Corporate executives unschooled in Spanish are learning one key phrase these days — “Estamos para servírle” — a popular Latin expression meaning, “We are here to serve you.” Companies that don’t understand the meaning or importance of those words risk ignoring a major business opportunity. Marketing to 38 million Hispanics in the U.S., particularly through advertising media and consumer services, is no longer a matter of choice; it has become a necessity.
When confronted with the numbers, little gets lost in the translation. The U.S. Census in 2000 showed that more than one person in eight in the U.S. is of Hispanic origin. It also revealed that Hispanics represent 35.7% of the U.S. population below the age of 18, 50% higher than whites, who account for 23.5% of the same age. What’s more, the fertility rates of foreign-born Latino immigrants in the U.S. fuel population growth faster than new immigration. Overall, this emerging market represents some 13% of the U.S. population and is now the single largest ethnic group in the U.S., surpassing African Americans who until recently were the dominant minority. The Selig Center for Economic Growth at the University of Georgia estimates that Hispanics control about $580 billion in spending power, and that figure is expected to grow to almost $1 trillion in five years.
“The economic importance of Spanish-language populations has grown disproportionately to their size,” says David C. Schmittlein, professor of marketing and deputy dean at Wharton. “This population is getting larger in terms of people as well as in economic terms. Their spending power is going up per person. It’s not just that they were 11% of the population and now they’re 14%; they’ve grown much more in economic terms than those three percentage points.”
Hispanic Spending Power
As Hispanic spending power expands, Corporate America is starting to take notice. Food companies such as the $750 million Goya Foods of Secaucus, N.J., have long recognized the strength and brand loyalty of the U.S. Hispanic market and catered to that segment. Now other firms too are targeting that population segment in both significant and more subtle ways.
Advertising has begun to significantly reflect the increased focus on the country’s Latino community. “Hispanic advertising has been growing anywhere from 15% to 20% in the last five years,” notes Reshma Shah, professor of marketing at Emory University’s Goizueta Business School. HispanicBusiness.com, the web site of a monthly magazine that reports on the U.S. Hispanic market, notes that the top three advertisers in the Hispanic Market in 2001 were consumer-products giant Procter & Gamble, Ford, the automaker, and telecom behemoth AT&T respectively. What is revealing is that Ford almost quadrupled its media expenditures in the Hispanic market from around $14 million in 2000 to $51 million in 2001. P&G and AT&T also increased their Hispanic advertising budgets in 2001 by at least 20%.
“We see more advertisers thinking seriously about Hispanic advertising,” says Schmittlein. “Prior to this, media, or at least potential media, would look at the advertising budget and decide it wasn’t an obviously attractive business opportunity, especially for advertising-supported media. The relatively recent rise of Spanish-language television, especially on cable networks in the U.S., has jumpstarted perceived opportunities for advertisers.”
In addition to spending money on ads targeting Spanish-speaking customers, companies want to make sure their message is reaching the U.S. Hispanic market. Location plays an important role in these decisions. Latinos tend to live in the cities, and their numbers are growing there as well. According to the Brookings institution, the Latino population in the U.S.’s top 32 cities more than doubled between 1990 and 2000.
“You have three distinct groups when you talk about Hispanics,” says Shah. “These include the Spanish-speaking population, the Portuguese speakers (principally the Brazilian influx in the U.S.) and undocumented immigrants. So you have numbers not even covered by the U.S. census. Largely, these folks may not be reading U.S. magazines, watching American TV channels and listening to American radio. As much as you can infiltrate through radio or media that are much more low-cost media, or those that are more likely to penetrate the undocumented population, the better your efforts are going to be.” She adds that many companies are beginning to recognize cultural differences in their marketing approaches, such as the Hispanic focus on family. Festivals and community-based events, she explains, are therefore important venues through which to reach Hispanic consumers.
Reaching the U.S. Hispanic population is seldom as easy as translating print ads, billboards and bus panels into Spanish. It is about influencing an entirely different culture, while remaining mindful of the mainstream. Many companies have been hiring such Hispanic advertising powerhouses as Anita Santiago Advertising of Santa Monica, Calif., New York City’s The Vidal Partnership and Casanova Pendrill of Irvine, Calif. to create campaigns for the Hispanic community.
“There are three steps on the road to advertising customization for the Hispanic market,” notes Schmittlein. “Transliteration, a different way to tell a brand’s story, or telling an entirely new story. It’s not uncommon to see a strategic choice made to choose a different positioning for a Hispanic audience. Go back over 15 years ago to advertising run by Coors Light. Created from the brand up for the Hispanic market, it had a completely different look and feel. It’s not about the Rocky Mountain clear waters, but it’s about smoothness in an urban setting. It’s a different story to tell about the brand, not just a different way to tell the brand’s story.”
Marketers have tried to get inside the heads and mouths of their target Latino audiences. Knorr, a food brand division of Unilever Bestfoods in Englewood Cliffs, N.J., has had considerable success in marketing soup packets and bouillon cubes to Latinos outside the U.S. This success is impressive in that pre-packaged and heat-and-serve products are not traditionally part of the Latino way. First-generation Latinos tend to have large families and shop accordingly. Shopping is often a multi-sensory, family experience, with aroma playing an important part. Sally Rivera, director of ethnic marketing at consumer-products company Colgate, claims that “60% of Hispanics smell a new product before buying it.”
Knorr’s nose for success evolved from good market planning and an understanding of how Latinos think about food. Knorr marketers like Maria Madruga, President of MASS Promotions, a Miami firm specializing in Hispanic marketing, knew (along with most of the supermarket and food industries) that Latinos, especially first-generation Latinos, prefer to purchase basic foods that are cooked from scratch. Knorr also knows that acculturated Hispanics are more likely to buy ready-to-eat foods, and encourages first-generation Latinos to emulate them by using Chef Pepin, a Latin TV chef, to endorse its product line. Knorr’s slogan, “Tu pones el amor, Knorr pone el sabor,” translates as “You put in the love, Knorr puts in the flavor.”
Not all advertising campaigns have, however, communicated their message so effectively to the Hispanic market. One of the best-known examples of mainstream advertising missing its mark is “Got Milk?” When the California Milk Processor Board ran the TV spots, created by a San Francisco ad agency, they appealed to everyone but Spanish-speaking Hispanics. A mainly Mexican-American focus group said that the “Got Milk” tag line translated to “Are you lactating?” in Spanish. Also, running out of milk in Spanish households is akin to failing your family, something in which Hispanics find no humor.
But advertising execs hardly cried over spilt milk. Later, they created cross-over ads that directly targeted the Hispanic market, bypassing Spanish-language stations to air on English language TV. According to a September 2002 article in AdAge.com, the “Got Milk?” campaign targeted Latino teens by combining English-language TV with Hispanic culture. The spot focused on the tale of La Llorona, the “weeping woman,” a story Latin parents sometimes tell their children (in order to get them to behave) about the ghost of a woman who killed her children to appease her lover and spends an eternity in a tearful search for them. In the commercial, La Llorona roams a sleeping household and cries over an empty milk carton.
Advertising and recent dual-language signage around the U.S. in high-profile retailers like Wal-Mart are prominent illustrations of Hispanic-centered marketing. A growing service-based economy, buoyed by the burgeoning Latino population, demands improved Hispanic services. In April, for example, North Carolina-based Bank of America and Yahoo! en Espanol announced the launch of a new financial services site. Located in the Centro Bancario section of Yahoo! en Espanol, the site offers U.S. Hispanic consumers access to Spanish-language information on checking and savings accounts, CDs, mortgages and the like. Bank of America has increased its commitment to the U.S. Hispanic market in the past few years with specialized services like SafeSend, an ATM card that provides family members in Mexico with fast, easy access to money.
Shah, in the course of her integrated marketing communications research, has spoken extensively with Carla Rizzoti, whose Bank of America division is responsible for Hispanic-centered services. Shah believes that companies must find ways to saturate themselves in the Latino culture to understand it and ultimately embrace it. “Companies are in the process of hiring multi-cultural marketing managers so they have people who can understand the markets inside and out,” notes Shah. “They are more tuned into the demographics and behavioral trends of different groups. I see it happening in all types of industries. To really understand this ethnic segment, you need to understand that there are nuances in the segment as well. You can’t market to all Hispanics the same way.”
California’s PacifiCare Health Systems has placed its top-down Hispanic transformation in the hands of Russell A. Bennett, a Mexico City native. He was hired last August as vice president of Latino Health Solutions, a newly created position at the $11 billion provider of health insurance products for employer groups and Medicare beneficiaries. The company operates in eight states and Guam and serves about 3.3 million members.
A realization about the demographics of those members prompted PacifiCare to begin to dramatically change the way it markets to its customers. “PacifiCare CEO Howard Phansteil recognized that the company operates in eight western states in which the Hispanic or Latino population is about 26.5% of the total population,” explains Bennett, who previously served as executive director of the United States-Mexico Border Health Commission, U.S. Section. “In some states, such as California and Texas, it’s even higher. A year ago our company was not making enough of an effort to reach out to that population. I came in and did an analysis of our Hispanic membership and what potential we had to grow it. We found out that we had more than 585,000 Hispanic surname members in our membership base. That’s about 20%.”
Bennett determined that Hispanics were in every PacifiCare market and every market segment. He has since instituted a program of sweeping changes that involves all areas of the company with customer/member interaction. Bennett’s first priority was the creation of PacifiCare en Espanol, a Spanish health-information Web site that can be reached through its own address (www.pacificarelatino.com), or through a link on PacifiCare’s existing site (www.pacificare.com). Other initiatives include the PacifiCare Latino Health Scholars program, a series of 25 $2,000 scholarships for young people interested in pursuing health-care careers; a more than $1.5 million Hispanic advertising campaign to be launched in September; and the creation of a Spanish 800 number that reaches the company’s three customer service centers in California, Arizona and Texas.
“The hardest part of the job has been coordinating everyone within the company to get everything done that we have to do,” says Bennett. “There’s a lot of acceptance and a lot of enthusiasm, but as in every company, especially a for-profit company, we’ve had to negotiate with every area to make sure they make serving the Hispanic community part of their goals. We’re working every day to have more member materials, more things in writing on the Internet, and a mentality within the company that this is an important market, not a fringe market for us. The Hispanic population is the driver, if you will, of the U.S. population growth. Companies that recognize this and become the best prepared for serving the Latino market will be able to lead the way in their specific industries.”
For the most part, U.S. corporations seem to be embracing that reality — though some exceptions do exist. José Acuna, a physician-turned-consultant who runs Hispanic America in Pennington, N.J., says that the Hispanic market still seems to be “unexplored landscape” for the pharmaceutical industry. Acuna consults with big pharmaceutical companies to educate them about meeting the needs of the growing Hispanic population through the physicians who treat Latinos. He has found, however, that “the pharmaceutical industry is an extremely conservative group. It took pharma companies a long time to understand the value of marketing to African Americans. Hispanics just weren’t on their radar screen.”
What’s more, drug firms deal in products that often have to be prescribed, which means their target market is the doctors doing the prescribing. “Trying to raise awareness of Hispanics in the physicians’ minds has been very difficult for pharma to do, since Hispanics are among the least-insured group in the U.S.,” adds Acuna. “It’s very tough to get a marketing manager from a pharmaceutical company to say, ‘I’m going to devote all these resources to a group that doesn’t have the money or the insurance to be able to afford the medicines they’re prescribed.’ That stops the machine very cold.” Even so, Acuna is motivated by one important goal: The more successful he is at getting pharmaceutical firms to spend advertising dollars on reaching physicians who treat Hispanics, the better care Hispanics are going to get.
Acuna spends a great deal of time trying to convince pharmaceutical executives that spending advertising dollars on the Hispanic market is a smart investment. His argument to them, he believes, translates to U.S. corporations from coast to coast, of all sizes and industries. Says he: “The sheer growth of the Hispanic community is such that it has created an inertia that people can’t ignore. You have to get on board. It’s crazy if you don’t.”