By Glenn Llopis (Forbes)
Entrepreneurs and corporate executives across America are awakening to the importance of Hispanic consumers and their growing purchasing power, estimated to reach $1.5 trillion dollars by 2015. Though brands still remain cautious in their approach, they are beginning to realize that if they don’t act now, they may never get a second chance. The companies that are making a serious commitment to the Hispanic market have already realized that more success will come to those who support specific Hispanic business models targeting the Hispanic consumer.
Just ask Antonio Swad, the Italian-Lebanese immigrant who founded the $40 million Pizza Patrón. Headquartered in Dallas, TX, Pizza Patrón has built an extremely loyal following with first and second generation Hispanics by satisfying the culturally relevant needs of these consumers. Mr. Swad may not be Hispanic, but he has demonstrated that culture is the new universal language in America.
Yes, culture is quickly becoming the new universal language in America. Cultural intelligence must replace the misguided notion that simply translating English copy into someone’s native language is all you need to do to reach them. Embracing cultural sensitivity has become critically important to the design of new business models, leadership development and the relationships that brands earn with their consumers. It is not only ethical and the right thing to do; it’s the “must-do” to be domestically and globally competitive. Given today’s demographic shift in America, brands can no longer afford to make guesses and assumptions about their target audiences.
You don’t have to be of a specific heritage to sell to that particular cultural group either – you just need to invest the time to learn about their cultural characteristics and the values that would drive them to trust your brand. For instance, Hispanic consumers don’t want to be sold to, they want to connect with brands that embrace their culture and commit themselves to earning long-term and trustworthy relationships. Mr. Swad has shown thisto be true. Furthermore, on a recent episode of MSNBC’s “Your Business” that featured Pizza Patrón, producer Frank Silverstein noted that, “While it is tempting to think there might be a 10-step playbook for Hispanic marketing, it’s just not so.”
The key to Hispanic marketing is understanding “the ingredients that define the recipe of success.” In other words, there are thousands of recipes each marketer can create based on how their specific products and services appeal to the cultural needs of their Hispanic consumers, or any targeted audience.But the ingredients – the culture – remain constant.
If you are like Mr. Swad and not Hispanic, then how do you start the process of marketing to Hispanic consumers? First, you must understand how culture defines the identity of the Hispanic person. If you don’t understand their cultural characteristics, then you will not understand how Hispanics are wired to think and why they purchase and remain loyal to certain brands. Reading my e-book on this subject will get you started in the right direction: The Six Reasons Why Hispanic Leadership Will Save America’s Corporations.
Since most business leaders and general market advertising agencies that manage brand strategies still lack cultural intelligence, many tension points still exist between Hispanic consumers and the industries that should be standing ready to serve them. As such, corporations across industries are struggling to earn loyalty and trust from a consumer base that is simply looking for brands to be more culturally sensitive about their particular needs and in how they communicate with them. Remarkably, very few brands have defined and consistently supported a strong enough narrative that speaks specifically to their Hispanic consumers.
This “weak narrative” extends to our political parties, and was quite evident during the 2012 Presidential elections – where President Obama represented the better of two misguided approaches to the community, and Romney might have had a chance at winning the election had he really “valued” Hispanics and other disenfranchised voters.
In part because of the election results, mainstream English-speaking Hispanic marketing efforts are finally starting to become more culturally sensitive. Budweiser, AT&T and McDonald’s are just a few examples of brands that are making greater efforts to communicate with the Hispanic community and empower them through culture. But the question remains: will their marketing and community outreach efforts continue to build along the way, and empower Hispanic voices to influence their strategies?
This is exactly what Mr. Swad has done, to great success. He understands that Hispanics are not a “one size fits all” consumer base. In fact, Latinos are a highly diverse community and their growing population resides in markets that brands may not be paying attention to, according to new research by Nielsen. This requires marketers to become ever more knowledgeable about their lifestyles, religious and political beliefs, cultural values and nuances – and the everyday things that shape and define their mindsets. This doesn’t mean that brands must communicate in Spanish, it means much more than that: they must communicate in their culture.
If more brands valued “cultural ingredients” and began to invest in Hispanic consumers in the right ways, tension points would begin to dissipate and revenue streams would grow. New recipes to unlock the Hispanic market would emerge and begin to generate favorable ROI – and mainstream businesses would become more comfortable about investing in this “super-consumer” opportunity. But for now, brand marketers still have a lack of confidence in the Hispanic market that is in direct proportion to their lack of knowledge about the community.
Despite the vast potential inherent in this opportunity, it’s easier for companies to steer away from the community and simply bundle the Hispanic consumer with their general market approach. While “Total Market” is a safe strategy, it is not the one that will earn loyalty and trust with Hispanic consumers. In many respects, not getting to know them is an insult that creates new tension points and widens the gap between Hispanic consumers and businesses from all industries across the country.
Sound complicated? It is when you don’t value the cultural ingredients that can create the right recipes for success. Nevertheless, the opportunity remains wide open and leaders like Mr. Swad are reaping the rewards of early investment, in his case with constant expansion of his franchises throughout the United States.
Unfortunately, there are many more marketers and brand owners who gave up on the Hispanic market when they didn’t get an immediate return on their investment. This is especially true with corporations that are faced with quarterly pressures from Wall Street.
As Armando Azarloza, President of The Axis Agency, a Culture Movement Marketing Agency, explained it: “Total Market means shifting from targeting particular ethnic consumers to strategies that will appeal to a multicultural nation. While the idea has its value, it also has its pitfalls. Some fear that this will further undercut investment in ethnic markets. Regardless, the shift in thinking will have substantial implications for the future of American marketing strategy.”
In my opinion, Total Market is a strategy that attempts to force Hispanic consumers to assimilate to “general market messaging.” Though this strategy is mindful of integrating Hispanic cultural sensitivities, it doesn’t take it far enough. Hispanic consumers are skeptical to begin with, so they know when a brand is not speaking specifically to them. One thing that brands in America must realize is that Hispanics see things that others don’t. For example, because many faced corruption in their mother countries, they know when someone is trying to sell them something without first earning a trustworthy relationship. As marketers continue to look for “short-cuts” – forgetting that converting Hispanics into loyal buyers is a marathon, not a sprint – the tension points will mount and the opportunity will languish.
Rich Melcombe, CEO of Richmel Media & Productions, offers his perspective as former Spanish-language Executive Producer and Hispanic Media Consultant: “Many Spanish-language television networks have adopted a total market strategy to derive more advertising dollars, but it’s a fool’s journey. CBS is the number one network because its shows appeal to the broadest demographic regardless of ethnicity. Spanish-language networks appeal to the narrowest of demographics; therefore they cannot be total market and should focus on growing their target audience. It’s not about the language, but rather connecting and identifying with people culturally.”
The bottom line is that Hispanic consumers are not valued enough because most companies don’t understand them nor are they willing to invest in a strategy when they don’t see the long-term opportunity. They see only the negative ROI of a mismanaged short-term strategy. Many have claimed that they launched a Hispanic marketing strategy, but they didn’t invest in the right “cultural ingredients,” created the wrong recipes, and mismanaged their ROI expectations. After a first attempt fails, many will never repeat the effort.
Chief Marketing and Strategy Officers from every industry must accept one critical success factor: create a Hispanic business model if you want to fully capture long term success with the Hispanic consumer. A model that invests in the right “cultural ingredients” and supports the most authentic leadership, supply chain partners, branding, communications and community outreach efforts for serving this rapidly growing community. While I certainly understand why many “general market types” are resistant to embrace this approach, full immersion and attention-to-detail are required to break through the tension points that exist with the community.
You might claim this is a segregated approach to marketing. This might have been a valid argument 15 years ago. But today’s new normal – riding a demographic shift in America that will make minority groups the majority (54%) by 2050 – requires a “reverse assimilation” strategy, not only to capture the Hispanic community (30% of the population by that same year), but all multicultural and diverse groups.
We are witnessing an identity crisis in America that will only grow if we don’t pay attention to and address the needs of our specific consumer demographic clusters. Every consumer wants their identity to be accepted and their needs to be recognized by brands. Not every brand may be able to satisfy the needs of every consumer group, but one thing is certain: your brand must complete its due diligence to determine whether or not Hispanic consumers are your right target audience. You may only get one shot, so make it a good one. Those who market rightly to Hispanics will be in a position to dominate their industry for many years to come.
Armando Azarloza concludes, “Segmentation schemes are being developed, beyond the conversation of total market, that recognize that the Hispanic market, for one, is not a single entity, but rather a segment that requires specification. Despite such difficulties in identification, marketers are attempting to reach consumers in this growing ethnic market. But you can’t reach them without understanding variables such as values, lifestyles, and country of origin.”
Categories: NGL News