Meet America's New Brand Manager: Latinos consumer buying power is gaining top brand support

Jackie Berg

Hispanic consumers are poised to become America’s most influential brand managers, according to industry experts.

“The impressive and sustaining growth of the U.S. Hispanic population, and its estimated $1 trillion in purchasing power, has taken Latinos from being a niche market — pursued by select category leaders interested in realizing incremental sales volume — to a highly-coveted consumer segment whose loyalty is necessary for survival in the 21st Century,” states Daisy Expósito-Ulla, Chairman and CEO of d expósito & Partners, a Hispanic market industry icon and innovator.

“Not only has it provoked more marketers to pursue our markets,” notes Expósito-Ulla, “it requires a more sophisticated, comprehensive approach when going to market.”

Explosive Disposable Income Growth

The Hispanic market, one of the fastest growing population segments within the U.S., is gaining the attention of America’s C-level officers. The reason is clear.

Hispanic disposable income is up 29% since 2001, over two times the growth among the general U.S. consumer, according to ACNielsen Consumer Segmentation & Targeting Director Kylee Hall.

“Economists are predicting that the Hispanic population boom of the first 20 years of the 2000s will have the same magnitude of impact to the U.S. consumer marketplace as the Baby Boom of the 1950s and ‘60s,” says Hall.[1]

CPGs on Board

Such growth has not escaped the notice of newly appointed General Mills CEO Kendall Powell, who made a bold statement to company employees and shareholders in his mandate announcing the company’s commitment to increase marketing to Hispanic consumers.[2]

General Mills recently relaunched its Hispanic Lifestyle Magazine Que Rica Vida and supports high touch consumer outreach efforts like its goodie bag and sample distribution campaign in California and Southwest states.[3]

Similarly, marketing behemoth Unilever launched ViveMejor, a major digital print, TV and retail Hispanic marketing program, which includes quarterly magazine distribution of its ViveMejor magazine at Wal-Mart, HEB, PathMark, Food4Less and Sedanos chains.[3]

The effort marks a continued increase in support for Hispanic marketing for Unilever, which last year boosted ad spending by 47%, and expects to increase spending again behind ViveMejor, according to Ad Age reports.[4]

L’Oreal, the number two spender in U.S. Hispanic media in 2006, according to HispanicMarketWeekly, also boosted its investment by roughly 14 percent to $17.4 million. Lancome and Maybelline are among heavily promoted brands slated for future expansion.

Explosive Growth

Nearly 12 million households, that’s one in every 10, are Hispanic. By 2020, that number will jump to one in every five, according to the U.S. Census Bureau.

Hispanics accounted for half the U.S. Population growth in 2006 and represent the fastest growing consumer youth segment nationally. Sixty percent of the Hispanic market is below the age of 30 and almost twice as likely to live in households of four or more people.[1]

Children dominate

More than 53% of Hispanic households have children living at home, which is 66% higher than the general U.S. population.[5]

“Companies that grasp the cultural nuances of this population and the resulting opportunities have the potential to be next generation business leaders with a very loyal brand following,” says Lizbeth Ardisana, a Hispanic-owned marketing services provider.

Though some companies are aggressively marketing to the Hispanic audience, the majority don’t fully understand the viability of the nation’s Latino population.

“Most organizations don’t know where to start in order to appropriately target the Hispanic market. At ASG Renaissance, we recommend retail tie-ins that recognize Hispanic shopping patterns,” Ardisana states.

Retailers Gain Hold

Some national retailers, like Albertsons, have been quick to take hold of these trends, opening ethnically-oriented Super Saver stores featuring expanded lines of fresh fruits and vegetables, bilingual signage and, in Albertson’s case, 80% bilingual employees.

Is it working?

Sales are 20% higher at these locations than former general market footprints, according to Drug Store News.[6]

Like Publix Sabor (meaning flavor in English), stores are outperforming general market stores. New American Dimensions, a Los Angeles-based ethnic marketing firm reports that, in Miami, 32% of unacculturated Latinos shop at Publix.

HEB reigns in Dallas markets according to New American Dimensions, which reports the retail giant attracts 88% of San Antonio’s unacculturated shoppers.

“About ten years ago, we saw retail chains beginning to realize the need to improve the Hispanic consumer’s shopping experience,” says Expósito-Ulla. “The first steps for many were to hire more Spanish-speaking staff, add bilingual signage and expand their offering to include products that appeal to Hispanics. Now, we’re beginning to see increased shopper marketing to deliver messages where the purchase decisions are being made.”

Consumer response rates will continue to increase in concert with the integration of higher touch consumer outreach campaigns, according to Promotional Management Group, Inc. (PMG), a full service below-the-line retail and entertainment firm specializing in Hispanic consumer promotions at the point-of-purchase.

Indeed, PMG reports that the combination of themed Hispanic in-store experiences with retail and CPG companies have resulted in double digit category sales lifts (above static demonstrations).

The Freedom of Free Standing Inserts (FSIs)

The Free Standing Insert (FSI), a long-standing staple among CPG manufacturers, is gaining attention with manufacturers interested in cost-effectively capturing Hispanic consumer loyalty and retail tie-ins, according to Ethnic Print Media Group Vice President Trevor Hansen, a San Diego-based ethnic media specialty firm.

According to research by the Newspaper Association of America, 83% of Hispanic adults use newspaper inserts (preprints or Free Standing Inserts).[7]

Traditionally FSIs — a four-color, mutlipage magazine which features promotional coupons and advertising to consumers — are used as pure traffic drivers. But they are capable of more.

Coupons are not common in many Latin American cultures, according to Hansen, who recommends that advertisers should use coupon-oriented vehicles like the FSI as a branding tool, in addition to a traffic driver.

“FSIs offer great call-to-action, but they also work well for branding because you have image and price point, reinforcing one another. Driving sales is primary, but the FSI is also an under-appreciated from of branding,” Hansen states.

Savvy marketing companies like EPMG and ASG Renaissance are vesting in efforts to morph the FSI into a more blended product, representing a cross-over between a ROP and traditional coupon advertisement.

“We are creating stickier products that clearly express understanding of cultural values and, as important, have immediate pick-up appeal. The new Hispanic FSI will surprise some customers,” says Ardisana. “We are truly leveraging the value of the FSI’s surcharge free environment, which is less restrictive than its general market counterpart, to offer brand-appropriate positioning in a editorial format alongside traditional FSI promotions.”

“Our ultimate aim is better position brands with retail locations by showing Hispanic consumers how featured products improve their everyday lives,” Ardisana concludes.

The days of putting a bilingual label on packaging, translating a general market ad campaign to Spanish language, or dedicating half of a store aisle to Hispanic brands no longer qualifies as Hispanic marketing.

The New Landscape

“It’s all about consumer engagement,” concludes Ardisana. “The companies that grasp the importance of delivering a culturally relevant and inviting customer experience are clearly growing share.”

Jackie Berg is a recognized ethnic market specialist and is the Hispanic FSI product manager at Valassis. Jackie has owned and operated urban publications, created national award-winning ethnic print magazines, newspaper sections and inserts on behalf of numerous clients and operated an independent ethnic market consulting firm.

1 Consumer Insights Magazine, Summer 2006, The Hispanic Consumer’s Shopping List
2 Wall Street Journal 9.25.07 ”General Mills new CEO says company will increase black marketing efforts”
3 HispanicMarketingWeekly 7.31.07
3 Media Post 8.22.07
4 AdAge 5.22.07
5 2006 Coharts CEO Scott D. Schroder, Direct Market News
6 Drug Store News
7 Portada February/March 2007