Segment Recesssion?

At the start of 2009 I wrote about the convergence of three factors relating to the U.S. Hispanic segment. The first factor dealt with the shrinking retail environment and how U.S. Hispanics would become increasingly important to marketers since they tend to be a more dynamic consumer segment, particularly on basic, everyday items.

And even with an unemployment rate almost 4 points above the national average there is evidence that smart marketers continue to reap the benefits of reaching out to Hispanics.  We see it with the continuing success of Bedoyecta and  BusinessWeek recently noted how well General Mills and State Farm are benefiting despite the economic maelstrom.  So well that General Mills has tripled its Hispanic media budget to $35 million.

To many Hispanics seem like the last  consumer segment to talk to, but this really could be called a “segment recession”. Some consumer segments are suffering while others are unexpectedly managing through intact and some even thriving.  Notably U.S. Hispanic consumers are less likely to be hobbled by a mortgage or serious credit-card debt, and tend to have two or more income earners in a household.

The “more” is important here.  In general many U.S. households have two income earners, this is not news, however, with Hispanics there’s a tendency to have more extended family living under the same roof, bringing in additional income while lowering living costs per person.  So, even if their disposable income is lower, and perhaps more stable, two key facts are often overlooked. One,  Hispanic consumers over index on a wide variety of basics by a far greater margin than the rest of the population. And two, Hispanic TV ratings continue to surge while general market TV remains flat.  Hispanics respond well to marketing efforts crafted in sync with their culture and language.

As the economy works through this recession many marketers will start to consider the Hispanic consumer as a segment which can take up the slack on softening demand in the broader general market, and begin to build a thriving Hispanic franchise that yields benefits beyond this temporary “segment recession”.

To see BusinessWeek article click here.