Not A Homogenous Bunch

When developing store brand products and messaging geared toward the growing U.S. Hispanic population, retailers need to consider acculturation level, country of origin and more.

Most U.S. retailers understand, or at least are beginning to understand, the importance of meeting the wants and needs of the rapidly growing U.S. Hispanic population. The U.S. Census Bureau notes that 50.5 million of the 308.7 million people residing in the United States — or 16 percent of the total population — are now of Hispanic or Latino origin (based on 2010 Census data). That figure represents a significant increase from the previous decade; the 2000 Census showed a Hispanic population of 35.3 million, or 13 percent of the total population.

What's more, the buying power of Hispanics in the United States exceeded $1 trillion in 2010, according to "Latino Population Growth Fuels $1 Trillion Buying Power," a 2011 report from Rockville, Md.-based Packaged Facts. Moreover, the report forecasts that buying power to reach $1.3 trillion by 2013.

Hispanic consumers represent a potentially huge opportunity on the store brand side of things, too. But to succeed here, retailers need to truly understand Hispanics' varying purchase motivators — and resist the urge to treat this extremely diverse population as one homogenous bunch.

Acculturation matters

One key influencer in U.S. Hispanics' shopping behavior is their level of acculturation.

"Unacculturated Hispanics tend to be recent arrivals to the United States, speak only Spanish at home, continue to practice the traditions of their homeland and rely heavily on the Spanish-language media to maintain strong ties to their culture," notes Anthony Luceno, senior marketing manager for Watt International of Toronto. "In contrast, highly acculturated Hispanics were born in the U.S. — or have been in the country for a significant period of time — tend to speak English as their primary language, prefer English media and have similar shopping patterns as the rest of the general market."

Although the unacculturated are likely to have lower incomes than their acculturated cousins, they also tend to have larger families. For that reason, they spend more on groceries per week than any other group in the United States, says Leylha Ahuile, senior multicultural analyst for global market research firm Mintel International.

Unacculturated Hispanics also cook more meals at home, shying away from convenience-minded ready-made products, Luceno says. Although highly acculturated Hispanics are showing rising interest in prepared-type foods, they tend to prefer healthful options and limit their consumption of sugar, salt and fried foods.

Spanish-dominant consumers like one-stop shopping and love Walmart, Ahuile says. But they frequent Hispanic grocery stores as well, which tend to play up the produce, meat and dairy departments and downplay the center store. But they can be big users of convenience stores, too.

"If you have a family of five, six people, I don't care how big your refrigerator is — you're just not going to fit that many gallons of milk," she explains.

And women are the buyers of more than 80 percent of goods and services in U.S. Hispanic households, notes Jackie Bird, CEO of the Redbean Society, a New York-based marketing communications firm that specializes in targeting Latino women.

"Hispanic female shoppers are nobody's fools," she stresses. "They are savvy comparison shoppers."

Brand loyalty varies

The level of acculturation impacts brand loyalty, too. Despite their price-sensitive nature, unacculturated Hispanics boast more loyalty to national brands in a number of categories, Ahuile maintains.

Luceno agrees, but notes that recent studies have shown that unacculturated Hispanics are making "significant purchases" in store brand product categories that include single-serve sauces, canned corn, table salt, cooking oil and tomato sauce.

"Highly acculturated Hispanics lean heavily toward items like complete nutritional products, refrigerated pizza and frozen fruit drinks," he says, adding that over-the-counter medications, beauty care products and health aids also represent key store brand growth categories for the overall Hispanic market.

But Bird does not agree that unacculturated Hispanic shoppers are any more brand loyal than their acculturated counterparts. Instead, they tend to be loyal to brands they perceive as being of satisfactory or excellent quality.

"As a consequence, Hispanics will likely gravitate to brands they know and/or have used in their home countries, simply because there is a basic positive experience," she says.

Still, Redbean's 2010 "Latina Shopper Study," performed in conjunction with New American Dimensions, found that Hispanic shoppers are open to considering and/ or buying new options they find in the United States, Bird says.

"While nearly 80 percent of all [surveyed] shoppers indicate they regularly buy grocery store brands, they will only accept a lower-priced store brand if it meets their threshold for quality acceptance," she adds. "Only 41 percent of shoppers agree that store brands are of similar quality [as] regular brands. This perception is consistent across all segments, regardless of acculturation level."

Country of origin counts

The level of national brand loyalty also differs according to country of origin, notes Mark Singleton, vice president of sales and marketing for Lima, Ohio-based Rudolph Foods. Country of origin greatly influences the types of products Hispanic consumers demand, too.

"For example, you don't see many Hispanic consumers of Mexican descent buying plantains, but if you look at a Hispanic consumer of Caribbean descent, you will see a tremendous amount of plantains being purchased," he says.

Ahuile agrees, noting that retailers need to factor their Hispanic shoppers' country — or countries — of origin into the store brand product development and marketing equation.

"In segmenting, you can't just say, 'Oh, they're primarily Hispanic,'" she says. "You need to identify which segment of the Hispanic population they are in. Are they predominantly Mexican? Colombian? Puerto Rican? Dominican?"

For one thing, Ahuile says, the favored foods vary greatly from country to country. For example, hot and spicy might be the norm in Mexico, but not in the Caribbean.

Because the U.S. Hispanic population is so diverse, it can be difficult for retailers to find a "formula" with widespread appeal, Luceno notes. For that reason, retailers should tailor product development and marketing efforts to reflect the specific national preferences of their market's Hispanic population. For national retailers, that could call for a regional type of approach.

In reality, the bulk of U.S. Hispanics are neither Spanish- nor English-dominant, Ahuile says, but bilingual and bicultural. For that reason, products that mix a bit of the American and the homeland cultures also can work well. She points to macaroni and cheese in bilingual packaging as an example.

"The moms or dads are making the purchasing decision, but they are being influenced by their kids," she explains. "And the kids are born and raised in this country, and their friends are eating macaroni and cheese, so they want to eat macaroni and cheese. I have friends from Venezuela, and they serve their kids macaroni and cheese with a side of fried plantains."

Consider the message

Marketing is critical to the success of store brand items geared toward Hispanics. And as Ahuile's macaroni and cheese example suggests, packaging language plays a critical role in the product marketing message.

"Interestingly enough, we see a high percentage of English-dominant Hispanics who want to see bilingual packaging," she notes. "It's a way of the brand saying to the consumer, 'We acknowledge you; we respect you.'8221;

Looks count, too.

"You have that moment of truth when the eye meets the shelf, and you have to make sure that your messaging is appropriate in language, messaging hierarchy and color," Singleton says.

Speaking of colors, Hispanics' preferences really vary based on country of origin, Luceno says.

"The use of bright colors is typically associated with Hispanic imagery," he explains, "and studies have shown that Hispanics tend to gravitate toward bright colors like pink, purple and green because they are easily discernible in the strong sunlight conditions found in Latin America. However, Mexicans tend to prefer reds, blues and blacks."

At the same time, retailers must be careful to avoid stereotyping, Luceno adds, as the practice could have a negative impact.

Of course, retailers need to consider much more than the product and the packaging when it comes to reaching Hispanic consumers with their own brands.

"Marketing to Hispanics is more than just creating signage and packaging in Spanish," Luceno stresses. "You must make an emotional and cultural connection with consumers."

Bird points to a number of need-to-know marketing influencers the "Latina Shopper Study" uncovered.

First, as a communication tool, the ad circular has a significantly higher influence on less-acculturated Hispanics than it does on those at a mid or high acculturation level, she says. Second, in-store influencers such as product demos, Spanish packaging and product displays are significantly stronger persuaders among less-acculturated Hispanics than they are among their highly acculturated counterparts. Finally, price comparison across different stores is common for approximately 40 percent of all female Hispanic shoppers, but impulse shopping varies according to acculturation level.

"Impulse shopping is significantly higher among highly acculturated Hispanic shoppers," Bird notes.

A cookie-cutter approach, therefore, won't cut it with marketing, either.

"In order to achieve relevance, there needs to be a clear understanding of that consumer prospect [and] the way they use and interact with that category or brand," Bird says.

'You must make an emotional and cultural connection with consumers.' — Anthony Luceno, senior marketing manager for Watt International

Ahuile agrees, noting that Walmart uses different messaging and touch points for unacculturated Hispanics than it does for acculturated Hispanics.

"If you try to go after every Hispanic with one blanket strategy," she adds, "chances are you're going to fail."