The Hispanic Market – Your Client’s New Niche

Presented by: Reynaldo Cano, South-West Texas Border International Trade Center

andPeter Morales, SBDCNet

This material is based upon work supported by the U.S. Small Business Administration. Any opinions, findings, conclusions or recommendations expressed are those of SBDCNet and do

not necessarily reflect the views of the U.S. SBA. This U.S. Small Business Administration (SBA) Grant is funded by the SBA. SBA’s funding is not an endorsement of any products,

opinions, or services. All SBA funded programs are extended to the public on a

nondiscriminatory basis.

In our presentation, the only realcommon term tying variouspeoples together is the label “Hispanic.” We will highlight the many facets of these diversegroups and endeavor to stimulate appreciation, awareness and continuing inquiry into this complex consumer segment.

• When you think Hispanic consumer, what comes to mind?

Agenda

• Who is the Hispanic consumer?

• Where is the Hispanic consumer?

• Why is the Hispanic consumer important to small businesses?

• What are some tools in helping your clients target this consumer niche?

Who is the Hispanic consumer?

28 Hispanic or Latino CategoriesAs identified by the US Census Mexican Puerto Rican Cuban Dominican Republic

Central American: Costa Rican Guatemalan Honduran Nicaraguan Panamanian Salvadoran Other Central American

South American: Argentinean Bolivian Chilean Colombian Ecuadorian Paraguayan Peruvian Uruguayan Venezuelan Other South American Other Hispanic or Latino: Spaniard Spanish American All other Hispanic or Latino

Affluence

• Hispanics in the continental U.S. are wealthier than most in Latin America

$0 $5,000 $10,000 $15,000

US Hispanics

Puerto Rico

Venezuela

Uruguay

Mexico

Argentina

Chile

Costa Rica

El Salvador

Guatemala

Honduras

Per Capita Income

Source: Marketing to American Latinos

Age

• The Hispanic Market is young

• Hispanic median age is much lower than General Market (26 years vs. 34)

Source: The Hispanic Market Primer

http://www.hispanic-market.com/a_primer.html

2634

0

5

10

15

20

25

30

35

HispanicMarket

GeneralMarket

Age Comparison

Age Distribution by Sex and Hispanic Origin: 2002

Source: The Hispanic Population in the US, March 2002, US Census

Heritage• Among Hispanics, more than half of 18-34 year olds, a very lucrative segment,

were NOT born in the US

41.2% 38.6%

53.1%55.7%

Born in the US Not Born in the US

18 +18-34

Source: Simmons Hispanic Study 2002

Where is the Hispanic consumer?

Population Trends• U.S. Hispanic population is larger than Canada’s

total population by almost 4.5 million people

• It was projected that Hispanics would be the largest minority in the U.S. by the year 2010They reached that milestone in 2003

• In less than 40 years, the Hispanic market has quadrupled, a trend predicted to continue

Source: Hispanic-Market.com & Current Population Survey, March 2002, PGP-5

Population

• U.S. is the fourth largest Spanish speaking country in the world

• Los Angeles is the third largest Spanish speaking city in the worldAfter Mexico City, Mexico and Buenos Aires,

Argentina

Hispanic Population as % of U.S. Population, 1960-2002

3.9%5.2%

6.4%

9.0%

12.5%13.30%

1960 1970 1980 1990 2000 2002

Source: Current Population Survey, March 2002, PGP-5

Hispanic Population by State, 2002

The Hispanic Population in the US, March 2002, US Census

Hispanic Population Percentage for Selected States, 2002 (estimates)

New MexicoCalifornia

Texas

Arizona

Nevada

Colorado

Florida

New York

New Jersey

Illinois

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Source: 2000 Census, http://www.census.gov

Percent Change in Hispanic Population, 1990 - 2000

Source: 2000 Census, http://www.census.gov

Non-Traditional Hispanic Cities

• Growth in cities due to shifting labor demands service industry industrial

development areas

• Growth attributed to relocation migration

0% 20% 40% 60% 80% 100% 120% 140% 160% 180%

Las Vegas

Ft. Smith

Bend

Atlanta

Wilmington

Omaha

Knoxville

Jonesboro

Little Rock

Minneapolis

Hispanic Non-Hispanic

Latino Population Growth, 1990-2002

New Hispanic Population Destinations

City # of Hispanics

% of

Total pop.

Hispanic Growth

1980-2000

Raleigh, NC 72,850 6% 1180%

Atlanta, GA 268,851 7% 995%

Greensboro, NC 62,210 5% 962%

Charlotte, NC 77,092 5% 932%

Orlando, FL 271,627 17% 859%

Source: Latino Growth in Metropolitan America. Center on Urban & Metropolitan Policy and the Pew Hispanic Center.

http://www.pewhispanic.org/site/docs/pdf/final_phc-brookings_paper-appendix-tables.pdf

Why is the Hispanic consumer important to small business?

• Targeting Hispanic consumers may help your clients tap an often undiscovered niche for their small business

Hispanic Market Facts

• Have a combined buying power of $630 billionBuying power is increasing at a rate of 118% per yearPopulation increased by 58% in the past ten yearsBuying power is estimated to surpass 1 trillion dollars by the

year 2010 and 2 trillion by 2020

• Between 2000-01, HALF of all new consumers in the U.S. were Hispanic40% from 90-00

Source: Association of Hispanic Advertising Agencies, Missed Opportunities

U.S. Hispanic Purchasing Power

• Business Perspective

Sustained Population Growth

Sustained Economic Growth

Important Segment of the U.S. market

Hispanic Households

• 8.5 Million Hispanic families 63% w/children under the age

of 18 27% Hispanic families with 5

or more people

• $33,565 median Household income in 2001

• 46% Hispanic home ownership

Source: Census Bureau Facts for Features, http://www.census.gov

Hispanic Households

• Hispanic household growth rates outpace the average Total household growth rate,

from 1990-2000, is 14.5% Hispanic household growth

rate, from 1990-2000, is 31%• Hispanic households tend to be

larger because of extended family and larger family units

Hispanic Households in the US, 1999

Cubans

Puerto Ricans

Central & South

Americans

Other Hispanics

Mexicans

Source: Cultural Access Group, Based on US Bureau of Census , Current Population Reports, February 2000

The Young Hispanic Adult

• 18-34 years olds are a coveted target market segmentMore than half (68%) of this Hispanic segment are Spanish

dominant or bilingualThey consume Spanish and English broadcast media at nearly

equal ratesThey are heavy readers of magazines with a focus on

lifestyle, entertainment, automotive, and sports They are more persuaded by advertising in Spanish and are

more loyal to companies with advertisement in Spanish

Source: Association of Hispanic Advertising Agencies

Buying Style

• In comparison to the average U.S. 18-34 year old segment, Hispanics 18-34 year oldsAre 40% more likely to be impulsiveAre 30% more likely to believe that advertisement

gives true picture Are almost 30% more likely to try different brands

Source: Simmons Hispanic Study 2002

Psychographic Profile of Young Hispanics

• They like to have the latest electronic equipment and are willing to pay for it

• They live in the moment• Free spending helps to improve their image• Concerned about looking young but don’t exercise

regularly or eat a balanced diet• Like cable TV• Shop on the Internet more than ever

Source: Association of Hispanic Advertising Agencies

Average Annual Expenditures for Selected Goods

$- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000

Food

Housing

Apparel & Services

Transportation

Health Care

Entertainment

White Hispanic African American

Source: Hispanic Association on Corporate Responsibility http://www.aacc.nche.edu/hacr/demographics/expenditure_2.html

Market Place Myths

• We are living in a “post-ethnic”America

• Everyone has the basic target market profile

• The majority of young Hispanics only speak English and therefore only consume English language media

• Only older Hispanics consume Spanish-language media

Source: Association of Hispanic Advertising Agencies

Segmentation

• Rating scale of consumer preferences based on languageSpanish onlySpanish preferredTrue bilingualsEnglish preferredEnglish only

Source: Marketing to American Hispanics

Segment Specific Campaign

• English preferred

Segment Specific Campaign

• Spanish Preferred

• Spanish solidifies a connection to their country of origin

Current Situation

• Many businesses are afraid of doing the wrong thing in their efforts to target Hispanics

• Strong racial divides in society are now being replaced by more nuanced views

Source: Association of Hispanic Advertising Agencies

“In-Culture” Marketing

• Strong identification with what mainstream Americans consider “traditional values”strong commitment to family, religion and heritage

• Each Hispanic group is distinct and possess different customs and idiosyncrasies

• Pronunciations are different depending on the country of origin

• Challenge is how to communicate one common message to these different Hispanic groups

Source: Hispanic-Market.com

“In-Culture” Marketing

• Hispanic groups tend to share similarities in terms of values, beliefs, culture, and self-perception

• Creative communication that captures the relevant emotional triggers of a realistic Hispanic lifestyle will convey a memorable message

• An effective marketing goal should be to create the appropriate marketing message so you can connect with this diverse yet unique group

“In-Culture” Marketing• High level of loyalty to Hispanic spokespersons,

celebrities, and sponsors• Adherence to the familiar due to limited brand

choices in country of origindetergent Ariel

• Always searching for new product and service informationcoupons, flyer, etc.

Source: Hispanic-Market.com

Only Your Client Can Determine When his/her Small Business

should Target the Hispanic Niche

What are some tools in helping your clients target this consumer

niche?

Essential Sources

• 2000 U.S. Hispanic MarketStrategy Research Corporationwww.strategyresearch.com

• Marketing To American LatinosBy Isabel ValdésParamount Marketing Publishing

• Hispanic Market Handbook By Isabel Valdés & Marta Seoane Gale Research

Tools

• Refer to SBDCNET website http://sbdcnet.utsa.edu

Questions

Thank You