Native Americans and Consumer Behavior

By Josh Wright

Introduction

            Marketers use a term called subcultures when talking about whom to target their products and services towards.  Subcultures are groups of people out of the entire population that share similar behaviors and beliefs.  This can be broken down even more into ethnic subcultures, where those groups are divided into smaller groups that share a common nationality background, race, or language.  Native Americans are the smallest, yet oldest ethnic subculture in this country.  In the last U.S census, there was found to be only 2.5 million living today, but 2 million others said they were part Native American, adding up to 4.1 million total (Raymond, 2001).  All 4.1 million people still only add up to barely 2 % of the country’s population.  This leads most people to ask the question of why to bother marketing to such a small group of people.  Is the money and effort worth spending to get knowledge of your products or service out to them?  Many people today would agree that this subculture has become an attractive group to market in, based on the fact that they are growing in wealth and that there is not a lot of competition yet.  

Explanation of the Topic

            The purpose of this tutorial is to explain the changes that have occurred in the Native American subculture over the last decade and how some companies have adjusted their marketing strategies to take advantage of these changes and compete with Native American businesses.  The discussion of Native Americans’ impact on the U.S. economy will also be highlighted.  Demographic information about the Native Americans will provide a solid understanding of where they earn and spend their money and what it takes for a marketer to reach them. 

            Demographics  As stated earlier, there are 4.1 million people in this country who are Native Americans.  There are currently 561 tribes recognized by the United States government, however, not all 4.1 million live on reservations.  Only four out of every ten live on reservations while the others are mostly found living in the southern and western part of the nation.  This group of people has forever been plagued by a lower income than the average American; earning almost a third less.  Most Native Americans attend school, but many do not finish since they usually end up in a profession that does not require higher education (Morton, 2002).  This seems to be changing however, as younger Native Americans are being encouraged to get involved in careers that are more financially rewarding.  The last decade has seen an explosion of prosperity for some, with business revenue increasing 179 %, and the number of Native American firms growing 84 % (Wellner, 2001).  The growth in revenue comes mostly from the casino and resort business, which has caused great concentrations of wealth in certain tribes.  All of this has resulted in over $4 billion in spending power for the Native American annually.

            Spending Power of Native Americans  Native Americans have a considerable amount of spending power for how small of a subculture they are.  It was reported that in 1997, Native American business owners generated $34 billion in revenue and businesses grew at a rate that far outpaced firms owned by Caucasians and others in the U.S. (Wellner, 2001).  Most of the businesses that added to the buying power were in the resort and casino industry.  Tribes in California have constructed casinos that are making Las Vegas nervous and many more tribes are in the midst of paperwork to open casinos of their own.  California allows their tribes to operate the casinos because tribes act as sovereign nations, or a community that is granted the right to govern itself.   Indian casinos are reported to have already taken 10 % of Nevada’s business or $1 billion in income per year (Economist, 2002).  Many critics have charged that supporting the casinos is hurting the subculture by making them rely on tourism for their survival.  The tribes in question believe otherwise. 

            Native American businesses have also infiltrated other areas of the service sector in relation to tourism like the hotel industry.  This rise in Indian owned hotels came from the need for a place to stay for the visitors to their casinos.  The hotels offer a slightly different atmosphere, one of a unique culture and experience.  This can be quite a variety when you consider that there are over 400 tribes located in the Western United States alone, each with slightly different cultures and traditions.  Native American hotel owners have worked hard to develop an image that is sort of Disney but with a taste of local culture (Jesitus, 2002).  So far the efforts have paid off since the Native American tourism groups have found that their resort stays are in demand and they have had little trouble developing their revenue. 

            The Native American businesses that have prospered over the last decade have seen certain tribe members earning over $600,000 a year (Raymond, 2001).  Companies in such industries as construction and retail are also adding to the strength of the subculture’s economy.  From this we have also learned Native Americans that live on or near reservations tend to shop at stores or buy services from businesses that are Native American owned.  This results from the fact that not a lot of businesses in the U.S. directly market towards this group of people. 

            Partnerships Between Businesses  With the assets that some Indians own due to successful business endeavors, it is only natural that they have looked to work with other subcultures in this country.  A prime example of this is with Frozen Fusion.  This company specializes in yogurts and smoothies, and operates retail stores in the Southwest.  At the opening of the first retail store, children dressed in traditional tribal outfits and danced to Indian music.  What seemed like just another marketing gimmick was actually the idea of one of the owners of the company, the Salt River Pima-Maricopa Indian community of Arizona.  They own 80 % of the organization and are very instrumental in how operations are carried out.  It has become the trend in recent years for Indian tribes to use their capital to expand out into long-term investing in such areas as oyster canning, software manufacturing, and even food franchises like Pizza Hut (Steinberg, 1998).  This showing of investment in traditionally owned American businesses proves that Native Americans are just as interested in marketing to non Indians as we are to Native Americans. 

Examples

            Clearly the idea of directly marketing to Native Americans is a concept that has not been adopted by a large number of companies yet.  This is due to the fact that until the rise of the business revenues in the subculture there was not a lot of worthiness in the effort.  Right now there is only one full-service Native American ad agency, G&G Advertising.  The agency is owned and operated by Michael Gray and was established in 1995.  Examples of some of the advertising done directed towards Indians include smoking prevention, ads for Wells Fargo, and Coca-Cola Co.  The smoking prevention ads were done similarly like ads towards other cultures in America except Native American teens were used in the commercials.  The premise of the campaign was to show all of the activities a person could participate in when they did not smoke, including basketball and shot shawl dances.  Mr. Gray says that advertising to Indians involves two worlds, including the world of tradition mixed with the world of suits and ties (Wentz, 2001).  The key is to find a way to advertise that shows that Indians can be both sides since they are a subculture with pride in their traditions and customs.  G&G Advertising was put in charge of advertising the 2000 census to the Native American population, a job that was worth a reported $100 million.  This included not only reaching Indians on reservations but also those that reside in urban areas.  Michael Gray said that the exposure that this account would give his company would hopefully aid in the motivation for other companies in the U.S. to market towards Native Americans (Fest, 1997).  Included at the end of this paper are some examples of the print advertisements that G&G did to promote voter turnout (Adweek, 2000).

            Another concept to consider when discussing Native American advertising is how other cultures portray them in commercials.  For years, the American Indian has been seen as either a savage warrior or an earthly spirit.  In the past, we have seen commercials such as the elderly Indian chief with the tear in his eye as he looks at America’s pollution.  This commercial struck emotions with many who saw it, but at the same time many groups offend this proud group of people when they use their image in a questionable manner.  A prime example of this is Jeep Cherokee.  This automobile takes the name of an Indian tribe and makes it into the brand name of a product, and promotes it as a rugged and tough machine (Green, 1993).  Imagine if a Native American made a car and called it the Caucasian?  We must show respect to the Native American subculture, no matter how small of a population they are. 

Reaching Native Americans Through Media  Native Americans use similar media that the rest of the country uses to get their information.  Two-thirds of tribes have newspapers and radio stations.  Some radio stations in Navajo tribes only charge $4 per spot for an ad that reaches up to 300,000 people.  It only costs a company $2,000 dollars to place an ad in the weekly Indian Country.  This is an amazingly cheap rate, one that should show advertisers in America how cost-efficient marketing to Indians could be.  Areas with large Indian populations can be reached by television just as effectively as other cultures.  Indians do not have their own major cultural channels like other groups such as Hispanics.  The one problem with advertising to such a diverse subculture is the difference in languages between the tribes (Wentz, 2001).  Translating the English language into tribal language for different regional ads often solves this problem.

            As mentioned above, Wells Fargo has already began a marketing campaign to gain the business of Native American firms.  They reached their target market by print media and direct mail.  This campaign started in 1998, and has proven very successful.  The goal of Wells Fargo was to capture the attention of business owners and capitalize on the relationships that were being built in business-to-business transactions.  There are sure to be more players in the Native American marketing field soon, as Anheuser-Busch, U.S. Bank, Coca-Cola, and NBC have expressed interest in developing such campaigns (Wellner, 2001).  

Native American Marketing Efforts  Native Americans also see the benefit of marketing their businesses towards other people in this country.  Many tribes in regions near Utah stepped up their advertising efforts during the Olympic Winter Games in Salt Lake City.  Resorts and hotels in the area targeted tourists with their offers of experiencing the Native American landscape.  Some tribes like the Navajo Nation invested $1.7 million in marketing efforts leading up to the Olympics (Wolfson, 2001).  Exhibits were also set up at the Olympic sites, such as the world’s largest teepee and tribal dance shows.  Their goal was to increase tourism and show that being Native American could be an asset.  They marketed to others what a real taste of the Wild West was all about. 

Conclusion

            I hope this paper has provided some insight on the characteristics of the Native American subculture in this country and how it affects American culture.  It is easy to overlook such a small, yet significant part of our population.  They are proud people, proud of their majestic past, and optimistic about their future that appears to be very promising.

Relevant Web Sites

www.minorityfranchising.com   A site featuring Frozen Fusion information and other minority owned businesses.

www.indiancasinos.com        Source for Indian gaming information.

www.adage.com       A good site for information on any ads including search engines for articles.

www.indian-nations.com       A site that offers free advertising for Native American goods.

www.gng.net      The official site for G&G Advertising.

Test for Understanding

1.  Approximately how many Native Americans is there in the U.S. including those that                                                        

     are only part Indian?

     A.     8 million
B.     250,000
C.     4.1 million
D.     1.5 million

2.      Which of the following statements is NOT true?

     A.    The financial status of the Native Americans shows that they keep getting farther into poverty.
B.    About 2/3 of tribes have their own radio station and/or newspaper.
C.    The growth rate for Native American-owned businesses currently exceeds that for Caucasian businesses.
D.    Approximately 60% of Native Americans do not live on a reservation.

3.      Which of the following industries do most of the Native American businesses operate in?

     A.     The shoe industry
B.     Automobile industry
C.     Grocery store industry
D.     Casinos and resorts

4.      Native American firms are growing at what percentage?

     A.     84
B.     40
C.     156
D.      0

5.      Approximately how much spending power do the Native Americans have each year?

     A.     $300 million
B.     $400,500
C.     $2 million
D.     $4 billion

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Answers:

1.      C

2.      A

3.      D

4.      A

5.      D

References

(2000) Adweek, v41 No.12 20 March: 43.

Anonymous (2002),  “United States: Chips with Everything; Indian Business,”  Economist, 16 (February): 30-31.

Fest, Glen (1997), “Count Gray in on Census 2000.”  Adweek, 20 (October): 6.

Green, Michael (1993),  “Untitled,”  Journal of Business Ethics, April: 323-330.

Jesitus, John (2002),  “Rolling the Dice,”  Hotel and Motel Management, 18 (February): 1,51.

Morton, Linda P. (2002), “Targeting Native Americans,”  Public Relations Quarterly, Spring: 37-39.

Raymond, Joan (2001),  “The Multicultural Report,”  American Demographics, (November): S3-S6

Steinberg, Carol (1998),  “Reservations Recommended,”  Success, (February): 26-29

Wellner, Alison Stein (2001), “Discovering Native America,”  American Demographics, (August): 21

Wentz, Laurel (2001),  “Gray’s Day to Shine,”  Advertising Age,  19 (November): S12

Wolfson, Hannah (2001), “Native American Catching Olympic Fever,” Marketing News, 22 (October): 16