In down times, Hispanic market booming
SANTA FE, NM (By Timothy Sun and Alex Johnson, NBC and MSNBC) March 4, 2010 ― With more than 46 million people, Nueva Hispania is the 27th-largest nation on Earth and the fourth largest in the Western Hemisphere. Its residents wield $1 trillion of buying power in the marketplace. Even as the rest of the economy contracts in the global recession, Nueva Hispania remains a thriving, even booming, market that’s expected to grow by 48 percent in the next four years.
And it’s not even a real country.
The imaginary “Nueva Hispania” is actually a substantial segment of the U.S. population. Hispanics now account for more than 15 percent of the U.S. populace as the nation’s largest minority group. And while other demographic sectors are growing only incrementally, the Hispanic population is exploding: The Census Bureau projects that 30 percent of Americans will be of Hispanic and Latino by 2050.
The Hispanic market’s growing clout comes even as the recession takes a harsh toll on Latino workers. The elimination of tens of thousands of construction jobs has hit the sector particularly hard, sending the national unemployment rate for Latino males to 11 percent.
For decades, businesses and cultural institutions could afford to ignore the Hispanic market. Now, they are chasing it aggressively, because that’s where the money is.
That poses a big challenge. Underrepresented for decades in U.S. commerce and media, Hispanic Americans long ago developed their own commercial, cultural and media channels. And that means companies and institutions can’t just throw open the doors and expect Hispanics to come in.
Those companies and institutions must go to the customer.
“For companies to grow in the coming years, it is critical to understand how to reach and connect with these consumers,” said Reinaldo Padua, assistant vice president for Hispanic marketing for Coca-Cola North America.
‘I was actually scared, like most Hispanics’
More than a third of the Hispanic population is younger than 18. For the Boy Scouts of America, that’s “a huge opportunity,” said Robert J. Mazzuca, the organization’s chief Scout executive.
“There’s a lot at stake,” Mazzuca said. “We’re not fulfilling our mission as an organization if we don’t see this incredibly rapidly growing and dynamic part of our population and do everything we can to reach out to them.”
To penetrate the cultural divides that have kept Hispanics from joining their ranks, the Scouts reached out to Hispanic Communications Network, a media company based in Washington that specializes in engaging the Hispanic community.
Together with HCN, the Scouts are developing pilot programs in six cities to reach the Hispanic market. There will be radio and TV spots, bilingual and bicultural staff representatives, local community leaders advocating on their behalf — and soccer.
“One of our pilot programs over ... recent years has been Scouting in soccer, using the attraction of the soccer game to gather Hispanic families around,” Mazzuca said. The sport is a common interest that draws in families while addressing the issues of individual character development that are at the heart of the Boy Scout experience.
Rosa Gonzalez of Irving, Texas, whose son, Jonathan, is in his first year with the Cub Scouts, said she was skeptical at first.
“I was not too convinced," she said. "I was actually scared, like most Hispanics. We tend to hold onto our kids even when they’re older.”
But after being reassured by the local Latino Cubmaster, Gonzalez decided to let Jonathan join.
“They teach them respect, responsibility and, you know, they’re more self-confident in their decisions,” she said. “I noticed that in my son, and I’m very happy.”
Mazzuca hopes to replicate that success across the organization.
“We have approximately 100,000 Latino scouts in our universal scouting,” he said. “We want to double that by the end of 2010.”
Identifying the audience crucial
The word “Hispanic” is misleading. Unlike many other minority groups, “Hispanic” is not a race — it is an umbrella word collecting people of Mexican, Cuban, Puerto Rican and any other Spanish or Latino cultural origin.
They are not united by culture or by history, said Jeffrey M. Humphreys, director of the Selig Center for Economic Growth at the University of Georgia, and Hispanics from different cultures tend to cluster in cohesive urban neighborhoods. What unites them, Humphreys argues in “The Multicultural Economy,” is simply the Spanish language.
That means a generic appeal is not enough, said Lorenzo Lopez, director of multicultural media at Wal-Mart Stores Inc.
“It’s not a matter of checking the ‘Spanish’ box” and calling it a day, he said.
The goal is to connect to the culture in a socially relevant way and make sure each community’s specific needs is served. For Wal-Mart, that means tailoring individual stores to meet to the demands of the local market.
The company installed a tortilla machine in its store in Garland, Texas, a heavily Hispanic area, and built a Pollo Campero, a fast-food chicken chain hugely popular in Central America, in a store in nearby Rowlett. It put up bilingual signs, stocked produce geared toward Latino appetites and sold movies and music skewed toward Latino tastes.
More than the Spanish language
AARP, formerly the American Association of Retired Persons, began applying the same principle about seven years ago. Today, the organization has 1.2 million Hispanic members.
“Reaching the Hispanic community will continue to be a key focus for us, and we will continue to expand outreach efforts to this demographic,” said Emilio Pardo, AARP’s executive vice president and chief brand officer.
The crucial point, he said, is not just to translate existing programs, publications and services into Spanish. Instead, you have to “transcreate — to be in the community.”
AARP “transcreates” through its magazine Segunda Juventud, or Second Youth. Billed as “the only publication for 50+ Hispanic Americans,” the bilingual magazine tailors AARP’s five universal pillars — health, financial security, community, intergenerational issues and fun — to the needs of Hispanic communities.
Hispanics, for instance, tend to have “stronger intergenerational ties than the general population, with multiple generations living under one roof,” Pardo said. So the AARP’s caregiving and financial advice is geared more toward family-oriented caretaking at home, as opposed to more independent caretaking for its general audience of retirees living alone.
Similarly, as its Hispanic members tend to be younger, AARP may focus more on college advice and tuition management.
In addition to the magazine, AARP also uses an arsenal of podcasts, Spanish-language radio broadcasts and live events to get its message out.
In May 2007, AARP sponsored its first national Hispanic event, drawing 16,400 people to Feria de la Segunda Juventud (the “Festival of the Second Youth”) in Puerto Rico, a two-day event that featured 60 exhibitors, music, food and celebrity appearances by the likes of Gloria Estefan. A similar event is planned for this May in San Antonio, Texas.
“Nearly 8 percent of Hispanics are over 50, but what is much more important is that this number is expected to more than double by 2025, according to the census,” Pardo said. “The considerable population growth dictates that we look at it as a business imperative.”
Hispanic ad firms thrive
One of the biggest beneficiaries of the explosion in Hispanic buying power is the U.S. Hispanic advertising industry, which the Association of Hispanic Advertising Agencies estimates is growing four times faster than all other sectors of the ad industry.
“Marketers now see that the Hispanic market in the U.S. is a great business opportunity,” said Sergio Alcocer, president and chief creative officer of LatinWorks Marketing Inc. of Austin, Texas, whose accounts include Anheuser-Busch, ESPN and Burger King.
It’s a sharp contrast from only a few years ago, during the first wave of Hispanic advertising in the 1980s and 1990s, when companies invested in the Hispanic market “almost kind of like a good citizen-type thing.”
The competition is especially acute within the cell phone industry.
In 2006, industry research found that Hispanics “over-index” in almost every category: They use more minutes, make long-distance calls, text more and download more ring tones.
“Family and social bonds are stronger than in the general population, and Latinos communicate more with each other,” said Isaac Mizrahi, director of multicultural marketing communications for Sprint Nextel Corp.
Both Sprint Nextel and AT&T Inc. have a wide array of tools with which to attract the Hispanic user. AT&T, for example, has developed 716 Hispanic Intensity Traffic (HIT) stores, where all sales material and staff are bilingual, in high-density Hispanic areas.
In addition to a similar network of bilingual stores, Sprint Nextel last year sponsored the tour of the Colombian rock star Juanes. The company released singles for download before his album “La Vida ... Es un Ratico en Vivo” was released and provided video, ring tones, concert information and the ability to purchase tickets over its Sprint mobile devices.
For Hispanics, Coke is it
Perhaps no other mainstream U.S. company has been building bridges to Hispanic customers longer than Coca-Cola.
Coke’s forays in targeting Hispanics go back more than 30 years. It has been a worldwide sponsor of soccer’s World Cup since 1978, frequently features Latino players in its ads, and it had the advantage of having had a strong presence in Latin America: When immigrants came to the United States, they regarded the brand as an iconic representation of their new homeland.
This month, Coke is launching a marketing campaign centered on the “American dream,” emphasizing the company’s historic role in Hispanic America’s immigrant narrative. The ads will be bilingual, highlighting Hispanics’ growing acculturation and placing Coke itself as a bicultural product.
“As a company, we identified (the burgeoning Hispanic market) many years ago and have strengthened the ... bond that exists between Coca-Cola and Hispanics,” Padua said.
“Any company who wants to grow must look at the Hispanic market.”