the hub magazine - counting cultures- integrated marketing services

Over the past several years, marketers have shown an increasing interest in understanding the Hispanic consumer in order to leverage the community’s explosive growth and purchasing power (estimated to be $1 trillion).

However, much of the quantitative market research on Hispanics has been online where reliability issues are frequent (survey bots, etc.) and participation may be questionable given the insight that members of the community are less likely to spend less time online. According to the Pew Hispanic Center, only 64 percent of Hispanics ages 18 and older go online compared with 78 percent of non-Hispanics.

In our review of available data, there also appears to be an absence of focus in understanding the topic of building retailer and brand loyalty for Hispanic shoppers. We, therefore, conducted primary research at several Hispanic festivals delving specifically into brand and retailer loyalty.

Over four days, we interviewed more than 468 festival-goers across two cities. In order to provide a comparison to our Hispanic respondents, we additionally interviewed a sample of non-Hispanic respondents. Results were reviewed by shopper-insights experts from our agency with long histories in the study of sales analysis and marketing analytics.

Retailer Loyalty: Hispanics and non-Hispanics appear to be at parity in terms of retailer loyalty, with 82 percent and 78 percent of these respective groups rating their loyalty to their preferred chain for grocery shopping a four or five on a five-point scale. While both segments seem to have had this loyalty weakened by the economy (46 percent and 43 percent somewhat/much less loyal), Hispanics of non-Mexican descent (59 percent) and those living in Spanish-speaking-only households (54 percent) have weakened the most.

There are marked differences between the Hispanic and non-Hispanic segments when it comes to the sources of their loyalty toward their preferred chain for grocery purchases.

Bilingual signage and meat selection have more influence on retailer loyalty for Hispanics, the latter being more influential in grocery outlets than supercenters. Customer service and sensory cues (“sights, sounds, smells that I like”) appear to have less impact on them. As expected, more foreign born than native-born Hispanics attribute their loyalty to sensory cues — likely due to nostalgia for the Mercado experience of their homelands.

As other studies (e.g., Nielsen) have identified such cues as ways to connect with the group, we were surprised when our general sample appeared to be even more influenced by them. These results may suggest that there is an unmet need. In other words, the lack of relevant sensory cues at retail minimizes the impact on Hispanic loyalty although those elements may be desirable.

While fewer Hispanics attribute their loyalty to their primary chain’s shopper card offers, this appears to be driven by non-English speaking households, perhaps because they are not able to understand the offers made at shelf as readily. And while they were not among either group’s most significant factors, Hispanic loyalty seems to be more influenced by in-store sampling events and traditional ads. Those favoring supercenters place even more emphasis on their ads and product selection, including items from their homeland.

Other survey questions show Hispanics to be less likely than non-Hispanics to use coupons (66 percent vs. 37 percent occasionally/frequently/always use) and buy store brands (88 percent vs. 43 percent). Interestingly, while store brand use appears to increase as more English is spoken in the household, coupon use appears to decrease as more English is spoken. That store brands receive little to no traditional advertising support (more influential for Hispanics) may explain their lower appeal to Spanish- only households.

Given these findings, retailers hoping to foster loyalty with the Hispanic segment might promote the quality and expansiveness of their fresh meat selection and butcher departments, as well as focus on customer service and bilingual communication. They can win more loyalty focusing on in-store sampling and experiential events than on discounting. They might leverage these along with targeted traditional advertising to introduce the quality of their own brands, tapping their potential.

They should also tread lightly in online and mobile recruitment as far as foreign-born Hispanics go, as our survey showed them to be less likely to search for product information online (51 percent vs. 62 percent), search on web-enabled phones (53 percent vs. 65 percent), and use a social network (42 percent vs. 59 percent).

Brand Loyalty: At the brand level, Hispanics appear to be significantly less loyal than non-Hispanics. Only 32 percent of all Hispanics strongly or somewhat agreed that they like to stick with a brand, compared to 78 percent of the non-Hispanic sample! Of note, Hispanic brand loyalty was much higher in English- speaking households (42 percent) and those born in the United States (47 percent).

That said, fewer Hispanics (26 percent) than non- Hispanics (48 percent) were willing to admit to switching brands due to the economy, with respondents living in Spanish-only households (20 percent), those who immigrated within the last 10 years (17 percent), or over age 46 (24 percent) the most steadfast.

If this segment is more fickle and open to brand switching, and yet not as influenced by the economy, what is the secret to building their loyalty? Apart from their reduced focused on ingredients (82 percent vs. 97 percent) and the stronger influence of traditional advertising (78 percent vs. 66 percent), Hispanics responded very similarly to non-Hispanics when asked what influenced their loyalty to a favorite food brand. However, there are some interesting differences within the Hispanic sample.

For example, brand loyalty is more likely attributed to value in English-only households and to family appeal in Spanish and English speaking ones. Festival participation is more likely to sway foreign-born Hispanics. Interestingly, US born Hispanics are more influenced by the availability of brands in their homelands than those whose lives actually originated in those countries.

This may have something to do with what Starcom MediaVest Group and Telemundo recently called “Retro Acculturators,” a psychographic segment of US-born Hispanics who have mainstream orientation and are searching to “rediscover” their Latino roots. Those with roots outside Mexico are more influenced by a product’s availability in their homeland (and are also more calorie-conscious).

Our survey exposed some additional differences between Hispanic and non-Hispanic respondents. For example, 46 percent of Hispanic respondents entered at least one sweepstakes in the past year relative to only 27 percent of non-Hispanics, suggesting that this may be a more effective promotions tactic for this community. Second, at the time we were writing the survey, MillerCoors had just launched its Keith Stone campaign, urging consumers to refer to its Keystone Light beers as “Stones.”

So, for fun, we asked respondents if they ever used a “nickname” when referring to their favorite brands. Fifty-eight percent of Hispanic respondents claimed to have done so on at least one occasion, versus only seven percent of non-Hispanics. Spanish-speaking households and recent immigrants had the highest incidence (70 percent), perhaps because Spanglish nicknames helped appropriate brands for their lives. Brands looking to connect with the Spanish-speaking segments might consider cultivating nicknames for the segment through grassroots efforts.

Ultimately, our study suggests that there is reason to question the idea of outsized Hispanic brand loyalty. In addition, if Hispanic loyalty is more up for grabs but less influenced by economic conditions, there’s more potential in the hands of those crafting the marketing mix.

Finally, the first step in eliciting repeat purchase from this group may be in recognizing that it is not one group at all. Shopper-marketing practitioners might leverage some of the differences observed by channel shopped, heritage, age, language spoken at home, and years in the US. Communities heavily inhabited by foreign-born Hispanics may respond better to experiential programming; English-dominant ones to a feature and display communicating appeal to the whole family.

Additional analysis may shed light into how variables interact. For instance, we may see through regression analysis that the increased impact of traditional advertising on Hispanic loyalty is due to nothing more than the preponderance of Hispanic marketing dollars going to traditional vehicles versus targeted shopper-marketing ones. We’ve really only scratched the surface in terms of learning.



	NOVEMBER / DECEMBER 2010


	Counting Culture

	*Hispanics and loyalty is more complicated than most marketers realize.*

	Over the past several years, marketers have shown an increasing interest in understanding the Hispanic consumer in order to leverage the community’s explosive growth and purchasing power (estimated to be $1 trillion). However, much of the quantitative market research on Hispanics has been online where reliability issues are frequent (survey bots, etc.) and participation may be questionable given the insight that members of the community are less likely to spend less time online. According to the Pew Hispanic Center, only 64 percent of Hispanics ages 18 and older go online compared with 78 percent of non-Hispanics. In our review of available data, there also appears to be an absence of focus in understanding the topic of building retailer and brand loyalty for Hispanic shoppers. We, therefore, conducted primary research at several Hispanic festivals delving specifically into brand and retailer loyalty. Over four days, we interviewed more than 468 festival-goers across two cities. In order to provide a comparison to our Hispanic respondents, we additionally interviewed a sample of non-Hispanic respondents. Results were reviewed by shopper-insights experts from our agency with long histories in the study of sales analysis and marketing analytics. Retailer Loyalty: Hispanics and non-Hispanics appear to be at parity in terms of retailer loyalty, with 82 percent and 78 percent of these respective groups rating their loyalty to their preferred chain for grocery shopping a four or five on a five-point scale. While both segments seem to have had this loyalty weakened by the economy (46 percent and 43 percent somewhat/much less loyal), Hispanics of non-Mexican descent (59 percent) and those living in Spanish-speaking-only households (54 percent) have weakened the most. There are marked differences between the Hispanic and non-Hispanic segments when it comes to the sources of their loyalty toward their preferred chain for grocery purchases. Bilingual signage and meat selection have more influence on retailer loyalty for Hispanics, the latter being more influential in grocery outlets than supercenters. Customer service and sensory cues (“sights, sounds, smells that I like”) appear to have less impact on them. As expected, more foreign born than native-born Hispanics attribute their loyalty to sensory cues — likely due to nostalgia for the Mercado experience of their homelands. As other studies (e.g., Nielsen) have identified such cues as ways to connect with the group, we were surprised when our general sample appeared to be even more influenced by them. These results may suggest that there is an unmet need. In other words, the lack of relevant sensory cues at retail minimizes the impact on Hispanic loyalty although those elements may be desirable. While fewer Hispanics attribute their loyalty to their primary chain’s shopper card offers, this appears to be driven by non-English speaking households, perhaps because they are not able to understand the offers made at shelf as readily. And while they were not among either group’s most significant factors, Hispanic loyalty seems to be more influenced by in-store sampling events and traditional ads. Those favoring supercenters place even more emphasis on their ads and product selection, including items from their homeland. Other survey questions show Hispanics to be less likely than non-Hispanics to use coupons (66 percent vs. 37 percent occasionally/frequently/always use) and buy store brands (88 percent vs. 43 percent). Interestingly, while store brand use appears to increase as more English is spoken in the household, coupon use appears to decrease as more English is spoken. That store brands receive little to no traditional advertising support (more influential for Hispanics) may explain their lower appeal to Spanish- only households. Given these findings, retailers hoping to foster loyalty with the Hispanic segment might promote the quality and expansiveness of their fresh meat selection and butcher departments, as well as focus on customer service and bilingual communication. They can win more loyalty focusing on in-store sampling and experiential events than on discounting. They might leverage these along with targeted traditional advertising to introduce the quality of their own brands, tapping their potential. They should also tread lightly in online and mobile recruitment as far as foreign-born Hispanics go, as our survey showed them to be less likely to search for product information online (51 percent vs. 62 percent), search on web-enabled phones (53 percent vs. 65 percent), and use a social network (42 percent vs. 59 percent). Brand Loyalty: At the brand level, Hispanics appear to be significantly less loyal than non-Hispanics. Only 32 percent of all Hispanics strongly or somewhat agreed that they like to stick with a brand, compared to 78 percent of the non-Hispanic sample! Of note, Hispanic brand loyalty was much higher in English- speaking households (42 percent) and those born in the United States (47 percent). That said, fewer Hispanics (26 percent) than non- Hispanics (48 percent) were willing to admit to switching brands due to the economy, with respondents living in Spanish-only households (20 percent), those who immigrated within the last 10 years (17 percent), or over age 46 (24 percent) the most steadfast. If this segment is more fickle and open to brand switching, and yet not as influenced by the economy, what is the secret to building their loyalty? Apart from their reduced focused on ingredients (82 percent vs. 97 percent) and the stronger influence of traditional advertising (78 percent vs. 66 percent), Hispanics responded very similarly to non-Hispanics when asked what influenced their loyalty to a favorite food brand. However, there are some interesting differences within the Hispanic sample. For example, brand loyalty is more likely attributed to value in English-only households and to family appeal in Spanish and English speaking ones. Festival participation is more likely to sway foreign-born Hispanics. Interestingly, US born Hispanics are more influenced by the availability of brands in their homelands than those whose lives actually originated in those countries. This may have something to do with what Starcom MediaVest Group and Telemundo recently called “Retro Acculturators,” a psychographic segment of US-born Hispanics who have mainstream orientation and are searching to “rediscover” their Latino roots. Those with roots outside Mexico are more influenced by a product’s availability in their homeland (and are also more calorie-conscious). Our survey exposed some additional differences between Hispanic and non-Hispanic respondents. For example, 46 percent of Hispanic respondents entered at least one sweepstakes in the past year relative to only 27 percent of non-Hispanics, suggesting that this may be a more effective promotions tactic for this community. Second, at the time we were writing the survey, MillerCoors had just launched its Keith Stone campaign, urging consumers to refer to its Keystone Light beers as “Stones.” So, for fun, we asked respondents if they ever used a “nickname” when referring to their favorite brands. Fifty-eight percent of Hispanic respondents claimed to have done so on at least one occasion, versus only seven percent of non-Hispanics. Spanish-speaking households and recent immigrants had the highest incidence (70 percent), perhaps because Spanglish nicknames helped appropriate brands for their lives. Brands looking to connect with the Spanish-speaking segments might consider cultivating nicknames for the segment through grassroots efforts. Ultimately, our study suggests that there is reason to question the idea of outsized Hispanic brand loyalty. In addition, if Hispanic loyalty is more up for grabs but less influenced by economic conditions, there’s more potential in the hands of those crafting the marketing mix. Finally, the first step in eliciting repeat purchase from this group may be in recognizing that it is not one group at all. Shopper-marketing practitioners might leverage some of the differences observed by channel shopped, heritage, age, language spoken at home, and years in the US. Communities heavily inhabited by foreign-born Hispanics may respond better to experiential programming; English-dominant ones to a feature and display communicating appeal to the whole family. Additional analysis may shed light into how variables interact. For instance, we may see through regression analysis that the increased impact of traditional advertising on Hispanic loyalty is due to nothing more than the preponderance of Hispanic marketing dollars going to traditional vehicles versus targeted shopper-marketing ones. We’ve really only scratched the surface in terms of learning.


	WILL MINTON is senior director of innovation for Integrated Marketing Services, specialists in shopper marketing, experiential marketing, shopper-centric custom publications and field events.

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