Everyone is plugged in down Mexico way

It’s 6pm and the Plaza Grande – or Main Square – in Mérida, the capital of Yucatan, is teeming with people enjoying the cool evening air. A striking feature of the square is the white loveseats, where couples can engage in conversation and light flirting. Even more striking is the fact that most people sitting there are engaged, not with their neighbour, but with their smartphone or tablet. The plaza is enabled with free wifi throughout, making it a popular destination for young Mexicans.

Smartphone and tablet penetration among internet users in Mexico is now higher than in the US or Canada. There is pent-up demand for increasingly rich and engaging digital communications. Any marketing campaign you launch in Mexico must have mobile and digital media at its heart.

Leave Mérida and drive two hours east to Valladolid, a delightful Spanish colonial town, and another fascinating marketing technique is in action in the local main square. Small groups of Mayan ladies (about 35 per cent of the population of Yucatan is Mayan) are approaching tourists with artisanal handicrafts. Distinctive in their traditional skirts and shirts, the sellers offer hand-made necklaces, baskets and dresses.  What is remarkable in this scene is the precise targeting of potential buyers. Foreigners are essentially left alone and it is Mexican visitors to the town who are accosted.

Two trends explain this behaviour. First, the rise of the middle class in Mexico. A generation ago, only 12 per cent of the Mexican population was considered middle class. A recent report by the World Bank showed that 17 per cent of Mexicans joined the middle class between 2000 and 2010, and now account for 53 per cent of households. Targeting compatriots is clearly a sensible direct sales strategy.

The second trend at play is the preference for local brands. Mexico is the largest per capita consumer of Coca-Cola beverages, with almost twice the level of the US or eight times the world average, but that does not mean all brands have to pretend to deliver the American dream. There are 14 Mexican brands in the top 50 Latin American rankings, accounting for 27 per cent of the aggregate value of regional brands.

Of all Latin American consumers, Mexicans have arguably the widest choice of brands and are attracted to those that stand out, and stand for something other than their northern neighbours’ consumerist tendencies. Here once more our team of sellers are intuitively tapping into a deep consumer dynamic.

There is a further trend that marketers will not spot in the squares of Mexico’s main cities. It’s called reshoring: the return to Mexico of manufacturing jobs lost to China in the past 15 years. This dynamic obeys the basic capitalist law of profit maximisation. A survey by BCG predicts that by 2015, the full cost of hiring Chinese workers will be 25 per cent higher than the cost of using Mexican workers. Reshoring is already gathering momentum in sectors such as automotive, aerospace and medical devices. Unemployment in Mexico has reduced sharply from its six per cent peak in 2009 to just 4.5 per cent in April 2013.

So, if your company makes things, you could do worse than deciding to make them in Mexico. In fact, you’ll be in good company. In May, Audi announced a $1.3bn SUV plant to be opened in San José Chiapa. In the same month, Honda announced its $500m factory, followed in June by General Motors investing close to $700m in its car plants. Electrolux has had a factory in Juárez since 2005. Levi’s has no less than 29 factories across the country.

A member of NAFTA, Mexico accounts for $200bn of the total $350bn of US trade with Latin America and is a gateway to both the north and south of the continent. As well as enjoying access to an affordable and well-educated workforce and less impact from US dollar fluctuations, brand owners manufacturing in Mexico are more likely to benefit from their presence in a growing home market. Brazil may well be the fifth-largest economy globally, but the country’s growth has stalled in the past two years and Brazil has very recently experienced widespread eruption of discontent, particularly among its youth. In the same two-year period, Mexico, the new Eldorado for savvy marketers, has seen its GDP grow at three times the rate of its Portuguese-speaking neighbour.

Vincent Rousselet runs a strategic marketing consultancy. When he’s not in Mexico, he shares his time between London and Paris [email protected]

This article was taken from the September issue of Market Leader. Browse the archive here.