A survey commissioned by leading direct mail media company ADVO, Inc., reveals important differences between Hispanic and non-Hispanic retail shoppers, and among Hispanics by level of acculturation. Among the findings:
-Shopping and spending levels increase with acculturation.
-Price is the primary driver of retail buying decisions.
-Service, familiarity and employee friendliness also influence purchases.
-Circular readership is 32% higher among Hispanics than non-Hispanics.
-Bilingual, culturally-relevant advertising approaches are best.
Hispanics are projected to account for nearly half of all U.S. population growth, with spending power of more than a trillion dollars a year by 2010. The ADVO study, titled El Mercado Minorista (The Retail Market), suggests that retailers who seek to reach this important group calibrate their marketing and advertising strategies to better match cultural and demographic attitudes and behaviors.
The study focused on six retail categories: discount superstores, and discount department, home improvement, drug, warehouse club and furniture stores. Respondents were asked about shopping patterns, preferences, spending levels and the degree to which bilingual advertising and service influenced purchases. Results were evaluated for Hispanics and non-Hispanics, and among Hispanics according to level of acculturation, adaptation to dominant U.S. cultural patterns while maintaining values and perspectives of the native culture.
“We found that Hispanics, like most consumers, have a fixed amount of disposable income,” said Therese Mulvey, ADVO’s vice president, Marketing Intelligence. “We know from past research that they tend to spend proportionately more on food than other categories, so lower prices for other goods become an important way for retailers to gain greater share of their spending.”
Shopping and Spending Levels Increase with Acculturation
While the study showed that Hispanics as a whole shop and spend less when buying non-food items than non-Hispanics, shopping increases with acculturation (Chart A). “Retailers have an opportunity to build awareness of their brands and products early on, to establish familiarity and capture market share as individuals become more acculturated and increase their purchasing power,” said Mulvey.
Capturing the Growing Hispanic Market:
Price, Service and Store Employees Affect Sales
The study showed that Hispanics cite price as the main reason for choosing their last store shopped. While non-Hispanics cite equal concern for price, convenient location is the predominant factor (Chart B). Past-month shopping by store type (Chart C, next page) shows Hispanic price sensitivity as well—with a clear preference for discount superstores. Additional findings (Chart D) show that Hispanics rate price above bilingual service when choosing a place to shop.
Service and courteous employees are other key drivers of Hispanic shopping behavior. Hispanic consumers cite these attributes as top drivers of purchases in nearly every retail category, whereas non-Hispanics cite good value for the money (willingness to pay higher prices for better products) and courteous service as the key drivers.
“Retailers could benefit from establishing clear price points in their advertising to capture the attention of Hispanic consumers and draw them into stores,” Mulvey pointed out. “Ensuring good service and friendly employees can keep them coming back.”
Bilingual, Culturally-Relevant Approach to Advertising is Best
The survey findings that showed 32% higher circular readership levels for all Hispanics, and varied purchasing preferences among Hispanics according to their level of acculturation, have important implications for retailers:
-Since familiarity and service levels strongly influence sales, stores with a Latin American presence can continue to build momentum with unacculturated Hispanics with advertising that reinforces their presence in the U.S.
-Retailers based primarily in the U.S. can advertise price and service, and include a strong call to action with coupons and special offers, to build familiarity and sales earlier in the acculturation process.
-Unacculturated and bicultural Hispanics are much more likely to use Spanish media. So bilingual advertising has the greatest potential to reach and impact Hispanic consumers.
-Retailers can best target Hispanic shoppers by acculturation level with relevant, effective creative messages.
-Mail remains the most effective medium for reaching Hispanics.
About The Study
The El Mercado Minorista study was conducted for ADVO by independent firm Woelfel Research, Inc. of Dunn Loring, Va. The findings are based on interviews with 1,200 randomly selected Hispanic consumers in the top ten U.S. cities by Hispanic population count (Los Angeles, New York, Miami, Chicago, Phoenix, San Diego, San Francisco/Bay Area, Houston, Dallas and San Antonio). Respondents were grouped according to acculturation level. Another 500 non-Hispanic survey participants were included for comparison.
The study represents the third phase of an in-depth ADVO research project to help its clients better understand and target the increasingly important Hispanic consumer. Phase I of the project, El Mercado, looked at Hispanic consumer behavior and attitudes toward grocery shopping and Phase II, El Mercado Restaurante, focused on Hispanic consumer behavior and attitudes toward restaurants.
ADVO is the nation’s leading direct mail media company, with annual revenues of nearly $1.4 billion. Serving 17,000 national, regional and local retailers, the company reaches 114 million households, more than 90% of the nation’s homes, with its ShopWise® shared mail advertising.
The company’s industry-leading targeting technology, coupled with its unparalleled logistics capabilities, enable retailers seeking superior return on investment to target, version and deliver their print advertising directly to consumers most likely to respond. ADVO’s targeting database provides more than 1,700 demographic and lifestyle variables, allowing clients to version messages for maximum relevance and effectively reach audiences such as Hispanics.
ADVO employs 3,700 people at its 24 mail processing facilities, 33 sales offices and headquarters in Windsor, CT. The company can be visited online at www.ADVO.com.
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