Hispanic 101

1
Hispanic 101 An Immersion

• January 2004

2
Three Key Themes

• Size Growth
• The U.S. consumer landscape will never be the
  same
• Complexity
• Demographic, language and cultural issues
  elements call for customized marketing efforts
• Financial Business Rewards
• Hispanics income growth and purchasing power
  represent a significant business growth
  opportunity

3
Contents

• Size
• Growth
• Composition
• Distribution
• Age
• Households
• Language Usage

• Spanish Ad Effectiveness
• Income Buying Power
• Media Dynamics
• Segmentation A Mix Of Lifestyles And Life Stages

4
Size

• 68 growth in one decadelargest U.S. Minority
  segment

Source U.S. Census Bureau
5
Size

• Formulation of a new America is evident

2000
2050
Source U.S. Census Bureau
6
Size
Diversity exists even within the Hispanic
community

• South American
• Argentinean
• Bolivian
• Chilean
• Colombian
• Ecuadorian
• Paraguayan
• Peruvian
• Uruguayan
• Venezuelan
• Central American
• Costa Rican
• Guatemalan
• Honduran
• Nicaraguan
• Panamanian
• Salvadorian

Source U.S. Census Bureau, July 2002 Estimate
March 2002 Current Population Survey
7
Size

• Comparable in size to key demographic groups
  embraced by the marketing community

Source Census 2000 July 1, 2002 Population
Estimates
8
Size

• Majority are foreign born and have been in the
  U.S. less than 20 years

73
Source Census 2000 Summary File 3. Foreign
Born Population Table 8.1 March 2000.
9
Growth

• Growth throughout the entire U.S.

Source U.S. Census Bureau
10
Growth

• The new Hispanic emerging markets

Growth 1990-2000 2000 Populations gt50,000
Source William H. Frey analysis of 2000 Census
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Growth

• Why the continued immigration migration?...
• Labor demand in the U.S.
• Weak economy in country of origin
• Political/social instability
• Ties with U.S. residents

12
Growth

• Projected to grow 68 by 2025

millions
Source Populations Projections Program,
Population Division, U.S. Census Bureau.
Consistent with the 1990 estimates base.
13
Growth
The 4th largest market in the Spanish-speaking
world... Second by 2025

• Population (millions)
• 2002 2025 (proj.)
• Mexico 101.7 131.7
• Colombia 43.8 59.7
• Spain 41.3 44.3
• U.S. Hispanics 38.8 61.4
• Argentina 36.5 47.2
• Peru 26.7 35.7
• Venezuela 25.1 34.8
• Chile 15.6 19.5
• Ecuador 13.0 18.5
• Cuba 11.3 11.8

Source Population Reference Bureau, 2002
Population Data Sheet and U.S. Department of
Commerce News June 18, 2003
Release
14
Composition

• On Average, the Top 20 Hispanic markets have a
  17 Hispanic penetration

Source A.C. Nielsen
15
Composition

• Hispanics are the market in top DMAs

Source Nielsen 2003 Universe Estimates (Top 15
Hispanic Markets)
16
Distribution

• Geographically concentrated ¾ of Hispanics
  reside in the Top 20 DMAs

Base U.S. Hispanics Adults Source
Scarborough USA Release 2, 2002
17
Distribution

• Even more concentrated than the general population

Source Scarborough USA Release 2, 2002
18
Age National

• A significant portion of key consumer segments

Kids 2-11
Teens 12-17
Adults 18-34
Adults 18-49
All P2
Adults 50
Source A.C. Nielsen
19
Age Top 10 Markets

• A crucial portion of key Kids and Teens segments
  on a market-by-market level

Source A.C. Nielsen
20
Households

• Younger, and larger HHs

Source A.C. Nielsen
21
Households
A mix of individuals
22
Households

• Over-index versus Non-Hispanics on children in
  the HH

Source U.S. Census Bureau
23
Households

• Leisure activities enjoyed are different based
  on acculturation level

Source People en Español, 2003
24

• Households

Differing value systems

• United States
• Calvinist Values
• Democracy
• Vietnam
• Individual (Me/mine/my)
• Sibling Rivalry
• Youth Fun
• Stable economy
• No Wrinkles Tomorrow

• Latin America
• Catholic Values
• Aspiring Democracies
• No Vietnam
• Group (We/our/us)
• Sibling Cooperation
• Maturity Diversión
• Fluctuating economies
• Look Good Tonight

Source TNS Market Development
25

• Households

Life experiences colored by different milestones

• Latin America
• Castro, Allende, Che Guevara
• Bay of Pigs
• Instability, Drug Cartels, Inflation
• Coup detats
• White Collar Corruption
• Political Activist Literature
• O. Paz, G.G. Marquez,
• P. Neruda
• El Puma, J. Iglesias, E.Guzman
• Pelé, R.Duran, R.Clemente

• United States
• Kennedy, Nixon, King
• Bay of Pigs
• Equal Rights Amendment
• Freedom Fighters
• Woodstock
• Washington Post/ Watergate
• B.Friedan, K. Vonnegut,
• J. Kerouac
• British Invasion, Hendrix, Morrison
• W.Chamberlin, Ali, H.Aaron

Source TNS Market Development
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Language Usage

• Majority of adults speak Spanish to some degree

92
Source A.C. Nielsen
27
Language Usage

• Use of Spanish will continue
• 2/3 were born outside the US
• Continuing immigration
• Preservation of cultural identity
• Geographic concentration
• Ease of travel and telecommunications

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Language Usage

• Hispanics speak Spanish at home regardless of
  education, age or HHI

HH Income
Education
Age
Source NHTI Installed Metered Sample, Feb 2002
Excludes English Only Homes Based on of
Persons Living in HHs that Speak Some Spanish
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Spanish Ad Effectiveness

• Roslow Research Group
• 1994 and 2000
• Document relative effectiveness of Spanish vs.
  English commercials among Hispanics
• Awareness
• Comprehension
• Persuasiveness

Source Roslow Research Group, 2000
30
Spanish Ad Effectiveness

• Spanish-language commercials are...
• 61 more effective at increasing Awareness
• 57 more effective in message Comprehension
• 4.5x more Persuasive

Source Roslow Research Group, 2000
31
Spanish Ad Effectiveness

• Spanish ads work best

Index to Total Hispanic Adults. Base Spanish
Dependent Adults with Bank Account, but no
checking or debit card accounts. Source
Simmons Hispanic Study 2001
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Income Buying Power

• Income level growing faster than population

AVG.56
AVG. 39
Source A.C. Nielsen, Selig Center
33
Income Buying Power

• Hispanic HHs have shifted from lower to middle
  and higher income brackets

Source U.S. Census, Money Income in the U.S.
2001
34
Income Buying Power

• Buying power will approach
• 1.2 trillion by 2012

Source Global Insight
35
Income Buying Power

• While whites account for the majority of consumer
  spending, their share is dwindling

Note Figures add to more than 100 because
Hispanics can be of any race Source Selig
Center for Economic Growth, University of Georgia
36
Income Buying Power

• Recent Hispanic HH spending dynamics show
  largest increases were in services-related
  categories

Source The Hispanic Buying Power Report,
2002, Target Market News
37
Income Buying Power
Growth of affluent Hispanic HHs outpacing
general community

• Estimated at 3.7 million
• Nearly two-thirds reside in CA, TX, NY
• Combined buying power of 292.4 billion by 2006
• Many are small business owners that reinvest in
  family businesses

Affluent 100,000 HH Income
Source Merrill Lynch, 2003
38
Media Dynamics

• English networks under deliver Hispanics

Hispanic based on (000s) Source A.C.
Nielsen, Sep-Nov 2003
39
Media Dynamics

• Top programs continue to be on Spanish
• 1992 season had 14 on English

Source A.C. Nielsen, Sep-Nov 2003
40
Media Dynamics

• A very different list of top advertisers

Source Hispanic Business Magazine 2002
41
Media Dynamics

• Nearly half of Hispanic advertising dollars are
  on a local market basis

Source Hispanic Business Magazine 2002
42
Segmentation

• Background
• Developed by Yankelovich in partnership with
  Cheskin
• 1,200 in person interviews, P16
• Seven top three emerging markets
• Spanish and English interviews
• Weighted for population

43
Segmentation

• The market can be visualized as falling into 12
  segments based on Life Stage categories

44
Segmentation

• Acculturation Definitions
• Hispanic Dominant
• Persons closest to the culture of their country
  of origin
• Choose to retain as much of their Hispanic
  culture, language and values as possible
• Bicultural
• Persons that desire to retain as much as possible
  of their Hispanic culture, while adopting aspects
  of U.S. Anglo culture as well
• Assimilated
• Persons who have moved away from their Hispanic
  culture to adopt U.S. Anglo culture, language and
  family values
• Culturally Unique
• Persons not yet arrived

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Segmentation

• The Segments Defined

46
Segmentation

• Young Progressives

47
Segmentation

• Home Builders

48
Segmentation

• Hearth Hearted

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Segmentation

• Prime of Life