Geoscape Versailles Breakfast Club090605

TheVersailles Breakfast Club Accessing the New Mainstream Capitalizing on a Culturally Diverse America Arthur Rockwell, Vice President, Sales Geoscape Friday, June 5, 2009 Access the New Mainstream

Agenda • The New Mainstream • America‟s Secret Weapon • Lifetime Profit Margin Contribution • “The Long Tail” • AMDS 2009 Demographic Data • Who is Geoscape? • Q&A 2 © Copyright Geoscape, www.geoscape.com, 1 (888) 211-9353.

New American Reality The face of America…is Multicultural!

Mainstream America • A new reality and wake-up call – What it means to be American has changed • Culturally and psychologically we are a diverse nation • This will continue to evolve towards increasing diversity • Many corporations still marginalize marketing to diverse cultural segments – Yet cultural segments represent fast growing opportunities • Business is still looking for ways to better-serve and capitalize on this trend

From 2000 to 2009… • Nearly 13.4 million additional Hispanics – 38% growth during period – 51% of the total population growth • More than 4.1 million non-Hispanic blacks – 12% growth during period – 16% of the total population growth • Over 3.7 million more Non-Hispanic Asian-Pacific Islanders – 36% growth during period – 14% of the total population growth • 26 million more people overall – Nearly 21.3 million persons and 82% of growth from these 3 minority segments Source: Geoscape; American Marketscape DataStream: 2009 Series; Estimates as of July 1 2009. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 5

Household Income in 2009 by Culture Group “Asians top the list in terms of annual household income, due in part to both the disproportionately large number in working age cohorts and to their higher levels of educational attainment. Hispanics are about 17 percent below the overall median.” Median Household Income $80,000 $70,000 $69,654 $60,000 $55,880 $53,214 $50,000 $44,073 $40,000 $35,843 $30,000 $20,000 $10,000 $- Asian Black White Hispanic Total HHs Median HH Income Mean HH Income Aggregate HH Income Aggregate Income Total 118,293,887 $ 53,214 $ 66,338 $ 7,847,322,306,519 $ 8,080,469,566,868 White 97,617,470 $ 55,880 $ 68,468 $ 6,683,637,940,846 $ 6,845,430,654,775 Black 14,362,997 $ 35,843 $ 47,373 $ 680,412,381,876 $ 716,056,511,124 Asian & Pacific Islander 4,324,691 $ 69,654 $ 79,678 $ 344,581,718,498 $ 367,316,430,437 Hispanic 12,987,859 $ 44,073 $ 55,217 $ 717,155,262,027 $ 758,800,826,112 Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Source: Geoscape, American Marketscape DataStream: 2009 Series. Page 6

Hispanic Income by Ranges: 2009 “Over 37% of Hispanic households earn over $50,000 per year and 69% earn over $25,000 per year.” $150,000 or more $100,000 to $149,999 3.3% less than $15,000 6.5% 16.0% $75,000 to $99,999 9.1% $15,000 to $24,999 15.1% $50,000 to $74,999 18.3% $25,000 to $34,999 $35,000 to $49,999 13.9% 17.7% Source: Geoscape, American Marketscape DataStream: 2009 Series. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 7

Hispanic Consumer Expenditures: 2009 “Hispanic spending is quite substantial in all major categories, especially due to their relative youth and larger average household size.” 160,000,000,000 140,000,000,000 120,000,000,000 100,000,000,000 80,000,000,000 60,000,000,000 40,000,000,000 20,000,000,000 - Food & Shelter & Utilities Housekeeping Furnishings Apparel Transportation Health Care Entertainment Personal Care Personal Beverages Insurance supplies And & Insurance Products & Insurance & Equipment Services Pensions Annual Expenditures Per Household in USD Source: Geoscape, American Marketscape DataStream and Consumer Spending Dynamix™: 2009 Series. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 8

America’s Secret Weapon • Unlike other developed and developing countries, the U.S. has a history of embracing cultural diversity and this could lead to a strategic advantage in the world economy. – “By 2030 Europe will have twice as many people over 65 as those under 15.” – “European and Asian societies do not seem to be able to take in and assimilate people from strange and unfamiliar cultures in an era where their future rides on its ability to take in many more.” – “By 2010 foreign students in the U.S. will get over 50% of Ph.D.’s awarded.”

America’s Secret Weapon – “Half of all Silicon Valley start-ups have at least one founder who is an immigrant or first generation American.” – “Americans have almost always worried about their immigrants…but these immigrants have gone on to become the backbone of the American working class…America has been able to tap their energy, manage their diversity, assimilate newcomers and move forward economically. Ultimately, this is what sets [the U.S.] apart from other historical powers…” – Fareed Zakaria, The Post-American World © Copyright Geoscape, www.geoscape.com, 1 (888) 211-9353. 10

Lifetime Profit Margin Contribution • LPMC is a metric that can help bring focus into a company‟s decision to invest behind cultural diversity. – Lifetime: • Younger age at initial acquisition leads to potentially more years of relationship – Profit Margin: • Cost of acquisition could be lower as under-served consumers’ are acquired in a less competitive environment, improving ROI and increasing margin – Contribution: • Compared to available alternatives, investment in cultural diversity could yield higher returns

Aggregate Lifetime Spending per Household 3.5 500 120 600 350 35 80 Household Furnishings Food atApparel Away Total Expenditures Transportation Food at Home Home & Personal Care Thousands (2008 $) 450 70 300 303 & Equipment Products & Services 100 500 Millions 400 Cumlative Household Spending Aggregate spending over the 60 lifespan of a Hispanic or 2.5 250 25 350 Asian household is usually 400 80 greater than that of Non- 50 Hispanic White households 300 200 202 NH White 250 300 40 60 Black 1.5 150 15 200 30 Asian 200 40 150 Hispanic 100 101 20 100 100 20 0.5 5 1050 50 00 0 2008 2013 2018 2023 2028 2033 2038 2043 2048 2053 2058 2063 2008 2013 2018 2023 2028 2033 2038 2043 2048 2053 2008 2013 2018 2023 Calendar Year ---Life Expectancy Calendar Year Life Expectancy Calendar Year Life Expectancy Median Age Life Expectancy Non-Hispanic White 40 81 Source: Geoscape modeling on various data inputs. Hispanic 27 83 Asian 33 85 African American 30 77

Ask yourself…. • How much of your current business is Hispanic? Asian? Black? • How are you doing with unacculturated Latinos? • Who might be your best customers? • What is your true opportunity in culturally diverse segments?

The Long Tail • The new mainstream is a myriad of niches – In the era of 3-network TV and bricks & mortar shopping, pop-culture meant marketers strived for “bit hits” – In today’s era of diverse programming and over-abundant 24 / 7 product selection, the mass is made up of niches • Marketers and business strategists have no choice but to advance their micro-targeting capabilities to fully exploit the opportunities • “Many of our assumptions about popular taste are actually artifacts of poor supply-and-demand matching—a market response to inefficient distribution.” – Chris Anderson, The Long Tail

Long Tail Chart on Cultural Diversity “The proliferation of product variety and expansion of distribution channels increase consumer choice and result in a greater complexity of offerings to satisfy a diversity of needs and wants. ::: The outcome is that the sum of the mass-cultures Unit Sales rivals the size of the mass market.” Mass Market Pop Culture Segmented Markets — Diverse Culture Product Types / Consumer Groups © Copyright Geoscape, www.geoscape.com, 1 (888) 211-9353.

Demographic Data and Trends The Emergence of The New Mainstream

Population by Ethnicity/Race 1940-2014 “By 2014 the population in the three largest ethnic groups will be more than 110.4 million and Hispanics will represent nearly half of that population.” 60,000,000 Hispanic 50,000,000 40,000,000 30,000,000 Black* 20,000,000 Asian & PI* 10,000,000 - 1940 1950 1960 1970 1980 1990 2000 2010 Population 1940 1970 1980 1990 2000 2009 2014 Asian & PI* 254,918 980,337 3,500,439 6,994,034 10,410,556 14,133,634 15,694,304 Black* 12,865,518 22,580,289 26,495,025 29,284,605 33,707,230 37,861,980 39,967,766 Hispanic 1,858,024 9,589,216 14,608,673 21,898,546 35,238,481 48,628,991 54,780,913 Total 31,669,275 203,211,926 226,545,805 248,684,787 281,421,906 307,469,178 322,217,026 Note: Population in the Commonwealth of Puerto Rico (3.97 million) is not included in Hispanic population figures. Source: Geoscape; American Marketscape DataStream: 2009 Series and the U.S. Census Bureau. * 2000-2009-2014 numbers for Asian and Black are for non-Hispanic; 2009 and 2014 Estimates as of July 1. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 17

U.S. Population: 2009 by Ethnic Group About one-third of America’s population is of either Asian, Black or Hispanic origin; these proportions vary dramatically at the state and metropolitan area levels. Many companies include Puerto Rico within their U.S. marketing efforts, although it is not technically part of the U.S. Commonwealth of Puerto Rico add'l 1.3% Hispanic 15.8% Asian & Pacific Islander1 4.6% Black1 12.3% Other1 67.3% Source: Geoscape, American Marketscape DataStream: 2009 Series. 1 Non-Hispanic portion of race. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 18

Increasing Cultural Diversity The “Non-Ethnic” market” is shrinking! 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1940 1980 2020 Other Asian Black Hispanic Hispanics may be any race, most are White (92.5%), Black (3.8%) or Native American (1.4%). Source: US Census Bureau (1980 & 1990) and Geoscape (2020). Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 19

Growth 1990 to 2014 by Ethnicity/Race The Non-Hispanic White population is a decreasing proportion of the U.S. population while Asians, Blacks and especially Hispanics are forming a larger part of our nation. 80.0% 75.8% 69.1% 70.0% 65.2% 63.8% 60.0% 50.0% 40.0% 30.0% 20.0% 17.0% 15.8% 11.8% 12.0% 12.5% 12.3% 12.4% 8.8% 10.0% 4.6% 4.9% 2.8% 3.7% 0.0% 1990 2000 2009 2014 N-H White N-H Black N-H Asia & N-H PI Hispanic Source: Geoscape, American Marketscape DataStream: 2009 Series. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 20

Majority-Minority Counties: 2009 Top 25 Counties (Except Non-Hispanic White) Los Angeles, CA Cook, IL Harris, TX Miami-Dade, FL Non-Hispanic Whites are the Orange, CA minority in an increasing Dallas, TX number of counties—316 in Kings, NY 2009—including some of the Queens, NY largest like LA & Chicago. San Bernardino, CA Riverside, CA Bronx, NY Bexar, TX Santa Clara, CA Broward, FL Alameda, CA Philadelphia, PA New York, NY Honolulu, HI Prince George's, MD Hidalgo, TX El Paso, TX Fresno, CA Fulton, GA Orange, FL Shelby, TN Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 21

™ Acculturation: Hispanicity “Acculturation is the process whereby immigrants acquire a new culture through language, customs, lifestyle, media usage and other practices—they retain elements of their home culture as well. For Hispanics, Geoscape calls this characteristic Hispanicity.” • HA1: Americanizado – English Dominant (nearly no Spanish) – Born in US; 3rd+ generation – Few Hispanic cultural practices • HA2: Nueva Latina – English Preferred (some Spanish) – Born in U.S. 2nd generation – Some Hispanic cultural practices often “retro-acculturate” • HA3: Bi-cultural – Bi-Lingual (equal or nearly) – Immigrant as child or young adult – Many Hispanic cultural practices • HA4: Hispano – Spanish Preferred (some English) – Immigrant as adult, in U.S. 10+ years – Pre-dominant Hispanic cultural practices • HA5: Latinoamericana – Spanish Dominant (nearly no English) – Recent Immigrant as adult (less than 10 years ago) – Primarily Hispanic cultural practices – Identify with home country more so than U.S. Hispanic Source: Geoscape, American Marketscape DataStream: 2009 Series. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 22

™ Hispanicity in 2009: Top 5 DMAs “Recent immigrants have increased the portion of less acculturated HA5 Hispanics, while second and third generation Hispanics have increased the proportion of HA1 & HA2 Hispanics. Although Hispanic population will increase in all segments, the future trend will have a steady proportion of HA5, increasing HA1-HA2, and decreasing HA3 and HA4. 100% 18.2% 16.0% 15.6% 16.4% 90% 32.2% 80% 18.2% 18.8% 19.0% 17.9% 70% 18.2% 60% 24.7% 25.9% 25.9% 27.3% 50% 22.7% 40% 30% 26.8% 27.3% 26.9% 27.0% 20% 22.4% 10% 15.3% 15.5% 15.7% 12.9% 7.3% 0% CHICAGO HOUSTON LOS ANGELES MIAMI-FT. NEW YORK LAUDERDALE HA1: Americanizado HA2: Nueva Latina HA3: Bi-Cultural HA4: Hispano HA5: Latinoamericana Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Source: Geoscape, American Marketscape DataStream: 2009 Series. Page 23

Hispanic Language use in 2009: Top DMAs “Spanish language use varies among the top five DMAs, however Spanish is preferred by about half of Hispanics over Age 5 within each of these major metropolitan areas.” 100% 23.3% 23.1% 22.5% 21.9% 90% 27.9% 80% 70% 19.9% 20.9% 22.3% 22.2% 22.6% 60% 15.2% 13.6% 50% 14.7% 15.6% 15.8% 40% 25.2% 30% 24.6% 26.4% 27.3% 27.5% 20% 15.3% 15.3% 17.8% 10% 12.8% 6.2% 0% Chicago Houston Los Angeles Miami-Ft. New York English Dependent Bi-Lingual English Preferred Lauderdale Spanish Preferred Spanish Dependent Bi-Lingual English & Spanish Bi-Lingual Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Source: Geoscape, American Marketscape DataStream: 2009 Series. Page 24

Hispanics in Florida are Cuban, right? Hispanic Origin Pop 2009 % of Hispanic Cuban 1,233,596 30.4% Puerto Rican 808,164 19.9% Mexican 659,476 16.3% Colombian 278,531 6.9% Dominican 158,073 3.9% Nicaraguan 141,304 3.5% Honduran 104,054 2.6% Peruvian 100,384 2.5% Venezuelan 96,099 2.4% Guatemalan 79,242 2.0% Ecuadorian 60,524 1.5% Salvadoran 55,358 1.4% Argentinean 51,893 1.3% Panamanian 24,051 0.6% Costa Rican 19,527 0.5% Chilean 19,516 0.5% Cubans and Puerto Ricans are the Hispanic Other Hispanic 165,392 4.1% majorities in only two Florida counties each Total 4,055,184 100% whereas Mexican’s are the majority in 31. Copyright© Geoscape®, www.geoscape.com, 1 (888) 211-9353. Page 25

Who is Geoscape? Market Intelligence :: Intelligent Marketing :: Business Advantage

Geoscape Background • Geoscape International, Inc. founded in ‟95 by Cesar Melgoza • Geoscape Europe BV founded in „02 • Merged interests with Latin Force and Goldman Sachs and in June ‟07 – Now a Goldman Sachs portfolio company: Urban Investment Group • Headquarters in Miami 27

Geoscape provides… TransFirmation™ • Strategic Analytics Business Advantage • Consulting Services • Databases • Market Intelligence Systems Market Intelligence Intelligent Marketing to corporations seeking growth by capitalizing on opportunities in culturally-diverse consumer and business segments.

Conclusion • Inaction could lead to missed opportunities to produce growth • Inefficiency is too expensive © Copyright Geoscape, www.geoscape.com, 1 (888) 211-9353. 29

The Versailles Breakfast Club Muchas gracias! ! • Questions? • Comments?

Accessing the New Mainstream Capitalizing on a Culturally Diverse America Arthur R. Rockwell Vice President, Sales arockwell@geoscape.com 1 (888) 211-9353 www.geoscape.com Access the New Mainstream

Geoscape Versailles Breakfast Club090605

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