Multidimensional Segment

It seems that U.S. marketers have finally discovered the Hispanic market. Not that it hasn't been here for some time; it has. And not that it isn't of substantial size; it is. So what has suddenly woken Madison Avenue to the potential in this market? A number of things.

First, consider the size of the Hispanic market—35.3 million people. Second, consider the growth rate—58 percent in the past decade (four times that of the overall population). Third, throw in the estimated $400 billion in buying power, which "seems impervious to the Nasdaq's swoons" according to Marci McDonald of U.S. News & World Report. The end result is an extremely attractive market. And, unlike the case in the past, this market has finally attracted the attention of some bigtime marketers.

CBS has noticed. Hoping that the Hispanic market will help reverse the downward trend in the size of its soap opera audience, the network has introduced a___'

Spanish simulcast of The Bold and the Beautiful titled Belleza y Poder ("Beauty and Power"). Liz Claiborne Cosmetics introduced its new perfume, Mambo, with a $20 million campaign targeting Latinos (among others), and the American Association of Retired Persons (AARP) has more specifically targeted the over-50 Hispanic market with a $3 million campaign. Among the other firms now increasing their efforts in this market are MasterCard International, Reader's Digest, and Tillamook Cheese.

Even though there has been a significant increase in spending in the Hispanic market, Spanish-language and bilingual campaigns still account for only about one percent of the $200 billion advertisers spend yearly on broadcast media (another $250 million goes to magazines and newspapers). While some companies already spend heavily to attract this segment (e.g., Sears has targeted this market for over 10 years, and AT&T spent about $35 million on it in 2001), most have simply ignored the segment—until now. The fact that young Hispanics will become the largest ethnic youth population in the United States by 2005 has made more marketers take notice.

Reaching this segment may not be as easy as it seems, however. Roberto Ramos, president of the Ruido Group, a Hispanic-youth-focused communication agency in New York, notes: "One of the biggest misconceptions about Hispanic youth is that they are a homogeneous group. Puerto Ricans, Colombians and Cubans are not all the same. What works to attract one group may not work for another." Erasmo Arteaga, a

Sears store manager in West Covina, California, adds: "People think Hispanic means one thing,... But it's different from Miami to Southern California. And here in California, it's not just Mexicans; it's Guatemalans, Sal-vadorans, and other people from Central America." Arteaga notes that two Hispanic-designated stores in Los Angeles only 20 miles apart reflect very different buying motives. While this segment is certainly a challenging market, there is no doubt among many marketers that Hispanics are worth the effort. Consider some of the efforts being taken:

• Reader's Digest has launched Selecciones magazine, a magazine showcasing Latinos.

• MasterCard International maintains a Spanish-language website to encourage Latinos to apply for credit cards.

• AC Nielsen formed a Southern California Hispanic-consumer panel to learn more about the likes and dislikes of this audience.

• American Airlines has an in-flight magazine titled NEXOS that is targeted at Hispanics.

• The "Got Milk" campaign now includes Spanish versions of the ads.

• Galavision,a Spanish-language cable station, launched five youth programs aimed at bilingual and bicultural Hispanic youth.

• Throughout its bilingual TV, print,and radio campaigns, the Office of National Drug Control Policy focuses its antidrug message on the strong family values inherent in Hispanic cultures.

The above are just a few examples of the many companies and organizations targeting the Hispanic market. With the segment's strong growth rates in population and in spending power, you can be sure that many more will join in. The question is, will they take the time and effort required to understand the diversity of this market, or will they simply attempt to reach Hispanics through the appeals and media they employ for other ethnic groups. One thing is sure: If they pursue the latter strategy, they won't be in the Hispanic market for very long.

Sources: John Kerrigan "Playing to Hispanics garners rewards," Marketing News, July 22,2002, p. 20; Jennifer Gonzalez McPherson, "Targeting Teens," Hispanic Magazine, September 2001, pp.33-36; Marci McDonald,"Madison Avenue's New Latin Beat," U.S. News & World Report, June 4, 2001, p. 42; Greg Johnson, "Gaining Insight into the Latino Middle Class," Los Angeles Times, June 11, 2001, p.C-1.

Exhibit 2-5 Big Red markets to a specific geographic region msHf msHf

Exhibit 2-5 Big Red markets to a specific geographic region

Bases for Segmentation As shown in Figure 2-4, several methods are available for segmenting markets. Marketers may use one of the segmentation variables or a combination of approaches. Consider the market segmentation strategy that might be employed to market snow skis. The consumer's lifestyle—active, fun-loving, enjoys outdoor sports—is certainly important. But so are other factors, such as age (participation in downhill skiing drops off significantly at about age 30) and income (Have you seen the price of a lift ticket lately?), as well as marital status. Let us review the bases for segmentation and examine some promotional strategies employed in each.

Geographic Segmentation In the geographic segmentation approach, markets are divided into different geographic units. These units may include nations, states, counties, or even neighborhoods. Consumers often have different buying habits depending on where they reside. For example, General Motors, among other car manufacturers, considers California a very different market from the rest of the United States and has developed specific marketing programs targeted to the consumers in that state. Other companies have developed programs targeted at specific regions. Exhibit 2-5 shows an ad for Big Red, just one of the regional soft-drink "cult" brands—along with Cheerwine (the Carolinas), Vernors (Michigan), and Moxie (New England)—that have found success by marketing in regional areas (in this case, Texas). One company—Olde Brooklyn Beverage Company—has even gone so far as to promote a brand based on a specific section of New York City, differentiating it from bigger brands by promoting the product's "Brooklyn Attitude."

Demographic Segmentation Dividing the market on the basis of demographic variables such as age, sex, family size, education, income, and social class is called demographic segmentation. Secret deodorant and the Lady Schick shaver are products that have met with a great deal of success by using the demographic variable of sex as a basis for segmentation. iVillage, a website targeting women, may be one of the most successful websites on the Internet (Exhibit 2-6).

Although market segmentation on the basis of demographics may seem obvious, companies sometimes discover that they need to focus more attention on a specific demographic group. For example, Kodak and Procter & Gamble, among others, have had to redo their images for younger markets. Abercrombie changed its image to reach the "echo-boomer" (18- to 22-year-old) segment (Exhibit 2-7). Magazines like Modern Maturity are targeted to the estimated 76 million people in the "Be Generation," who are now in their fifties or older or are from the baby-boomer generation, the cohort born between 1946 and 1964, and Segunda Juventud to the 50+ Hispanic market (Exhibit 2-8).

Other products that have successfully employed demographic segmentation include Virginia Slims cigarettes (sex), Doan's Pills (age), JCPenney Co. (race), MercedesBenz and BMW cars (income), and prepackaged dinners (family size).

While demographics may still be the most common method of segmenting markets, it is important to recognize that other factors may be the underlying basis for homogeneity and/or consumer behavior. The astute marketer will identify additional bases for segmenting and will recognize the limitations of demographics.

Figure 2-4 Some bases for market segmentation



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    Which segment of the market has most spending power?
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