Hispanic Consumers Lead, General Market Follows

Joan Driggs, EnsembleIQ

10/26/2013

A shifting landscape has given rise to consumers willing and able to function competently in two cultures.

For the past several years, the numbers and statistics have impressed the importance of the Hispanic consumer upon retailers and marketers. Now experts say it’s time to move past the numbers and drill down into how Hispanics think as they take their place as influential consumers.

“The future is not in the numbers, but in understanding human behavior,” Edward James Olmos told attendees of the ninth annual Hispanic Retail 360 Summit in Las Vegas produced by Stagnito Media. The actor, producer and humanitarian presented the keynote address of the three-day event in August.

Evidence of increased emerging cultures and influences can be seen in just about every city in the United States. For retailers and marketers it’s important to understand the role emerging cultures play in today’s society, according to Gustavo Razzetti, EVP and managing director at Chicago-based Lapiz, the Latino agency of Leo Burnett.

When it comes to the emerging Hispanic consumer, the industry needs to keep three key considerations in mind: The culture, not the consumer, is the boss; Latinos enjoy the social experience of shopping; and value doesn’t mean cheap, it means getting more than what a consumer pays for, explained Esteban Ribero, strategy director at Lapiz.

In a nod to the growing influence the Hispanic consumer wields, Ribero added that it would serve retailers well to test initiatives on Hispanic consumers before rolling them out to the general market, instead of vice versa.

A New Generation

As for Hispanic millennials specifically — the theme of this year’s Hispanic Retail 360 Summit was “Understanding Millennials’ Path to Purchase.” The importance of culture to this demographic sets them apart from their non-Hispanic counterparts according to Terry Soto president and CEO of Burbank Calif.-based About Marketing Solutions Inc.

In addition, capturing the dollars of this demographic requires an understanding of Hispanic millennials’ in-home behavior, because their shopping strategies are formed before they ever step foot inside a store, noted Darren Seifer, food and beverage industry analyst at The NPD Group, based in Port Washington, N.Y.

“So much happens before they get to the store that influences what they do in the store,” explained Seifer, who co-presented with Soto.

With Hispanics making up 20 percent of all multicultural millennials, companies must include them in their marketing if they want to employ a sustainable strategy Marie Quintana, president of The Quintana Group, in Dallas, stressed this point as she served as mistress of ceremonies for this year’s summit. What makes the younger generation so important, she explained, is that Hispanic millennials have the immigrant mindset at their core while moving seamlessly between both worlds.

Just as the immigrant mindset is at their core, technology and social media are at their fingertips.

Generally speaking, millennials are 18 to 34 years old, have a $1.3 trillion buying power, and are highly opinionated, vocal and controlling. But not all millennials are the same. As Jose Espinoza VP of strategy and business solutions at Austin, Texas-based Mercury Mambo, explained, millennials fall into six categories: Hip-ennial, Gadget Guru, Millennial Mom, Clean and Green Millennial, Anti-Millennial, and Old School. Broken out even further, Latino millennials fall into the Clean and Green, Anti-Millennial, and Old School categories.

There are three key differentiators between Hispanic millennials and general-market millennials: Hispanic millennials are focused on empowerment, cause marketing and technology, Espinoza added.

Dennis Devlin, CEO of Cincinnati-based Consumer Clarity, cited several examples of engaging millennials, including Kum & Go convenience stores. The West Des Moines, Iowa-based retailer launched a “Snaxpert” program that allows customers to share their favorite snack pairings and post them on social media. Devlin said this initiative hits two of the three musts for Hispanic millennials by empowering them to voice their opinions through technology.

Just as importantly, Kum & Go contributes 10 percent of its profits to nonprofit organizations with a focus on education and youth, he noted.

Overall, the rules of traditional marketing don’t work with Hispanic millennials, according to Victoria Clark, co-founder and chief creative officer of Gravy, in the Washington, D.C., area. “You cannot talk to them; you must talk with them,” she emphasized.

Mother Knows Best

One of the many highlights of this year’s summit was a Beechnut/Goyasponsored panel of four millennial Latina mothers who spoke about their personal, everyday experiences shopping for and buying products for their families. Questioned by Dr. Monica Torres, a strategic partner of New York-based XL Alliance, all of the women agreed they’re the decision-makers in their households. While their husbands offer their opinions, they don’t influence the decisions Latina mothers make regarding their family, whether it’s about banking, buying a flat-screen TV or grocery shopping.

With the role that homemade meals play in Hispanic culture and life, food retailers should pay close attention to this shopper. For example, all four panelists explained that they use mail circulars to compare prices, frequent stores that offer the products they are looking for — especially the brands and items their grandmothers and mothers used — and look for stores that are friendly and welcoming. To that end, they agreed that having bilingual employees helps them feel comfortable.

One Message, Two Voices

Companies must also remember that language is key. Juan Carlos Davila, SVP and general manager of the Hispanic Market Center of Excellence at Nielsen, in Schaumburg, Ill., pointed out that although 65 percent of Hispanic millennials are U.S.-born, almost 40 percent of total Hispanic millennials are bilingual — a 73-percent increase in the past decade.

“They are made in the USA with Hispanic ingredients,” Davila quipped.

According to Brett Dennis, chief media communications officer at Latino agency Conill, based in Torrance, Calif., success in this market has resulted from customizing creative for a given audience. He shared an example of work done for Toyota, a brand that ranks high with Hispanics. The company’s English-language message was of reliability and safety, whereas the Spanish creative was more about the excitement of the brand.

“We want to deliver messages in a relevant way,” said Dennis. “Consumers don’t live in one world.” Hispanics consider themselves as much American as their country of origin, he said, and messaging should respect that.

Not Either/Or

Although millennials fall into their own generational definition, they more importantly fall into a new mainstream. That the new mainstream is here isn’t a revelation — as evidenced by the 2012 Hispanic Retail 360 Summit’s “Hispanic Retailing: From Niche to Mainstream” — but knowing what to do with it is something else entirely, explained Guy Garcia, president of new mainstream initiatives at Dallas-based EthniFacts LLC.

“The new mainstream is the multicultural population, along with those who are multicultural by inclination, multicultural by choice and multicultural by proximity,” he said.

With the convergence of cultures and shifting landscape has come a rise of “ambicultural” consumers with a willingness and ability to function competently in two cultures, Garcia added. “Ambiculturals are the growth engine of the future,” he said. “Understanding and reaching them is the key to success.”

Total Market is Totally Now

Like the emerging demographic it applies to, total market has become an emerging term over the past 18 months. But total market is more than a demographic: It describes not only the ethnic shift in the United States, but the psychographic shift as well, according to Stephen Palacios, EVP at Added Value Cheskin, in Los Angeles.

According to Palacios, Hispanics are likely driving generational norms and producing “culturally open” consumers. Specifically, he noted that Hispanic millennials are optimistic, have a collective view, are socially conscious and live in the moment.

The J.M. Smucker Co. and Wal-Mart Stores Inc. are among the companies that have found success by taking a total-market approach to reaching consumers. Historically, Orrville, Ohio-based Smucker employed two Hispanic marketing strategies: translating the general market insights into Spanish and the silo approach of developing Hispanic insights into an independent campaign, according to Manny Bartolini, marketing manager for the company’s Café Bustelo coffee brand. While those approaches worked, things changed about two years ago, when Smucker acquired Café Bustelo and Café Pilon. Now, Bartolini explained, the company takes insights born from Hispanic consumer information and develops marketing based on the relevance of ethnic-inspired insights.

Bentonville, Ark.-based Walmart has also transitioned its thinking in regard to multicultural marketing, according to Senior Marketing Manager Javier Delgado-Granados. Like Smucker, Walmart formerly used one approach for the general market and a separate silo approach to Hispanic marketing. At the time, the retailer thought it was “doing something right for our customers,” he said.

However, about two years ago, Walmart decided to refocus its strategy to a multicultural marketing view. One key step was combining the general marketing team and multicultural team into one unit, Delgado-Granados explained, adding, “It doesn’t happen overnight, but we will get there.

Overall, though, retailers need to try connecting with emerging Hispanic influencers “in culture, in context and in language,” explained Armando Martin, managing partner and co-founder of XL Edge, in Denver.

Fueling Total-market Growth

Hispanic millennial moms are more likely than white, non-Hispanic moms to cook from scratch, but the former do turn to prepared foods in case of “emergencies.”

Given the hectic pace of millennial moms in general, it’s understandable that these emergencies are occurring with increasing frequency. That’s one notion that retailers and marketers should give consideration to, according to Carlos Santiago, president and chief strategist of the Santiago Solutions Group, a strategic growth consultancy based in Burbank, Calif., who presented “Maximizing the Hispanic Market Opportunity to Fuel Total Market Growth” at the ninth annual Hispanic Retail 360 Summit.

Total-market growth hinges on “double plays,” Santiago explained, where “connectors” and “nuances” come together. Connectors are themes common to Hispanic millennials, such as family dinners, traditional dishes, and fresh, healthy ingredients.

Nuance is taking the elements of some of those connectors and adding or expanding, not taking away from the traditional, but perhaps spinning it a bit. Rice, for example, might be replaced by quinoa or couscous in what’s otherwise a traditional dish. If we take a mainstream view, we can see how potato chips and dip have been replaced by pita and hummus, or tortilla chips and guacamole. Nuance also comes into play with convenience foods, which Santiago Solutions research indicates resonate with Hispanic millennial women if the products are of good quality and taste, and her family can’t tell she didn’t prepare the food herself.

Retailers have an opportunity to drive the double plays by communicating their connectedness to the family meal; helping provide solutions and planning around meals, not just with ingredients for a more convenient meal, but also with prepared meals themselves; and acknowledging the rising popularity of Hispanic cuisine across the entire population and how that might affect acceptable new approaches to traditional family dishes.

Redefining the General Market

Conventional wisdom has different cultures in the United States taking a linear path to assimilation: unacculturated to acculturated to assimilation. While that may have been true in the past, today’s U.S. Hispanic millennials are beating their own path.

The reality, according to Cultur8, is that 90 percent of U.S. Hispanics consider themselves bicultural — not one or the other, but both. In light of this new normal, companies need to rethink how they approach this demographic, because it’s clear that the general market is becoming an outdated approach, executives at a multicultural marketing agency pointed out during the “Language is a Tactic, Not a Strategy” panel at the ninth annual Hispanic Retail 360 Summit.

Language preference, media consumption and level of cultural identification support Hispanic consumers’ bicultural reality. Specifically, 88.5 percent of Latinos prefer to speak in English and Spanish. This highlights an important principle for markets to keep in mind: Culture trumps language.

Kelly Ravestijn, director of strategy at Dallas-based Cultur8, explained that a simple translation from general-market advertising doesn’t always work. Marketers need to translate for meaning, not direct words. For example, simply translating the famous “got milk?” campaign into Spanish becomes “¿tienes leche?,” which literally means, “are you lactating?”

“How you say it and what you are saying are more important than the translation,” added Roberto Saucedo, executive creative director at Cultur8.

In addition, marketers need to look at language as a tactic, not a strategy, according to Ravestijn. “We don’t live in acculturation silos,” she said. “People move in and out of acculturation definitions.”

Case in point: English-dominant Hispanics prefer to watch soccer in Spanish, but the same people change the channel to watch “CSI” in English, she explained.

Marketers also need to understand that sometimes multicultural leads, Ravestijn said.

“Millennials are more multicultural than any other generation,” she said. “The myth is that Hispanic youth are embracing mainstream culture. The reality is, they are influencing culture and redefining the fabric of America.”

For some generations, she added, culture has been a barrier, but for millennials, it’s an asset.

“Look at the unique attitudes of Hispanics and non-Hispanics. Where they overlap is the sweet spot for general-market advertising,” said Alejandro Martinez, market intelligence strategist at Dieste/Cultur8.