Posted by Elena del Valle on July 27, 2006
By Elena del Valle, MBA
Principal, LNA World Communications
Elena del Valle, MBA, principal, LNA World Communications
Photos: LNA World Communications, Dunkin’ Donuts
As part of a national or international franchise chain, franchisee stores are often required to meet certain contractual obligations and standards, offer a set line of products or services, purchase from specific vendors, display pre-approved materials and have a company “look.” In exchange for their compliance with those obligations they reap the benefits of the larger company and its support in the form of an established brand name, negotiated wholesale prices, corporate training, and other advantages that drive their business model.
In spite of the corporate franchise advantages at the end of the day franchisees are responsible for their business success and building a strong customer base. To do this they must understand their local market base and cater to it. For many businesses, especially those offering products and services catering to young audiences, Latinos represent a highly desirable market because they have growing buying power, demonstrate elevated brand loyalty and are superior consumers, spending a higher than average percentage of their income on certain items.
Franchises rely on the idea that their business model applies in national markets and across geographic areas. The assumption is that the general market or a predetermined segment of the general market will respond to the brand allowing the company to spread and promote the franchise across the country. In the past franchisors created promotions and campaigns for a relatively homogenous national market. In the last few years, census and demographic data have revealed the U.S. in peppered with increasingly heterogeneous markets which represent some of the fastest growth segments.
At the national level, the franchisor is in charge of research, marketing and public relations services. Generally they develop marketing programs to fit the mainstream national audience and leave franchisees to build up localized and minority outreach efforts. This means franchisees in heavily Hispanic areas are often on their own when it comes to understanding and targeting Latinos consumers in their area of business.
The UPS Store/Mail Boxes, Etc., for example, places mainstream ads only. At the national level, the company’s only Hispanic specific effort is the translation into Spanish of its quarterly mat release.
“It’s up to the local franchisee or marketing co-ops if they want to advertise to Hispanics,” said Becca Andrews, UPS Store/Mail Boxes, Etc. spokesperson. “Usually co-ops in Hispanic DMAs like Chicago, California, Miami and New York consider Hispanic ads.”
Franchisees are, as a general rule, small business owners with limited know-how and minimal marketing, advertising and public relations budgets. These limitations and the reduced negotiating position they have from small purchases make them reliant on the franchisor for their marketing counsel and services. Savvy franchisees in booming or heavily Hispanic areas take the initiative and rely on their own or locally acquired cultural understanding to win Latino consumers.
“The bottom line is [that] in order for you to target the Hispanic group is to make them feel welcome; let them know the services are here for them too,” said Alan Toledo, a Mail Boxes Etc. store owner in the Los Angeles suburb of Downy. “Hispanics are willing to spend the extra dollar as long as you inform them and make them feel welcome.”
Some franchisors target Hispanic consumers directly, carrying products or offering services of interest in an area, sometimes developing Hispanic specific materials or placing Spanish language ads. This is the case with hotel company Accor North America. They place Spanish language ads at radio stations in Hispanic centric areas across the country and propose Latino oriented stories to print media. Dunkin’ Doughnuts has translated English language ads in the past in an effort to address Latinos.
“It depends. Different hotels at the local level do different things. We have so many locations nationwide,” said Janice Maragakis, senior director, Public Relations, Accor North America, which has almost 1,200 hotels in the U.S. “Anything that’s pertinent that we do is submitted to the Hispanic publications.”
Dunkin’ Donuts Supreme Omelet Breakfast Sandwich with bacon
“Dunkin’ Donuts is committed to speaking directly to Hispanic consumers,” said John Gilbert, vice president of Dunkin’ Donuts marketing. “The U.S. Hispanic market represents a powerful and an integral part of our future growth plans. With strong buying power and discerning tastes, Dunkin’ Donuts will continue to listen to and serve the Hispanic market.”
The Athlete’s Foot conducts extensive research prior to opening new stores to establish area concentrations and shifts the product mix to cater to local markets. Latinos, a company representative indicated, are more fashion conscious than other markets. The company keeps this information in mind when preparing product inventories for each store.
Latinos – a closer look
Following the release of the 2000 Census figures many eyes turned to America’s Hispanics. The announcement that this long ignored segment of our country’s population had officially become the largest minority in the U.S. brought Hispanics much sought after attention. The notice was accompanied by a great deal of misunderstanding about who Latinos are and what Latino culture is about.
Latino or Hispanic refers to an ethnic group with common heritage and cultural characteristics. Sometimes, but not always, Latinos share a common language, Spanish. Often they share a love of Hispanic music, media, food, culture and ethnic traits that differentiate them from the rest of the minorities and the mainstream.
The truth is that there is no single profile that fits Latinos neatly. Latinos can be of any faith; any race; and belong to any political party. There are Hispanics in all fifty states, although some cities and states have more Latinos than others. That is the case for Los Angeles, New York, Miami, Chicago, San Francisco and Houston, for example.
Although Latinos may hail from any of the Latin American countries south of the border, the majority of U. S. Hispanics were born in Mexico or of Mexican parents or grandparents. The remainder is divided between countries of origin with Caribbean Hispanics, those from Puerto Rico, Dominican Republic and Cuba, representing a significant number. Each country of origin group has distinct characteristics that can set it apart from other subgroups. In order to reach Latinos effectively franchisees marketing on their own behalf have to be aware of the cultural nuances that unite and separate them. They must, in short, understand Hispanic culture.
“Only because you’re Hispanic doesn’t mean the ad needs to be in Spanish. I only watch TV in English and listen to the radio in English. It comes down to knowing the culture. Hispanics are from many different countries. Knowing where they are from and making them feel welcome is what is important,” said Toledo whose store is in an area with a soaring percentage of Latinos.
Five Basic Steps
Marketing priorities have shifted across America following the U.S. 2000 Census. Slowly, marketing experts as well as some franchisors and franchisees have become aware that it is necessary to understand and take special steps to make an impression on minorities and influence their behavior effectively. This is especially true with Latino audiences, whose combined buying power is projected to reach in excess of $700 billion this year according to Geoscape International.
Demographers estimate 50 percent of the growth in the U.S. in the next five years will be from Hispanics markets. At the same time, Latinos are present across the country, expanding rapidly beyond the traditionally Hispanic metropolitan areas and states. Franchise businesses with an eye on the future have begun to position their business to capture this growing, brand loyal and desirable segment of the market.
For years marketers have relied on language proficiency to determine their Hispanic marketing strategies. English language materials are often translated to Spanish as the sole means to reach the growing Hispanic population in the U.S. While translations may be invaluable for some marketing plans, extensive research and years of practical applications indicate reaching U.S. Latinos effectively requires much more than translations.
Many experts agree that cultural understanding and market segmenting are essential marketing tools. Hispanics are diverse and from many backgrounds, races, countries of origin, political and religious beliefs. Latino subgroups have spread across the nation and expanded their spheres of influence in countless areas. Following are five steps marketers, communicators, entrepreneurs, small business owners, franchisors and franchisees and anyone else wishing to tap into this increasingly profitable market can take to improve the impact of their outreach campaign and increase their bottom line:
1. Acknowledge the diversity of U.S. Latino markets
2. Identify which segment(s) of the market you wish to reach (for example, first, second, third generation)
3. Determine the characteristics of the targeted segment (such as age, area of residence, income level, language preference and fluency, level of acculturation)
4. Consult with market experts (or learn on your own) to identify specific strategies and tactics relevant to your target market
5. Formulate in-language and in-culture marketing and communication strategies specific to the targeted segment
The better franchisors and franchisees understand Hispanics the more effective their efforts to reach that brand loyal audience with high buying power and desirable consumer spending habits will be. The first step is taking the initiative by becoming aware of Latino cultural diversity and what it means to their business. Whichever road they choose, cultural understanding will be at the core of their success.
Elena is editor of Hispanic Marketing & Public Relations Understanding and Targeting America’s Largest Minority (Poyeen Publishing, $49.95). She is editor of the book’s companion website, HispanicMPR.com. She is also host of the first podcast (audio) show addressing how to reach Latinos with marketing and public relations tools. To learn more about reaching U.S. Latinos effectively, visit www.hispanicmpr.com . This article was first published in the June 2006 issue of Hispanic Trends magazine.
Hispanic Marketing and Public Relations book
To purchase a copy of the Hispanic Marketing & Public Relations book edited by Elena del Valle, principal, LNA World Communications visit the HispanicMPR.com Resoures Section