New
Study Reveals Connection between Hispanic Marketing Investment
and Return on Equity
LOS ANGELES--(BUSINESS WIRE)--With
shareholders demanding higher and better returns, companies
are examining all facets of their strategy to see what delivers.
A new study released today by Santiago Solutions Group (SSG),
found that companies might want to take a harder look at their
Hispanic marketing strategy to see how it translates into bottom-line
profitability.
The study of 180 top national advertisers,
Translating Shareholder Value: An Examination of Well-Resourced
Hispanic Corporate Strategies, reveals that the top 25 percent
of companies that lead in their allocations to Hispanic marketing
generated 2.1 times higher bottom-line profitability (net income)
than companies who did not provide adequate resources to their
Hispanic marketing strategies. Other findings of the study include:
-
The top quartile of companies
investing in Hispanic marketing generated higher cumulative
shareholder value for 2000-2004 than the remaining 75 percent
of companies. Each $1 invested in Hispanic marketing by these
top 25 percent of companies returned $4;
-
The top quartile of companies
allocating to Hispanic marketing, during this same time period,
generated 1.5 times higher operating income margins than the
remaining companies;
-
There is a positive correlation
between Hispanic marketing allocations and EBITDA (earnings
before interest, taxes, depreciation and amortization) with
the top 25 percent of companies allocating to their Hispanic
marketing generating 1.3 times higher EBITDA than the others
in the study;
-
Of the companies in the
study, those in the consumer packaged goods category (CPG)
led all other industries in their percent of marketing budget
spent on targeting Hispanics with 5.5 percent of budget to
Hispanic marketing; Following on the list were entertainment
(4.7%), retail (4.4%) and automotive manufacturers (4.1%);
-
Companies leading the pack
in Hispanic marketing investment and shareholder value include:
AutoZone, Kellogg, Anheuser-Busch, Colgate-Palmolive, PepsiCo,
TJ Maxx, Radio Shack and Procter & Gamble;
The data demonstrates that properly investing
in Hispanic marketing is an integral component of the winning
DNA of companies that generate superior returns for their shareholders.
"The findings of this study are consistent
with our own point of view that well-honed and well-supported
marketing to Hispanic consumers pays off in all of our performance
metrics. I expect that allocations to Hispanic marketing will
be better justified as a result of these findings," said
Al Carey, president and CEO, Frito-Lay, a division of PepsiCo.
"In our experience, companies that translate
their Hispanic market investment into superior shareholder value
do not merely throw money at the Hispanic market," said
Carlos Santiago, president and CEO, Santiago Solutions Group.
"More often, these leading companies adopt new allocation
paradigms matched to the specific growth opportunity, have solid
executive leadership, have passionate "doers" at all
levels, a solid strategic direction, and flawless action with
accurate quantitative metrics. In short -- the bottom-line value
is so clear to these companies, they do it right and they reap
the financial rewards."
The 180 companies evaluated in this study
were carefully selected based on strict criteria from an original
list from TNS Media Intelligence of the 684 top advertisers
(based on average TV, print expenditures for 2000-2004). Using
financial data from ValueLine and Mergent for the same time
period, SSG was able to examine key profitability metrics for
shareholder value creation. SSG decomposed ROE to examine the
most important profitability metrics as they are key components
of companies' valuations and shareholder value creation. The
work by Santiago Solutions Group was supported and reviewed
by Dr. Karl Schmedders, associate professor of managerial economics
and decision sciences at the Kellogg School of Management at
Northwestern University.
About Santiago Solutions Group -
Santiago Solutions Group (SSG) is a national
consultancy firm providing multicultural business strategy development,
opportunity sizing, market management, planning and execution
to help clients become indisputable market leaders. In 2000,
SSG created a defined new niche, establishing itself as the
premier business strategy consulting firm in the multicultural
space. SSG's strategic approaches have optimized marketing ROI
for clients such as Pernod-Ricard, Johnson & Johnson, American
Express, Nestle, and Humana among others.
Please visit www.santiagosolutionsgroup.com
Contact:
Big Voice Communications, LLC
Natalie Judd, 203-389-5223
natalie@bigvoicecomm.com
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Source: Santiago Solutions Group
