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Gay Capital – When Green Meets Rainbow

Wed, 06 Jul 2011

Are sexual minorities the new market niche for companies striving to increase their sales?

Gay Capital – When Green Meets Rainbow

The gay and lesbian market has remained relatively untapped in large part due to the associated stereotypes triggering prejudice and discrimination. With the rise of the gay rights movement, the tide may be changing as businesses are beginning to realise the spending power of the homosexual community. Often characterised by a ‘Dual Income, No Kids’ (DINK) policy, the group’s income level tends to hover above the national average. The purchase power of the gay and lesbian community in the United States is currently estimated to be around 835 billion dollars and is expected to continue to grow as a result of changing attitudes towards sexual minorities.

Worth cultivating as a target market, research shows that members of the community not only responds to advertisements that are aimed at them, they are also ready to pay higher prices for gay-friendly products and services. According to Harris Interactive Witeck Combs Communications, over 70% of gay and lesbian consumers prefer to buy from companies that cater directly to them. They also tend to be very loyal to specific brands, finding it important to support the companies that support their community.

The branch that is currently targeting gay and lesbian consumers most effectively, complete with a wide variety of products and services, is tourism. The gay tourism industry includes travel agents and tour companies that organise trips to gay-friendly destinations, including excrsions to cities and countries wishing to attract gay and lesbian tourists. It is estimated that annually 65 billion dollars are already spent on gay tourism.

As a reaction to recent developments in gay marriage laws, the latest financial boom has happened in the wedding industry. A study at the University of California found that the over 12,000 same-sex marriages performed in Massachusetts since 2004 have brought in over 111 million dollars to the state's economy. Other industry branches that have started to actively seek out gay and lesbian customers include restaurants, bars and bookstores.A multitude of other businesses that are just not catching on and following the trend include banks and insurance companies, florists and sports retailers.

In addition to companies that have targeted their products, services and advertisements solely at the gay and lesbian community, the new market niche has also caught the eye of some mainstream companies. For example, the increased interest is clear in the organisation of the so-called pride parades. The logos of large and well-known corporations have begun to mix the well-known rainbow flags with promotional material, flyers and posters. More and more companies are also embracing the gay and lesbian community’s consumers by including domestic partner benefits and non-discrimination measures in their company policies.

The increased interest of businesses may be viewed as a new force to drive equal treatment of sexual minorities. With consumerism, it is not sexual preferences that matter, it is only money. The associated attention the gay community is receiving has helped to fight prejudice and discrimination by making sexual minorities more visible also in the mainstream society. Simultaneously, some organisations have raised concern that this new liberal attitude is only motivated by economic interests and not accompanied by social goals of acceptance and tolerance.

Other critics have gone as far as claiming the rise of gay and lesbian businesses can serve as a form of segregation, whereby the mainstream society becomes even more distant. Holidaying at gay-friendly destinations, eating at gay-friendly restaurants, using gay-friendly banking – all actions that are capable of isolating homosexuals from mainstream society, not encouraging equal treatment within it. The main point of such criticisms is that in order to improve the attitudes of society toward homosexuals, they cannot be perceived as walking dollar, euro or sterling symbols.

Yet US the business elite – a group that is commonly portrayed as rather conservative – is actually promoting a more comprehensive campaign whereby gays and lesbians are pportrayed as productive and important members of society. In June, as the discussion around the same-sex marriage legislation in New York was at its most heated, a group of 23 top executives released an open letter supporting the legalisation. According to the some CEOs, failure to permit same-sex marriage would be harmful to the state’s economy, weakening the ability to attract qualified workers. The letter concludes that in an age where talent determines the economic winners, it is crucial to demonstrate a commitment to creating an open, healthy and equitable environment in which to live and work. In today’s economy, cities and countries simply cannot afford to discriminate against a group of potential workers and tax-payers. These claims can be verified through research conducted by the University of California, which reports that highly educated people in same-sex relationships were 2, 5 times more likely to move to Massachusetts after same-sex marriage became legal in the state in  2004.

In general, securing the rights of minorities has to be a priority of each society. However, this end cannot justify all means. Rather than isolating or segregating minorities from the mainstream even further, such means must pave a way for groups to move towards equal membership and participation. Exclusive offers and targeted marketing might contribute, but it cannot achieve that without a social change in values. Thus, the focus needs to be on creating a working and living environment where members of sexual minorities feel safe and appreciated.

by Marko Kananen

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