Where Commerce & Culture Collide

Hispanic InsightsPOPAI University - On the Web

January 22, 2009

Agenda

• Speaker Introduction

• Changing Face of America

• Cultural Nuances - Hispanics

• Hispanic Shopper Insights

• In-Store Opportunities

• Insights into Action - 7UP Case Study

• Questions

Becky Arreaga

• Agency Partner & Founder

• Over 23 years industry experience specializing in client management, strategic planning and marketing integration

• Began career at nation’s largest Hispanic advertising agency, now Bromely Communications

• BA from Texas Tech University, MA from The University of Texas at Austin

• Appointed to the National Board of Directors of the College of Mass Communications at Texas Tech University

• Full-service Hispanic agency specialize in strategic below-the-line marketing driven by real-time consumer and marketplace insights

• Seasoned team of marketing junkies with 20+ years experience in segment marketing and sales activation

• Network of Market Ambassadors in the top 25 Hispanic markets

• Based in Austin, TX and are 100% minority and woman owned

Mercury Mambo

Mercury Mambo

Motivate Hispanic consumers to take action!

• Create brand experiences designed to make a positive and meaningful impact on consumers

• Work with some of the most recognized brands on the planet

• Do amazing things with amazing clients

• Named to Inc. Magazine’s 500/5000 Fast Growing Companies in 2007 and 2008

Mercury Mambo

The changing face of America

Increasing Cultural Diversity

Source: US Census Bureau (1980&1990) and Geoscape (2020)

The non-ethnic market is shrinking

9

10

11

12

Percent Hispanic of the Total Population in the United States1970 to 2050

*Projected Population as of July 1

Source: U.S. Census Bureau, 1970, 1980, 1990, and 2000 Decennial Censuses; Population Projections, July 1, 2010 to July 1, 2050

Census Projections

7/1/08: Hispanic population surpassed 45 million, representing 15.1% of total pop!

Market Opportunities

Current Population Population Growth

2000 - 2008 CAGR

State Hisp. Pop. (mil)Hisp. as % of

TotalHispanic Total

Largest Markets

States with the largest Hispanic

Populations

California 13.5 36% 3% 1%

Texas 8.8 36% 4% 2%

Florida 3.8 20% 5% 2%

New York 3.1 16% 1% 0%

Illinois 2.0 15% 3% 1%

Concentrated Markets

States with the highest

concentration of Hispanics

New Mexico 0.9 44% 2% 1%

Arizona 2.0 30% 5% 3%

Nevada 0.7 25% 7% 4%

Colorado 1.0 20% 4% 2%

New Jersey 1.4 16% 2% 1%

Growing MarketsStates with

fastest Hispanic population growth

Georgia 0.8 8% 8% 2%

Tennessee 0.2 3% 8% 1%

South Carolina 0.2 4% 7% 1%

North Carolina 0.7 7% 7% 2%

Maryland 0.3 6% 5% 1%

U.S. Total 47.2 15% 4% 1%Source: U.S. Census Bureau, Geoscape® American Marketscape DataStream™” 2008 Series; Latin Force Group LLC and Goldman Sachs Research

Acculturation

Skews Foreign BornIncludes both foreign and U.S.

bornU.S. Born (2nd & 3rd

generations)

Typically married, less education, rent vs. own

Skews slightly femaleMore likely to be college-

educated

Avg. HHI approx. $53k Average HHI $65k Average HHI $81k

Todo en español Fastest growing segment English only

Desire to belong, connect to home, familiar brands

Blend both languages, embrace heritage and innovation

Brands = reconnect, retro-acculturation

Source: Adapted from Yankelovich MONITOR Multi-Cultural Marketing Study 2005, Simmons NHCS/NCS Spring 2006 Full Year Study, Hispanic adults 18+

Understanding Hispanic Cultural Insights

Macro Trends

Sources: Adapted from Yankelovich MONITOR Multi-Cultural Marketing Study 2005, Simmons NHCS/NCS Spring 2006 Full Year Study, 2006 ACNielsen

Values Orientation

Economic Impact

Pop Culture

Understanding Hispanic Cultural Values

Latino American

Interactions

Family InterdependenceRelationship OrientedSympatía y Harmony

We decide as a family

Individual AchievementTask Oriented

Healthy CompetitionI make my own decisions

Success Get ahead Get more joy out of life

Authority Respect Authority Challenge Authority

Source: adapted from Isabel Valdes Paramount Publishing, Inc., AHAA Identity Project, GFK Roper. Lionel Sosa. Felipe Korzenny.

Understanding Hispanic Cultural Values

Latino American

Gender Roles

Machismo - provide & protect family

Marianismo - sacred duty, sacrifice

Gender equality is prized.

Initiative

Como Dios quiera. However God wants.

Tread carefully. Avoid verguenza/embarrassment.¡Dale ganas! Give it your

all!

God helps those that help themselves.

Blow your own horn.Take the bull by the horns.

Higher Education

Greatest Emphasis on High School DiplomaCollege = Fear

Greatest emphasis on College Degree

Source: adapted from Isabel Valdes Paramount Publishing, Inc., AHAA Identity Project, GFK Roper. Lionel Sosa. Felipe Korzenny.

Pop culture - influencing & creating

•Recognize, celebrate and affirm cultural affiliations• Creating their own culture

• Inspired by the past but facing the future

• Spanish & English, American & Latino: you can have it both ways

•Examples Plentiful• Ugly Betty, American Idol, George Lopez, Nickelodeon, YouTube, MySpace

• LatinoLit - Barnes & Noble Spanish books grew 3X since 2000.

• Latino Theatre: In the Heights, Celia Cruz, Macho Men & The Women Who Love Them

Economic Impact

• Buying power of over $800 BILLION today....expected to reach $1.2 TRILLION by 2010! Source: Selig Center of Economic Growth

• 1990s to mid-2000s were financially strong for Latinos

• Disposable income and home ownership grew disproportionately among Hispanics, education rates improvedSource: Global Insight, 2008

• Latinos more likely to be cash consumers than total market so high proportion are debt-freeSource: CFSI, 2008

• Hispanics are price sensitive but willing to spend on value. 40% of unacculturated Latinos say they always look for a brand name vs 33% of Non-HispanicsSource: Simmons 2007/2008

Hispanic Shopper Insights

Total CPG Spending

Source: IRI Multi-Outlet Panel Data for 52 week ending 8/5/07Note: % indicates difference between Hispanic Basket and Non Hispanic Basket

Hispanics spending is 13% higher than Non-Hispanics

Dif = +13%

Dif = +1%

Dif = -2%

Dif = +37% Dif = -7%

Dif = +10% Dif = +2%

Dif = +21%

CPG Dollar Share by Channel Among Hispanic Consumers

Channel 2008 ShareShare Index

vs. Total PanelPoint Changevs. 2007

Grocery 53.4 96 0.0

Supercenter 11.9 81 1.9

Mass 10.2 122 -0.7

Club 11.0 139 0.2

Drug 5.1 91 -0.1

Dollar 1.3 93 -0.1

Other(Specialty, Convenience)

7.0 106 -1.1

Source: IRI Consumer Network™; 52 weeks ending 3/9/08 vs. prior year

Mass & Club stores earn an above average share of Hisp. spending, but Supercenters are gaining ground.

•Each month, Hispanic shoppers make 26 grocery trips, 3 times greater than the General Market who makes 8.8 trips per month.

• Cycle through food faster, stretches the budget, proximity of small stores in urban areas.

• Most fill-in trips for baby products, frozen desserts/refrigerated treats, dairy, bakery, deli meats or cheeses

• Most quick trips (speed related) for pharmacy, health/beauty/personal, pet or car care, non-food items (books, clothes, toys) or beverages.

Retail budgeting behaviors

Source: Unilever, Winning the Hispanic Shopping Trip

Shopping Trips

Hispanics are somewhat more likely to shop early in the week

Source: Diary Data: Q. What time did you start shopping

Shopping TripsAfternoon and especially evening trips are a good time to reach Hispanics In-Store

Source: Diary Data: Q. What time did you start shopping

Product preferences change with acculturation

Source: 2006 ACNielsen

CategoriesLeast

AcculturatedMost

Acculturated

Beer

RTE Cereal

Toothpaste

Bodywash Soap

Fabric Softener

In-store Opportunities

Importance of Advertising

Hispanics are much more likely than General Market to be aware of specials before going to the store

Source: Diary Data: Q. If yes, where did you notice these advertised specials

Things that people always refer to when shopping in-

storeHispanic

Non-Hispanics

Unacculturated

MESSAGE/OFFERS AT THE SHELF 7.4% 5.7% 8.7%

IN-STORE SAMPLES 5.7% 6.5% 6.5%

ANNOUNCEMENTS IN STORE 12% 3% 14%

Source: Unilever, Winning the Hispanic Shopping Trip

Hispanics are more likely than non-Hispanics to always refer to offers at the shelf, in-store samples, and announcements in-store.

Hispanics are more attuned to value messages

Merchandising Mandates

• Know your audience• Level of acculturation• How they use your product• Brand lifecycle

• Use appropriate language• Avoid slang, geek-speak• Walter Cronkite Spanish• Translate the message not the words

• Understand retailer requirements• Language guidelines• Acceptable formats• Pricing requirements• Space availability/display standards

Insights into Action - 7UP Case Study

7UP Celebrity Chef Mobile Tour & Recipe Contest

• Challenge

• Drive frequency of 7UP 100% Natural Flavors new product innovation and stay ahead of competitive pressure.

• Insight• Unacculturated Hispanic women are heavy Lemon-Lime CSD users, but were not aware that 7UP had undergone a innovation of 100% Natural Flavors in 2007.

• The natural message is highly compelling to Unacculturated Hispanic moms who want to feel they have made a better choice for themselves and their families without sacrificing taste.

• The use of fresh, natural ingredients is inherent to their culture.

7UP Celebrity Chef Tour - 360º Focus Market Integration

7UP Celebrity Chef Mobile Tour & Recipe Contest

• Merchandising Kits

• Standee

• Pole Sign w/info tearpads

• Rack Cards

• Door Posters

• Neckringer recipe booklets

• Danglers

• Results

• 100% Natural Flavors awareness doubled between a pre and post wave study (DPSG Qualitative Study, Sept. 2008.)

• Campaign markets experienced a +8% sales lift.

Questions?

For more information, please feel free to contact:

Becky Arreagabecky@mercurymambo.com512.447.4440 xt 111