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May 03, 2010

Cover Story

The New American Heritage: Tapping the Hispanic Market Segment

by Michael Rice

The success of your business—of any business—relies on sustained growth over time. And sustained growth requires access to fresh opportunities in new markets with high growth potential. Fortunately, America has a long history of regenerating itself. New immigrant populations coming to America to seek a new way of life have long been the lifeblood of our workforce and our consumer base. They bring a vibrancy and excitement to our culture and ensure the continuation of the American dream. Nowhere is this more evident than in today’s growing Hispanic market segment.

Latinos are now the fastest-growing population in the United States, and their numbers are expected to eclipse those of any other ethnic group by 2050. This is a sweeping change of the American profile that has many people wondering how they can prepare. And it’s not simply a matter of learning to speak Spanish. Reaching the Hispanic market effectively means understanding the history, culture and the needs and values of the people. Many companies have already begun moving forward, developing programs and business strategies that target the Hispanic market right now. When your company gets started, will it be late to the ball?

The Numbers

Not All Hispanics Are Alike

Hispanic Americans are in no way a monolithic culture, but they do share some common values. While the largest portion of Hispanic Americans is of Mexican descent, they also hail from places like Puerto Rico, Cuba, the Dominican Republic, and Central and South America. Like many waves of immigrants before them, they come to America (if they are not born here) seeking financial and social stability, a chance to make new lives for themselves, and perhaps even attain a level of wealth that allows them to help other members of their family and community.

Take the case of Graciela Reyna, a former migrant worker from Rio Grande, Texas, with no formal education. For years, Reyna traveled from her home in Texas to California in search of seasonal work harvesting fruit and vegetable crops. The hours were long and the work was arduous. And every year, her financial stability and that of her family was at the mercy of the regional climate, the success of the crops, and her ability to perform demanding physical labor. And then, at the beginning of one working season, an illness in her family made it impossible for Reyna to make the trip.

Fortunately, Reyna had learned from a neighbor about an opportunity to own her own business—an opportunity that required little initial investment from her. When things got tough, she approached the neighbor saying she wanted in. Today, Reyna is a National Executive with Celebrating Home, a Texas-based direct selling company that specializes in interior design, housewares and gardening accoutrements. To be exact, Celebrating Home is a company recently formed out of the merger of two other companies: Home & Garden Party and Home Interiors & Gifts. But more important to our story, Celebrating Home allowed Graciela Reyna to transition from migrant farmworker to self-employed interior designer. She now boasts the ability to consult with homeowners on how to make their homes more comfortable. And it’s a business that Reyna can run on her own schedule, one that has empowered her to support her family without the risks associated with migratory labor.

While exceptional, Reyna’s story illustrates how direct selling businesses have helped change the lives of millions of people around the world. These careers provide a low threshold of entry and a level playing field where people can reach great levels of success independent of their previous work experience or educational background. And direct selling is an industry that provides that great American value: equal opportunity.

“After I started my own business with Celebrating Home, I started to value myself more as a woman and feel like an entrepreneur,” Reyna says. “I was able to buy myself a house and send my kids to college. I credit Celebrating Home with changing my life.”

The Benefits Are Mutual

Of course, this is one of the hallmarks of the direct selling industry—empowering people to reach unprecedented success that favors determination and resourcefulness over educational pedigree. It is also why direct selling is an attractive career path for new immigrants. And when it comes to sheer numbers, no immigrant group can compete with Hispanic Americans. But while the industry is providing new opportunities to Hispanic Americans, it is by no means a one-way street. Direct selling companies are quickly recognizing the advantages of serving the Hispanic population. Reyna is just one example from a growing market segment that direct selling companies are eager to tap into. Hispanic Americans represent a vibrant, dynamic part of the American fabric, one with tight family bonds, strong cultural values, and a fast-rising middle class. Because of this, more and more companies are designating resources to address the needs of Hispanic Americans and creating the customized tools necessary to support this market. Why? Just look at some statistics:

According to U.S. Census Bureau estimates, there are more than 46 million Hispanic Americans in the United States today, making Latinos the largest ethnic minority in the nation, with 15 percent of the current total population. There are already more than 35 million Americans who speak Spanish regularly in their homes. By 2020, one in five Americans will claim Hispanic heritage, and by 2050, the total Hispanic population is expected to nearly triple its current size to approximately 133 million, at which time Hispanics will account for 30 percent of the American population.

But if those figures don’t impress you, consider another figure that is more relevant to today: By 2011, the spending power of the Hispanic market is expected to reach $1.2 trillion. That means that this high-growth market has already grown. In fact, it has practically doubled since the 1980s. Take note: The Hispanic market is an undeniable force to be reckoned with, and ignoring its importance is ill-advised.

That’s why companies like Amway Global, Herbalife, JAFRA, Avon, Celebrating Home, Immunotec, MonaVie and many others are already taking serious steps to understand and accommodate the needs of this market. From hiring specialized staff fluent in not just Spanish but Hispanic culture to rethinking their recruitment and support strategies, these companies are fast positioning themselves to lead the direct selling markets of the future.

“Our Hispanic initiative launched during the latter half of 2009, and already we’ve seen a positive trend in brand awareness and favorability.”  —Paula Otero, Hispanic Marketing Brand Manager, Amway Global

Amway Global has recently ramped up its Hispanic marketing division and is fast realizing the benefits of such new strategies.

“Our Hispanic initiative launched during the latter half of 2009, and already we’ve seen a positive trend in brand awareness and favorability,” says Paula Otero, Hispanic Marketing Brand Manager for Amway Global. “We continue to track our success through various measures as the initiative evolves and grows.”

JAFRA says it has developed the Hispanic market in the United States, including Puerto Rico, for more than 40 years. The company’s National Sales Team includes nine dedicated Regional Sales Managers who work together with Hispanic consultants to support their business development on a personal and financial level.

“Over 90 percent of our Customer Relationships Team is bilingual, and most of our key corporate team members and leaders are bilingual, or have had experience working in diverse markets,” says Connie Tang, President of JAFRA Cosmetics USA.

What’s a Company to Do?

So how, exactly, can a company reach the coveted Hispanic market? It turns out it takes a lot more than just translating brochures into Spanish.

“Merely translating materials would be setting ourselves up for failure,” says Tom Zimmer, Senior Vice President and Managing Director of North America for Herbalife, “because the Latino consumer and distributor have unique psychographics and even varying demographics within their community, which need to be addressed. Additionally, we consult with the top-tier Latino distributors in order to aid us in the decision-making process of most of the activities that will affect their business. This group is extremely helpful when it comes to helping us zero in on winning promotions, marketing campaigns and event organization.”

Zimmer says it is important that a company tailor its communications to suit a niche market, but stresses the importance of keeping business policies consistent. That means no favoritism, no special deals.

“Our business policies don’t change from one segment to the other,” Zimmer says. “Integrity and ethics are equal across the board, as are good business practices. At Herbalife, we try not only to be culturally relevant but, first and foremost, we strive to be culturally sensitive and respectful of those differences found in particular market segments. We are acutely aware of the cultural and linguistic differences found in the Hispanic community; therefore, our marketing and sales materials reflect that not only from a language standpoint, but also from a cultural perspective.”

To that end, Herbalife works with its Latino marketing team to create specialized training tools and promotional materials. Whether it’s about developing marketing collateral for new products or producing training videos for new distributors, it is important that the messages are presented in a culturally relevant context that not only speaks to the target market today, but is able to adapt to changes in culture, customs and even technology.

Laura Bujanda, Director of Hispanic Marketing at Celebrating Home, agrees with this strategy. “When dealing with the Hispanic market, we need to consider the unique qualities of the community. There is a growing Hispanic middle class who are increasingly concerned with attaining a comfortable lifestyle and all the things that come with that. But they are also rooted in tradition and family values. They value having a beautiful home where they can entertain their family and friends. Our products and our training tools need to speak to the community in a way that shows we respect these traditions.”

Bujanda says Celebrating Home focuses on teaching its members to provide a service. “We’re not just selling products for the home and garden, but training our members how to create groupings of products that promote a lifestyle. It’s about matching floral patterns with artwork, with cookware and accessories that provide aesthetic continuity. This is why we call our members ‘designers.’ ”

And there are aspects of the community that require special consideration. For example, Dan Boyles, Vice President of Sales at Celebrating Home, points out that the Hispanic market spends a disproportionate amount on cellular phone technology when compared to other market segments. Latinos rely heavily on their cell phones for communication, even more so than on the Internet.

“We are exploring new ways of addressing the unique aspects of this market,” Boyles says. “This can include anything from using text messaging as a platform for promoting sales and opportunities to using cell phone apps that help our designers connect to Twitter, Facebook and other new media.”

Boyles says that currently between 20 and 30 percent of his company’s business is derived from the Hispanic market. “We expect that in the next two years that number will be up between 40 and 50 percent.”

Connie Tang says JAFRA expects its Hispanic market segment will see double-digit growth in 2010.

Herbalife says the Hispanic market now accounts for roughly 65 percent of its total domestic business in the United States.

“The Latino business brings us enormous enthusiasm and growth potential,” Zimmer says. “It’s a community with close family ties and where personal recommendations are respected.”
The Hispanic market segment is also a market with specific consumer needs. Zimmer notes that the Hispanic community, like many American communities, is greatly concerned with and affected by health issues stemming from obesity. And Herbalife believes its nutritional supplements can play a role in addressing that problem. So the company has made a strong commitment to reaching this market.

“We have dedicated a business unit led by a vice president of sales and marketing devoted to the Hispanic market,” Zimmer says. “We have teams in our call center, and in sales and marketing, which are responsible for the production of all Spanish-language marketing and point-of-purchase sales materials, catalogs, flyers, and other communications and training tools for our Latino distributors.”

What’s more, several years ago, Herbalife began hosting an “annual extravaganza” in Spanish, specifically for its Latino distributors. And they make a point to reach out to the Hispanic media, seeking editorial coverage in leading outlets, such as La Opinión and People en Español magazine. The company has also developed Spanish-language content for its social media pages, including publishing bilingual posts on Facebook and a dedicated Spanish-language Twitter account.

We believe that we have only touched the tip of the icebert and see opportunity for growth deep within the community

“We believe that we have only touched the tip of the iceberg and see opportunity for growth deep within the community,” Zimmer says. “We do understand the importance of the Hispanic market in the United States and continue to explore outreach and retention efforts that make good business sense. Our target is to penetrate deeper into every market we’re currently in and expand into new markets across the country that are fertile ground for growth.”

At Amway Global, a number of initiatives to target the Hispanic community are already under way. These include multiyear endorsement contracts with professional athletes, including international soccer superstar Ronaldinho, women’s soccer star Marta, and team sponsorships that include the San Jose Earthquakes and AC Milan. Amway has also launched a new Spanish-language Web site with new brand experiences it says are based on Web 2.0 technologies.

The Bottom Line: Opportunities Abound

Being Hispanic is about a rich cultural continuum and a strong sense of ethnic pride and identity.

But the companies that excel at reaching the Hispanic market know that being Hispanic goes well beyond being devoted to soccer and Facebook. Being Hispanic brings with it a strong commitment to faith, church and community. It’s about a rich cultural continuum and a strong sense of ethnic pride and identity. And it’s a market segment that responds to messages that communicate these very values. And yet, it is not a stagnant market by any means. It is quickly evolving as it weaves its way into the essential American fabric. Where once Hispanic women had limited career options, more and more are joining the workforce, supporting families, and learning to run businesses of their own.

The direct selling industry has long been a strong proponent in empowering women to find independence, to be educated, and to reach unprecedented levels of success. In the Hispanic market, the industry can continue to be an important catalyst for women’s empowerment. And, of course, it is not limited to Hispanic women. It is a highly suitable career path for any self-starter who wants to dramatically change his or her life.

With its strong sense of family and community and its fast-growing numbers of people looking to improve the quality of their lives, the Hispanic market is ripe with fresh faces just waiting to join the ranks of distributors, executives and entrepreneurs who account for the best this industry has to offer. And all it takes to reach them is a little bit of understanding, respect and commitment. So, what are you waiting for? ¡Vámonos, amigos!