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Scanning mortgage documents: Is it right for you?

Jan 30, 2006

Emerging markets: Playing chess with Latinos Gil Zapatamarketing toward Hispanics and Latinos In general, business is like playing chess. Sometimes you make the right moves and sometimes you make moves that can cost you the game. It's all a game in the end. The question is, how do we play chess with an emerging market like the Hispanic population? It's not easy. At our company, we have disagreements about how to design our marketing for Latinos. What's funny is that more than 90 percent of our staff members were either born in Latin America or were born in the United States, but have an Hispanic background. It may sound ironic, but it's true. How do we resolve this dilemma? I couldn't possibly answer this question in one article, but I can give you some suggestions so that you have a clearer idea of some of the steps necessary in determining your marketing campaign. First, I would do some research. In my last article ("Emerging market strategies: 'Buenos Dias' is not enough," The Mortgage Press, June 2005), I noted that the Hispanic community is very broad and diverse. You cannot market to an Hispanic who arrived in this country almost 10 years ago the same way you would market to someone who was born in the United States. I would analyze data first and then start making some decisions. In this article, I did some of the research for you. Obtaining data from the U.S. government is not easy. However, the U.S. Department of Commerce's Bureau of Economics and Statistics publishes data such as what I am going to share with you. According to the March 2002 U.S. Census Bureau report published in 2003: - More than one in eight people in the United States are of Hispanic origin. - Approximately 66 percent of U.S. Hispanics are of Mexican origin, 15 percent are Central and South American, nine percent are Puerto Ricans, four percent are Cubans and the remaining were from other Hispanic origins. - Approximately 13 percent live in the Northeast, seven percent in the Midwest, 34 percent in the South and 44 percent in the West. - Approximately 34 percent are under the age of 18, 60 percent are between the ages of 18 and 64 and five percent are greater than 65 years of age. - Approximately two out of five U.S. Hispanics are foreign born; that's close to 50 percent. - Approximately 26 percent of family household consist of more than four family members living under the same roof. This report has more data. But just reviewing some of this information leads me to a number of questions that all of you should ask yourselves before launching in a marketing campaign. These questions will not apply to everyone. Some brokerage operations are small and some, like Chase, have the resources to market at a national level. But we can examine both scenarios. Nationwide companies If you review the aforementioned data, you will note that Hispanics are spread throughout the United States. Do you allocate all of your resources in the West where 44 percent reside, or do you penetrate seven percent in the Midwest? Keep in mind that many companies are targeting this market. Do you follow what everyone else is doing or do you go in an opposite direction? Yes, it makes sense to go after the 44 percent; however, knowing this information, other companies may not be targeting that seven percent in the Midwest. Therefore, you may obtain a higher return on your investment by penetrating a market that most companies are not targeting (which in this case is the seven percent). How fierce is the competition in the West? Recently, we completed a seminar in our company provided by CEO Advisors, titled "Innovation & Fortune at the Bottom of the Pyramid." The 'Bottom of the Pyramid' is a market that you have to identify through innovation and numbers that are larger than life. The underlying theory behind this seminar was that every company is trying to enter the high end of the pyramid where competition is fierce, while the bottom of the pyramid is usually ignored. One of the other interesting concepts is that you need to avoid competition as much as you can. If you enter the 44 percent market segment, your competition will be greater than in the seven percent market share. Furthermore, you can capture the greater share of the market with time. For instance, U.S. Census Bureau statistics indicate that the Hispanic population is growing. At one point in time in the West, the Hispanic market was probably at two percent. Imagine if you had entered that market when it was four percent; today you would be well known and would have captured a greater share of what has grown into a 44 percent market. These are just questions and factors to consider. My theory on market share may not be correct. Thus, I recently completed courses for executives at Harvard Business School and our advisors came from INCAE, which is an affiliate of Harvard Business School in Latin America. We studied more than 20 companies that applied a similar strategy and today they have beaten their competition. These companies are known as disruptors - tapping emerging and under-serviced markets, capturing smaller market shares and eventually acquiring a portion of the larger market. This is the case with the Hispanic market. City or statewide companies There are certain companies that will have a competitive advantage over others. States such as California, Texas, Arizona, Nevada, Florida, Illinois, Virginia, New York and New Jersey have large concentrations of Hispanics. However, this doesn't mean that other states may not have this ethnic group emerging into new cities or states. Let's take the case of Florida, which I know best. Back in 1979 when I first arrived in the United States at the age of seven, the city of Miami was very remote. The west end of town was just swampland with alligators. The downtown area had maybe seven high rises at the most. The only ethnic group representing Hispanics were Cubans. As a seven-year-old, I was the only Hispanic child in a classroom. Today, there isn't any room to build in the swampland, the downtown area has more than 40 high rises and about 80 going up, and today, the Cubans are not the only Hispanics living, visiting or doing business in Miami. Today, I would say that on average, more than 80 percent of the population in this city was either born in Latin America or is of Hispanic descent. This story gets even more interesting. As an Hispanic, I will tell you that we are not easy to understand. Many Hispanics got tired of being around other Hispanics and fled to the west and central areas of Florida such as Orlando and Fort Myers. Furthermore, these two cities, like the west end of Miami, were very remote, mainly consisting of farmland. Today, these are two of the fastest growing cities in the state of Florida. What can we learn from this story? Today, more than ever, the world is constantly changing. Don't ever underestimate the forces of the markets and market niches. Forecasting and running projections are not easy, but when you project and forecast different factors and equations in your company, you have to project and forecast market niches. Obviously, this is not easy if you don't have a market researcher or haven't hired a top-notch Wall Street research firm that analyzes anything you can imagine. KGFA Capital Partners is not a Fortune 500 company, but we have built a culture where staff members are consistently educating themselves by reading newspapers, magazines and periodicals that aren't only mortgage related. For example, I never imagined (and most people didn't know) that as reported by CNN Money News, Bradenton, Fla. is among the top five U.S. cities with an average appreciation growth in real estate of 50 percent. Here I am in Florida, and I didn't even know that! One of my staff members forwards us everything that CNN Money News reports on real estate. The first lesson here is to train your people internally to have a broad approach in doing business and to consistently remain up to date with the latest events taking place, not only on a local level, but on a national level as well. Second, as a smaller company, whether or not you are in a state were Hispanics reside, begin gathering statistics from your local Chamber of Commerce, economic or business bureaus. Every state has some sort of statistical database on population growth and other interesting information. Once you gather information at a local level, form a group to analyze it. You should then open up discussion groups where all sorts of questions, ideas and suggestions can arise. Playing chess Gather some statistics and determine how large the market is, where it is and where it is going. Thereafter, you need to determine how much share of the market you want to capture by setting milestone goals and taking baby steps. It's not realistic to say that you are going to capture 80 percent of the marketplace. Once you know what's out there and what you want, how do you get it? This is the magical question. You will need to determine your tactics and strategies. There are a series of questions that should arise here, regardless of whether you're a nationwide company or smaller company. I can come up with about 30 questions and topics of discussions that we have at our firm. However, I will just highlight one question and provide you with an illustration of what to consider: - Should I form an affiliated business arrangement with another company whose strength is already in the marketplace? Recently, we held a seminar for small business owners and one of the topics was positioning the "Right Framework for Finding the Right Organizational Structure." What did that mean? Allow me to explain by this using an example: At one point in time, the foreign national market from South America was very strong in Miami. It still is, but not like before. South Americans were buying $400,000 condos left and right. I decided to travel to the area and try to capture the business myself. I'm Hispanic, but I failed. Why? As an individual and with my company being located in the United States, I did not have the right organizational structure in place to capture foreigners in their homeland. Our company was described as a "poor fit." In this case, I would have been better off trying to find a heavyweight team to handle this job for us in South America. I did try that; however, the cost of the operation was too expensive and by the time I had initiated my plan of action, the market started to dry out - Wall Street cut off Argentina, Hugo Chavez took over Venezuela, and banks in Ecuador went bankrupt overnight. South America was a nightmare. The question that you should ask yourself when trying to play this chess game is whether your organization is a good or poor fit for the emerging Hispanic marketplace. If you are a poor fit, then you should consider hiring the best or outsourcing this task by forming an affiliation with another company. If your company is a good fit, then you have a functional organization and the right people to enter this market. Some companies want to do things in the least expensive way and that isn't always the best choice. They will tailor a pilot program and hire someone with the minimal skills necessary to do the job and end up with poor results. If you aren't going to expend the necessary effort to set up the right organizational structure, then you shouldn't be surprised when the result is failure. I will leave you with this thought in mind: Who would ever imagine that China, once one of the poorest nations, would become a threat to powerful economies such as the United States, Japan and Europe? Keep your eyes open, because opportunity is all around you. Don't underestimate the forces of a hidden and growing market. Today, the Hispanic population accounts for almost 20 percent of the U.S. population - where will it be 20 years from now? Gil Zapata is CEO/managing partner of KGFA Capital Partners LLC in Miami. He may be reached at (305) 379-4457 or e-mail [email protected].
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Jan 30, 2006
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