The Powerful Minority: The Financial Importance of the US Hispanic Population
As of 2010, the Hispanic community of America had increased to 50 million people, and accounted for approximately 16.3% of the United States population. Having grown by a staggering rate of 28.7% between the years of 2000 and 2007, Latinos now represent the largest minority in America. This figure is quite remarkable, particularly considering that the growth rate for the rest of the United States during this timeframe was 7.2%.
To put this simply, more than one of every two of the nation’s babies born between July 1st 2008 and July 1st 2009 was of Hispanic origin. This meant that an estimated 1.4 million Hispanics were added to the population of the United States during that year.
According to the U.S. Census Bureau, by 2050, the Hispanic population in America will have reached 132.8 million people, with Latinos making up 30% of the population.
What are the Commercial Implications?
With the Hispanic population growing in size and strength, their numbers could help determine the success or failure of a brand. Although this powerful minority may live in the United States, it is important to understand that this community has unique tastes and buying habits.
Therefore, the best way for firms to exploit this rapidly growing and lucrative market is to ensure that all products, services, and promotional materials have been fully localized for Hispanic consumption.
Recent research into the Latino consumer has revealed a distinct set of purchasing values. For instance, Hispanics are generally very close to their families, and are liable to purchase a product that will benefit the entire family as opposed to the individual. Similarly, Hispanics look for value for money with their acquisitions, and are inclined to spend more money on products that will last.
Finally, all Latinos, whether they originate from Mexico, Cuba, Puerto Rico, or the Dominican Republic, retain a strong sense of culture. Interestingly, these emotions have a positive impact on purchasing decisions, meaning that a localized product is more likely to appeal to the Hispanic community than a generic alternative.
The draw of Localization
Despite much of the Hispanic population being bilingual, many would still rather communicate in Spanish. This view is supported by findings from the Pew Research Centre, who note that Spanish-language news was televisions success story for 2010.
According to the data cited by Pew, Univision’s prime time viewing audience grew by 8%, and peaked at 1.9 million people in 2010. Univision now rivals ABC, CBS, and NBC in terms of audience size, with such viewing figures even encouraging Univision to launch a 24 hour Spanish news channel.
Surprisingly, Univision and Spanish language rival Telemundo were the only two broadcasters in the whole of America to enjoy rating gains this year. Their success clearly mirrors the overall population increase in the Hispanic community.
Yet, only 1.2% of a total $365 billion of the advertising budget in America is spent to target this community. This seems illogical, particularly when you look at the demographic of cities such as New York, Los Angeles, Chicago, and Houston, where the bourgeoning Hispanic society equates to approximately 29% of each population.
In response, Randy Falco, President and CEO of Univision, states that marketing experts need to realise that the Hispanic community is a “trillion dollar economy”. For instance, although Proctor and Gamble was the biggest spender in Hispanic specific media, their $197.7 million investment in 2010 only corresponded to 4% of their total budget of $4.61 billion.
Lili Gil from the Huffington Post believes that the Latino community could be a real vehicle for growth for American businesses. However, their success will be dependent on their ability to produce localized products, services, and brands that appeal to the thriving Hispanic economy.
Brands that have spent time and resources localizing their products, services, or advertising campaigns have found much success in the global market.
For instance, sportswear giant Nike have localized many of their advertising campaigns to directly appeal to the Chinese market. Their latest promotion even includes French Open Champion Li Na to help appeal to the Chinese consumer.
With Nike’s traditional “Just Do It” tagline having no meaningful Chinese translation, Nike opted for the localized “Use Sports”. The motivational television spot that accompanies this campaign is about “using sport” in China, or, according to Nike, “just doing it with Chinese characteristics”. The advert also makes several cultural references, including the use of a loudspeaker voiceover, which is intended to evoke images of morning exercise in Communist China.
This localization campaign has been a success for Nike, as China now accounts for 57% of their international revenue after apparel sales broke the $2 billion barrier.
Using Nike as a template, international firms need to accurately and meaningfully translate all marketing copy in order to connect with the Hispanic consumer. However, to fully penetrate the lucrative Hispanic market, businesses need to understand regional cultural values and unique purchasing habits.