Hispanic Segmentation Made Simpler
By Terry Soto, President and CEO, About Marketing Solutions, Inc.
I’m often asked how companies can avoid stereotyping or generalizing when creating a Hispanic strategy, given the various ways in which the market segments.
One of the first considerations when creating a Hispanic brand strategy is to understand how a product or service is purchased. Unless a product is country specific or purchasing behavior is representative of a certain country, nationality is often not a consideration. It is a consideration, however, for certain types of food, music, concerts, restaurants, or specialized services like money transfers. What’s important is to be clear on whether the product or service is a functional purchase or an emotional purchase.
Functional purchases are typically for commodities and are usually inelastic in terms of costs. This means price sensitivity is high and they meet minimum characteristics considered acceptable or preferred options between brands. Defining a Hispanic target for one of these categories is more about basic demographics and consumption patterns. Target profiles are typically broad. Areas like distribution and pricing are likely to be the drivers of the business. Branding work that focuses on special attributes or advantages is especially important in these categories to create a distinction between similar competitors. These categories also tend to be very promotion activity dependent.
Emotional purchases are very different. They are discretionary purchases and are made not because they are necessary, but because they make the purchaser feel good. These categories include wine, premium distilled spirits (cognac), luxury cars, fine restaurants, jewelry, flowers, specialty foods and spa services. The important segmentation work here is based not only on behavior, but attitudes, values, life style and life stage. This results in the psychographic profiles most likely to be consumers of your product/service/brand. In these cases, developing a brand personality that closely aligns with how the Hispanic consumer perceives him or herself is a strong consideration when developing a brand strategy.
Messages depicting how the consumer sees himself as the user and the emotional benefit gained are most effective. These messages tap into consumers’ emotional and psychological hot buttons. Pricing is typically elastic. Merchandising and distribution channel exclusivity is important to conveying a distinctiveness for which consumers are willing to pay more. Demographics such as age, gender, education and income are important factors, but they typically fall naturally out of the behavior or lifestyle description of the category user. Again, nationality is typically unimportant here.
Once a target market and its purchase hot buttons for your category or banner are clear, the objective becomes creating a message that best motivates functional and/or emotional purchases. Here, it’s important to craft messages that avoid colloquialisms to avoid misinterpretation, unless they are necessary to make the point or if tongue in cheek humor is being employed. Messages should focus on using language that ensures comprehension among as many different Hispanics within a target definition as possible.
Moderator’s Comment: What segmentation challenges do you see for consumer marketers and retailers reaching out for Hispanic consumers? How do ‘best in
class” marketers address Hispanic consumer segmentation without getting into the complexity and cost of creating branding or banner messages on a individual country of origin
basis? – Terry Soto – Moderator