Market Focus: Hispanics Growing in Buying Power

It used to be that marketing to the U.S. Hispanic population meant a limited change in your ad campaign to appeal to a few urban markets. It used to be known as marketing to a minority. Anybody in the ad business who still feels that way might be shocked by the following numbers.

Today, the Hispanic population in the United States exceeds 37 million, with a buying power of $428.3 billion (or about 6% of total U.S. purchasing power). Within 10 years nearly one in five Americans will be Hispanic, and their buying power is expected to reach $900 billion. Hispanic household incomes are increasing by 7.5% per year, their families are averaging 3.6 people per household (vs. 2.6 for non-Hispanics), and purchasing power for Hispanics is growing at triple the rate of inflation. So what’s preventing so many companies from going after this seemingly perfect target?

Hispanics are avid media consumers, comfortable with computers and connected to the Internet. Forty-seven percent of Latino households reported owning a computer in 2001, according to research at Cheskin, the Multicultural Research Center, which specializes in Hispanic market research and consulting. That’s a growth rate of 80% in a two-year period, compared to 21% for the general market. They indicated being exposed to an average 11.5 hours per week of television in Spanish and 10.8 hours in English. This amount of Spanish television consumption is particularly high considering that opportunities for watching Spanish-language television in almost every market are few compared with English options. Similar findings held for radio and print exposure. In fact, the most listened-to radio stations in Los Angeles and New York are Spanish-language. There is also a growing trend for the Hispanic consumer, even those born in the U.S. and fluent in English, to place more importance on their heritage. Being Hispanic is popular, and it’s become desirable for marketers to reach out to them through mainstream media.

What should you know? First, Hispanics typically have a high level of brand loyalty. According to Felipe Korzenny, Ph.D., principal and co-founder of Cheskin, many Hispanic immigrants remain loyal to products they know well and used in their native countries. These immigrants usually depend on Spanish for everyday life and would be the appropriate targets for advertising aimed at persuading consumers about a new product. When the objective is to provide information or appeal to the pride of Hispanics, then all those who identify with the language and culture count. Also, Hispanics are young (the median age of U.S. Hispanics is 26, compared to 30 for African Americans, 33 for Asian Americans, and 38 for white non-Hispanics) and generally have large families. It’s crucial that these numbers and subtleties in lifestyles be understood by any advertiser hoping to target this market.

CBS was successful making The Bold and the Beautiful more appealing to Hispanic viewers. The network went well beyond dubbing the soap into Spanish. With help from Orcí Public Relations in Los Angeles, they added Latino characters to the cast, brought in Hispanic guest stars, and created new story lines sensitive to current issues in the Hispanic community. Meanwhile, other companies have learned the hard way that literal translation equals advertising suicide. Some of the more infamous mistranslations include the Dairy Association’s "Got Milk?" which became "Are you lactating?" and Coors’ "Turn It Loose," translated as "Suffer from Diarrhea."

Though Hispanics made up over 6% of U.S. purchasing power in 2001, Spanish-language media garnered just $2.4 billion, or about 1%, of the $236 billion that was spent on all advertising in the United States that same year, according to the Association of Hispanic Advertising Agencies. One reason for this may be that some 36% of U.S. Hispanic households send remittances abroad. Hispanics send an average $6.7 billion outside the country every year, cutting into their U.S. buying. According to Korzenny, another key consideration is acculturalization, or the degree to which an individual has acquired the mainstream culture in addition to his or her native culture. Korzenny contends that "more in-depth work and research is needed to better understand cultural archetypes for frames of reference that the Hispanic consumer brings to the consumer situation."

Furthermore, marketing to culturally diverse targets often requires more time and research. Hispanics speak a common language, but they also come in multiple shapes, forms, cultural backgrounds, levels of acculturation, and mixtures of psycho-socio-cultural traits. Dialectical differences in their Spanish are subtle but real, and market researchers can totally miss the intended audience by conducting research with just the most conveniently located group of Hispanics.

Marketers attempting to conduct Hispanic research are then faced with other issues: Are they looking for predominantly Spanish- or English-speaking respondents? Are they interested in respondents who rely on Spanish for survival, or are they interested in individuals for whom the Spanish language is the best way to touch an emotional chord? Whatever the case, it has been proven time and again that speaking to Hispanics in their native tongue is the most effective way to reach them. According to José López Varela, author of "Yes, Hispanics Do Exist," advertising to Hispanics in Spanish is 4.5 times more persuasive than English.

Korzenny contends that since language and culture are strongly related, "researchers that aspire to uncover deep meanings in consumers need to be members of the culture, and not just speakers of the formal language code." Marketing is about uncovering and establishing emotional links with consumers. But before establishing emotional links with Hispanics, advertisers need to better understand the cultural basics of this powerful market.

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