By Ellen Byron (Wall Street Journal)
Expect more Spanish on your tube of Crest toothpaste.
Procter & Gamble Co., looking for ways to boost its sluggish U.S. business, is accelerating its efforts to win over Hispanic shoppers. Using insights turned out by its army of researchers, P&G is tweaking products, retargeting its marketing, changing its mix of celebrity spokeswomen and making greater use of Spanish on its products.
The motivation is simple: Hispanics accounted for more than half of the gains in the U.S. population from 2000 to 2010, according to the U.S. Census Bureau, and their younger, bigger families are a good fit for the maker of Pampers diapers and Tide detergent.
P&G added exotic fragrances to its Febreze air fresheners; is pushing Gain for hand-washing dishes over dishwasher detergent Cascade; lavender-scented Downy tested well with Hispanics.
But P&G has some catching up to do. Its penetration of that growing group of buyers lags in key areas like toothpaste, where rivalColgate-Palmolive Co. has leveraged its strength in Latin American markets to build a dominant position in the U.S.
“You’ve got to consistently shift your business model to target where the growth is,” says Melanie Healey, P&G’s group president of North America.
The U.S. has been the bane of the P&G’s results lately. More American shoppers remain reluctant to spend, hampering sales growth for P&G’s brands and the overall household-products industry. Sales in emerging markets, where P&G is aggressively expanding, are growing briskly, but it still depends on the U.S. to deliver the biggest share of its sales and profit.
Sales in the U.S. Hispanic population, however, are showing better growth. In the past decade, the demographic’s spending on laundry, household-cleaning supplies and personal-care products grew nearly three times faster than non-Hispanics’ outlays, according to market-research firm Packaged Facts.
Hispanic households tend to spend more on cleaning and beauty products and are more loyal to the brands they like than the average U.S. consumer, industry analysts say. P&G’s researchers have found that while generally frugal spenders, Hispanics are also willing to splurge on the types of premium household goods that P&G makes, subscribing to the phrase “lo barato sale caro,” meaning that cheap things may ultimately prove costly.
Procter & Gamble Co.’s Downy fabric softener sits on the shelf at a supermarket in New York.
“She’s not necessarily going for the least expensive option all the time, because that can be more expensive in the long run,” Alexandra Vegas, P&G’s multicultural marketing director, says of the Hispanic consumer.
Hispanics spent about $1 trillion last year, accounting for some 9% of total consumer buying power in the U.S., and are expected to shell out $1.5 billion by 2015, outpacing growth in spending by non-Hispanic consumers, according to estimates by the University of Georgia’s Selig Center for Economic Growth.
Households with children appeal to P&G because those families will need more diapers, wash more clothes and use more personal-care items. Marketers of household staples try to hook consumers at a young age, believing they will be loyal to their brands for life.
P&G has increasingly targeted Hispanic shoppers in recent years, designing products and marketing to appeal to the demographic. The company has found Hispanic consumers are more likely to be fans of using fragrances in their homes. To capture that preference, P&G has rolled out products including Febreze’s “Destinations Collection” of air fresheners featuring scents like Brazilian Carnaval and Hawaiian Aloha. Likewise, its new Gain dish soap features fragrances like “Apple Mango Tango.”
Meanwhile, P&G’s Pantene shampoo and Gillette Venus razors now include actress Eva Mendes as well as singer and actress Jennifer Lopez, respectively, as spokeswomen.
Other changes are more subtle. Most of the products on a new website that P&G will roll out Thursday to promote its products to Hispanic consumers have no obvious ethnic affiliation. They include Downy fabric softener—but scented with lavender, which P&G research shows Hispanic consumers favor.
The products P&G chose not to include on the site are also revealing. Many Hispanic consumers, according to company research, don’t think dishwashers do a good job of cleaning. So Gain dish soap makes the cut, but P&G’s blockbuster Cascade dishwasher detergent is out.
The company soon expects to import more of the products that it developed for Latin American markets. It wouldn’t be more specific, because plans are still developing. Already, independent distributors have been importing such products informally to stock supermarkets in Hispanic neighborhoods with P&G goods that aren’t usually sold in the U.S.
Also on the agenda is greater use of Spanish on P&G products and coupons. Such moves rankled some shareholders who complained at the company’s annual meeting last October that most Americans spoke English.
Ms. Healey is undeterred. “We declared about a year ago that we would be doing more trilingual packaging everywhere we possibly could,” she says, covering Spanish, English and French, for Canadian consumers.
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