Finding Your Niche in the Hispanic Market

Specifying your target customer in the diverse Hispanic demographic can help food sales soar at retail.

By Howard Riell, Associate Editor.

The first rule of marketing for the average Hispanic consumer is understanding that there is no such thing as the average Hispanic consumer.

The Hispanic consumer spans a diverse demographic composed of many niche groups—Colombians, Brazilians, Mexicans, Salvadorans and others from Central America—and yet retailers often make the mistake of targeting Hispanics as a homogenous block.  This can be a lethal blunder for your business, especially considering the demographic currently represents about $1 trillion of spending power across the nation.

Savvy c-store operators succeed by specifying the niche within this population they most want to attract and leveraging some commonalities and sensitivities that appear across the spectrum of this key demographic.

With so many sales dollars at stake, why do businesses intent on drawing the Hispanic population often fall into the trap of generalizing the Hispanic market?

“Because it’s easy,” said J.D. Moya, founder of the Pegasus Group, a Hispanic marketing consultancy based in Albuquerque, N.M. “It’s easier to comprehend: ‘Oh, there’s one group out there.’ That’s why there are variations of success in the market, because instead of focusing on one niche market of a particular group, some retailers tend to generalize too much. They spend a bunch of money, and in some areas it works, but in some areas it doesn’t.”

The potential rewards for retailers who take the time to learn the broad spectrum within this diverse consumer base are a host of new sales opportunities on products ranging from foodservice and beer to packaged beverages. Best of all, it gives you an advantage in drawing a group with disposable income to burn.

Getting it Right
Before you can effectively market to Hispanic consumers, you have to know your audience. The terms Hispanic and Latino usually refer to those tracing their roots to Cuba, Mexico, Puerto Rico, Spanish-speaking Central and South America countries, and other Spanish cultures, regardless of race.

The U.S. Department of Transportation throws Dominican and Portuguese into the mix. The estimated size of the Hispanic population in the U.S. as of July 1, 2009 was 48.4 million, according to the census, making people of Hispanic origin the nation’s largest ethnic or race minority. Hispanics constituted 16% of the nation’s total population, and are projected to reach 30% by the year 2050.

In addition, there are approximately four million residents in Puerto Rico, a Caribbean U.S. territory. More than half the people added to the nation’s population between July 1, 2008, and July 1, 2009, were Hispanic. The top five Hispanic cities in the country are Los Angeles, New York, Miami, Houston and Chicago.

“You’ve got to remember that 70% of all Hispanics in the U.S. are Mexican,” noted Moya. “That’s why you get the feeling that (Hispanics) all look alike, which they don’t. Look at me: I’m green-eyed and blond-haired. You would never know that I’m Hispanic. We all speak Spanish, but we speak it with different accents. The Mexican in Texas is going to speak a lot differently than the Mexican in California.”

If c-stores are going to be successful in the Hispanic market they’ve got to pick out the group that they really want to do business with, Moya advised. “That’s really the goal of any business. Go after your niche market with whatever it is you’re selling.”

For those companies whose marketing programs have been guilty of generalizing the demographic, there is good news. While some Hispanic customers might resent being marketed to as little more than a two-dimensional stereotype, others may see things differently.
“I am Hispanic, and in fact I appreciate the effort,” said Moya. “One positive step forward over the past 10 years is that more Hispanic customers feel important now. Marketers are paying attention to them.”

Non-Hispanics may tend to minimize that sentiment, but they shouldn’t, Moya suggested. “The Hispanic consumer, by and large, has not been paid attention to until probably the last 15 years, but the business world has really woken up. It’s the political season now, so we hear every day, ‘Hispanics are the fastest growing market,’ and ‘the election is going to actually be swayed an awful lot by groups like women and Hispanics.’ Hispanics are feeling that, and it’s a relatively new feeling for us, to tell you the truth.”

Authenticity Matters
But Hispanic customers do have a few things in common. Recent research by Chicago-based foodservice research firm Technomic Inc. found that Hispanic consumers across the spectrum place high importance on the authenticity of Hispanic menu options when dining out.

“Authenticity is crucial to the ethnic food and beverage purchasing decision,” said Darren Tristano, executive vice president. “Sixty-five percent of consumers say food that tastes authentic is one of the most important factors in deciding which establishment to visit for ethnic foods and beverages.”

Technomic also found more than a third of acculturated Hispanic consumers (35%) report a high level of brand loyalty. More than two out of five purchase foodservice options at convenience stores on a monthly basis.”

Driving Sales
Another too-common marketing mistake some retailers make is treating Hispanics as if they just arrived in the U.S. “You’ve got to remember that Hispanics, my ancestors, they came in the 1500s,” Moya noted. “So if there is anybody Americanized it’s got to be me—and if I’m feeling it, we’re all feeling it.”

Clues to how to appeal to Hispanic c-store customers include the fact that most are gregarious, according to Moya, which makes them susceptible to suggestive selling. “The Hispanic is not a private person. We like to talk. You don’t know me, I don’t know you, and yet I’m willing to share a lot of stuff as long as you ask me. We are not shy about expressing our opinions. Privacy is not a big deal for us.”

Moya suggested having your employees engage your customers in conversation. “They want to talk. They want to tell you about their lives, so engage them,” Moya said.  Having Spanish-speaking and friendly employees can be a big asset in helping Hispanic customers feel welcome.

But it’s not enough just to get them to talk—you also have to listen. Getting customers to open up means better opportunities to craft just the right product mix. “Ask them what else they’d like to see in your store,” Moya suggested. “Is there something that the store is missing that they’d like to see?”

Across most niches in the Hispanic market, you’ll find a very family-oriented population that often values religion and enjoys music. Small touches in your store that cater to these preferences can help Hispanic customers connect with your store. “That means that my advertising would be nothing but pictures of groups, such as families. Having a cross here and there wouldn’t hurt. And I’d have music. It doesn’t have to be Hispanic music. In general, in fact, I would play oldies.”

Like all customers, Hispanics like freebies. “Give something away,” said Moya. “The 10th customer that walks in the store, give them a ‘regalo,’ a gift. If you go to any Costco or Sam’s Club you’re going to bump into more Hispanics than whites. Why do people go to Costco? It’s an experience: you go past all those little tables and you get something, the little tastes. They like that. Trader Joe’s does a great job of that, too. If you’re in a convenience store, frozen beverage giveaways to the 30th customer, something along those lines would help excite this customer base.”

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