Insights into the Brand Loyalty of Hispanics

Austin, Texas — Spanish-dominant Hispanics will try new brands – including private labels – if they receive samples, Spanish-language product information and discounts, according to Mercury Mambo's "Hispanic Shopper & Retailer Study" released in the fall of 2011. This erodes the common notion that Hispanics are fervently loyal to a small cadre of national brands.Seventy percent of the 249 Latinos surveyed said they participated in supermarket price promotions or samplings over the past six months. Ninety percent of those who participated in both purchased the featured product (both national and store brands), up 12% over the previous year. Eighty-four percent had never bought the item previously, and 84% had not planned on buying it. (See chart.)Liz Arreaga, agency partner at Mercury Mambo, says Hispanics do have a history of brand loyalty. The most loyal are Spanish-dominant Latinos who hesitate to buy something they do not understand, even if it is cheaper. This reinforces the educational value of Spanish-language events and sampling. These tactics are more effective among Hispanics, as just 52% of Anglos purchase an item promoted this way, she says. These initiatives are most effective when combined with other marketing strategies."The data brings to light the need to talk to retailers – not so much about price, but about added value like sampling, promotional partnerships and store circular content," Arreaga says. "While brand loyalty is a longstanding 'tradition,' purchasing a new brand becomes low risk to those who don't speak English if they can try it. Strategies have high conversation rates."Saving money is particularly important to Spanish-dominant Latinos. Many have larger families than Anglos, earn less and have been harder hit by the recession. While Hispanics are generally optimistic, Arreaga says, 50% worry about paying bills (vs. 43% of the general population). Hence, 64% embrace discounts, coupons and free offers, 63% shop discount chains, and 58% wait to buy things. (See chart.)Many Hispanics (78%) buy the merchandise after a promotion is over, a practice that grew 26% over the previous year. This results largely from word of mouth. "Events not only drive trial, they drive purchases and secondary purchases," says Arreaga. "There is a long residual factor that marketers should be aware of."Circulars and Cell PhonesCirculars and, increasingly, cell phones and cause marketing also drive traffic. Hispanics use circulars to locate sales and coupons, says Becky Arreaga, also a partner. They are often passed from person to person. If a circular includes lifestyle content and not just pricing, Hispanics have more reasons to read it, she adds. The most relevant topics are baby care/families (39%), health (37%) and cooking (32%). H-E-B, for example, has transformed its paper circular into a mini-magazine. Price information, says Becky Arreaga, is at "the very back." Online, Unilever, General Mills, Kraft and Johnson & Johnson have successfully developed Spanish-language lifestyle sites.As for cause marketing, 52% of Hispanics are "very likely" to buy a brand that supports the community. Charities related to youth/family (38%) are more than twice as important as those involving education, cancer, Hispanic issues and health. "I thought cancer would be a bit lower, but they are aware of the pink ribbons," says Becky Arreaga. (See chart.)More companies are using cause marketing to reach Hispanics. Anheuser-Busch's Budweiser sponsors Hispanic scholarships, while Unilever supports the Southern California Youth Soccer Organization, which benefits indigent Latino youth. "Cause marketing is something to pay attention to, but the cause has to be culturally relevant," Becky Arreaga says.Hispanics also love cell phones: 98% own one (vs. 83% of the general population), she says. Since many use smartphones instead of a home computer, Latinos over-index in several usage areas. For example, 89% text compared to 73% of other groups. "They skip the step of the home desk or laptop and conduct product searches through their phone," says Becky Arreaga. Many Hispanics (39%) are receptive to cell phone offers.Cell phones, along with computers, are shortening the product learning curve. Two decades ago, Spanish-dominant Latinos were not in touch with the general market. Today, they can read product reviews and descriptions in their language. "Value is defined differently," says Liz Arreaga. "It is changing among Hispanics, who are seeking it in non-traditional ways."Editor's note: Mercury Mambo began studying Hispanics' shopping habits in 2009. Its goal was to learn how the poor economy was affecting Spanish-speaking individuals, who have often been harder hit than Anglos. This study was conducted in Spanish and involved 249 people under age 40. It also queried 99 retail executives (51 large chains and 49 small/medium ones) that service Hispanics.

Insights into the Brand Loyalty of Hispanics

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