Setting Hispanic Market Share Objectives? Look Beyond Market Population.

Discussion
Nov 11, 2005
Avatar

By Terry J. Soto, President & CEO, About Marketing Solutions, Inc.

(www.aboutmarketingsolutions.com)


No doubt, you have been bombarded by population numbers that speak to the enormity of the Hispanic marketplace. But what does that mean to your ability to grow market share among these consumers? In some cases, very little. Why? Because market population numbers do not consider where those Hispanics are geographically concentrated vis-à-vis your distribution channels or those of your competition.


When assessing market share opportunities, it is critical you know where the entire Hispanic market is concentrated, not just in areas where you have locations. This is where you must start, followed by mapping where your competition is located in relation.


Once you understand your competitive situation, you’ll want to map how you fit into the equation. This will highlight the following: 1) whether or not your locations are in areas where Hispanics live, 2) whether your competition is located in areas where Hispanics live, 3) the relative strength or weakness of the competitive set with which you compete in each trading area, 4) market presence gaps in areas where Hispanics live, but where you do not have locations, 5) coverage gaps where you do not have presence and your competition does.


Then you will want to know how many Hispanics live in the trading areas where you have locations and how many live where you don’t. You will also need to know this for each competitor. Once you have this information, you can add up the population for each of your and your competitor’s locations. You now have the total Hispanic market population.


When you take each of those numbers and divide them by the total geography you have the proportion of market reach/access to your retail brand and the same for your competition. What you will find is that, while a market may be 35 percent Hispanic, your Hispanic population opportunity is only 15 percent. If your competition’s opportunity number is higher, you will find yourself at a competitive disadvantage from a market presence/reach perspective. Then again, the opposite may be true or you may find yourself at parity. The bottom line is that your Hispanic population opportunity is never equal to the market population.


When you look at physical market presence and the Hispanic market potential versus your competition, you can set more realistic market share goals. You are also in a position to calibrate marketing expectations and determine the efficiency and role of mass versus grassroots efforts, especially if you want to aggressively compete for and protect customer share in areas where competitive threats are stronger. Lastly, you’re in a position to assess your presence gaps and develop channel expansion strategies to increase your reach in the market. An assessment of viable options may shed light into alternate distribution models that are relevant yet not as capital intensive.


Moderator’s Comment: How big a role should Hispanic-targeted marketing and consumer segmentation play in a retailer’s overall competitive strategy?


Effective retail Hispanic market strategy development requires detailed upfront assessment of your market presence situation and your competitive environment.
Not only will it ensure the right metrics, it is a key pillar for developing marketing strategies that can positively impact your specific market advantages or minimize competitive
disadvantages. Separately, consumer segmentation, trade area concentration benchmarks, and competitive gap analysis are other key assessment pillars for developing market strategies
for product assortment, merchandising, and staffing.

Terry J. Soto – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

3 Comments on "Setting Hispanic Market Share Objectives? Look Beyond Market Population."


Sort by:   newest | oldest | most voted
M. Jericho Banks PhD
Guest
M. Jericho Banks PhD
15 years 3 months ago
Perhaps a major point to be gleaned from Terry’s (as always) excellent report is for all but the most narrowly-targeted products and services. For commodity-type product manufacturers and for mass merchants: Step away from the segmentation and trust your ad media research reports. Acculturation research previously presented in these spaces indicates that Hispanic citizens are actually melting into America’s celebrated melting pot. Who’d a thunk it? That being the case, brands and retailers must skeptically consider the siren song of segmenting their marketing communication and the extra expense that accompanies it. Is the ROI of segmentation really worth it? No, it’s not, generally speaking. I strongly recommend buying advertising space and time according to whatever medium provides the most efficiency. If that’s Hispanic radio, go with it. If their audience is comprised of a sufficient number of customers and potential customers, how can you pass it up? But, the marketing message should always be the same across all media. Sometimes I think we speak to Hispanic consumers as we do to children, always ending our… Read more »
Eva A. May
Guest
Eva A. May
15 years 3 months ago
This was a great overview of segmenting Hispanic market potential geographically. It’s also very useful to sort store locations by potential to generate a high-Hispanic customer base. But there are many other factors that come into play for retailers. One must analyze the product offerings both for your chain as well as for your competitors’; current perception of the retailer; current Hispanic shopper profile (do they over- or under-index what the trading area analyses predict?); array of products that appeal to Hispanic shoppers; pricing; willingness to have Spanish-language signage and staff; and willingness to COMMIT to bringing in and establishing loyalty with Hispanic consumers. Many Spanish-dominant consumers will drive for many miles to work with a financial services representative that they trust, if he/she has been transferred to a different location. The mileage is irrelevant (even with today’s gas prices); it’s the service and trustworthiness that counts. So while the trading area analysis is a very important one, there’s much more work that a retailer needs to do prior to determining the power of the… Read more »
Mark Lilien
Guest
15 years 3 months ago

Clearly, major marketing commitment is more important to sales in Hispanic clusters, such as Miami, compared to places with tiny Hispanic populations. And it’s easier to engage the Hispanic market in the key areas, since Hispanic media is available. Tip O’Neill said, “All politics is local.” Well, some retailers know that too.

wpDiscuz

Take Our Instant Poll

How big a role should Hispanic-targeted marketing and consumer segmentation play in a retailer’s overall competitive strategy?

View Results

Loading ... Loading ...