1. Understanding The Hispanic Market August, 2004

2. 2 Agenda U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

3. 3 Hispanics in the U.S. n The Hispanic population grew by 13 million between 1990 and 2000, to a total of 35.3 million. n Hispanics have now overtaken the African- American population as the largest minority group with 35.3 million Hispanics in the U.S. n The Median age of Hispanics is 28 vs. 37 for non-Hispanics. n 92 percent of Hispanics live in metropolitan areas, compared to 77 percent of white non-Hispanics. n 50 percent of all Latino households have household incomes of $28,300 or more. Source:2000 U.S. Census Strategy Research Corporation, 2002

4. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

5. 5 Definitions n Assimilation: 1. the cultural absorption of a minority group into the main cultural body n Acculturation: 1. Cultural modification of an individual, group, or people by adapting to or borrowing traits from another culture; also: a merging of cultures as a result of prolonged contact 2. The process by which a human being acquires the culture of a particular society from infancy.

6. 6 No Need To Assimilate n Constant influx of new immigrants n Spanish media meets wide range news/entertainment needs n Keeping “in touch” is easy and inexpensive n Geographically close to home countries n Tolerance to cultural differences has increased in the U.S.

7. 7 Source:The Urban Institute, Washington DC, 1998, in Valdes, I., Marketing to American Latinos, 2000 Hispanic “Generational” Segments Will Continue to Grow in the Coming Decades Millions

8. 8 Source: Strategic Research Corporation - 1994 & 2002 U.S. Hispanic Market YEAR 2002 47% 34% 19% YEAR 1994 Acculturation Segments

9. 9 Source: Strategic Research Corporation - 2002 U.S. Hispanic Market “Retroacculturation” “Do you consider yourself Hispanic or American?”

10. 10 Source: Valdes, I., Marketing to American Latinos, 2000 © 2002 Santiago & Valdés Solutions Hispanic “Acculturation” Diversity Will Continue to Grow As Well U.S. born n First, second, third generation n Brand, category “mature” n Marketing savvy Foreign-born n Recent arrivals vs Long-term n Brand heritage/ lack thereof n Advertising, information “hungry”

11. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

12. 12 HISPANICS WERE ALREADY THE LARGEST MINORITY IN THESE STATES Source: Census Bureau, 2000; USA Today Before the 2000 Census

13. 13 HISPANICS BECAME LARGEST MINORITY IN SEVEN MORE STATES Source: Census Bureau, 2000; USA Today After the 2000 Census

14. 14 HISPANICS WILL BE THE LARGEST MINORITY IN THESE STATES Source: Census Bureau, 2000; USA Today And in the 2010 Census

15. 15 Source: Census Bureau, 2000; USA Today 85% of Hispanics Live In Ten States

16. 16 Source: Census Bureau, 2000; USA Today In the Top 10 Hispanic States, 46% Live in TMN Markets

17. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

18. 18 Source: Strategy Research Corporation, 2002 Language Frequently Spoken at Home

19. 19 Strategy Research Corporation, 2002 Language Most Comfortable Speaking

20. 20 Source: Strategy Research Corporation, 2002 Language Most Comfortable Speaking

21. 21 Source: Strategy Research Corporation, 2002 Language Most Comfortable Speaking

22. 22 “I am more inclined to purchase brands advertised in Spanish” Source: Yankelovitch Hispanic Monitor, 2002 “I get more information about a product when it’s advertised in Spanish” The Importance of Advertising in Spanish

23. 23 Source: Strategy Research Corporation 2002 n Spanish is the preferred advertising language for the majority of Hispanic parents and grandparents n Heavily influencing under 18 segment Adult Language Preferences in Advertising ENGLISH 30%44%26%29%26% SPANISH 55%46%58%57%62% BOTH 13%10%16%13% % TOTAL Latino Adults Young Adults (18–24) Bebes, Niños Parents (25–34) Tweens, Teens Parents (35–49) Bebes, Tweens, Teens Grand Parents (50–64)

24. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

25. 25 19% 14% 16% 13% 8% 10% HISPANIC POPULATION BY AGE BREAK “New” LATINAS/ LATINOS 1 in 3 Gen Ñ 1 in 5 LOS BEBES Y LOS NIÑOS 1 in 5 LOS GRANDES 1 in 10 LATIN BOOMERS 1 in 5 Age Cohorts Are Large Enough for Focused Sub-targeting Opportunities

26. 26 0% 5% 10% 15% 20% < 6 6-12 13-17 18-24 25-3435-4445-5455-6465-7475-8485 + Hispanics Non- Hispanics Source: 2000 U.S. Census Over a third (35%) of all U.S. Hispanics are younger than 18 years of age vs. 26% of the overall population Population by Age Group (%)

27. 27 Source: Valdés, I. Marketing to American Latinos, PMP, 2000 Los Bebés - A Latino Baby Boom n Age 0–6 n Presently, more than one in five (20%) of all babies born in the U.S. will be born to a Hispanic Mom n 60% in Los Angeles, n 30% in New York, n 40% in Miami, n 82% in El Paso, n 67% in San Antonio, n 22% in Chicago …. n This presents unique challenges and opportunities

28. 28 Source:Valdés, I. Marketing to American Latinos, PMP, 2000 Most being raised Bilingual and Bicultural Los Bebés y los Niños n Age 6–12 n 7 million in 2002 n Will grow over 25% by 2010, faster than any other group n Live mostly in bilingual households, fewer in English-dominant households n Have more in common with American youth n Experience a society where it’s “OK” to be different

29. 29 Source: Valdés, I. Marketing to American Latinos, PMP, 2000 © 2002 Santiago & Valdés Solutions Generation Ñ Culture n “Best of Both Worlds” n Tweens 10–14 n Teens, 15–19 n Bilingual and Bicultural n Have more in common with American Teens n Proud to be “Latino” n Hip and consumption-oriented

30. 30 Hispanic Youth (Age 0–19) “Generational” Segments n 14% born outside the U.S. n 54% first U.S. born generation to at least one immigrant Hispanic Parent 14% Source:Strategic Research Corporation, 2002

31. 31 Hispanic Youth Purchase Power $$ n Hispanic Teens account for about $20 billion of the $140 billion teen market purchases n Spending their allowance and own earned money n Allowance money received by Hispanic Youth n Tweens$13/wk$2.4 Billion n Niños$8.60/wk$3.6 Billion n Total Hispanic Youth Direct Purchase Power = $26 Billion n Spend their money on music, entertainment, food & snacks Sources: Nielsen Media Research, Visa’s Annual Back To School Survey

32. 32 Source: I.Valdes, “Marketing to American Latinos”, PMP, 2000 The “New” Latina/Latino n Bilingual and Bicultural (47% are foreign born) n Age 18 – 39 n Fastest growing among first-time employed persons (women more so) n Increasingly in managerial positions (women more so)

33. 33 Source: 2002 Santiago & Valdés Solutions The “New” Latina n Fastest growing small business owners in the U.S. n Good spenders n More “banked” than previous generation n Modern, yet many times caught between old/new ways of life

34. 34 Source: I.Valdes, “Marketing to American Latinos”, PMP, 2000 Latino Boomers: “Sandwich” Generation! n The Latino Boomers segment has over 7 million Hispanics between the ages of 40 and 59, or every 1 in 6 Hispanics. n They are a “Sandwich Generation” between the old and the new Latino culture (60% are foreign-born)

35. 35 Source: I.Valdes, “Marketing to American Latinos”, PMP, 2000 Latino Boomers: “Sandwich” Generation! n “Foreign-borns” have resided about half their adult life in the U.S. … becoming U.S. citizens n Slowly acculturating, motivated by children and labor opportunities n But a large segment of Latino Boomers is still traditional n Many more fully bilingual but not necessarily “bi-cultural” n Many are young grandparents n Most have credit cards and are “banked” n Many own brand new cars; more own homes than ever before (selected markets) n Almost universal ownership of durable goods (cameras, several TVs, microwave ovens, DVDs)

36. 36 Los Grandes: An Emerging Mature Market n About 1 in 7 Hispanics or 6 million are 50+. n Hispanics represent 7% of 50+ U.S. population. n Hispanic 50+ population is expected to nearly triple by 2020, from 4.5 million in 1998 to 12.2 million. Source: I.Valdes, “Marketing to American Latinos”, PMP, 2000

37. 37 Source: I.Valdes, “Marketing to American Latinos”, (forthcoming, PMP, 2002) Los Grandes: An Emerging Mature Market n “Learning the ropes” of being seniors in a very different culture (64% are foreign-born) n Many live with their children or other family members n Involved in “rearing” grandchildren n Social activities center around the family

38. 38 Source: I.Valdes, “Marketing to American Latinos”, (PMP, 2002) Los Grandes: An Emerging Mature Market n Many prefer Spanish language n Quality of life varies drastically based on socio-economic status n Interested in insurance services, advocacy, voter registration, health and wellness, religion

39. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

40. 40 Communicating with Latinos requires Deeper Knowledge than ever n Growing Complexity of Target Market n Fundamental changes in media structure n Customization n Fragmentation n Technology n Permission marketing n One person at a time SRI U.S. Hispanic Boom Conference. June 10-11, 2004

41. 41 Latinos continue to Love Being Latino n Fundamental culturally based behaviors continue n Deeper consumer knowledge is required to effectively communicate n Advertisers need market experts SRI U.S. Hispanic Boom Conference. June 10-11, 2004

42. 42 Values n Communal, interdependent orientation centered on “La Familia Unida” n Legacy of human values, centered on loyalty, cooperation and helping one another n Respect, particularly for those of a higher social status, their elders and the mother n Hospitality –“Mi casa es tu casa” – in which food is key element Religion n Predominantly Catholic Cultural Identification n Latinos identify with their country of origin Language n Latinos speak Spanish with distinct national idioms Food n Our Food is Us! Bonding Latino emotional mainstay n Flavor Please! The cuisines differ slightly, but the requisite is the same Class Structure n Latinos naturally accept a social pecking order n American egalitarianism can be unnerving, depending on their social status Source: Project “Corazon” 2001 - Kraft proprietary study Latino Characteristics and Core Values

43. 43 Source: Cultural Access Group Non-HispanicHispanic How do we relate to people? Minimize differences Everybody is the same Stress differences Show respect What do we stress in relationships? Balance, Harmony, Competition, Informality Respect, Cooperation, Formality What do we value in people? A person's achievements through special skills A person's background On whom do we rely for help? Ourselves and institutions Family, friends, community, "our social security" Differences in Values & Beliefs SRI U.S. Hispanic Boom Conference. June 10-11, 2004

44. 44 Family Unity continues to be Imperative Machismo (Man’s role) Leads Provides Marianismo (Woman’s role) Keeps family together Chicoismo (Children’s role) Family legacy Acculturation: Surrender some power over the household Acculturation: Awaken to the self Gain more freedom Familismo (Family) Source: Marketing to American Latinos, Isabel Valdes 1999 Acculturation: Gain more freedom Become self-reliant Four Imperatives of Latino Culture

45. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population

46. 46 Marketing Implications: Be Flexible; Communicate Differently n Consider re-positioning, re-labeling, re-introducing product for greater ROI n Highlight new products n Assume many existing products are new to a large percentage of adult Hispanics n “Show Me” vs “Tell Me” n Provide practical advice n To gain “Share of Pocket” n First gain “Share of Mind” (Awareness/Familiarity/Trust) n But more importantly, “Share of Heart” (emotional & cultural Hot Buttons) n To “Gain Share of Heart” n Leverage distinct value orientation vs anglos, impacting communications

47. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage TMN Markets

48. 48 Hispanic Population Have Larger Households Average Persons Per Household (Top 5 Most Populous Hispanic Markets) Source: 2002 Strategy Research Corporation.

49. 49 Source: 2002 Strategy Research Corporation; Hispanics Have an Increasing Economic Impact on the U.S. Hispanic Buying Power:$428 Billion Total Hispanic Retail Sales: $240 Billion Mean Household Income: $45,701

50. Hispanic Diversity of the Total U.S. and TMN Markets Total U.S. Market (38,628,652 people) Chicago Market (1,603,761 people) Mexico 75% Mexico 66% Source: 2002 Strategy Research Corporation. L.A. Market (7,000,800 people) Mexico 75% Orlando Market (383,540 people) Puerto Rico 50% Miami Market (1,719,474 people) Cuba 45% N.Y. Market (3,971,345 people) Puerto Rico 34%

51. 51 Source: 2002 Strategy Research Corporation. Acculturation Levels Into U.S. Culture By Market Acculturation by DMA (% of adults)

52. U.S. Hispanic Facts and Figures Assimilation vs. Acculturation Geography Language Preferences Hispanic Segments Characteristics and Core Values Marketing Implications Hispanic Population & Media Usage

53. 53 The Changing Face of Los Angeles Source: 2002 Strategy Research Corporation. Nationally, L.A. is the largest Hispanic market with 4 out of every 10 of the Los Angeles population being of Hispanic descent % Increase in Los Angeles Population (1980 – 2002) L.A.’s Hispanic Population 2002 7,000,818