News Column

Marketers Target Growing Hispanic Segment

September 30, 2002

George Chamberlin

From snack foods to sports sedans, American businesses are beefing up their efforts to attract new customers in the growing Hispanic marketplace.

"According to our extensive research, the buying power of Hispanics in America has increased more than 110 percent over the past 10 years," says Barbara Firment, senior vice president of Advertising and Sales at Kmart (NYSE: KM). "With our exceptional reach into urban markets, we feel we have a distinct advantage over other discount retailers when it comes to connecting with Hispanic customers."

What's at stake is a booming market segment with growing buying power. Projections say that the Hispanic population of more than 35 million people will triple in size by 2050, making up nearly a quarter of the U.S. population. And the purchasing power of Hispanics is expected to reach $630 billion this year, according to consulting firm Santiago and Valdes Solutions. That's an increase from $561 billion last year.

Hispanic households in San Diego recently received a copy of La Vida, a new entertainment and lifestyle magazine issued by Kmart. More than 1 million copies of the Spanish-language magazine were distributed in key markets in California, Arizona, Texas and elsewhere.

"The topics covered in La Vida are the mainstay of our stores -- from music, to health and beauty, to food and to our employees, who contribute a great deal to our customer care and to their communities," said Kmart's Firment. "This publication is just a natural extension for Kmart in that both traditionally and historically, the Hispanic community is one of our most loyal customer groups."

San Diego is also one of the markets that was selected by Frito-Lay -- the convenience food division of PepsiCo -- to launch a line of snacks targeted specifically at Hispanics. And General Motors (NYSE: GM) earlier this year introduced a marketing campaign targeting Hispanic consumers for the Chevy Trailblazer EXT.

"The Hispanic market is a priority for General Motors," said Sonia Maria Green, director of Diversity Marketing and Sales at the world's largest automaker. "This family-oriented promotion is part of that mission. Research has shown us that Hispanics are similar to general market customers in that they want safe, top-quality, high-performance products. Where they differ is in purchase motivation."

Green says that Hispanics often base purchase decisions on what is best for their family. And, according to a survey by the Food Marketing Association, the same factors apply when Hispanics shop for groceries.

In a new study, "U.S. Hispanics: Insights Into Grocery Shopping Preferences and Attitudes, 2002," FMI found that most Hispanics do not shop alone. More than half shop with an adult in their household and 15 percent shop with children. More than 40 percent of the time these companion shoppers influence the purchase decisions.

The study also found that Hispanic households spend an average of $117 per week on groceries, compared to the $87 spent per week by the average U.S. household. That also means that they eat most of their meals at home, dining out an average of just 1.3 times a week.

Speaking of households, a meeting earlier this month in San Diego of the National Association of Hispanic Real Estate Professionals brought together leaders in all segments of the housing industry to discuss overcoming the obstacles to Hispanic home ownership.

"Over the next 10 years, 40 percent of first-time homebuyers in the U.S. are expected to be Hispanic," said Ernest Reyes, chairman of NAHREP. "This industry has a real opportunity and an obligation to help the Hispanic community invest in America's future and their own financial stability."

Last year, Hispanic homebuyers purchased more than one in five homes sold in California.

Despite the growing financial clout of the Hispanic community, most businesses are doing a poor job of marketing to this growing group. According to the Association of Hispanic Advertising Agencies, most companies have been slow to respond to the changing demographic realities and their marketing budgets are out of line with the Hispanic purchasing behavior.

"Most industries would have to double or triple their current allocation to be aligned with current Hispanic purchasing," said consultant Carlos Santiago. "Stockholders should be concerned about widespread overspending in other consumer segments generating much less for every dollar of investment. These times of economic downturn are perfect to correct historic misalignments and invest 2003 dollars in a way that truly maximizes each segment's short and long-term returns."

The San Diego region offers a perfect opportunity for companies to market to Hispanics. According to the San Diego County Hispanic Chamber of Commerce, nearly 30 percent of the population is Hispanic. When combined with the population of Tijuana, that brings the local Hispanic population to more than 2 million people.

Source: San Diego Daily Transcript

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