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
- 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
- Approximately 13 percent live in the Northeast, seven percent in
the Midwest, 34 percent in the South and 44 percent in the
- 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.
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.
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
- 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]