Firm Seeks to Become Key to Latinos’ Pocketbooks
Hugo Pimienta considers himself a bridge. At his son’s soccer games, the Mexican-born millionaire and his wife shuttle up and down the sidelines, forming a rare link between Latino immigrant parents clustered at one end of the field and the wealthy white Westsiders on the other.
And through his Pueblo Corp., Pimienta is trying to bring together the fast-growing immigrant consumer market with companies eager to sell to it.
With a confidence that borders on hubris, Pueblo suddenly appeared in Los Angeles earlier this year, spending millions of dollars to build an instant community reputation and woo immigrant Latino consumers.
Pueblo’s product: a $25-a-year membership card that offers discounts on phone, travel, medical, financial and other products.
To the companies it aims to lure as partners, Pueblo vows to deliver Spanish-speaking immigrants who are often overlooked, misunderstood or exploited by marketers. Its access to that market, Pueblo says, comes from firsthand knowledge of Latin American immigrant culture and Spanish-language customer service.
Now, just six months after its official launch, it is spending hundreds of thousands of dollars in educational scholarships to cardholders and underwriting public opinion programs on Spanish-language television and radio.
It has announced plans to build a $10-million, 16-field soccer academy. And, in perhaps the most unorthodox effort to build a loyal following, Pueblo is bankrolling the Los Angeles tour of a blessed image of the Virgin of Guadalupe that is drawing thousands in its voyage from parish to parish.
The value of the affinity card--which has yet to attract a significant number of major corporations to offer discounts--remains to be seen, marketing experts say. But Pueblo’s bold efforts to cast itself as a community pillar are unprecedented, observers say. Already, the company’s financial muscle is earning it brand recognition in tens of thousands of immigrant households.
“Our goal is to create a mechanism where we can market anything we want at any time,” Chairman and Chief Executive Pimienta, 36, said at the company’s 20th-floor Century City offices. “We are going to bring [to corporations] the Hispanic market that they don’t understand.”
Federico Herrera, Pueblo’s president and chief operating officer, casts the company’s mission this way: “To be the only channel through which all U.S. Hispanics purchase their products and services.”
Although that might seem far-fetched, marketing experts say the venture stands out. It may be the first well-financed effort to offer an affinity card targeting the elusive immigrant Latino market with a broad range of products and services. It differs from other affinity discount cards--such as those offered by the American Automobile Assn., American Express and Costco--because it is not linked to a credit card or other core service.
Pueblo’s firsthand understanding of immigrant culture is also unique, said Felipe Korzenny, president of Hispanic & Asian Marketing Communication Research Inc., a Belmont, Calif.-based market research firm.
“The more recent immigrant, the less acculturated Mexican, really could benefit from someone delivering to them a package of products and services they need but that others aren’t offering them,” he said.
Offering Discounts, Sense of Community
So far, Pueblo has enrolled 20 partner companies and close to 40,000 cardholders, most generated by telemarketers at its El Monte call center, Herrera said. It also aims to lure members through neighborhood kiosks and its Web site, https://www.pueblocorp.com.
It has dubbed its card “La Llave del Pueblo,” (“The Key to the Town”), in folksy deference to cardholders, whom Pueblo refers to as patrones. The Spanish word means not only patron, but boss. Pueblo’s slogan drives home its affinity message: “De Hispano a Hispano” (“From Hispanic to Hispanic”).
But Pueblo’s challenge is to offer core services at prices that consumers can’t hunt down alone. And big corporations with Latino marketing efforts already in place may be loath to offer price breaks and pay the commissions Pueblo seeks.
“All the utility companies and the banks and the airlines have learned they have to have high-quality Spanish-language services available to their consumers or they’re going to lose business,” said Carlos Garcia, president of Garcia Research Associates Inc., a Burbank-based Latino market research firm. “People are learning how to use those services and [the companies] would rather go after those consumers themselves rather than have to go through an intermediary.”
Pueblo has the resources to buy name recognition: Parent company IFS Financial Corp.--doing business as Pueblo Holdings and also headed by Pimienta--is listed by Hispanic Business Magazine as the sixth-largest Latino-owned company in the country. It is linked to Pimienta’s Interamericas Investments Ltd., incorporated in the Cayman Islands to invest the capital of wealthy Mexicans here.
IFS--an empire of financial services firms with nearly $2 billion in assets and some controversy in its past--changed its name and image and moved its headquarters west last year from a Houston suburb to tap the nation’s largest Latino market. The marketing venture is a departure for Pueblo Holdings, whose other companies are all regulated financial services firms.
This year alone, Pueblo Corp. budgeted $12 million for advertising and product promotion. Television commercials and a 30-minute infomercial created by Irvine-based Casanova Pendrill Publicidad Inc.--whose clients include General Mills, Coors and Kids R Us--have been running on an aggressive schedule.
And Pueblo earns community points by underwriting a daily KTNQ (1020) radio program--”La Respuesta del Pueblo” or “The People’s Reply”--as well as the weekly “El Pueblo Dice” or “The People Say” that airs on Telemundo’s KVEA. Both public affairs programs touch on key community issues.
The company has doled out $90,000 from a $500,000 scholarship fund launched in June. And it arranged to sponsor the tour of a replica of the image of Our Lady of Guadalupe, transported from Mexico City in September.
It has been carried from parish to parish by a Pueblo truck and driver. Pueblo has financed all fliers and posters--adorned with the company logo--and set up an 800 line to handle inquiries. The image will conclude its tour at a Dec. 11 celebration at the Los Angeles Memorial Coliseum expected to draw 100,000.
Pueblo cardholders receive varying discounts on such services as money transfers, long-distance calling, autos and dental care. The mortgage lending and insurance subsidiaries of Pueblo’s parent company are also available to cardholders.
Discounts vary. Long-distance carrier Qwest Communications Inc. offers cardholders 9% to 17% off its lowest rates on calls to designated Latin American countries. The money transfer partner charges cardholders $5 to wire $300 in funds to their home countries--50% off its going fee and a rate that rivals those of major firms. And a skin-care company offers products at 30% off. But discounts offered by other Pueblo providers are vague, and the products and services may not offer the best prices in the marketplace, critics say.
In addition to offering preferential pricing, partner companies pay commissions to Pueblo on all transactions and in some cases a signing fee. In return, they get name recognition in a hard-to-reach-market and access to Pueblo’s growing database.
“We think the commission is worth the increased value in the relationship we have with our customers,” said Jonathan Ebinger, Qwest’s vice president of consumer markets.
Volume Critical to Making a Profit
Delivering a market is the core concept of affinity cards. But volume is critical to turning a profit, said Korzenny, who saw a similar attempt by a national insurance company fail several years ago for lack of subscribers.
The American Assn. of Retired Persons, for example, offers a range of discounts through corporate partners to older Americans for $8 a year. In turn, AARP’s partners gain access to its 33 million-member database. Herrera declined to state Pueblo’s projected break-even point, but said the company’s goal is to increase its membership to 1 million by the end of next year.
Despite its multimillion-dollar marketing effort, Pueblo’s launch has not been smooth. The company has had difficulty drawing major corporations, although Qwest and discount prescription service Rx America are among the national partners.
Several deals that Pimienta described as imminent last summer never materialized. Others have fallen through: One company listed as an initial partner is no longer in business, another has stopped providing services it signed to deliver, and a third partnership initially promoted by Pueblo evaporated after a business dispute.
A Business With a History
The Pimienta family has deep business roots on both sides of the border. In 1985, Pimienta’s father, Enrique, and a partner incorporated Interamericas Investments Ltd. in the Cayman Islands as a vehicle for Mexican investment here.
Headquartered in a Houston suburb, Interamericas acquired an array of ventures, including a title company, auto-repair shop, 20 El Pollo Loco franchises and the National Bank of Conroe, in Texas. Schooled in computer science at a Catholic college, the younger Pimienta pestered his father to allow him to move north. He soon took control of the company.
By the late 1980s, Interamericas turned its focus to financial services companies, selling off others. The group acquired AccuBanc Mortgage Corp., now the country’s largest privately held mortgage lender. Acquisitions of Bradford National Life Insurance Co. and American Founders Life Insurance Co. followed--and were eventually incorporated under the IFS umbrella. Along the way, Pimienta’s wife acquired a majority stake in First Federal Savings Bank of San Antonio.
But the family operations were shadowed by regulatory scrutiny--a fact that Pimienta blames on youthful inexperience, false accusations and the ignorance of regulators who automatically suspect Mexican wealth as illicit.
The U.S. Office of Thrift Supervision fined Pimienta in 1991 for not disclosing that some board members and officers of First Federal Savings Bank were associated with Interamericas. The red flag caused heightened scrutiny of Pimienta’s insurance acquisitions but ultimately no wrongdoing was discovered.
Then, in 1994, Interamericas Investments Inc. was fined $1 million by the Federal Reserve Board for surreptitiously acquiring and controlling National Bank of Conroe in violation of the Bank Holding Company Act, which forbids foreign investor control of a U.S. bank. Interamericas paid the fine after the action was upheld two years ago on federal appeal. Pimienta said the Conroe acquisition occurred before his tenure at the helm of Interamericas, which no longer owns a stake in the bank.
And last year, AccuBanc entered into an agreement with the Department of Housing and Urban Development to make $2.1 billion in loans to minorities and low- to moderate-income applicants after inspectors found evidence it had discriminated against minority loan applicants. HUD did not make an official finding of racial discrimination against AccuBanc, and the company acknowledged potential problems and moved to correct them.
‘Coherent Effort to Do It the Right Way’
A host of other federal regulatory agencies raked over Interamericas in its early years, Pimienta said.
“When you come from Mexico and you have a lot of money . . . there are predispositions in the thoughts [of regulatory agents] that there has to be something wrong,” he said. “We’ve been lucky we’ve had the resources to go over the battles with all these people so our name is clear.”
To Pimienta and Herrera, Pueblo marks a promising chance to leverage their Mexican roots while serving fellow Latinos.
The company is close to finalizing a location for El Pueblo del Futbol, the soccer training facility. Pueblo plans to expand next year to the Bay Area, San Diego, Chicago, New York and five Texas markets, and hopes to go public by 2001.
“You see all these corporations throwing cents at this [market] but I don’t see any coherent effort to do it the right way,” Pimienta said. “We are betting our marbles on the affinity in the community.”
