Recession and Hispanic Consumer Segment

The following is an entry from Retail Wire:

"BrainTrust Query: How is the recession changing Hispanics as consumers?
By David Morse and Maria Gracia Inglessis, New American Dimensions, LLC
06/19/09

How is the economy affecting the Hispanic market? The answer, at this time, may be inconclusive. In a recent article by Terry Soto, president & CEO of About Marketing Solutions, she cites data from Experian and concludes that Hispanics may be 'recession proof' or at least 'recession aloof.' For example, 34 percent of Hispanics are optimistic about their finances in the coming year (compared to 25 percent of non-Hispanics), and 29 percent of Hispanics are more positive about the U.S economy (compared to 21 percent of non-Hispanics).

Hispanics may also be less burdened with financial difficulties because they are not as involved in some of the most problematic areas. According to Packaged Facts' analysis of Experian Simmons Summer 2008 National Consumer Survey data, 46 percent of Hispanics use credit cards compared to 72 percent among non-Hispanics, and only 15 percent of Hispanics own investments (compared to 43 percent of non-Hispanics). The Simmons data also highlight that Hispanics are more likely to rent their homes than non-Hispanics. This makes them less likely to be affected by the mortgage foreclosure.

There are some categories in which Hispanics are spending more than their non-Hispanic counterparts. According to the Packaged Fact Study, Hispanics spend more in:

• Food at home (8.3 percent vs. 6.8 percent - of total annual expenditure)
• Poultry (0.5 percent vs. 0.3 percent)
• Fresh vegetables (0.6 percent vs. 0.4 percent)

That Hispanics spend more in food is not surprising. They have bigger households and like to cook from scratch. But interestingly enough they are also spending more in less expected areas, for example, in apparel and services (4.8 percent vs. 3.7 percent). What is more, Hispanic men are more likely to keep up with the latest fashion (25 percent vs. 17 percent). Also...

• They like to experiment with new styles (26 percent vs. 14 percent)
• Buy the latest fashion every season (17 percent vs. seven percent)
• Enjoy any kind of shopping (28 percent vs. 13 percent)

More Hispanics say they buy recycled paper products (men 40 percent vs. 34 percent and women 45 percent vs. 39 percent). Also, Hispanics are more likely to claim that they would pay more for environmental friendly products (men 42 percent vs. 35 percent and women 47 percent vs. 40 percent).

But additional data from the Nielsen Homescan Hispanic Panel present a less positive view on how Hispanics perceive that the current downturn is affecting their lives. The data show that about half of Hispanics feel that their household is somewhat or much worse financially now than a year ago, and 37 percent feel that their or their spouse's job is not too secure or not secure at all. More than 70 percent feel that their level of savings to deal with potential disasters is not secure.

According to this study, not only do Hispanics have a less positive outlook, they have changed some of their consumer habits; for example, in the past three months they are eating at fast food restaurants less often (64 percent vs. 47.9 percent of non-Hispanics), and close to 45 percent are bringing lunch to work more often (compared to 36 percent of non-Hispanics)."

Nothing surprises me about the data and implications. We addressed this issue on my company’s website on April 14, 2009 (link, http://www.arambulaphillips.com/?p=75)
My advice to any marketers is to follow proper marketing disciplines when addressing the Hispanic consumer segment. Learn of your brand’s relationship with the Hispanic consumer. What role does the economy play? Is the consumer receptive to your communications?

The Hispanic segment could provide a positive ROI in marketing investment.
Copyright 2009, Carlos Arámbula. All rights reserved.

Is Your Brand On the Path to Irrelevancy?

Can you recall the last time you heard anyone speak of his unmentionable BVD®’s? What about Nuprin®? How about Xerox®? Has anyone xerox’ed papers lately? A very common function back in the day.  Remember the good old days when Oldsmobiles and Plymouths traversed the country’s roads? How about when Nolan Ryan took Nuprin® for his aches? Or when smokers and coffee drinkers knew exactly which toothpaste to use and what premium coffee to drink?

There are many factors that contribute to the demise or irrelevancy of a brand, this is not about listing those factors — ultimately bad brand management kills a brand — rather this is about another huge factor that is at the marketer’s doorstep and in due course will be the death of additional brands; demographic shifts in population.

According to the Pew Research Center, the Hispanic population in the U.S. grew by 10 million from the year 2000 to 2007. To put in perspective, the total U.S. population grew only by 20 million during the same period, which indicates that 50% of all the country’s population growth was contributed by Hispanics. In other words, of 50% growth, 30% was by native-born Hispanics with immigration accounting for the rest.

It’s ok then; native-born Hispanics will speak English and know my brand, right?

Native born Hispanics will speak English because they will be educated in the U.S., however they will be unfamiliar with your brands. Think about your introduction to brands. It was mom who initially brought the product home, dad's brand preference contributed to yours. But if mom and dad are foreign-born Hispanics, then your brand will not have that “little piece of real-estate” in the consumers’ brain.

Country of origin or cultural brands will have the advantage over yours. Almost everyone knows the Mission Foods brand, but how familiar are you with Picot®, Bimbo®, Lala®, or Bedoyecta®? These are brands with equity from their country of origin, and while you may not think it affects your brands, ask the Alka-Seltzer® folks at Bayer — Picot® outsells them in Walmart.

How do I learn if my brand will be affected by demographic changes?

Learn if your category is developed with the Hispanic consumer segment. Is your brand history seeded in the post WWII baby boom? Is your brand steeped in 1900’s Americana? Are you tapping the emergent consumer markets not familiar with your brand? If you are, is the message relevant or simply a translation?

Think about your personal experience:  Remember traveling in the old station wagon and spending the night at the Holiday Inn®, the familiar shag carpeting and AstroTurf® by the pool? The fun time you had while staying there.  That’s a memory — a brand perception, that is not shared by about 15% of the US population.

Copyright 2009, Carlos Arámbula. All rights reserved.

Hispanic Consumer Segment Rising In Importance

An Ad Age news video from the National Retail Federation Convention made me realize how segment marketing is becoming even more crucial to marketers, and that the Hispanic consumer is now seeming to really rise in importance. I saw the convergence of three factors.
1. Post Recession Consumer Spending May Not Fully Recover: According to Mark Zandi, Chief Economist for Moody’s Economy.com, we are right at the beginning of a 15 to 20 year period of lower consumer spending in general across the United States. No doubt, there will be sectors with aggressive growth and surely the Hispanic consumer segment will probably be one of them. Hispanics tend to be younger and more dynamic in spending, especially in categories like retail and food shopping. So, targeting marketing efforts to reach this segment will jump to the front of the line. To see the video click here.
2. Hispanics account for over 50% of annual US population growth: Of the over 4 million or so people born in the U.S. every year over 50% are of Hispanic origin. This robustness in population growth will continue to increase their importance with marketers and retailers. This holiday season Walmart had a Three Kings Day celebration at over 480 locations specifically targeting the Hispanic consumer base. To check stats or download the report from the Pew Hispanic Center click here.
3. More and More Hispanics are Online: According to Horowitz Associates “State of Broadband Urban Markets 2008″ 48% of U.S. Hispanics have a broadband connection, this is still 9% lower than the overall market, but it’s become a large enough segment to make it economically feasible to market to. Today top brands such as Walmart and Bank of America spend between 5 and 20% of their Hispanic marketing budget on Hispanic geared online marketing efforts.
Conclusion: As the retail environment shrinks U.S. Hispanic consumers will become more important to marketers and retailers. Especially as the Hispanic population segment continues to drive total U.S. population growth. And now a large swath of Hispanics are online making it feasible to develop more accountable web based marketing efforts. In 2009 many companies will be taking a second, more thoughtful look, at U.S. Hispanic consumers.

Entry contributed by Richard Phillips.

Copyright 2009, Carlos Arámbula. All rights reserved.