The Hispanic auto market is poised to boom in the coming decades. Understanding how to reach it means tuning in to nuances of language, culture, and media habits.
Fermina Platon likes to talk about the early days of advertising cars to Latinos, a time when reaching this emerging market meant relying on little more than trial-and-error targeting strategies, scant research, and even less money. In the 1970s, Hispanic marketing was a grass-roots effort at best, says Platon, a vice president at UniWorld, a New York City-based advertising agency, where she is in charge of marketing Ford Motor Co.'s Lincoln and Mercury brands to the Latino and African American markets.
Things began to change after the 1980 Census, however, when new data was released about the growing Hispanic population. "The world discovered the Hispanic market," says Platon. Then working in J. Walter Thompson's Hispania unit, Platon remembers the excitement she felt when the Ford media director called her at the end of 1982 with a $79,000 budget tagged for reaching Latino car buyers. A paltry sum by today's standards, at the time it seemed like a pot of gold, Platon recalls. She quickly put together radio spots, and soon after convinced Ford to produce original Hispanic TV spots. "That started the automotive advertising ball rolling."
The ball has been picking up speed ever since. Hispanic Americans, who last year numbered 30.3 million, according to the Census Bureau, are poised to grow to 36 million by 2005, due to high birth rates as well as immigration. Last year, Hispanic purchasing power reached an estimated $383 billion, according to the Selig Center for Economic Growth at the University of Georgia. And cars - for many Latinos a symbol of success in this country - stand to account for a sizable share of their future spending; Standard & Poor DRI projects Hispanics will spend $18 billion this year on motor vehicles and parts, a figure expected to grow to $40.2 billion in 2010.
The decade ahead will be a high-stakes race for market dominance among car manufacturers, industry observers say. General Motors Corp.'s Pontiac division and Nissan recently hired Latino agencies of record. And Toyota, which had been gradually upping its Hispanic marketing budget, increased its spending by about a third last year, overtaking GM as the largest automotive spender, according to recently released figures from Hispanic Business magazine. The estimated $20 million it spent on media in 1999 makes Toyota the seventh-largest advertiser overall in the Hispanic market (Procter & Gamble claimed the number-one spot, with $46.2 million). GM ranks 11th, at $15 million, followed by 13th-ranked Ford, at $12.2 million.
The biggest challenge, however, will be to gain a more nuanced understanding of this particular market, which for years has been stereotyped as lacking adequate spending power or sophistication to warrant the attention of large-scale auto marketing efforts. Latino consumers, researchers say, are upwardly mobile, hungry for all types of information, in both English and Spanish, and likely to buy cars at all price levels.
A new survey for American Demographics by Arlington Heights, Illinois-based research firm Market Facts-TeleNation reveals the subtleties inherent in understanding this growing market. In the survey, conducted last November, a national sample of car buyers and a separate sample of Hispanic consumers in three of the largest Latino markets in the country - Los Angeles, New York, and Miami - were asked about the factors likely to affect their automobile purchasing decisions.
Among the most telling findings were those on media usage. Hispanics consult an average of 4.2 sources before buying a car, more than three times the national average. And they rely heavily on print media for car information: Almost 66 percent cite newspapers as an information source for cars to be bought in the next 12 months, versus just 13.8 percent of the general market; 54.2 percent say they will be turning to magazines, versus 17.5 percent of the general market; 45.3 percent cite television; and 27.9 percent say radio. In second place, after a friend/ relative (67.6 percent) is the car dealer: 62 percent of Hispanics in the survey say they'll turn to dealers to learn more about a car, while just 38.7 percent of the general market say they will do the same.
"Hispanic consumers are very information-hungry consumers," says Nancy Tellet, director of media and strategy for the Hispanic market at Messner Vetere Berger McNamee Schmetterer, in New York. "They are receptive, non-jaded, and perhaps more willing to understand marketing messages." Tellet is not alone in her assessment. "They're in the information-seeking stages of their life, not unlike the Anglos in the 1950s," explains Ernest Bromley, chairman and chief executive officer of San Antonio, Texas-based Bromley Aguilar & Associates, the Latino agency of record for Pontiac.
And many respondents in our survey said they would be consulting sources in both English and Spanish, a fact that was especially surprising to Deborah Gonderil, senior vice president of Strategy Research Corp., the Miami-based division of Market Facts that conducted the Hispanic portion of the survey. "In all three markets measured, Spanish is the language spoken at home and preferred for the interview," Gonderil says, yet 50.8 percent of respondents said that they would seek out information in English- and Spanish-language newspapers, 45.4 percent said they would turn to magazines in both languages, and 43.2 percent said the same of television channels.
The fact that Latinos are great consumers of information is both a joy and a puzzle to marketers, because it makes media buying more challenging. "The biggest issue facing us is trying to wrap our hands [around] the total Hispanic community," says Karen Treydte, the media director overseeing the Toyota account at Conill Advertising. "The general market influences the Hispanic market," adds Conill account planner Francesca Runza. "Hispanics are really living in two worlds."
That's why New York City-based Conill has begun to experiment with new ways to reach Latino consumers, beyond the traditional practice of placing ads on popular Spanish-language channels like Univision and Telemundo. During the airing of the television movie Selena, for example, Toyota sponsored the use of Secondary Audio Programming (SAP), a device that makes it possible to listen to an English program in Spanish. In other instances, the agency has employed the use of English subtitles on Spanish-language Toyota ads.
Both Treydte and Runza say that Toyota, which has been a presence in the Hispanic market for more than a decade, has realized the importance of understanding the cultural nuances of this market. Toyota and Conill conducted an ethnographic study in the spring of 1998 which included videotaped interviews with Spanish language-dominant consumers in Chicago, Los Angeles, Miami, and McAllen, Texas, to gauge the role of their cars in their daily lives. Among the insights revealed was that the interviewees associated quality of life with owning a new car. It represented a symbol of accomplishment and success, the study concluded.
The fact that Latinos also buy new or higher-priced vehicles has been lost on many car manufacturers, who traditionally targeted their lower-end models to this demographic. Platon puts it simply: "This market is aspirational and works very hard to get ahead. There'll always be a market for the compacts, which everyone associates with the ethnic markets. But less-expensive vehicles are stepping stones, space savers for the idealized vehicles." Platon predicts big increases in the Hispanic share of the luxury auto segment in the coming decade.
The aspirational factor could explain another key finding in our study: When asked to name the two most important factors in purchasing a car, Hispanic respondents chose price and style, compared to the general market's preference for price and safety features. Even though the word "style" has a slightly narrower meaning in Spanish than in English. Conill's Runza says that in Spanish vernacular, style also connotes quality, brand, and prestige.
"The conventional wisdom of the auto industry is that Hispanics can't afford new vehicles," says Armando Ojeda, director of client services at Ornelas & Associates, which last July was chosen by Nissan North America as its Latino agency. "The reality is that Hispanics come here to achieve a certain level of economic security." Owning a new car is a big part of that, he says.
Ojeda's Dallas-based agency has developed a segmentation analysis that divides Hispanics into four groups. "Traditionalists" are recent immigrants, most of whom are male and likely to be employed in entry-level jobs. "Seekers" are those who have been in this country for less than ten years. Some are bilingual and have achieved some level of stability, such as owning a house. Children of the seekers make up "Strivers." They are often American-born, bilingual, and fairly young, probably not yet at their peak-income levels. Finally, "Adapters" are those first- or second-generation Latinos who have a college education and solid middle-class incomes, although they still retain many of the cultural values of their relatives in their home country.
Ojeda says Nissan's Frontier truck might appeal to the Seekers, especially since it serves a dual purpose - as transportation for families as well as a work vehicle. Many Latinos are entrepreneurs in such fields as landscaping and construction, Ojeda says. But even Traditionalists are potential buyers of new cars, he emphasizes. One focus group participant - a newly arrived immigrant - had acquired six trucks in seven years.
Our own study reflects Hispanics' appetite for new cars. About half of the respondents in the three major Hispanic markets overall said they were planning to buy a new car in the next 12 months. And in Miami, with its sizable affluent Latino community, 62.7 percent said they intended to purchase a new vehicle in the next year.
Numbers like these finally helped convince Nissan to go after this market seriously after years of dabbling in the area. Peter Goodwin, Nissan's corporate manager of advertising for the North American region, talks about the reports that the company was receiving from the field. Dealers wanted to see more marketing support in Hispanic areas, such as Miami and Los Angeles, where sales were very strong. "It bubbled up quickly," Goodwin says.
Finally, after seeing statistics about Hispanics' growing purchasing power, Nissan decided it needed to catch up and chose Ornelas as its national Latino agency. "We're a little behind our competitors," admits Goodwin, who says that the ads that broke last November for the Nissan 2000 Altima and Frontier Crew Cab models are the beginning of what he sees as a long-term advertising effort. There is also talk of marketing the 2000 Sentra to this market, especially since the vehicle will be built at Nissan's plant in Aguascaliente, Mexico. Like other Japanese car makers, Nissan has had a presence in Mexico for years.
John Gartman, the executive manager of Nissan's Santa Monica, California, dealership, says that more and more Nissan dealers are waking up to the fact that Latinos are great car-buying prospects. He estimates that most of the ten dealerships in the Los Angeles area now devote between 30 percent and 40 percent of their advertising budgets to Hispanic marketing, whereas as recently as a year ago, only a couple would have spared even 20 percent. Nissan also distributes manuals to help dealers learn how to make Latino customers feel more comfortable, and many of the stores now display bilingual signs.
But Japanese automakers aren't the only ones targeting this market. U.S. car makers are, in fact, big spenders in this category and control the largest share of Hispanic vehicle sales, for now. GM was the 1998 leader, with a 23.2 percent share of the Hispanic market, followed by Ford, with 19.5 percent and Chrysler, with 13.6, according to The Polk Company. Toyota was in fourth place, with 11.8 percent share.
"If you're a large marketer, targeting Hispanics has to be part of the mix or you'll miss the boat," explains Bromley Aguilar chairman Ernest Bromley. "There is a major shift occurring in our country," he says. "We're in the middle of a great communications explosion, during one of the biggest migrations of Hispanics and Asians. In the next 10 to 15 years, the definition of what's American will be revised."