Editor’s note: Art Padilla is director of online panels at ThinkNow Research, Burbank, Calif.
For many American brands, expanding into Latin America is the next logical step in their strategic growth plan. While direct investment in the region has slowed, it is still significant, creating a favorable environment for expansion. When coupled with the fact that internet access has risen dramatically in the area, making goods and services more accessible, the potential for line extensions, new product launches and the like becomes more appealing for companies who have maxed out their potential in domestic markets. But like marketing to Hispanics in the U.S., attracting Latin American consumers isn’t as easy as translating product messaging into Spanish. Several factors impact a company’s ability to enter the LATAM market successfully, chief among them are race and socioeconomic status.
It’s important to note that while race and socioeconomic status are considered in the U.S. when targeting consumers, these classifications differ in Latin America markets. The ability of brands to understand this and factor it into their sampling can be the difference between resonant marketing campaigns and those that fall flat.
In short, LATAM race and socioeconomic targeting cannot be done the “American” way, and here’s why.
LATAM race targeting is nuanced
Contrary to popular belief, Hispanic/Latino is not a race, nor is it the way people identify in LATAM countries. Hispanic refers to language spoken or people of Spanish-speaking countries. A person from Spain (Spanish) can also be classified as Hispanic. Latino, on the other hand, identifies people whose origins are from a country in Latin America. An American of Brazilian descent, for example, would identify as Latino but not as Hispanic because the language in Brazil is Portuguese not Spanish. Confused yet?
Latin America is a rich cultural tapestry made up of descendants of immigrants from all corners of the world. With so many variations, people claim the part of the culture they identify with most.
Race identifiers in Latin America vary from country to country and are not as broad as those in the U.S. For example, a Mexican American in the United States (such as myself) usually identifies as a U.S. Hispanic. My counterpart in Mexico, however, would identify as Criollo (European descent) or Mestizo (mix of two races).
For sample providers, proper racial identifiers for the LATAM market must be included in the research methodology to ensure quality sample that produces useful insight. Consider this: Brand X sells shampoo and wants to enter the Brazilian market. If the sample methodology does not account for Brazil’s racial identifiers and instead targets the racial groups found in U.S. samples (non-Hispanic white, African American, Asian, Hispanic/Latino), the brand will most assuredly miss the cultural nuances important to the multifaceted Brazilian consumer base, comprised of racial/ethnic groups such as Pardo (mix races), Mulato (black and white), Cafuzo (black and Amerindian) and Ainoco (white and Japanese), to name a few. The questions answered by the respondents would be segmented inaccurately and leave Brand X marketing to the wrong group or not marketing properly to a certain ethnic group.
This is a simplified example, but I see it play out time and time again in marketing campaigns from brands attempting to enter a new market without first understanding its inhabitants. Failure to have the appropriate racial profile of who you’re targeting will most likely skew your data and leave your data set relatively useless.
LATAM socioeconomic status is more than income
Americans identify socioeconomic status based primarily on yearly household income. In Latin America, however, socioeconomic status is based on a unique set of measures. Colombia, for example, goes by a government-defined stratification system (STRATA), Argentina goes by SAIMO, Mexico uses AMAI and so on. AMAI has a point system based on a few questions about the respondent’s home. Questions such as “How many bathrooms with a showerhead do you have in your house?” and “Do you have internet at home?” provide visibility into one’s lifestyle. Each response awards points and the higher the total points, the higher your socioeconomic status. A score of 205+ points grants you the AB social classification, representing the higher income society.
On the contrary, a score of 0 to 47 points grants you the E social classification, representing the lowest income and status. In the middle are scores of 48-204, which represent the different levels of middle class. This point system is how Mexico labels social classes.
Not including the right social classification questions on online surveys when sourcing sample in LATAM may cause researchers to place respondents into the wrong category, causing brands to make inaccurate assumptions about consumers they are targeting. Sample providers not accounting for these nuances during data collection are painting an incorrect portrait of a very diverse landscape, with far-reaching implications on product development, branding, positioning and advertising, just to name a few.
What we know about LATAM sample
When launching Latin American research studies, it’s imperative to create race algorithms that properly identify each LATAM country as well as applying the proper socioeconomics measure per country. Otherwise, results will be open to misinterpretation. Combining technology, data and cultural awareness helps ensure actionable insights lead to better business decisions.