Who's Tapping Into the Surging Hispanic Market?
Jane is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
The numbers from the U.S. Census dazzle. One out of six residents of America is Hispanic. Over the past decade this group grew 43%. By 2014, its purchasing power will reach more than $1.5 trillion. Mmmmm, if you think about it they will eventually constitute the 10th largest economy in the world. This should be a gold mine for marketers. But, it isn’t, at least not yet. Investors have to be cautious about companies gushing about the potential. That might all it turns out to be - potential.
The reality is that the Hispanic market is a tough nut to crack, at least for outsiders, that is those who aren't Hispanic. Their number-one mistake is to see it and treat it as a monolith. Actually, as MARKET WATCH documents, it's complex, made up of "an ethnically and racially diverse population." Too many marketers made that same wrong assumption in pitching the over-50 audience, which is really at least three very different segments. In addition, each generation of Hispanics brings its own changes, including in language abilities, preferences, and nuance. So much of marketing involves language. As we know, a generational shift in our digital fast time can happen every few years or even sooner.
Trade publication MOBILE DEMYSTIFIED points out that Verizon (NYSE: VZ) Wireless hit a homerun with an ad during the Copa America. It is written in “Spanglish,” a mash-up of Spanish and English. Verizon has been close enough to the customer to get this idiomatic way of speaking down cold. Maybe that has plenty to do with why Verizon is the leader in wireless and can charge the highest fees. Its stock price at 39 is very near the 52-week high.
As for Hispanic values, they're as many-layered as they are with any group. The innate diversity of just about any culture becomes clear when someone is paying attention to what's really going on in the culture, which is actually loosely connected clusters of subcultures. Therefore, pitching to the supposed dominance of the family in Hispanic life could be off the money with large parts of the poulation. That's because more and more are consumed business owners, including the women. According to HispanTelligence, in the next six years, Hispanic-owned businesses in the US are expected to grow almost 42% to 4.3 million with total revenues of $539 billion. Being an entrepreneur pulls in the emotions and economic survival of many others. Therefore, marketers have to tap into the broad-based drive to make it in America.
So, how can companies understand this multi-faceted Hispanic market? One approach has been to become an insider. Here are three examples of that.
Providing Opportunity. Way back when IBM (NYSE: IBM) was expanding its reach around the world it developed a new model. It knew that to succeed it had to become an insider. It did that by creating economic opportunity for the natives of the nations in which it was establishing businesses. Not only did IBM provide good jobs but it also developed the residents for positions of top leadership. Eventually, the country manager was a native. An added goody was that the IBM brand became the symbol of global good corporate citizenship. AT&T (NYSE: T) is mirroring that pattern, only domestically. About 12% of its workforce is Hispanic, with a number reaching the top such as Chief Executive Officer and President of its Mobility and Consumer Markets Ralph de la Vega. Almost 19% of its purchases are from minority vendors.
Finding the Right Dance Partner. There’s the age-old business question whether to grow a business internally or graft on another company’s successful enterprise. Investors recognize how critical this decision is, always questioning what would be cheaper and quicker with the best odds for success. DISH Network (NASDAQ: DISH), the third largest pay-TV provider, has decided to go the second way - joining forces with a proven entity in the Hispanic space. Why reinvent the wheel? It has entered a multi-year agreement with Univision Communications, the leader in Hispanic America media. Together the two are launching new networks for sports, soap operas (popularity of “Downton Abbey” showed that genre isn’t dead), news including from Mexico and Latin America, and entertainment. Since many alliances come undone, this is one investors will be monitoriing for cracks. Rumor has it that AOL's acquisition of Huffington Post isn't going so hot, not in spirit and not in profits.
Being There To Help. Help, as every businessperson knows, is a two-way street. Doing good often is the platform for doing well. Members of the Fortune 500 such as JP Morgan Chase (NYSE: JPM) have partnered with the U.S. Hispanic Chamber of Commerce (USHCC) to be there with resources, ranging from know-how to networks. For example, JP Morgan Chase’s Vice President of the Office of Corporate Responsibility Peter R. Villegas chairs USHCC's Senior Executive Corporate Advisory Board. That group, as its name indicates, advises the USHCC on business and policy issues which could impact Hispanic entrepreneurs. One of USHCC's missions is to increase vendor contracts with corporations and government. Another is to encourage Hispanic youth to develop an entrepreneurial mindset.
The first challenge is for the outsider to get inside. Next comes the ongoing need to keep creating value. That’s what investors should keep their eye on when predicting the company’s profits from the Hispanic market.
I do not own stock in any company mentioned. Several years ago I did consulting assignments for the U.S. Hispanic Chamber of Commerce. The Motley Fool owns shares of JPMorgan Chase & Co. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.