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.

FOOD & IDENTITY

Marketing Agency Arámbula-Phillips Communications And World Renowned Chef/Author John Sedlar Form Partnership With New Musem Tamal In Los Angeles

Arámbula Phillips Leads Marketing Campaign For The First Museum Dedicated To The Study Of Latin Heritage Through The Culinary Arts

Los Angeles, CA (PRWEB) October 20, 2008 -- International Marketing Agency Arámbula Philips Communications has joined forces with Southwestern cuisine pioneer John Rivera Sedlar's new Museum Tamal in Los Angeles. APCOMM was chosen to brand and market this groundbreaking museum dedicated to the study of Latin culture through cuisine. This is an historic excursion into the heart of South America, Mexico, Spain and the Southwestern United States, via the taste buds - presenting art good enough to eat.

Arámbula Philips Communications is the brainchild of Carlos Arámbula and Richard Phillips. Combining Arámbulas' knack for developing brands across cultural, language and geographical boundaries with Phillips' unique mix of traditional marketing and digital know how, they have over 35 years of proven results in the domestic, US, Hispanic and international markets. Arámbula-Phillips were chosen to maintain the authentic brand integrity of this culinary museum while translating the experience to a global audience.

"We are thrilled to be working with these creative thinkers who have carved such a unique voice within the industry," says Sedlar. "Carlos Arámbula and Richard Phillips are essential in the forward motion of this culinary contemplation that will definitely have a wide reaching cultural impact."

With a proven track record of guiding and branding ethnic product development into mainstream media, APCOMM brings their experience from previous campaigns for international brands such as Unilever's Ragu Brand, Azteca Milling's Maseca Brand, Kellogg's, Burger King, Heinz, Pepsi, Toyota Motors, Kia Motors and American Airlines. Museum Tamal stands to benefit from the long standing relationships Arambula / Philips have built from years of experience within the Latin American communities of Los Angeles and beyond.

"Food is at the heart of Latin identity which represents family, livelihood and a way of life," says Carlos Arámbula. "The ingredients, methods and culinary techniques indigenous to Hispanic heritage are the unique focus of this project and we are very excited to be a part of the experience."

Boasting hands-on art appreciation, Sedlar's Museum Tamal will feature interactive exhibits with world renowned published food writers. Sedlar is also hard at work his new venture, Rivera - a modern Latin restaurant slated to open in late 2008/early 2009.

Arámbula-Philips Communications launched the comprehensive Museum Tamal website in September of 2008, which also serves as a membership and resource hub for members. This innovative concept of combining social awareness through culinary arts appreciation is a timely endeavor for the growing international consciousness of Los Angeles and its visitors.
Copyright 2008, Carlos Arámbula. All rights reserved.

THERE IS NO HISPANIC MARKETING

A common mistake is the assumption that there is a discipline called Hispanic Marketing. The mistake is perpetuated and promoted by self-anointed "Hispanic Marketing experts" who claim their "Hispanic Marketing expertise" is needed to advertise to the Hispanic consumer segment.
These experts claim knowledge of a "different" marketing practice entirely based on their time working or living with Hispanic consumers in a non-marketing function, speaking Spanish as a second language, birth, mission, marriage, or peace corps experience. Imagine trusting your mainstream marketing efforts to a social worker because he once built schools in Belize? While he speaks the language he is not a marketer.

From their seemingly authoritative experience they recite erroneous facts and present misguided marketing strategies. These facts are based on obsolete data, and in some cases simple observations based on a sample of one.

Worse, these flawed strategies are duplicated and overlaid on other categories and products. Marketing principles are ignored in favor or “if it worked once, then it should work again” mindset. As Anne Bradstreet said, “Authority without wisdom is like a heavy axe without an edge; fitter to bruise than polish."

The aforementioned “experts” exist because there is a real need to market goods and services to the Hispanic Consumer Segment. A segment that demands proper marketing practices, just like any other segment in the marketplace.

My philosophy is that marketing is an absolute discipline. A marketing plan is developed properly or it is not a marketing plan.

The essential steps necessary to create a solid marketing plan are similar to the framework in a building. There is a strong base and supporting elements on which to build upon, without them the structure collapses. You wouldn’t build a house on a shaky foundation, so why trust any advertising plan built on anything but structurally sound marketing.

Good ideas are based on logical thinking and solid rationales – It’s common sense. Good marketing plans are built on a disciplined process; serendipity does not exist in good marketing plans.

I understand the rationale behind believing the "Hispanic Marketing" myth. Targeting consumer segments is different than targeting the general market. Segments have different consumer behavior, different media, and in some cases different or multiple languages. I understand it can be daunting, and in most cases a new and unfamiliar task to an already full card in the responsibilities of a brand manager or director of marketing. Accepting the expertise might be easier than challenging it. But the Hispanic Consumer Segment has become too important to ignore in many product and service categories. Especially in economic downturns, when every consumer (especially younger ones with larger families) becomes increasingly important.

All marketing plans to all consumer targets must possess the same elements. And while the category might deem a segment market emergent to the category, the steps necessary to plan and implement a marketing program will always be absolute. When elements are ignored, or bypassed, the chances for success will decrease. Inversely, a well-executed plan decreases the chances of failure.

Speaking the language, sampling the culture and cuisine or knowing the holidays is not enough. Advertising to consumer segments requires sound and disciplined marketing. That is an absolute necessity.
Copyright 2008, Carlos Arámbula. All rights reserved.

LARGEST CONSUMER SEGMENT MARKET IN THE U.S.

The Hispanic Segment is the he largest consumer segment in the U.S. I could list data describing the size of the market, households, and growth projections. But there are research companies and census date that list very accurate information. I’ll provide a link to the information from our agency’s website.

Of course, if the segment can’t be measured, If the efforts lack an evaluation metrics, you might as well be throwing your money away. Additionally, it will be rare when the entire consumer segment is entirely your target, so it is critical to understand the target group within your segment

Copyright 2008, Carlos Arámbula. All rights reserved.

AN OLD AND STILL TOPICAL COLUMN

Four years ago, as a guest columnist for TalentZoo.com, I wrote the column below. I'm disappointed to recognize that while Hispanic consumer market advertising has gotten better over the last four years, there are still agencies and clients turning out the “Hispanic Marketing” creative I criticize in the column. Please read on.

Grandmas and Mustaches
by Carlos Arámbula
Guest Columnist for TalentZoo.com
09/29/2004

"What's Hispanic about them?"
The first time I heard that phrase was eleven years ago, while working on Hispanic market efforts for an automobile account. The principal of the agency was referring to concepts developed by the creative team. They were on strategy, entertaining, relevant, compelling and apparently not Hispanic enough for his taste.

"Hispanic?"

The principal explained that the commercials did not have a single icon to merit it being "Hispanic." "Relevance," he elaborated, "is not enough to make it Hispanic, it needs an iconic representation such as family, art, music, grandmas." In other words, stereotypes.

With a bit more than a half decade on the business, albeit not necessarily targeting the Hispanic consumer, I was stubborn, or foolish, enough to argue the "Hispanic" qualifier with the principal.

My logic, at the time more academic than practical, stated that consumers were not defined by the product or brand. Instead, the attributes of relevance to our consumer dictated the communication. Adding a mustache to the dad, or a grandma to the family did not make the spot more relevant, or more Hispanic.

In the end, I persevered, and eleven years later I am still in the industry, while my old principal, thankfully, is not.

A couple years later, I worked internationally managing the Pan American Grey Advertising efforts for Mars' Pedigree dog food, and I can't think of a single instance where an agency global manager asked: "What's Brazilian (or any other country) about it?" I also never had requests to add gauchos or mariachis to make concepts relevant to the country. Instead, we always endeavored to find the relevant points of a well-established brand to cultures where the concept of prepared dog food was just starting to develop.

A global brand promoted across different cultures does not change, the consumer does. And in some cases, where the brand and category development are parallel, the consumer does not change very much.

We, as advertisers, have become efficient in managing global brands and consumers. However, we continue to experience stereotypes in domestic Hispanic creative that fail to deliver brand relevance. I still see communications presented as "Hispanic" simply because of added icons to the brand and images. This is not unique to ethnic segments; anyone living in California can tell you about the overabundance of surfing Santa’s at the end of the year.
While humorously exaggerated stereotypes can serve a purpose in setting a mood, holding a mirror to segment consumers and sticking a brand in it usually appears contrived and hardly engaging. For example, a fiesta in the midst of an antacid commercial does not make it a Hispanic spot—it is actually more relevant to non-Hispanics who might have experienced stomach problems while eating Mexican food.

I could list a dozen current creative pieces where I find the stereotyping insulting and wasteful, but I rather leave the creative critique to my right-brained colleagues. The reason it bothers me is a lot simpler; as a "suit" I like to see efficient creative work. I enjoy smart strategy—even when it comes from competing agencies, and smart strategy usually results in compelling creative. From my perspective, using broad stereotypes is a wasteful and lazy use of client's resources.
Admittedly, international markets are easier to define than domestic segment markets. Domestic segments—particularly those stereotyped, include various degrees of acculturation and assimilation, language preference, socio-economic situation, and several countries of origin.

But the difficulty of defining the segments, the challenge of finding the answer without having to rely on broad stereotypes, is part of the reason I got into this business. It's the reason I look forward to coming into work every day.

Copyright 2008, Carlos Arámbula. All rights reserved.
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