Private Label and Hispanics - Consider the Opportunities

16 Dec 2010|spalacios

(This article also appears in the December issue of Private Label Buyer magazine… see page 27.)

Hispanics are more brand loyal. This truism has the benefit of actually being true, by degree. However, current recessionary conditions, increasing consumer sophistication and rising expectations from Hispanic consumers that need to be marketed to with cultural consideration are creating conditions that are changing the brand loyalty game. How do you win? Let’s look at some best practices from a new feminine care brand, Bella Flor, that has been gaining a lot of traction with leading Hispanic retailers like HEB, a regional chain in Hispanic heavy Texas.

The management team at Bella Flor began with a strategy that targeted Hispanics, but were very careful and very conscious about positioning the brand for cross over appeal beyond Hispanics. How did they do it?

The first thing they did was pick a product category that had few (if any) culturally focused brands – the feminine care category. Next, they chose a name that was pronounceable and understandable in Spanish and English – Bella Flor means “beautiful flower.” Then they surveyed product benefits that have worked in country of origin, specifically looking at the growth of chamomile as an ingredient in feminine care in Mexico. Their next step was to execute packaging that reflected “natural” (a key Hispanic value) through green and flower graphics.

Finally, Bella Flor offered an excellent product at a lower price. By having all of these other elements, at a cost savings and without any national advertising, Bella Flor has been very successful at HEB. They have had similar success in other regional Hispanic focused chains, and are now scheduled to go national with Target and Walgreen’s. Their efforts have not gone unnoticed by private label executives, as they are in active conversations with at least three chains to replicate their success in related product categories.

What Bella Flor did so well can be broken out into key principles for serving Hispanics that apply equally as well to nationally marketed and private label brands. Here they are:

Principle One: Which Hispanics?
Hispanics are not a monolith. Hispanics can be quite diverse in their interests relative to retail format, product category and brands. So knowing who you are targeting is the first step. Country of origin, Spanish language reliance, lifestage, and self-defined cultural identity are some of the factors to consider in segmenting your Hispanic customers. Depending on what you are selling, some or all of these factors can be important and will define the size of the opportunity as well as the nature of it.

Principle Two: Can We Go Big?
As with the Bella Flor example, thinking through how to position a brand for a Hispanic specific audience while making it relevant beyond that segment is the home run. Flavor and variety expansion like Haagen Daas’ Dulce de Leche or Bush Brothers’ Ranchero have specific Hispanic appeal, but succeed beyond ethnic target, for example. Pozole or Piloncillo do not. Knowing how far to go is a key nuance, and the line is constantly moving (who knew what “Chipotle” was 5 years ago?).

Principle Three: Pick Your Spot
Some categories, like fashion apparel, are less vulnerable to private labels for Hispanics. Other categories, like food/beverage, are quite open. In general, all categories have some level of opportunity for culturally focused brands, but it is important to evaluate effort vs. reward and pick the best opportunity.

Principle Four: Positioning, Naming and Key Product Attributes Matter
Hispanics are highly conscious of and receptive to even subtle cultural cues. The name of the brand and its key attributes can serve as these cultural cues. In the deodorant category, for example, we have found that brands positioned as unisex are less relevant to Hispanics, as gender distinctions are more pronounced.

Principle Five: Execution Makes It All Real
Packaging, including bi-lingual communication, visual imagery, color and even font type can be consciously employed to drive Hispanic cultural relevance. It can be the most important element of the strategy, since smaller brands and private label brands are often competing at point of sale and do not have the advertising budgets to compete with national brands.

It is true that Hispanics tend to be more brand loyal than non-Hispanic white mainstream consumers. A targeted, thoughtful approach that is guided by the principles above can win market share however for private label brands. In the current recession, where value driven decisions are more prominent, this opportunity abounds.

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