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Diapers For Fatima
Everyone Wants To Own The Booming Hispanic Consumer Market. Procter & Gamble Can Offer Some Lessons
By Sandra Hernandez
24 January 2005
Companies trying to reach America's expanding Hispanic population should listen to Julieta Parilla and her family. Parilla, who emigrated from Guadalajara, Mexico, with her relatives eight years ago, is preaching about Pampers. Sitting on a four-poster living- room bed in the cramped apartment she shares with her baby daughter, mother, sister, brother-in-law and five nieces and nephews in Norwalk, Calif., a predominantly Hispanic working-class suburb of Los Angeles, she waxes eloquent about the diaper brand's absorption abilities and its "softer cloth." At a baby shower before her 6-month-old daughter Fatima was born, a friend gave Parilla a competing diaper as a gift. She regrets ignoring her sister's advice to stay away from other brands. Those other diapers, she says, caused her daughter to break out in a rash.
Although the endorsement by her sister and prenatal nurses turned Parilla on to Pampers, a few marketing tactics from Procter & Gamble, Pampers' $51 billion parent company, have helped the 21- year-old single mother stay loyal to the brand. Parilla recalls a Pampers television ad she liked, broadcast in both English and Spanish, showing a smiling baby crawling in the diapers. The nurses at Garfield Medical Center in Monterey Park, Calif, gave Parilla free samples of Pampers and other P&G brands like Crest and Tide as she checked out after Fatima's birth (Parilla uses Crest, although she prefers Cheer, another P&G brand, to Tide). At a local health clinic, she picked up a copy of Avanzando con Tu Familia (Helping Your Family Move Ahead), a P&G-published Martha Stewart Living for recent Hispanic immigrants that reaches 1 million homes across the country. Besides coupons for P&G products, the magazine prints recipes, exercise tips and other lifestyle advice. Parilla especially liked a story on how to clean the belly of your newborn, and she has been impressed by P&G's support for the Hispanic Scholarship Fund.
With such clever tactics, Proctor & Gamble has hooked Parilla and a whole lot of other Hispanic Americans. The Hispanic population is growing faster than any other group in the U.S., and its buying power is soaring too. By most accounts, P&G is leading the pack in the race to grab its business. Competitors like Colgate-Palmolive, which imported fabric softener Suavitel from Latin America, and Unilever, with grass-roots campaigns like storefront tastings for brands such as Hellman's mayonnaise and Rag spaghetti sauce in Hispanic neighborhoods, are also active. But P&G spent $107 million on Spanish-media advertising in the first nine months of 2004, tops in the U.S. (excluding Lexicon Marketing Corp., which sells products that teach English to Spanish speakers).
Six of the 12 brands that P&G's ethnic-marketing division manages are ranked No. 1 among Hispanics in their categories, and five others are ranked second. "Senior management has tested our will and challenged us to blanket the market," says Graciela Eleta, director of P&G's Multicultural Business Development Organization, a unit the conglomerate created in 1999 to reach African, Asian and Hispanic Americans. "We Hispanics like to see who's going to put toda la carne al asador," says Alex Lpez Negrete, president of Lopez Negrete Communications, a Houston-based Hispanic marketing company. "All the meat on the grill. That's who wins."
By that token, you might call Eleta P&G's chief backyard chef. As P&G's top ethnic marketer, she heads the company's Hispanic efforts from the division's headquarters in Puerto Rico. But the Panama City--born P&G vet doesn't spend too much time in the Caribbean-- every month she spends a week or so in Hispanic hotbeds like Los Angeles, Dallas and New York City, managing retail relationships, meeting with customers. "She walks the stores, walks in the community," says Ernest Bromley, head of ad agency Bromley Communications, based in San Antonio, Texas. "She's not learning this stuff out of a book."
P&G has combined national advertising with grass-roots marketing to increase Hispanic share for three-quarters of the brands targeted by the multicultural unit. For example, P&G holds demonstrations in stores and homes to teach recent Hispanic immigrants the advantages of Bounty's "Quicker Picker Upper" paper towels vs. the sponges and rags with which many were raised. Bounty's Hispanic market share has jumped some 10%. "[P&G] won't lift a finger without talking to a customer, without finding out exactly what a customer wants," says Felipe Korzenny, a Hispanic- marketing professor at Florida State University and a consultant for several FORTUNE 500 companies. "They've just done it better than anybody else."
The Hispanic market didn't always get this kind of attention. For years before Hispanics overtook African Americans as the country's largest minority group in 2001, companies often marketed to U.S. Hispanics on the cheap. Even at P&G, which always dabbled in ethnic marketing, Hispanics weren't always a high priority. Sometimes, says Eleta, "Hispanic marketing was the first item out of the budget."
Companies like P&G can't afford to ignore the Hispanic market anymore. The U.S. Hispanic population has grown 85%, to 41.3 million, since 1990, compared with only 18% for the overall population, according to the Selig Center for Economic Growth at the University of Georgia. U.S. Hispanic buying power has more than tripled in the past 15 years, to $686 billion, whereas total U.S. buying power has grown at less than half that rate. The Selig Center projects that Hispanic buying power will grow an additional 45%, to $992 billion, by the end of the decade; and the U.S. Census Bureau says the Hispanic population will triple, to 102.5 million, by 2050, when Hispanics will make up nearly 25% of the U.S. population. (The group now has a 14% population share.)
Those demographics have spawned a marketing frenzy. Hispanic- targeted advertising more than doubled, to $3.4 billion, from 1997 to 2003, according to the Association of Hispanic Advertising Agencies. P&G spending has jumped 80% since 1997. Unilever, whose household brands like Surf detergent compete directly with P&G's, says it will triple its Hispanic advertising and promotional budget in 2005. General Electric, Telemundo's parent company, has identified Spanish-language TV as a strategic growth area. (Univision and Telemundo used to be the sole TV options. There are now 67 Spanish-language cable networks, from ESPN Deportes to the History Channel en Espaol.) To counter sluggish growth, Miller Brewing Co. signed a three-year, $100 million deal with Univision in October to sponsor programs, buy commercial time and place products on Univision's radio, cable and broadcast network properties.
Coca-Cola slashed its Spanish-language TV-advertising budget 48% in 2003, then reversed course, promising to spend an additional $350 million to $400 million on advertising, with a percentage dedicated to the Hispanic market. In November new CEO Neville Isdell said Hispanics are one of Coke's three most important growth segments for North America (young people and baby boomers are the others).
P&G gained an early edge in the Hispanic market, in part because it started before anyone else. More than 40 years ago, P&G became one of the first major companies to air a Spanish-language TV commercial. In 1984, it was the first major U.S. corporation to sponsor Sbado Gigante, America's leading Spanish-language entertainment-and-variety program. But with so much competition-- and money--now rushing into the sector, P&G can't afford to rest on those laurels. Enter Eleta's 45-person Puerto Rico--based multicultural-marketing division. "I realized how important this [division] was when a few white men within P&G wanted to come and work for us," says Eleta. (She jokes: "They're part of our minority diversity program.")
Eleta's tactics are instructive. Step One: P&G chose to focus its marketing dollars on just 12 of its 300 brands: Always feminine products; Bounty; Charmin toilet paper; Crest; Dawn dishwashing cleaner; Downy fabric softener; Gain and Tide laundry detergents; Herbal Essences, Head & Shoulders and Pantene shampoos; and Pampers. Why not, say, P&G's Iams pet-food line? Median household income for Hispanics is $33,000, compared with $48,000 for the non- Hispanic population; P&G's market research found that relative to the general population, Hispanics tended to spend less on their pets.
And why Pampers? Here, P&G is obeying what Juan Faura, a Hispanic-marketing executive and author of The Whole Enchilada: Hispanic Marketing 101, calls a basic "law of the Hispanic universe": "Family is always first," writes Faura. "Family means your mom and dad and brothers and sisters and second cousins and cousins of your aunt's husband's sister and aunts of your mom's second cousin Dionisia from Veracruz." (Or, in real-world terms, Parilla, a single mom, won't skimp on her baby, no matter how stretched her pocketbook.) Plus, diapers are a growth category: 1 in 5 babies born in the U.S., and 1 in 2 in California, is Hispanic.
The next stage, after identifying target product lines, was honing P&G's marketing message. According to P&G research, for instance, 57% of Hispanic customers describe themselves as "avid scent seekers," compared with 31% for the general market. So P&G tapped into that sensory preference in its packaging of Gain, a midpriced laundry detergent, launching several versions geared specifically to the Hispanic consumer: Gentle Breeze, Island Fresh, Whitewater Fresh. "There was really no other soap that satisfied me," says Juan Nungary, 35, a Dallas cabinet installer and faithful Gain user, touting the detergent's scent.
In addition, P&G has tailored its Gain advertising to Hispanic culture: in an English-language commercial, a Norah Jones song plays while a young man hangs his girlfriend's bright tank top, washed with Gain, on a life-size cutout of Rocky Balboa. P&G drops American icons Norah and Rocky from the Spanish ad; instead, a middle-age man won't get in bed with a woman because he can't stop sniffing his Gain-scrubbed undershirt. The woman is disappointed but not P&G: Gain's Hispanic market share, which is 60% as high as the general market number, has increased 34% over the past four years. Gain is the second-leading brand in the $544 million Hispanic detergent market; it trails only Tide, P&G's higher- priced detergent.
Another innovation of Eleta's group: building a proprietary database of undocumented Hispanic immigrants--the cutting edge of the growing Hispanic population. While the P&G crew is circumspect about the details of that list, they have used it, for instance, to send out thousands of free Pampers diaper samples, in search of prospective customers. Kimberly Clark's Huggies (the dominant brand in Mexico and the Dominican Republic) still leads the $604 million U.S. Hispanic diaper market. But P&G's free-sample effort--along with heavy print and television advertising--seems to be paying off: since 2000, Pampers' Hispanic market share in the U.S. has increased 25%.
P&G's efforts, of course, are hardly the last word in this arena: there are lessons throughout the Hispanic marketplace. According to Nielsen Media Research, for example, 71% of Spanish-language television viewers say they receive information relating to their purchasing decisions from commercials, compared with just 30% for non-Hispanics watching English television. Plus, Hispanic viewers are three times as likely as non-Hispanic viewers to discuss advertisements with others. That's a potent combination. "We're less jaded," says Lpez Negrete, the marketing executive. "We haven't been sold to as aggressively." And once they're sold, they're more likely to stick around: Nielsen says predominantly Spanish-speaking Hispanics are 16% more brand loyal than their non- Hispanic counterparts.
Still, nearly half the top 250 U.S. advertisers are spending less than 1% of their ad budgets in Hispanic media. And some companies just get it wrong. According to a Transperfect Translations Corp. survey, 57% of people who speak Spanish--and English as a second language--say they've seen Spanish advertising that is incorrectly translated from English. In one case, pointwas translated as puta, which means prostitute in Spanish, instead of punta. "Our market is maturing," says Lpez Negrete. "But it's never too late--we're still waiting for an invitation from many brands." Given the sheer potential of this segment, companies will come to the party. The question remains: Who will turn it into a bottom-line fiesta? -- With reporting by Anna Macias Aguayo and Cathy Booth Thomas/ Dallas and Sandra Marquez/Norwalk
P&G ADDS THE SALSA
Tropical Clean Tide was launched to remind some Hispanics of their island homeland
Studies show that Hispanics place more emphasis on a toothpaste's taste, so Crest has released vanilla and cinnamon flavors
P&G has urged new Hispanic Americans to purge their sponges and try Bounty
"SENIOR MANAGEMENT HAS CHALLENGED US TO BLANKET THE MARKET." -- GRACIELA ELETA, P&G'S HISPANIC GURU"P&G WON'T LIFT A FINGER WITHOUT TALKING TO THE CUSTOMER." --FELIPE KORZENNY, HISPANIC-MARKETING PROFESSOR