By Terry Soto, Author of Marketing to Hispanics A Strategic Approach to Assessing and Planning Your Initiative
Due Diligence Should Precede Resource Allocation
Many companies look at the data on the growing Hispanic population and its increasing buying power, and wonder if they’re positioned to leverage this market to enhance their company’s total market growth. The truth is that most companies don’t consider seriously enough that leveraging a new market segment like the Hispanic market requires a methodical and strategic approach that includes a due diligence process and ultimately, requires foundational change. They start by asking some of the right questions about the market such as:
- How large is the Hispanic market?
- How many of them buy our types of products and services?
- What do we need to say to them and how, to attract them to our brands?
And then, parting from a sound strategic planning process, they dive head first into driving demand for their products and services. While defining and deploying a communication strategy is an important step, it is only part of the equation when trying to enter and succeed in a new market. I would argue this step is often too premature and should not precede a business strategy planning process. Before your company, takes steps to develop a marketing and advertising strategy in haste, consider that the end goal of driving demand in a new market is to build the total business and that takes accurate discovery, planning and implementation by the entire organization.
Can your company deliver?
So, before you do anything else, ask yourself if your company is in a position of competency and capability to deliver the same high quality experience that keeps your current customers happy, to Hispanic consumers which make most sense for your brand assuming you know who they are.
First off, to be effective, top management must position any new market opportunity as strategic growth imperative so key stakeholders within the organization prioritize and integrate the new market. By this I mean stakeholders see the need to allocate time, people and resources to the discovery and planning process for the new market, and of course, the operational implementation which will follow. Management must assign a high level project sponsor or team lead to organize a representative cross functional team to collectively work towards answering key planning questions, and who will mobilize the team to act on the necessary strategic, marketing and operational alignment work.
I’m a strong proponent of starting with a macro view so I always challenge my client teams to start by answering important questions about the external environment, or stated differently, the environment in which their company will compete for high potential Hispanic market segments. The following questions are a good start:
- Which segment of the Hispanic market is most profitable for you? Is there more than one focus segment?
- How active have other marketers been in targeting to these Hispanics in your category?
- What is the competition doing?
- Will you need to invest to build our category or can you just focus on building your brand?
- Are your products and services relevant?
- How high is the product or service threshold you must meet or surpass to be competitive?
- Given your chosen target segments, what does being linguistically and culturally relevant mean?
- Do you know how and where to reach your chosen target Hispanic segments effectively and efficiently?
Once the project team answers the questions above, the answers are used as valuable context as the team turns its attention inward to assess how their organizations should and can deliver its products and services to meet the needs and requirements of its high profit Hispanic targets in view of consumer, competitive and category dynamics, and always in keeping with the company’s total market strategy. While my questions are always specific to the client’s line of business, the following list of questions can serve as a good general base to help determine where your company’s offering is strong and where it may have some gaps:
- How do the external dynamics compare to your current category, competitive, targets and strategies?
- What can you leverage? Where can you win? Which Hispanic segments should you prioritize?
- Given the category and competitive environment, will your company need to invest to build its category or just the brand?
- Do you understand what this means in terms of resource allocation and ROI timing so you can set realistic expectations and metrics that support your overall direction and goals?
- What areas require the most attention to create and implement a holistic and integrated go to market strategy?
- Do you have the appropriate internal organization to lead and manage the initiative, including supplier partners?
- Do you have the capacity and infrastructure to create and modify your products and services for a better fit and an equally positive customer experience?
- Does your distribution system make sense for your chosen target market?
- Do you have the required diversity in your corporate and sales organizations?
- Do your hiring and training practices align with your total market growth objectives?
- After all is said and done, will you be able to deliver on your corporate values with integrity?
Plan for Success
I think we can all agree that substance always outlasts the superficial fix so avoid the shortcuts. To successfully and sustainably leverage Hispanics for total market growth, you must ensure your foundation is strong and enduring. If you can check off all the items on this list, you are on a strong path. If not, use it to call attention to the business requirements for achieving total market success among decision makers in your organization.
- Having key business intelligence is critical for a complete understanding of your particular Hispanic market position. Notice I said business intelligence, not just consumer intelligence.
- Assessing and integrating your company’s operations at every level to ensure a lasting and effective engagement with the Hispanic market is critically important.
- Ensuring your strategies are customized to your company’s particular external and internal landscapes will help build the business with a foundation that is grounded in your company’s situation and priorities.
- Successful new market entries need to be on everyone’s radar. Capturing a significant and rapidly growing consumer base requires a representative team, from all parts of a company, to learn and to deliver on focused, integrated solutions.
- Don’t be myopic. Maintaining a 360 view provides far reaching insights, and will allow your company to develop effective, sustainable strategy and activations plans to capture and retain a growing share of this valuable market.
Terry Soto is President and CEO of About Marketing Solutions, Inc., a Burbank, California – based strategy consulting firm specializing in transformative business readiness and strategy consulting for profitable and enduring total market success. She helps her clients dramatically improve overall business performance by optimizing their strategies to succeed in the Hispanic market. email@example.com
by Terry Soto, Author and President of About Marketing Solutions, Inc.
- It’s unfamiliar to us; we don’t know anything about Hispanics.
Our organizations have very sharp and astute research and insights folks whose job it is to identify and understand segments which could represent growth opportunities for our companies. With some guidance they are in a perfect position to validate, size and provide insights on how to best attract and retain that Hispanic target segment that can bring incremental growth to your company.
Solutions: 1) Scan the internet for every credible research resource on the Hispanic market. I recommend the U.S. Census, Pew Hispanic Center Reports, Bureau of Labor Statistics, the annual Hispanic Fact Pack to get you started. 2) Reach out to vendor partners and ask the questions you’d like answered about the market and the segments which are relevant to your products. I recommend contacting AC Nielsen, Simmons, Spectra, Scarborough, and Yankelovich for relevant market views. 3) Search the online archives of your industry’s trade publications and associations and search Hispanics or Latinos, you’d be surprised how many articles and relevant insights you will find. 4) Include credible magazines and newspapers like Forbes, Newsweek, and The Wall Street Journal in your insights search. Note: Articles should be used as directional insights which must be validated. 5) Purchase current category analysis reports published by Mintel and Packaged Facts. They are based on existing secondary data like Simmons and interviews with subject matter experts and for $2,000 to $3,000 these reports can save you lots of time and money and will provide broad overviews of Hispanic consumer behavior across a variety of categories.
- It’s a complex market. There are so many nationalities and dialects.
Yes, it is complex, but it is no more complex than understanding and developing strategy for the other 260 million people in the US. who live in different regions in the country, have different cultural influencers and even have different dialects and accents, yet we manage to target them just fine. The good news is the Hispanic market is no different. They may come from different countries and have different dialects, but there is a common dialect of English and Spanish that is understood by all and they respond to marketing messages that speak to their needs just like everybody else.
Solutions: 1) Don’t get mired in the complexity of nationalities and dialects prematurely because not all Hispanics are your target market. 2) Identify the commonalities and differences in category purchase drivers for your products or services between Hispanics and your current customer target. 3) Determine which Hispanic segment is actually purchasing the greatest volume of your products and services or is buying them most frequently. And determine if that segment is Spanish-dependent or is bilingual or English dominant. About 70% of the Hispanic market understands and can speak at least some English, so dialect may be a non-issue among high potential Hispanic users of your products and services. 4) Your high potential Hispanic targets may speak English, but you will still need to align your communication to their attitudes and values, 5) Define where your high potential target is concentrated geographically vis-à-vis your trade area. Over 2/3 of Hispanics are Mexican and they are concentrated in certain states as are Caribbean, Central American and South American Hispanics. Once you have a clear picture of the market, your Hispanic target and where it’s concentrated, you will see it is not so complex after all.
- It’s costly and we barely have the budget to do what we need to do now.
I would argue that it’s costly and inefficient not to integrate your high potential Hispanic segment as part of your target market. Do you know what it costs you not to effectively attract sales to your company from the Hispanic segment? Do you know that even though Hispanics represent 12% of HH’s they represented 47% of the growth in consumer spending across categories in 2010? How much business growth are you leaving on the table? Do you know what it is costing you to innovate and deploy products, services and programs that are relevant and effective to only a portion of all potential consumers? I would argue that in most cases integrating Hispanics as part of your core target market maximizes your current investments, produces incremental growth and often times only minimally adds to cost.
Solutions: Now that you know which Hispanic segment of the market holds greatest potential for your company, determine a few key numbers which will help put budget allocation into perspective. 1) The size of the high potential Hispanic segment or segments overall and in specific trade areas, 2) the proportion of the market in your trade areas or footprint and the value of their consumption in your category, 3) your company’s market share of high potential Hispanic segments in your trade areas and the value of their consumption, 4) the gap between your existing market share and their consumption and high potential Hispanics’ concentration and spend in your category in your trade areas, 5) the value of the gap in year one and in subsequent years, 6) the value of possible attrition of your existing Hispanic customers due to under-optimized ability to deliver and provide satisfaction in a relevant manner.
- I’m not sure, but I think somebody’s working on that. It’s not my area.
I think we can all agree that we all share some part of the responsibility for developing, distributing, merchandising, marketing and selling our products to our end customers. So it stands to reason, that if a new target segment has the potential to offer our companies growth, optimizing these various areas to successfully attract their business would become our respective responsibilities. I would argue that identifying, validating and ultimately, if it makes sense integrating the Hispanic market into our strategies is everybody’s job.
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style=”font-family: Arial Narrow,serif;”>Solutions: 1) Now that you understand the value of your high potential Hispanic segment, make sure key stakeholders understand what is at stake for the company’s growth goals and how that translates in their respective areas. 2) Speak to the importance of taking a total market approach in order to capture the total market’s full buying potential, 3) Emphasize the importance of optimizing company strategies to maximize results, 4) Emphasize opportunity loss due to shifting market demographics including aging non-Hispanic population, changing demographics in key trade areas and negative impact on growth results and goals.
- We have so many initiatives and priorities so right now is not a good time.
The fact that you have so many initiatives going on at the same time is a wonderful thing. In most cases, it means business is good. But ask yourselves, how much more effective would those initiatives be if you optimized them to generate even more sales? The reason we get stopped when we think about pursuing a new market in the midst of all we have to accomplish is due to many of the reasons we’ve discussed in points 1-4. But if we think about it, being too busy is just not a good excuse. You’re basically stating that you don’t have time to figure out how to leverage the Hispanic market to make your company grow because you’re trying to figure out how to make your company grow. Think about it.
Solutions: Integrating Hispanics as an initiative’s target segment means the right Hispanic segment becomes part of the total target segment as part of the same effort with the same resources and the same budget. It requires a mind shift to automatically include the right Hispanic target from the beginning, but it is the only way to maximize business results. Here are are the steps I recommend:1) Consider the total target segment including Hispanics in every initiative’s opportunity assessment process, 2) develop the plan with total target insights in mind, 3) coordinate and align the front and back end operations to be relevant among the initiative’s total target segment and, 4) Implement the plan so the total target receives it, has access, is satisfied and becomes loyal to you.
- I simply don’t see the need to adapt the way we do business to target this market.
The truth is that consumer markets are changing and evolving constantly and it is our ability to change with them or even ahead of them that allows us to maintain our success and achieve growth. We change and adapt our products and our go to market approaches constantly. We have national, regional and local strategies so we can adapt to our customers different needs and expectations. Well adapting to the growth and needs of the Hispanic market in our trade areas has also become a necessity for many of us. Your company’s continued growth depends on it. Don’t make the mistake of the retailer which launched a multimillion dollar initiative to take back California where it is losing market share and Hispanics were nowhere on their radar. I wonder if they know California is 40% Hispanic.
Solutions: To understand the demographic and cultural change our country has been going through and the coordination and alignment work that might be required of your company’s go to market approach, you need to step outside and get on the ground floor. 1) Step out of your offices and go into the markets experiencing the greatest changes, 2) visit and speak to your sales organization and/or speak with your store or branch managers about the changes they see and the tools they need to continue being successful, 3) watch for the mix of cultures and languages spoken by your new customer base, 4) watch how multicultural consumers behave, how they shop for your products and services and think of the implications, 5) watch who they shop with, 6) watch how they interact amongst themselves and with your sales people, 7) observe the relevance of your store environment, including product and service skews, merchandising, POP, staffing, literature, digital screens, kiosks, and everything else you consider critical to the customer experience and to sales generation.
- I’m not sure we should be targeting this market. Aren’t they illegals?
We’re all entitled to our personal, philosophical and political views on our personal time, but in our companies and in our areas of responsibility, we are rewarded for profitable growth. Achieving growth requires that we educate our game before making unfounded blanket statements and it requires that we think and make decisions with the business goals of our organizations in mind. For starters, consider that not all Latinos in the United States are recently arrived. Some families have been here for five generations. In the state of New Mexico, Hispanics can trace their roots in the Southwest back several hundred years. The Census indicates that 2/3 of Hispanics are U.S. natives while only one third are immigrants. Of the 20 million Hispanic immigrant population, the Census estimates 11.2% are illegal or just over 2 million.
Solutions: 1) Leverage credible and factual sources of information like those I reference in reason #1, solution #1 and I would add Center for Immigration Studies and the 2010 American Community Survey (ACS) and the March 2011 Current Population Survey (CPS). 2) Stay open to the fact that without addressing the Hispanic population in most U.S. geographies, future growth will slow and even come to a halt for many industries.
Overcoming these perceived obstacles and applying these solutions and others will depend on our ability to focus on what is best for our businesses, on organizing to define and validate the Hispanic market opportunity, and on taking action to optimize our strategies, organizations and infrastructures so we can continue to produce growth for our organizations well into the future.