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<p>“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?<br>
The answer lies in a seriously flawed system for gathering Hispanic sales data. What market researchers call the “sales undercount” is estimated at between 40 to 60 percent of the true volume of Hispanic consumer retail sales, depending on the brand or product category.</p>
<p>How does this occur? Most consumer product and service companies gather all sorts of demographic, psychographic and behavioral data and have made great strides in marketing and advertising to these customers. But it remains hard to measure the results: what percentage of corporate sales and growth is generated by Hispanics?</p>
<p>Corporate managers rely on Hispanic 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 determine business opportunity predictions, and budgets for marketing, advertising and product and service innovation.</p>
<p>However, Hispanic consumer retail sales data is not just flawed, it tends to be incomplete. Retail data generally does not include sales from the growing number of independent, mom-and-pop and convenience stores where many Hispanic consumers shop. This is commonly referred to in the industry as “unmeasured” or “un-tracked” channels. These channels may also not represent urban and hard-to-reach consumers, who tend to be miss-identified, and/or under-represented in research samples and data analytic models.</p>
<p>Why is this the case? To-day’s system for measuring Hispanic retail sales data is outdated.</p>
<p>The methodology or algorithms used do not include many of the stores where multicultural consumers shop, which explains why true Hispanic sales are significantly under-reported and not reflective of the total purchases made by these consumers.</p>
<p>How can CMOs accurately allocate Hispanic budgets without having reliable sales measures? How can they budget the proper level of investment if they are unable to link sales to their Hispanic advertising efforts? This is one of the key reasons why companies continue to underinvest in the Hispanic market, which should be a primary source of real and sustainable growth for corporations.</p>
<p><strong>Solution</strong></p>
<p>Presently, companies try to “fix” the data undercount issue though “guesstimates” and “patchwork,” i.e., sales estimates applied from one market to another, a mixture of syndicated data from different sources, etc. The problem is that they fall short of being a true measure of ‘what’ and ‘how much’ is being purchased by Hispanic consumers.</p>
<p>The solution lies in the hands of corporations, which—first, need to become aware of the Hispanic sales undercount issue, and secondly, need to demand improvements to the existing syndicated measurement system by adding those retailers (e.g., independent, mom-and-pop and convenience stores) where Hispanic consumers make purchases.</p>
<p>Once the sales undercount is corrected, corporations will be able to make informed business decisions based on complete Hispanic sales data. This will not only help companies maximize their ROI, but also make the correct Hispanic sales data fully visible to their bottom line.</p>
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<p><em>Isabel Valdés is Principal of Isabel Valdes Consulting (IVC, <a href="http://www.isabelvaldes.com" target="_blank">www.isabelvaldes.com</a>) a marketing consulting firm that advises corporations on a broad range of business-related issues, and is the nation’s leading multi-cultural marketing expert, consultant, published author and public speaker. </em></p>
<p><em>Reprinted from Latinovations’ La Plaza (<a href="http://blog.latinovations.com" target="_blank">http://blog.latinovations.com</a>)</em></p>