| Carlos
Santiago’s shareholder value presentation at SRI |
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NEWS FOR
IMMEDIATE RELEASE |
Corporate Leaders in Hispanic Targeting
Create Four-Times
Higher Shareholder Value
First phase of study finds statistical
link between corporate investment in the Hispanic Market
and above average Return to Shareholder Equity.
San Francisco, CA – February
13, 2006 - Companies that have seriously realigned resources
to the US Hispanic market appear to significantly expand their
ability to create shareholder value. Santiago Solutions Group
(SSG), a national strategy consultancy specializing in multicultural
segments, released the findings of its nine month breakthrough
study at the 12th Strategic Research Institute in Miami.
The statistical analysis of five years of financial
performance among nearly 200 US top corporate advertisers found
that companies allocating the highest percentage of resources
to the Hispanic market, without a doubt, generate significantly
higher return on shareholder equity, that is, four times
higher than “all other” publicly traded companies
in the study.
“Until now, chief marketing officers,
chief financial officers, as well as brand and segment managers,
lacked reliable proof to substantiate moving dollars from the
‘General’ Market to the booming Latino segment”
said Carlos Santiago, President and CEO of Los Angeles based Santiago
Solutions Group. “This study,” continued Mr. Santiago
“begins to validate that committing to a well resourced
corporate Hispanic initiative not only can generate accelerated
top line growth, but if smartly planned and executed, can also
help to deliver best-in-class shareholder value creation.”
The first phase of the study titled “Does
a Well-Resourced Hispanic Corporate Strategy Translate into Shareholder
Value Creation?” found that the 10% of the companies allocating
the highest resources to Hispanic advertising as a percentage
of their total advertising spending between 2000 and 2004, or
“Top Decile,” created a mean cumulative return on
shareholder equity of 9.0, while the remaining 90% of the companies
had a return of only 2.2. Therefore, every $1,000 of net worth
in a “Top Decile” company in 2000 returned $9,000
in 2004, as compared to a return of only $2,200 from $1,000 of
net worth in the remaining 90% of companies.
SSG’s study also suggests that the impact
to value creation varies by industry and sub-categories. In fact,
a deeper analysis on the Consumer Packaged Goods (CPG) industry,
which led all other industries in marketing investment allocations
to Latinos, revealed that the leaders within the CPG industry
had a mean cumulative return on shareholder equity 12 times higher
than the followers. On $1,000 of net worth in 2000 in the “Top
Decile” CPG companies with the highest allocations to Hispanic
media, the return to their shareholders was a whopping $33,800
by 2004, as compared to a meager return of $2,800 by the remaining
90% of CPG companies.
The full value of the Hispanic market is largely
misunderstood by corporate America. As shown in previous studies
directed by Santiago Solutions Group for the Association of Hispanic
Advertising Agencies (AHAA), corporations still dedicate insufficient
investments to spark sustained revenue growth proportionate to
the existing purchase habits of Latinos.
In essence, investors choosing companies that
properly apply resources towards mining the opportunities from
the Latino marketplace are much more likely to reap higher return
on equity. “Thus, this study points at the danger of short-changing
shareholders if executives under-allocate resources to reach Hispanics
while overspending for lower growth and value creation from non-Hispanic
households,” Santiago said.
SSG is committed to further investigate the
critical success factors that drive these returns in subsequent
phases of this study.
More information about this study can be found
at www.santiagosolutionsgroup.com.
About Santiago Solutions Group
Santiago Solutions Group (SSG) is a thought
leader in strategy and management consulting, creating innovative
multicultural business strategies. SSG has found that the fundamental
questions confronting decision makers are proving incremental
shareholder value and choosing the optimum investment level to
mine the multicultural opportunity. To address these challenges
and identify the optimum course of action, SSG’s strategic
framework focuses on quantifying the core target segments’
upside revenue potential vis-à-vis its acculturation trigger
points through an array of proprietary methodologies, such as
custom volumetric models, internal and competitive assessments,
and behavioral analytical tools tailored by category-product life
cycles and sub-segments. SSG’s discipline in strategic planning
engages clients in a culture of change creating differentiated
solutions, strengthened by effective internal cross-functional
structures, while ensuring full alignment with customer touch-points.
The resulting 5-P’s strategic blueprints empower corporate
planning and marketing teams, as well as ad agencies, to conceive
multicultural programs capable of sustaining traction. SSG works
with clients such as AARP, Johnson & Johnson, Nestle, GMAC
Mortgage, and Humana, to implement these strategies.
