How CPG Brands Can Reach Hispanics

Hispanics represent $1.3 trillion in purchasing power

January 8, 2015 | Demographics | CPG

According to new research from IRI, effective marketing to Hispanics could raise total consumer packaged goods (CPG) sales by as much as 7%. The segmentation report, “HispanicLink 2014,” found that a $1 billion CPG company could earn $71 million in incremental revenues by marketing to Hispanics effectively. The study, which compared the responses of 700 non-Hispanic shoppers with those of 2,100 Hispanic shoppers, segmented the US Hispanic population in order to best determine which segments would be most receptive to and influenced by product advertising.

0

0

For starters, marketers trying to reach Hispanic consumers have to remember that they make up one-sixth of the US population—53 million people and counting—and $1.3 trillion in purchasing power, according to the US Census Bureau. On top of that, they represent the fastest-growing population segment in the US.

As for how marketers can reach them: Spanish-language advertising can help, according to a March 2014 Experian Marketing Services study. Just over 37% of US Hispanics said that when they hear a company advertise in Spanish, it makes them feel that their heritage is respected and that the brand genuinely wants their business. More than one-third of respondents said Spanish-language advertising makes them more loyal because the company shows appreciation for consumers’ culture by advertising in Spanish. Others (33.9%) said that Spanish-language labeling even helps with the selection process.

An IRI study from earlier this year indicated that Hispanic consumers shopped at both mass-market stores (74%) and smaller, ethnic markets (28%)—one to accommodate larger family size and the other to locate authentic products and ingredients.

IRI approached its study by breaking down the respondent pool into three segments—“acculturated Hispanics,” “bicultural Hispanics” and “unacculturated Hispanics”—in order to investigate spending patterns, each of these categories representing potential, different opportunities for retailers. For example, Hispanic shoppers who fall into the acculturated group—that is, who are familiar with US culture and are more optimistic about the future—with an income of $62,000 want the best deal and are often willing to sacrifice product quality for it. The study indicated that this group tends to be more digitally savvy than the general population, too.

Unacculturated Hispanics have a more limited knowledge of English and rely heavily on Spanish-language marketing, labeling and packaging to help them select items. It’s biculturally savvy Hispanics who are also the most digitally savvy of all groups, consuming both English- and Spanish-language media. In general, Hispanics express the same level of brand loyalty for products like laundry detergent, toothpaste, toilet tissue and orange juice as the general population, though they will go out of their way to find their favorite brand if it’s not on store shelves, ThinkNow Research revealed in a study earlier this year.

Though Hispanics mirror the general population in brand loyalty, the methods to locate them and encourage a first-time purchase should be tailored to their specific needs, whether in Spanish or English. And, as Peter DeLuca, senior vice president of brand and advertising at T-Mobile, told eMarketer in February 2014, cultural relevancy is really “about the consumer, regardless of the language they speak.”