Trying to tap local Hispanic market

No market segment has been more in the news in recent months than the Hispanic market. However, as soon as the word “Hispanic” appears in any medium, it fractures into a complicated mosaic of assumptions and definitions.

Is it Hispanic or Latino? What ever happened to Chicano? Do Hispanics/Latinos/ Chicanos really have any disposable income to spend, or is that population simply growing?

In trying to sort out the random pieces of undifferentiated information that might help identify trends in this market, it is first useful to understand that when the term “Hispanic” is used in economic calculations, it is different from a term like Caucasian, black, Native American, or Asian.

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According to the report “The Multicultural Economy 2005,” published by the Selig Center for Economic Growth, “Hispanic refers to a person of Mexican, Puerto Rican, Cuban or other Spanish/Hispanic/Latino culture or origin, and is considered an ethnic category rather than a racial group.” Which is to say that persons of Hispanic origin may be of any race, but probably united by the Spanish language.

The great variety within the Hispanic market requires marketers and advertisers to pay attention to cultural details: Cinco de Mayo will not resonate in Miami’s “Little Havana,” but it’s a hit in Denver where the connection with Mexico is deep.

“Cinco de Mayo in Denver is one of the biggest celebrations of the day in the country. People drive in from all over the state and beyond,´ said Chris Day, a Colorado State University graduate and general manager of Impacto, the promotions and public relations arm of the Cartel Group based in San Antonio, Texas. “I come to Denver every quarter or so to try to work with some different organizations to get a jump on one of the great untapped markets in the U.S.”

The Selig Center’s 2005 report on Americans’ buying power (the total personal income of residents available for spending on everything they buy; it is not a measure of wealth, and does not include what tourists spend during their visits) suggests that Day’s interest is well founded. In Colorado, the collective buying power of the Hispanic market is expected to rise to $26,783,522 in 2010, up from $11,114,821 in 2000.

In 2005, Colorado had the eighth largest Hispanic market in the country (worth $17.1 billion) and the seventh largest market share. The larger the market share, the lower the average cost of reaching a potential buyer in the group.

Entrepreneurs reaching out

When the Selig report broke down where different minority groups spent most of their money, the Hispanic list included groceries, phone services, major appliances, furniture, children’s clothing and footwear. Hispanic customers also spent slightly more on eating away from home than did non-Hispanic consumers. That last detail is driving the pizza company Pizza Patrón to move aggressively into the national market, including Colorado. While the franchise is not yet in Northern Colorado, it is opening stores quickly in Denver. The first two went in less than a year ago, and two more are on the way.

“Three years ago we had four stores total,´ said Andrew Gamm, director of brand development for the Dallas-based company. “Since then we have changed the identity to make it stronger, and redesigned the stores to make it easier for our market to identify with the look and feel.”

Pizza Patrón could serve as a model for taking a well-known product and customizing it for a Hispanic market.

“The pizza business is tough,” Gamm said. “It’s not enough to have a good product and price point. Our distinct advantage is our focus. Everything is directed to building a rapport with the Hispanic customer. All of our point people are bilingual because our customers speak both English and Spanish.”

And is there anything different about the ingredients in a Pizza Patrón pizza?

“We offer a very traditional flavor profile,” Gamm said. “Occasionally we’ll offer something special like a barbacoa pizza. It’s good and works culturally.”

Despite the statistical information that the Hispanic market is on the rise and despite solid information on where spending tends to collect, there appears to be little going on in the way of marketing to the Hispanic segment in Northern Colorado.

“Most of what we do is business-to-business rather than consumer marketing,´ said Laurie Steele, director of client services for Burns Marketing in Fort Collins. “But we are recommending that our clients use Spanish as part of their marketing plans. It’s an opportunity that they might overlook.”

Northern Colorado lags behind

Day noted that Northern Colorado is lagging in the effort to tap the Hispanic market. In Fort Collins, the relatively small population remains largely invisible as a political or economic force. Greeley, a city that is about 30 percent Hispanic and growing, has tended to stay ethnically divided.

Even so, some businesses in town, Union Colony Bank and the Greeley Tribune among them, have recognized the potential for creating a presence in that market. A year ago, the Greeley Tribune started up a free weekly La Tribuna, and Union Colony Bank advertises there.

“We are looking at four key markets to develop in Greeley, and the Hispanic market is one of those,´ said Mick Evanson, executive vice president of Union Colony Bank. “When I arrived six years ago, the bank already had a program under way to create a comfortable banking experience for Spanish speakers. It seems to us that a community bank needs to reflect the community.”

Mary Audette, director of marketing for the bank, added that the hiring of a community outreach officer has helped the bank understand how to gain exposure in the Hispanic community.

“René Gonzalez has given us a lot of ideas concerning how to be present in the life of the Hispanic community,” she said. “We sponsor some events and are visible at others.”

The investment in understanding the nuances of Hispanic culture seems to be paying off for the bank in what may be a market trend of its own: having a checking account.

“The senior marketing students at the Monfort School of Business at the University of Northern Colorado did a survey for us,” Evanson said. “What they found was that while checking accounts were not common in the Hispanic community, of those who did have checking accounts, 60 percent of them had Union Colony checking accounts.”

Although exploratory initiatives by banks, newspapers and pizza entrepreneurs hardly count as trends, they do suggest that some enterprises are willing to create paths through the thicket of assumptions that has kept buyers and sellers from getting to know each other in ways that benefit them both.