are finding that reaching out to a second audience often brings in a bigger share of revenue than the company’s original intended target. It’s a lesson worth keeping in mind as companies look across the broad spectrum of Americans and decide who to woo.
Photo courtesy of Saffron Road