Marketers Reach Out to Hispanics - A Multidimensional Segment

It seems that U.S. marketers have finally discovered the Hispanic market. Not that it hasn’t been here for some time; it has. And not that it isn’t of substantial size; it is. So what has suddenly woken Madison Avenue to the potential in this market? A number of things.

First, consider the size of the Hispanic market—35.3 million people. Second, consider the growth rate—58 percent in the past decade (four times that of the overall population). Third, throw in the estimated $400 billion in buying power, which “seems impervious to the Nasdaq’s swoons” according to Marci McDonald of U.S. News & World Report. The end result is an extremely attractive market. And, unlike the case in the past, this market has finally attracted the attention of some big time marketers.

CBS has noticed. Hoping that the Hispanic market will help reverse the downward trend in the size of its soap opera audience, the network has introduced a Spanish simulcast of The Bold and the Beautiful titled Belleza y Poder (“Beauty and Power”). Liz Claiborne Cosmetics introduced its new perfume, Mambo, with a $20 million campaign targeting Latinos (among others), and the American Association of Retired Persons (AARP) has more specifically targeted the over-50 Hispanic market with a $3 million campaign. Among the other firms now increasing their efforts in this market are MasterCard International, Reader’s Digest, and Tillamook Cheese.

Even though there has been a significant increase in spending in the Hispanic market, Spanish-language and bilingual campaigns still account for only about one percent of the $200 billion advertisers spend yearly on broadcast media(another $250 million goes to magazines and newspapers). While some companies already spend heavily to attract this segment (e.g., Sears and AT&T has targeted this market for over 10 years), most have simply ignored the segment—until now. The fact that young Hispanics has become the largest ethnic youth population in the United States has made more marketers take notice.

Refining Hispanic Market Segmentation through Cluster Analysis

Reaching this segment may not be as easy as it seems, however. Roberto Ramos, president of the Ruido Group, a Hispanic-youth-focused communication agency in New York, notes: “One of the biggest misconceptions about Hispanic youth is that they are a homogeneous group. Puerto Ricans, Colombians and Cubans are not all the same. What works to attract one group may not work for another.” Erasmo Arteaga, a Sears store manager in West Covina, California, adds: “People think Hispanic means one thing… But it’s different from Miami to Southern California. And here in California, it’s not just Mexicans; it’s Guatemalans, Salvadorans, and other people from Central America.” Arteaga notes that two Hispanic-designated stores in Los Angeles only 20 miles apart reflect very different buying motives. While this segment is certainly a challenging market, there is no doubt among many marketers that Hispanics are worth the effort.

With the segment’s strong growth rates in population and in spending power, you can be sure that many more will join in. The question is, will they take the time and effort required to understand the diversity of this market, or will they simply attempt to reach Hispanics through the appeals and media they employ for other ethnic groups. One thing is sure: If they pursue the latter strategy, they won’t be in the Hispanic market for very long.

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