June 27, 2007
CPGmatters: How to Promote Brands to Hispanic Consumers
By Jack Grant
Through a special arrangement, what follows is an excerpt of a current article from CPGmatters, a monthly e-zine, presented here for discussion.
Hispanics account for 14 percent of the U.S. population, 30 percent of population growth and eight percent of U.S. buying power – yet Spanish-language media represents only four percent of advertising dollars.
“Even though Hispanics are growing at a fast rate, they are still under-index relative to the population and relative to their share of buying power. It’s half of what their buying power may justify,” said Dan Kitrell, vice president of account solutions at Marx Promotion Intelligence.
Mr. Kitrell recently outlined the role of Spanish-language consumer promotions at the Industry Coupon Conference hosted by the Association of Coupon Professionals (www.couponpros.com).
In 2005 and 2006, 88 manufacturers used either bilingual FSIs (free-standing inserts) distributed through mainstream newspapers or Spanish-language FSIs distributed through Spanish newspapers.
Of that total, 28 manufacturers relied on Spanish-only FSIs, 46 used bilingual FSIs, and 14 did both. Procter & Gamble, for example, used its Spanish vehicle, Ahorros de P&G, as well as a bilingual one. Spanish FSIs were up 20.4 percent in pages in 2006 compared to the previous year.
Spanish-language media also includes TV, radio and magazines. Total expenditures in Spanish-language media grew 6.8 percent in 2006 versus 2.2 percent for all other media.
“If you are going after Spanish-language consumers, it’s best to get them early,” said Mr. Kitrell. “Not only do you get the lifetime value of that consumer, you also get the influence that consumer has over future generations, which is very strong within the Hispanic community.”
For marketers targeting Hispanics, Mr. Kitrell offered three recommendations:
- Understand that Hispanics are not a homogenous segment. Apply segmentation
based on language, culture, acculturation, lifestage and other variables
to align the category, brand and media with the Hispanic consumer. - Develop an inclusive campaign. Focus on universal truths that incorporate
culturally relevant cues appealing to Hispanics without excluding non-Hispanics. - Align consumer promotions with shopping behavior. Modify promotion
tactics that deliver value in preferred categories, on preferred sizes, and
in preferred quantities. Focus on creating loyalty longitudinally rather
than through pantry loading.
Discussion Question: What do you think are some of the most effective advertising/promotion methods to reach Hispanic consumers? What are some common mistakes marketers make in targeting Hispanics?
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The essence of advertising is repetition. Success in the Hispanic market is based on a permanent commitment, since it takes time to build the repetition and earn credibility. Like anything else in business, either commit or don’t bother.
The most effective method is commitment and clarity of objectives. The tactical decision of whether or not to use a particular medium is somewhat less important than a corporations decision to make Hispanic marketing part of a marketing strategy. It has to be funded appropriately, tested, allowed to use a variety of tactics and supported by management and sales forces alike. Commitment is key. Clarity is also of great importance because the market is not homogeneous. Therefore, it is critical that everyone know who is being targeted and what the expectation is in terms of results. Hispanic marketing is simply marketing that uses cultural connections to address consumer needs. Just like no one method would ever be considered the right one to reach non-Hispanic America, the Hispanic consumer cannot be reduced to a one-shot approach or a one-tactic solution.
Many CPG brands and categories are virtually unknown to 1st generation Hispanics. As these immigrants begin to earn dollars, they frequently become consumers with disposable income for the first time in their lives. Unlike the small “stores” (frequently found in an extra room in a house) which typically stocked 1 or at most 2 brands in a limited number of essential categories, stores in the US offer a plethora of categories and brands, many of which could be extremely appealing to these new consumers. However, without communications that are relevant, informative, and convincing, these new consumers are unlikely to seek out new products and categories. For this reason, the CPG manufacturers who have developed relevant, informative, and convincing Spanish-language marketing programs have frequently enjoyed great success in the Hispanic market. And the best communications tools–Spanish-language TV and radio, especially when coupled with in-store sampling and purchase incentive programs.
In all age groups below 40, Hispanics outnumber non-Hispanic whites. Younger Hispanics are acculturating and assimilating (the intermarriage rate for US-born Hispanics is about 50%), but are also changing the mainstream in the process. They are both melding and mixing the Anglo and Hispanic cultures, as well as creating a new, unique, third culture. I think an effective way to reach these consumers is to show consciousness of these new realities. Although the language purists don’t like it, I favor the use of Spanglish (depending on the specific product and market).
Any company that is not thinking about this is not just leaving money on the table, they are threatening their own future growth, profitability and long-term viability.
The effectiveness of media is determined by who the specific target is and what the objective is for the product and how it relates to the target.
As pointed out in the article, Hispanics are not a homogeneous group. There are various national backgrounds, language usage, and even cultural norms. For example, if you are targeting Hispanics of Mexican background, mariachi music may be appropriate while Puerto Ricans may prefer salsa. Level of acculturalization is another important factor. It can determine the need for native language and the positioning of the product within a usage framework.
Perhaps most important is the objective for the product. Are you trying to convert Hispanics to an essentially American product? Or are you positioning your brand or store to appeal to Hispanics? Or are you marketing a product as specifically targeted to the Hispanic market?
These are all key factors in selecting media and executing a marketing program.
You have to remember that acculturation plays an enormous role in this. First generation Hispanics prefer Spanish language ads only, while second and third generations prefer both Spanish and English, with a stronger preference toward English. Smart marketers know their products, therefore they know which generation segment(s) to target. Market demographics are a key component to success in Hispanic advertising.
Overall there could be a slight increase in ad dollars devoted to Spanish language advertising over the next few years, but on the whole second and third generation Hispanics are growing at a faster rate and also have a higher household income equating to more buying power. Also, acculturated Hispanics use the internet more frequently and spend more time per week online compared to less acculturated Hispanics. As more people are using the internet for shopping, news, social-networking, etc., ad dollars are following. The largest increase overall will come in bilingual and strictly English ads targeting the Hispanic market, but successful advertisers understand their market demographics and execute accordingly.
In a globalized world as the one we live in, it is increasingly less relevant, and therefore less effective, to target customers based on their ethnic background. Especially for young consumers that have grown up and are growing up with internet access all over the world, there are no distinctions between a Caucasian American and a Hispanic (American or not) that drinks Pepsi, or a Russian and a Chinese that dig MTV.
You don’t engage these customers by “recognizing” their cultural background. These young men and women’s cultural background isn’t defined by where they were born, where they live or what their mother tongue is. It is defined by who and what they are in contact with, and they are literally in contact with the whole world.
I think the focus has to be shifted, especially in American companies, to building products and marketing them for a global and culturally-melded audience. Those who fail to do so will find themselves with a smaller pool of customers responding to their offer than they might have imaged.
Unfortunately, the power of direct mail when considering effective advertising/promotion methods to reach Hispanic consumers, is too often ignored. Take a look at the poll question above. Direct Mail is missing from the list. Yet, just like general market consumers, Hispanics love to get mail, visit the mailbox six out of seven days a week, and it’s the first thing they do when they get home from work, just like the rest of us.
However, this segment still receives a significantly less amount of direct mail than other groups. With direct mail being the most measurable form of advertisement available to companies and the ability to provide positive ROI when seeking exposure to U.S. Hispanic consumers, it is unfortunate that it is not considered by many companies or their agencies, whether general market or Hispanic. When considering options for effective advertising/promotion methods to reach Hispanic consumers, direct mail should be looked at as an option.
Today’s transcultural consumer is redefining “multicultural marketing” as we know it.
That being said, experiential and edutainment programs, including word-of-mouth are the key to going beyond the language/acculturation debate and connecting with this fragmented demographic. A demonstration is worth a thousand words as they say, works across cultures, goes beyond language and allows for different learning styles.
Educating the population on the benefits and usage of your product or service is key yet understanding the context of how your product/service fits into the consumers life-cycle is the key to creating a connection that goes beyond language and acculturation.
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The essence of advertising is repetition. Success in the Hispanic market is based on a permanent commitment, since it takes time to build the repetition and earn credibility. Like anything else in business, either commit or don’t bother.
The most effective method is commitment and clarity of objectives. The tactical decision of whether or not to use a particular medium is somewhat less important than a corporations decision to make Hispanic marketing part of a marketing strategy. It has to be funded appropriately, tested, allowed to use a variety of tactics and supported by management and sales forces alike. Commitment is key. Clarity is also of great importance because the market is not homogeneous. Therefore, it is critical that everyone know who is being targeted and what the expectation is in terms of results. Hispanic marketing is simply marketing that uses cultural connections to address consumer needs. Just like no one method would ever be considered the right one to reach non-Hispanic America, the Hispanic consumer cannot be reduced to a one-shot approach or a one-tactic solution.
Many CPG brands and categories are virtually unknown to 1st generation Hispanics. As these immigrants begin to earn dollars, they frequently become consumers with disposable income for the first time in their lives. Unlike the small “stores” (frequently found in an extra room in a house) which typically stocked 1 or at most 2 brands in a limited number of essential categories, stores in the US offer a plethora of categories and brands, many of which could be extremely appealing to these new consumers. However, without communications that are relevant, informative, and convincing, these new consumers are unlikely to seek out new products and categories. For this reason, the CPG manufacturers who have developed relevant, informative, and convincing Spanish-language marketing programs have frequently enjoyed great success in the Hispanic market. And the best communications tools–Spanish-language TV and radio, especially when coupled with in-store sampling and purchase incentive programs.
In all age groups below 40, Hispanics outnumber non-Hispanic whites. Younger Hispanics are acculturating and assimilating (the intermarriage rate for US-born Hispanics is about 50%), but are also changing the mainstream in the process. They are both melding and mixing the Anglo and Hispanic cultures, as well as creating a new, unique, third culture. I think an effective way to reach these consumers is to show consciousness of these new realities. Although the language purists don’t like it, I favor the use of Spanglish (depending on the specific product and market).
Any company that is not thinking about this is not just leaving money on the table, they are threatening their own future growth, profitability and long-term viability.
The effectiveness of media is determined by who the specific target is and what the objective is for the product and how it relates to the target.
As pointed out in the article, Hispanics are not a homogeneous group. There are various national backgrounds, language usage, and even cultural norms. For example, if you are targeting Hispanics of Mexican background, mariachi music may be appropriate while Puerto Ricans may prefer salsa. Level of acculturalization is another important factor. It can determine the need for native language and the positioning of the product within a usage framework.
Perhaps most important is the objective for the product. Are you trying to convert Hispanics to an essentially American product? Or are you positioning your brand or store to appeal to Hispanics? Or are you marketing a product as specifically targeted to the Hispanic market?
These are all key factors in selecting media and executing a marketing program.
You have to remember that acculturation plays an enormous role in this. First generation Hispanics prefer Spanish language ads only, while second and third generations prefer both Spanish and English, with a stronger preference toward English. Smart marketers know their products, therefore they know which generation segment(s) to target. Market demographics are a key component to success in Hispanic advertising.
Overall there could be a slight increase in ad dollars devoted to Spanish language advertising over the next few years, but on the whole second and third generation Hispanics are growing at a faster rate and also have a higher household income equating to more buying power. Also, acculturated Hispanics use the internet more frequently and spend more time per week online compared to less acculturated Hispanics. As more people are using the internet for shopping, news, social-networking, etc., ad dollars are following. The largest increase overall will come in bilingual and strictly English ads targeting the Hispanic market, but successful advertisers understand their market demographics and execute accordingly.
In a globalized world as the one we live in, it is increasingly less relevant, and therefore less effective, to target customers based on their ethnic background. Especially for young consumers that have grown up and are growing up with internet access all over the world, there are no distinctions between a Caucasian American and a Hispanic (American or not) that drinks Pepsi, or a Russian and a Chinese that dig MTV.
You don’t engage these customers by “recognizing” their cultural background. These young men and women’s cultural background isn’t defined by where they were born, where they live or what their mother tongue is. It is defined by who and what they are in contact with, and they are literally in contact with the whole world.
I think the focus has to be shifted, especially in American companies, to building products and marketing them for a global and culturally-melded audience. Those who fail to do so will find themselves with a smaller pool of customers responding to their offer than they might have imaged.
Unfortunately, the power of direct mail when considering effective advertising/promotion methods to reach Hispanic consumers, is too often ignored. Take a look at the poll question above. Direct Mail is missing from the list. Yet, just like general market consumers, Hispanics love to get mail, visit the mailbox six out of seven days a week, and it’s the first thing they do when they get home from work, just like the rest of us.
However, this segment still receives a significantly less amount of direct mail than other groups. With direct mail being the most measurable form of advertisement available to companies and the ability to provide positive ROI when seeking exposure to U.S. Hispanic consumers, it is unfortunate that it is not considered by many companies or their agencies, whether general market or Hispanic. When considering options for effective advertising/promotion methods to reach Hispanic consumers, direct mail should be looked at as an option.
Today’s transcultural consumer is redefining “multicultural marketing” as we know it.
That being said, experiential and edutainment programs, including word-of-mouth are the key to going beyond the language/acculturation debate and connecting with this fragmented demographic. A demonstration is worth a thousand words as they say, works across cultures, goes beyond language and allows for different learning styles.
Educating the population on the benefits and usage of your product or service is key yet understanding the context of how your product/service fits into the consumers life-cycle is the key to creating a connection that goes beyond language and acculturation.