Courting
the Latino market: 3 mistakes to avoid
bCentral
Marketing Intelligence / Joanna L. Krotz
January 16, 2004
By now, everyone has heard a lot about the
growing Latino market. But you probably haven't paid much attention.
Well, snap to. The buzz about Hispanic buying power has revved
up to a roar.
As you sort out the year's marketing plans
or the launch of new products or the need for expanded services
— really, any grow-the-company strategy at all — you
should be thinking hard about how to attract, acquire and retain
Hispanic customers.
Otherwise, you will miss the boat on burgeoning
and lucrative opportunities.
A commercial powerhouse
Not only do Hispanics make up the fastest-growing
ethnic group in the country, they also represent a commercial
powerhouse. Consider:
- The Hispanic population grew an astonishing
61% from 1990-2003, from 22 million to 35 million, according
to the U.S. Census Bureau.
- Hispanic consumers currently control about
$653 billion in spending power, according to the Selig Center
for Economic Growth at the University of Georgia. That's expected
to hit a staggering $928 billion by 2007 and $1.2 trillion by
2010, according to estimates by Santiago Solutions, a market
researcher.
- The Hispanic population skews younger.
Median Latino age is 25.9 compared to 35.3 for the U.S. population.
Since 1980, the Hispanic middle class has grown by 80%.
- Today the average Hispanic teen spends
$320 a month, outspending the non-Hispanic teen by 4%.
- While Hispanics account for 13% of the
U.S. population, leading advertisers allocated only an average
2.4% of their media ad resources to target Hispanics over the
past three years.
- While lagging the general population, Hispanic
Internet users are growing fast, spending only an average 27
hours a month online, but increasing page views 30% over the
past year, according to a recent comScore survey.
Overlooked and underserved
Tracking such trends, mainstream marketers
are realizing the Hispanic market is both overlooked and underserved.
Many are trying to play catch-up. NBC, for example, spent $2.7
billion in 2001 to purchase Telemundo, the No. 2 Spanish-language
broadcaster in the United States, in an effort to create cross-cultural
programming and draw Hispanic viewers.
Generally, though, few companies invest the
time, research or dollars to define what hits nerves for Hispanic
buyers. As a result, when ad campaigns fall flat or promotions
or programming don't work, companies walk away with incorrect
assumptions about Latino consumers.
Experts say that when Anglo companies target
Hispanics, they tend to repeat the same mistakes. "Marketers
can't assume that a general brand foundation will fit a Hispanic
target," says Frenchie Guajardo, strategist in San Antonio
for multicultural marketing agency PowerPact. "Brand positioning
can be very different. For the Hispanic market, it's the cultural
connection that leads to an emotional connection between the brand
and the consumer."
These are the top three mistakes marketers
make when wooing Latino customers.
Mistake No. 1: Treating Hispanics
as one uniform market. So you think Hispanics are just one big
homogenous group? Big mistake, says Manuel Chinea, marketing director
for Banco Popular North America. "You have to know who you're
going after and target accordingly."
Diverse and not always Spanish-speaking, the
Hispanic market embraces Cubans, Mexicans, Central Americans,
Puerto Ricans, Caribbeans and South Americans. Then there are
deep variations in income, education, age and acculturation, from
immigrant through third-generation American. About two-thirds
of Hispanics are Spanish-language dominant or bilingual. One-third
of the group speaks only English.
Banco Popular North America founded its North
American banking company more than 40 years ago in the Bronx.
It now has 97 branches in six states and some 400,000 customers,
only half of whom are Hispanic. Chinea suggests partnering with
community organizations and face-to-face interactions to attract
Hispanics. "You can't just bombard the community with mass
ads; you need to get involved," he says. "We participate
in local events in all of our markets."
That includes neighborhood events and street
festivals, health-care fairs and rodeos. In New York, where the
annual Puerto Rican Day parade draws thousands, the bank brings
in Latino celebrities to host its float, such as Don Francisco,
a Spanish-language TV entertainer.
Mistake No. 2: Assuming you
can simply translate marketing messages into Spanish. Companies
frequently think they can take marketing campaigns for the Anglo
community and just translate them, says Mayté Sera Weitzman,
a Houston PR consultant born in Mexico of Cuban parents, raised
in the U.S. and married to an Argentinean. But often, when directly
translated into Spanish, an American message turns offensive,
silly or meaningless.
One marketing agency offers this example: "China"
is used in Cuba to mean orange while "naranja" is used
everywhere else. So "Jugo de China" would mean "orange
juice" in Cuba but "Juice of China" elsewhere.
The decision to serve bilingual or Spanish-speaking
customers requires continuing and careful commitment. For instance,
about two years ago, Richard Downing, president of The Credit
Network (TCN) in Framingham, Mass., recognized the huge Hispanic
market. TCN provides consumer mortgage credit reports to banks
and lending institutions. "There is a large portion of the
Hispanic home-buying community, perhaps 22%, that isn't proficient
in English," Downing says. To meet that need, he began requiring
bilingual skills for all TCN's new hires, as well as Spanish-language
pages on the company Web site, which offers debt counseling and
other credit information.
But the biggest effort was deciding to offer
bilingual FAQs (frequently asked questions) and credit information
to all lender clients. The marketing goal was to give lenders
interviewing tools so Hispanic homebuyers and mortgage lenders
could understand each other and the terms of every deal.
"It took four separate tries to get the
translations right," says Downing, including several trips
to the local community college to tap fluent Spanish speakers.
"We needed to account for the fact that Cubans in South Florida
are different from Hispanics in Arizona or New Mexico. It was
trial by error and a steep learning curve. It made us more sensitive
to the issues."
Companies must take enough interest in their
markets to hire experts who can tell them what messages really
mean in Spanish, advises consultant Weitzman.
Mistake No. 3: Thinking you
can't afford this market. Many small businesses believe they scarcely
have enough money to market mainstream customers, let alone Hispanics.
But, "if you want to stay in business for the next 10 years,
you better find the money," warns Aida Levitan, president
of the Association of Hispanic Advertising Agencies (AHAA) and
co-chair of Publicis Sanchez & Levitan, a multicultural ad
agency.
Generally, based on a study it commissioned
of Hispanic purchasing power and spending behavior called "Right
Spend," the AHAA recommends that at least 8% of your marketing
budget be targeted to Hispanics to be effective in serving the
audience. That figure also depends on the region and product,
however.
For instance, in key markets such as New York,
Los Angeles or Miami, 8% would be low, given the concentration
of Hispanic consumers. And, says the study, for key Hispanic categories
such as children's over-the-counter remedies, personal care products,
travel and entertainment, apparel, home-cleaning and other products
and services associated with younger families, you might also
want to kick in more dollars.
But even with a tight budget, experts suggest
you enlist marketing help to reach this audience. Doing it on
your own might seem cheaper, but could add up to wasted effort,
experts say. There are too many variables in the Latino market,
for one thing. For another, it's very fast-moving and evolving,
given the income and economic shifts and the influx of immigrants
from so many countries. You're much better off partnering with
a multicultural expert at the outset, if only to set strategy
and then mount your own campaigns.
Levitan, naturally, suggests checking the online
AHAA agency roster (via its Web site) to find a suitable partner.
"There are many small agencies that will work with every
size budget," she says. It's certainly a good place to start.
Finally, make sure you sustain whatever marketing
you begin. "We've seen a lot of companies come into the Hispanic
market aggressively and then when they don't get results right
away, they abandon it," says Banco Popular's Chinea. "But
this marketing is all about building relationships." You
have to stay in for the long term.
For more marketing and management advice, visit
the Web site http://www.muse2muse.com/m2m.html for Joanna's company,
Muse2Muse Productions.
