Editor’s note: Jennifer Lynch is director of marketing and new business development, and David Morse is chief operating officer, at Cultural Access Group, a Los Altos, Calif., research firm.
The U.S. Hispanic population is attracting a lot of attention from merchandisers and retailers in the U.S. With a purchasing power estimated at $383 billion, the Hispanic market is an attractive target for companies looking to expand their customer base.
Tapping into this market is a popular agenda item during company strategy meetings. Many companies realize that when it comes to targeting Hispanics, they lack a point of reference. They cannot draw directly from personal experience or look back to previous multicultural marketing efforts in order to make strategy decisions. Obtaining accurate and complete information on the purchasing patterns of this complex and diverse ethnic group is complicated by varying levels of language proficiency and acculturation. In addition, most syndicated data sources tend to under-represent Hispanic household purchasing power and only include acculturated households that speak English.
Two research firms - Schaumburg, Ill.-based ACNielsen and Los Altos, Calif.-based Cultural Access Group - formed a strategic relationship to develop and maintain the first Homescan Hispanic Consumer Panel. Los Angeles was selected as the initial location of the panel since it is the largest Hispanic market in the U.S. and represents 25 percent of the total U.S. Hispanic market.
The sample for the ACNielsen Homescan Hispanic Consumer Panel is demographically balanced and representative of all Hispanics in the market. Household demographics and acculturation variables are tracked and analyzed using a proprietary language segmentation model. The panel includes over 700 Hispanic households that mirror market population targets for language/acculturation and demographics. Household purchase data is collected for all UPC products that are purchased by these households.
The data shows that disparities exist between Hispanic and non-Hispanic shoppers. Likewise, within the Hispanic population, there are marked differences resulting from different levels of acculturation. These disparities can be attributed to a variety of variables including lifestyles, taste, diet, demographics, and brand preferences. The following examples look at these differences and the associated marketing implications.
Lifestyles
Data collected from the panel shows that Hispanics have a low usage of prepared foods. Also, frozen foods have a low incidence among Hispanic shoppers. Why the difference? Cooking from scratch is a way of life for most Hispanic housewives. Packaged or frozen food would reflect badly on them as mothers. Conversely, certain food items are used extensively in Hispanic cuisine. These dishes are a staple of the household out of preference, habit, experience, and the need to maintain elements of the culture. For example, Hispanic households, primarily Spanish Dominant/Preferred, outspend the general market on tortillas 10 to 1 and on bouillon by 16 to 1 (refer to Graph A). Not surprisingly, they are buying fewer rice mixes (indexing at 22 percent) and less canned soup (indexing at 30 percent).
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Based on the panel’s data on prepared food, marketers may want to develop marketing communications emphasizing the quality of prepared products. Advertisers may want to develop creative campaigns that show images of mothers serving products with love and care.
Taste and diet
Hispanics tend to prefer sweet drinks. Data from the panel shows that Hispanics over-index on fruit juices and soft drinks (refer to Graph B). One cultural explanation is that soft drinks and juices are associated with family events and happy occasions. Also, diet drinks tend to index low given that low-calorie considerations are less important than in the general market. The result: sugar and sweet-tasting foods continue to drive the Hispanic palate, despite the general market obsession with low-calorie alternatives.
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Results of the panel data in the beverage category may influence marketers to develop campaigns for diet products with images of family and friends at play. To promote diet soda, a brand manager may want to design an educational communications plan that informs Hispanics about the bad effects of excess sugar.
Demographics
Hispanic households are considerably larger than non-Hispanic households. In 1997, the size of non-Hispanic household was 3.2 while the average Hispanic family size was 4.171. The size of a household corresponds to a greater demand for consumer product staples such as milk and toilet paper (refer to Graph C). The panel data for the dollar index for milk reflects demographics as well as acculturation. Since language is used as one indicator of acculturation, English Only/Preferred Hispanics are considered to be more acculturated. As Hispanics become more acculturated, their dollar index for certain categories comes close to mirroring that of the general market. For example, English Only/Preferred Hispanics have a milk dollar index of 96 percent.
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As Hispanics become more acculturated, they are often captured by a general market advertising campaign if the correct mix of symbols and images are used.
Brand preference
As illustrated by catsup, brand preference is very different between Hispanics and general market. For example, Brand A may capture 60 percent of the general market and only 30 percent of the Hispanic market (refer to Graph D). Conversely, Brand B is the leader in the Hispanic market. Among Hispanics, brand preference is often a carryover from the consumer’s country of origin or “brand heritage.”
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Based on the differences in brand preference, companies may want to develop advertising campaigns with strong brand linkage. Advertising targeting Hispanics should include themes, images and symbols that are important to consumers and remind them of their heritage.
Useful tools
Panels such as the ACNielsen Homescan Hispanic Consumer Panel can be useful tools for understanding the purchasing behavior of U.S. Hispanics. They highlight marketing opportunities, product strengths and weaknesses, and often point the way to areas requiring additional market research.
Notes
1Bryson, Ken and Lynne M. Casper, “Household and Family Characteristics: March 1997”, Current Population Reports, U.S. Bureau of the Census, March 1997.