|Alberto J. Ferrer|
For example, a marketer can take the latest Census data and learn that about 14% of the US population is Hispanic and thus strive to budget an equivalent share of resources to that population. Some companies go further and factor in the population trends in the appropriate age groups for their product or service and other future-looking data to make a determination of the relative importance of these groups to their business. Then they use these figures to determine the "right spend" for each group.
On its face, this seems like a reasonable approach to budget allocation: assign resources proportionately to population so that larger groups get more resources and smaller groups receive fewer.
The potential pitfall of this approach is that overall the lion's share of the marketing resources are allocated to marketing to the general or mainstream market. These are the non-Hispanic, non-African American, non-Asian American, non-insert-ethnic-group-here. They're defined by the U.S. Census as "non-Hispanic whites." They're also commonly referred to as "Anglos," a steadily decreasing population in the country.
While Anglos still represent 70% of the total population of the US, this ignores the fact that in key Designated Market Areas the majority is the minority.
Take the Los Angeles DMA, for example. Anglos account for 35% of the population, while Hispanics account for 45%. What is the general market in Los Angeles, then? Similarly, in the Miami-Fort Lauderdale DMA, Anglos account for 30% of the population, while Hispanics make up 46%. In the New York and Chicago DMAs, Anglos account for little more than half the population.
The point is not that the Hispanic budget allocations should be increased in the above markets (even though it probably should be done). The point is that these are markets that impact the rest of the U.S. population in a very real way.
The trendsetter markets like Los Angeles, New York, Miami, and Chicago have very significant multicultural populations. They also are the markets that consumers look to for direction on what to consume. These large metropolitan areas have for a long time been the nexus of popular culture and popular opinion. It's no longer "Will it play in Peoria?" but rather "How will it do on the coasts?"
The other element to consider is each group's relative consumption of the product. For example, Hispanics live in larger households than the general population. That increases their consumption of certain products and services, further increasing their relative impact on a brand's sales performance.
What that means for marketers is that these groups in these markets have more impact on the generation of business for a brand than their numbers suggest. It means, for example, that really connecting your brand with Hispanic consumers in key DMAs will drive these markets which in turn will drive the rest of the country.
The lesson here, then, is to not stop at superficial budget allocation exercises that are based on how many Hispanics (or any other group for that matter) are in the country—although that is a good start. Smart marketers should take into account the disproportionate impact these folks will have on the rest of the country and invest accordingly, which will often result in larger resource allocations to Hispanic and other populations versus general market.