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.

CONSUMER SEGMENT MARKETS

As mentioned on my prior post, a segment is defined as a significant consumer block that due to different purchasing behavior, media usage, and in some cases language, are not reached via the mainstream marketing communication efforts.

Not all segments share the same characteristics. Some segments can be the core target of a particular advertiser, others are simply a segment outside a larger core group, and still other segments are emerging and new to a category.

In any stage or format, the particular consumer segment is not being motivated by the mainstream marketing efforts to buy into the brand or services of the marketer.

You might think you don’t have any unattended consumer segments. Look again.

Is your sales data showing a significant gap in certain geographies? Have sales steadily declined in a particular distribution format or geography? Is there a regional competitor outselling your national brand? Is the ideal demographic target not responding to your messages?

The aforementioned challenges will not be solved by new distribution initiatives... Additional media expenditures and/or a new mainstream message will be as irrelevant as the old one...And it definitively doesn’t mean that consumers in certain retail formats, or geographies “don’t get it.”

Just look closer…or step back and conduct proper marketing practices. You might find that your product is not positioned in the relevant context to the consumer needs and wants.

Take food as an example; in the US West Coast, flavor profiles have been heavily influenced by the foreign immigration into the region. The schisms between the West Coast and the rest of the country in regards to flavors are huge. So it’s reasonable to expect lower sales of particular flavors in the Western regions unless the consumer segments are being addressed in a relevant manner.

McDonald’s recognized that within this Big Mac loving country, regional flavors played a significant role. So it split it’s operational and marketing teams into the regions. They got it right.

Opposite to the golden arches, Burger King insists on dictating to the rest of the country from the Southeast. The results? Well…there are happier franchisees in the East than on the West Coast (where the consumer segments are not being properly addressed with the national programs).

There are many other examples of consumer segments not being addressed and the opportunity to positively impact profit is lost. Automotive, Packaged Foods, and Financial Services, are the worst at leaving potential sales unattended.

On following posts, I will address the Hispanic Consumer Segment. The largest of all the consumer segments, the myths and their origins, and the realities.

Copyright 2008, Carlos Arámbula. All rights reserved.