WINNING with the HISPANIC CONSUMER TODAY an IRI & Latinum Network Presentation
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WINNING WITH THE HISPANIC CONSUMER TODAY An IRI & Latinum Network Presentation July 17, 2014 Introduction Marketing Productivity Practice Leader JOY JOSEPH IRI Global Analytics & Consulting GUEST SPEAKER: Vice President ANDY HASSELWANDER Latinum Network Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 2 Insights Agenda 1 Hispanic Consumer Trends and the Need for Customized Strategies 2 Inaccurate Data & Metrics May Be Costing You an Incredible Opportunity 3 Proactive Hispanic Engagement with a Total Market Strategy 4 Case Studies Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 3 Insights Agenda 1 Hispanic Consumer Trends and the Need for Customized Strategies 2 Inaccurate Data & Metrics May Be Costing You an Incredible Opportunity 3 Proactive Hispanic Engagement with a Total Market Strategy 4 Case Studies Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 4 Hispanics Are a Diverse and Rapidly Growing Consumer Segment with Some Common Characteristics… There are Mexico Puerto Rico Salvador 50.5 MILLION 67% 10% 4% Hispanics in the U.S. Cuba Dominican Colombia 4% Republic 2% Which is 3% Guatemala Spain Honduras 43% MORE 2% 1% 1% Than in 2000 Peru Nicaragua They Represent Ecuador 1% 1% 1% 1 IN 6 Venezuela Argentina Americans 1% 1% Source: www.ahaa.org LARGE VALUE CULTURAL Family Size Shoppers Connection Why You Should Care: Common & Targetable Need-states Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 5 More Importantly, Hispanics are a Consumer Segment Brands Looking to Grow Cannot Ignore… Over • Total U.S. population grew by 0.7% in 2013…the Hispanic population grew $1 TRILLION over 2% in the same time period Purchasing power • The opportunity is, however, exponential…at an average age of 27, Approximately the Hispanic population is 10 years younger than the U.S. average and just entering the prime of their 12% earning years…their earning power will increase dramatically over the U.S. CPG Consumption next decade • IRI’s Ethnic workbench that tracks Hispanic sales indicates that brands The time to act is having a higher development (BDI) in Hispanic markets are growing much now… faster than their peers Source: Pew Center Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 6 Hispanic Acculturation & Dual Language Usage Complexities Drive Further Differentiation from the General Market… Hispanic Acculturation Continuum Unacculturated Unacculturated New American Mostly Traditional Traditionals Stable Latino Latino Acculturated 14% 7% 19% 21% 28% 11% Med to High Low Cultural High Cultural Medium Cultural Low Cultural No Cultural Cultural Tension Tension Tension Tension Tension Tension Spanish-language only 80% of Hispanic adults 52% speak Spanish media consumption is learned Spanish as first mostly or all the time at strongest among less language home acculturated ~50% are comfortable Drops to 39% when away speaking Spanish in a from home social situation Spanish Only Some of Both English Only Source: Ipsos 2012 U.S. Diversity Markets Report Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 7 Hispanic Shopping Behaviors: Venue Locations are Driven by Cultural Motivations Hispanic vs. General Market Venue Preferences Supermarket/ 79% Grocery store 80% 61% Mass Merchant/ Super-Center, such as Large Family Size Wal-Mart/Kmart/Target 74% 46% Drug store 53% 30% Dollar store Value Shoppers 56% Convenience store, 29% such as 7-Eleven or Quik-Chek 34% Warehouse Club, 23% such as Sam's or Costco 33% Large Family Size 4% Ethnic Supermarket/Grocery store 28% Authentic Ingredients Bodega or tiendita, a small neighborhood 1% Hispanic store 42% Authentic Ingredients Hispanic General Market Source: Ipsos 2012 U.S. Diversity Markets Report Copyright © 2014 Information Resources, Inc. (IRI). Confidential8 and Proprietary. 8 Hispanics Are Social Shoppers, Decisions Heavily Influenced by Family and Friends as well as Advertising… Source: (Via Mintel) Experian Marketing Services, Spring 2013 Simmons NHCS Adult Study 12-Month. Copyright: 2013 Experian Information Solutions, Inc. All rights reserved Source: Mintel Hispanics & retail, Dec 2013 Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 9 Hispanics Within your Omnichannel Strategy… Fast Facts*: • Hispanics under-index in online shopping relative to non-Hispanics (35% vs. 49%) • Willingness to shop online increases with acculturation levels • Predominant device is the PC but smart phones are their second favorite device • Interestingly, English sites are preferred • Hispanic online shopping tends to be non-CPG focused, with a much smaller percentage of Hispanics shopping CPG online • Spanish-dominant Hispanics still hesitant to use payment cards online • More than half of Hispanics prefer to shop in physical stores • Hispanics are comparing prices online more in 2014 than they did a year back BOTTOM LINE: Omnichannel strategy-wise, Hispanics may be more similar to the rest of the market…Brick & Mortar experience is still critical but online brand experience increasingly vital… *Source: Hispanic Consumers and Online Shopping - US - May 2014 Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 10 Cultural Connection and Multi-Platform Strategy in Messaging Is Vital… Source: Mintel Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 11 Insights Agenda 1 Hispanic Consumer Trends and the Need for Customized Strategies 2 Inaccurate Data & Metrics May Be Costing You an Incredible Opportunity 3 Proactive Hispanic Engagement with a Total Market Strategy 4 Case Studies Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 12 Performance Measurement Is Indispensable, But Incorrect Approaches Drive Misconceptions of Hispanic ROI Potential… What effect does Hispanic advertising have on my sales? Advertising effectiveness is measured by evaluating the effect individual marketing drivers have on sales CurrentHispanic calculations advertising evaluate efforts how Hispanic should advertising be evaluated efforts (aimed at 17% ofagainst the population) Hispanic change sales sales changes for the total population Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 13 Although Spend Allocations are Slowly Rising, Perceptions of Poor ROI Result in Continued Under Investment WALMARTSPANISH NAMED LANGUAGE FIRST MEDIA‘MARKETER INVESTMENT OF THE ALLOCATIONS YEAR’ BY AHAA Print, Television and Radio Investments 2011 2012 2013 ALCOHOLIC BEVERAGES 14.40%11.5% 14.00% 18.82% IN 2013 AUTOMOTIVE 4.05% 4.80% 7.34% Tony Rogers to indicateBEAUTY theirCARE commitment to 6.79%spending 8.03%and to SL:9.30% “One hundred percentCPG FOOD of the AND growth BEVERAGES [in sales] 7.44% is going 7.66% to come from8.68% multicultural customers; Our spending against multicultural customers will grow by at least 100%.” PHARMACEUTICALS 2.14% 3.43% 4.16% RETAIL 4.72% 5.12% 6.53% Source: Nielsen AdViews, includes TV (National & Local), Print (National & Local Newspapers, Magazines, Sunday Supplements) and Radio (National & Local) Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 14 Hispanic Strategy Has Typically Been Executed Based on Instinct Rather Than Insights Lack of appropriate decision Resulting in the fate of Hispanic support systems has created a strategy resting with the “gut feel” vicious cycle of under-investment of a few stakeholders Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 15 Breaking Out of Vicious Cycle Requires a Comprehensive Insights Regimen Founded on Robust Data, Rigorous Analytics INSIGHTS • Gain crucial insights about the Hispanic consumer to learn how to best create a cultural connection • Identify how to best target key Hispanics at the household and store levels • Track Hispanic sales to right-size the opportunity and leverage evolving trends ACTIVATE • Optimize marketing execution • Activate consumers offline / online / in-store MEASURE • Measure marketing impact on sales and brand perception INNOVATE • Develop specialized product improvements / launches Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 16 The Upside to Effective Engagement is Substantial… A Total Incremental Spend of $8MM in Hispanic Strategy Yields $71MM (+7.1% / ROI = $1.57*) Average Marketing Average Hispanic 10 CPG Product Average Sales Budget Spend Portfolios Evaluated $1B $115 MM $6MM $11 Million $28 Million $1,071 $32 Million Million $1,000 +7.1% Million Prior Hispanic Hispanic Hispanic Shopper Current Year Media Assortment Marketing Year Source: IRI Marketing Benchmarks & Simulations *using average profit margins across the brands Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 17 Insights Agenda 1 Hispanic Consumer Trends and the Need for Customized Strategies 2 Inaccurate Data & Metrics May Be Costing You an Incredible Opportunity 3 Proactive Hispanic Engagement with a Total Market Strategy 4 Case Studies Copyright © 2014 Information Resources, Inc. (IRI). Confidential and Proprietary. 18 What “Total Market” Really Means: Steering Committee Key Insights BEFORE: “GENERAL” WITH SATELLITES NOW: ONE BIG PIE WITH SLICES Asian Total Market: AfAm • “Inclusive” • “Integrated” • “Additive” General • “Baked-in” Market • “Business” LGBT • Mandated from the top; senior leadership