Great post by Isabel Valdés, president, Isabel Valdes Consulting and Jake Beniflah, executive director, The Center for Multicultural Science…
“If the [U.S.] Hispanic market were a nation, it would soon be the 11th largest economy in the world,” global CEO Sol Trujillo told the Wall Street Summit of 2010. That would place it on the list right near Russia, Canada and Australia. At that size, and with tremendous growth potential — the Hispanic market grew 43% in the last 10 years — how can this market still seem invisible so much of the time, failing to get the investment share and business priority it ought to have?
The answer lies in a seriously flawed system for gathering multicultural sales data. What multicultural market researcher experts call the “sales data undercount” is estimated at between 40% to 60% of the true volume of multicultural consumer sales, depending on the brand or product category.
How does this occur? Most consumer product and service companies gather all sorts of multicultural demographic, psychographic and behavioral data and have made great strides in marketing and advertising to these customers. However, tracking sales remains poor: What percentage of corporate sales and growth is generated by purchases of each of the different consumer groups: Hispanic, African-American, Asian-American and Asians?
Many corporate managers rely on multicultural retail sales data provided by syndicated measurement companies, which quantify how much of a product is purchased by a given demographic group. These numbers are crucial because they measure who purchased what, and are used to make business decisions, including budget allocations for marketing, advertising and product and service innovation.
However, multicultural-consumer sales data tends to be incomplete. Today’s system for measuring multicultural retail sales data is outdated, for a number of reasons. Syndicated retail data do not include sales from the independent, mom-and-pop and convenience stores where many Hispanic, African-American and Asian-American consumers shop. (These are commonly referred in retail as “unmeasured” or “untracked” channels.) In other cases, syndicated retail data under-represent urban and hard-to-reach consumers, including non-English speaking Hispanics or Asians.
These limitations explain, in part, why actual multicultural sales are significantly under-reported, making the U.S. multicultural markets effectively an invisible emerging economy.
How can CMOs budget the proper level of investment if they are unable to link sales to their Hispanic or African-American marketing and advertising efforts? How can they accurately allocate multicultural budgets without having reliable sales measures? The lack of reliable multicultural sales data is one of the primary reasons why companies continue to under-invest in the Hispanic market, which should be seen as a source of real and sustainable growth for corporations.
Presently, corporations try to “fix” the data undercount problem through retail data “guesstimates” and “patchwork,” that is, by using sales estimates applied from one market to another, using a mixture of syndicated data from different sources, etc. These approaches fall short of being a true measure of what and how much is being purchased by multicultural consumers.
The solution lies in the hands of corporations, which first, need to become aware of the multicultural sales undercount problem, and secondly, need to demand improvements to the existing syndicated measurement system by adding all retailers (e.g., independents, mom-and-pops, convenience stores, mass-retailers, etc.), and asking all retailers and syndicated data companies to work together to find a reliable solution to this problem.
Once the sales undercount is corrected, corporations will be able to make informed business decisions based on complete multicultural sales data. This will not only help them maximize their return on investment, but also make the correct multicultural sales data fully visible to their bottom line.
Source: Ad Age Blogs