Census data indicates that Hispanic population has grown faster than overall U.S. population since 1990 and is projected to become the largest U.S. minority group by 2005.
By the year 2020 the Hispanic population is projected to reach 53 million. Hispanics are expected to spend over $458 billion as a consumer group next year and this buying power is projected to surpass the $1 trillion mark by the year 2010.
The "Latin Wave" is bigger than the baby boomer generation. Ninety-five percent of Hispanics consume some form of Spanish language media. This phenomenon demonstrates that Hispanics actively seek out Spanish language media because it is relevant to them.
As the fastest growing minority group in the United States, the Hispanic market is capturing the attention of marketers, advertisers and companies representing all sectors of the business community. The increasing political, cultural and economic influence of this population has captured the attention of the nation.
Hispanics are changing the way the country looks, feels, thinks, eats, dances, votes and does business. It is becoming increasingly clear that corporate America should not take this market lightly, in face of the following overwhelming statistical evidence:
Just as impressive as the sheer size of the Hispanic population is its heightened buying power which exceeds $387 billion, a huge 76 percent increase since 1990. And by 2000, Hispanic purchasing power is anticipated to be over $450 billion.
- The Hispanic population has grown 38 percent since 1990, to 31million, while the overall population has grown just 9 percent.
- By the year 2005, Hispanics are projected to be the largest minority in the country, surpassing non-Hispanic Blacks for the first time.
- By 2050, the population is projected to hit 96 million, an increase of more than 200 percent, representing nearly one quarter of the population.
- Hispanics are younger than the rest of the nation: one third are under 18.
- Over one million Hispanics in the U.S. report an annual income of more than $75,000.
The significant and accelerated growth of household income is due, mainly, to the larger household size common in this market. In most cases, all family members of a household make financial contributions. According to the 1995 Hispanic Consumer Market Report by DRI/ McGraw-Hill, Hispanic households average 3.6 people, compared with 2.6 in the general population. Moreover, because the median age of the Hispanic population is 26, versus 33 for White non-Hispanics, it is reasoned that this segment will invest for a longer period of time. Even today, Hispanics outspend other groups in many categories.
According to the New America Market Basket Index, a recently published report from New America Strategies and Demograph, Hispanic-American expenditures per household grew 15.5 percent from 1995 to 1998, compared to 13.7 percent in White non-Hispanic households.
Map of The American Continent
Understanding the culture and its importance to the Hispanic market, collectively, is key when marketing to this extremely loyal segment. Seventy-seven percent of Hispanics now living in the U.S. come from another country. Their origins, however, cannot be neatly pigeonholed. They come from 22 different countries, with the dominant ones being Mexico, Cuba, Puerto Rico, the Dominican Republic and countries in Central/South America. Although removed from the origins of their culture, Hispanics continue to have a strong attachment to their countries of origin and language. In a recently conducted poll, 83 percent of the Hispanic market said that being Hispanic was important to their identity.
Map of Central America
This strong sense of heritage has permeated "mainstream" America, so that, instead of witnessing widespread assimilation, America is experiencing acculturation -- Latin culture, including food, music and entertainment is being preserved, accepted and even emulated by non-Hispanics.
According to a 1998 report from Doublebase Mediamark Research, Inc., over 90 percent of U.S. Hispanics rate language as the most important element of their culture to preserve.
Moreover, the commonality of the language creates a bond that surpasses differences resulting from varied country origins. While the use of English has increased over the years, 94 percent of U.S. born Hispanics learn to speak Spanish before they learn English.
Eighty percent of U.S. Hispanic adults speak Spanish at home, of which one-third treat English as their second language. Spanish is expected to continue to be the U.S. Hispanic market’s language of choice for several reasons, including the geographic clustering of the market, which makes it easier to interact without having to speak English, continued immigration as a source of Hispanic population growth, and the proliferation of Spanish-language media.
Family, socializing with friends, happiness and festive events are important in the Hispanic culture and the family, as a group, is usually a high priority. According to a 1996 study done by MDI, the Hispanic mother tends to define herself mostly in terms of her family and her ability to provide the best for them. Gender notwithstanding, 45 percent of Hispanics consider their family as the source of their satisfaction versus 21 percent of the general consumer market. As a result, the Hispanic household includes more children and extended family members as compared to the general consumer market.
One important pastime in the Hispanic culture, in addition to communal events, is watching sports. In the top ten markets alone, 89 percent of the Hispanic population watches sports on television. Professional boxing is favored, garnering 68 percent viewership, Major League Baseball with a 57.8 percent viewership and Major League Soccer follows closely with 53.7 percent viewership. The family unit also influences the way Hispanics shop and do business. Given the wider choice of brands available in the U.S. versus in their indigenous countries, Hispanics are more likely to purchase familiar brands as opposed to unknown names. Instead of price, the following motivators prevail in choosing new products and services: peer conformity, improving quality of life and product quality.
The geographic concentration of Hispanic-Americans makes them one of the easiest consumer segments to reach. According to the U.S. Census Bureau, 80 percent of all U.S. Hispanics reside in five states, and approximately 59 percent live in 10 cities – Los Angeles, New York, Miami, San Francisco, Chicago, Houston, San Antonio, McAllen, Dallas/Ft. Worth and San Diego. American Demographics report that these demographic patterns are unlikely to change. The key metropolitan areas are experiencing a large increase in their population, mainly coming from Mexican and Latin American immigration, as well as from high birth rates among long-time Hispanic residents.
MARKETING TO THE HISPANIC CUSTOMER
To effectively target this group, companies should consider doing more than just carrying the right products or services. Companies may find that developing culturally relevant programs will increase their Hispanic customer base. As indicated, family is key to this group; therefore, it is important to customize materials as well as marketing events which address this issue. In autumn, for example, New York-based Paniagua, LLC, a sports-event marketing company hosts the annual Hispanic Heritage Day at ballparks. Families in targeted cities are encouraged to come out to watch their favorite Hispanic ball players in action. Sponsoring such an event would be an effective way to create positive awareness of your firm within this community.
Another important strategy would be to form significant partnerships with media outlets serving Spanish-speaking markets, thus making their built-in, loyal audiences immediately accessible.
According to a 1995 study in American Demographics, Hispanics prefer their media in the language first learned. The Roslow Research Study reports Spanish-language advertising is 45 percent more effective than English advertising in reaching this consumer segment.
For main message recall, commercials in Spanish yield 56 percent higher comprehension, and commercials in Spanish are five times more persuasive in creating an "intent-to-purchase" attitude.
Relationship marketing is also key. Hispanics respond well to people who, "make them feel part of the family," and who extend themselves to provide excellent customer service.
As demonstrated through its strong family and community ties, this group is relationship-oriented and personal contact is important not only in attracting business, but also in maintaining customer loyalty. This feeling of "inclusion" and "belonging" could bereinforced by highlighting culturally relevant themes in promotions. In Los Angeles, for example, special programs could be developed around the Mexican holiday, Cinco de Mayo.
Along with in-language materials and cultural event sponsorships, it is also important to recruit Hispanic personnel who can communicate with, and understand, the concerns and needs of this group. This is an extension of relationship marketing, a key element in the Hispanic culture, and it is essential to many customers who might be looking for an "ally" or a "familiar face" as they make important financial decisions such as where to invest.
In order to achieve long-term corporate awareness, the creation of specific vehicles to attract the young segment of the Hispanic community is highly recommended. On a whole, the Hispanic market is younger than the average general consumer market. One-third of the population is under 18, and the median age of U.S. Hispanics is 26. This very large group, called the Latin Generation X or Generation N is considered the driving force, pushing the increase of Hispanic influence on American culture. Rather than assimilating, they are retaining their culture.
HISPANICS AND FINANCE
For the financial services industry, the Hispanic market represents a largely untapped population with the potential for significant growth because Hispanic household income is on the rise. This suggests that this group might be more likely to be receptive to planning for the future. Since family is important, and there are more members per household, individuals might be more desirous of securing family income and quality of life. As in other ethnic groups, attitudes in the Hispanic market toward finances vary:
When it comes to buying financial products, as little as 6.1 percent said they would pay for good financial advice. However, 41 percent think it is important to learn as much as possible before buying financial products, and over 29 percent shop around for the best financial deal.
- Only 9.5 percent feel financially secure.
- 43.3 percent are careful with money.
- Over 53 percent say they do not like being in debt.
According to a 1998 Simmons Study, 44.5 percent of Hispanics invest. Common stocks are by far the dominant investment vehicles, leaving much room for exposure and expansion into other types of financial products. Indeed, only 7.7 percent own mutual funds, and only 1 out of 10 Hispanics maintains an investment portfolio.
Fuente: SIA’s Diversity Committee y US Census Bureau