Martinez in the Middle - marketing to Hispanic Americans - Brief Article

Brandweek, May 14, 2001 by Jose Villasenor

Before this year began, the number 35,305,818 could have represented anything substantial. The value of my sister-in-law's stock options (before the crash, natch), last week's Texas Lotto jackpot (I was THISCLOSE to winning), the latest license plate issued (and subsequently subjected to a Los Angeles traffic jam).

But post Census 2000, that number means pure, unadulterated power. According to the U.S. Census Bureau, Hispanics now number more than 35 million and are in a statistical dead heat with African Americans for the honor of being designated America's largest minority segment.

No doubt, all the press over the census will inspire many to woo Hispanics with various products and services. But before marketers try to inject a little ethnic flavor into their niche efforts by spouting quirky Spanish taglines or inundating Hispanics with second-rate Latin entertainers, they should look at the numbers and understand a key, yet often-overlooked, fact: Stereotypes aside, the biggest growth in the market is among the Hispanic middle class.

The Latino Middle Class: Myth, Reality and Potential--a study released last month by the Tomas Rover Policy Institute--reveals that the Hispanic middle class has grown nearly 80%, to 2.7 million households, since 1980. Fully one-third of all Hispanics are part of middle class America, about 12 million Latinos at last count.

This tier had been largely ignored by most U.S. marketers, who have chosen to focus targeted efforts on "traditional" Hispanics--those who speak only Spanish, work low-wage jobs and boast a limited education.

When one evaluates disposable income levels, marketing to middle class Hispanics makes more economic sense. Obviously middle class Latinos will spend a much larger percentage of their salaries on premium consumer products than less-affluent consumers.

Below a $50,000 household income threshold, only about 10% of purchases can be considered discretionary but this figure soars to 50% of every dollar earned above $50,000. For companies selling premium products and services, this signifies an entire new market.

Marketing to middle class Hispanics will require brands to develop messages that resonate with that consumer. While family remains a hot-button issue, marketers may find that climbing the economic ladder, education and individuality are starting to become top-of-mind issues.

Miller Brewing began shifting its Hispanic marketing strategy last year. The new direction not only includes advertising in English and Spanish, but also incorporates a new theme of economic success. In one ad, a Hispanic family watches as workers board up their neighborhood market. As a mariachi band plays upbeat music, the family turns around and gazes proudly to celebrate the grand opening of their much larger grocery store. The American dream theme resonates well among Hispanics experiencing a rise in purchasing power and business success, the same economics that are fueling middle class growth.

Capitalizing on the bilingual characteristics of many middle classers, Chuck E. Cheese ran a 15-second bilingual Hispanic-targeted spot on Nickelodeon, an extension of the pizza chain's Spanish-language campaign.

While some marketers realize the potential of this segment, many others have not. Pharmaceutical companies that spend billions marketing new drugs directly to consumers seem to be bypassing it. Perhaps they don't realize that not only do middle class Hispanics have specific concerns about cholesterol and diabetes, but they are more likely than lower income Hispanics to have health insurance. And while Gateway has done a fair job of marketing to the demo, other personal computer companies like Dell, Compaq and H-P lag far behind in reaching a market whose interest in the Internet is growing as fast as that of the public at large.

The strategy for media also needs to be re-evaluated. Spanish language radio has long been considered the most cost-effective way to reach Latinos, as well as the more culturally sensitive choice. However, recent figures indicate that 60% of Hispanics are U.S-born and they often prefer ads in English. Also, more consumers are calling themed cable channels, magazines and the Web their preferred media.

The growth of English language preference among middle class Hispanics also opens the door to other marketing tools that had not been a viable option before. Since the discipline helps communicate a brand's message through the news media, pr will see strong growth as more Hispanics start picking up English language newspapers and become stronger consumers of local and network news.

In a study released last year by Strategy Research Corp., the firm noted that the use of English language newspapers jumped from 21% for" relatively unacculturated" Hispanics to 77% for "highly acculturated" Hispanics. With a few exceptions, middle class Hispanics tend to have higher acculturation levels, thus making them more open to receiving information via English language newspapers.

While Spanish language TV networks such as Univision and Telemundo will continue to see tremendous growth in viewership, general market networks should find their niche in delivering culturally relevant programming and news angles to this new middle class. Most of these nets and affiliates figured out the diversity thing years ago. Today, many anchors and reporters in the top 50 markets mirror the diversity of their audience. The next logical step is for these broadcasters to begin featuring and focusing on stories that appeal to Hispanics and middle class Hispanics specifically.