Any group of people that represents 17 percent of the U.S. population definitely deserves attention from major brands. Even more important than the growth of the population, for marketers it’s extremely crucial to understand the magnitude of the purchasing power Hispanics currently hold. According to recent estimates, by 2014 Latinos will represent a $1.3 trillion opportunity for marketers, which will be an increase of about 31 percent in purchasing power over six years (it was $997 billion in 2009). But how do you best use your marketing dollars to reach a group of more than 53 million people? As we mentioned in our last blog, while we do have similarities, Latinos are not all the same. We come from 20+ nationalities, and depending on the region of the U.S. you’re targeting, the Hispanic demographic will change. There are, however, three “sub-groups” marketers need to pay close attention to, as well as a trend that provides a cultural thread to reach them. Let’s examine these three “sub-groups” and their purchasing power:
- Latinas: Okay, so we’re not all Sofia Vergara, but we are just as influential. Nielsen recently published a report showcasing how Hispanic women are outpacing Hispanic males in education and career growth, and have become the primary decision-makers in their homes. Overall, Latinas are the key to reaching the Hispanic family. However, we’re not just a marketing powerhouse within the Hispanic segment – keep an eye on us as we become a larger part of the general population. By 2060, we are expected to become 30 percent of the total female population, while non-Hispanic white females are expected to drop to 43 percent. A key trend among Latinas, is that we’re shifting from caretaker to bread winner. According to Nielsen, as part of this power shift, households with Latinas over the age of 18 making $75,000 or more has increased by five percent over the past 10 years.
- Upscale Latinos. While Latinas are growing in size, “Upscale Latinos” are increasing in spending power. This sub-group, defined by Nielsen and the Association of Hispanic Advertising Agencies as households with an annual income of $50k-$100k, controls about $4 out of every $10 Hispanics spend. For marketers it’s important to note though that they differ greatly from the upscale non-Hispanic whites. This group of Latinos is much younger by an average of six years, and is more family oriented – 85 percent of them have a household of three or more, compared with only 65 percent of upscale non-Hispanics.
- Hispanic Millennials. Latinos between the ages of 18 and 29 are considered to be part of the Millennial generation, being the first generation of Hispanics that is predominantly U.S. born. In the next few years, they will account for 80 percent of the total growth of this age segment. They are primarily native-born, embracing some of the key Millennial values of risk aversion and seeking balance, yet at the same time holding on to their culture and Latino identity. The majority are more likely to identify with their parents country of origin or the terms “Hispanic” or “Latino,” than “American.” They have high aspirations for career success and believe in the rewards of hard work. And when it comes to traditional foods, they enjoy not just eating them, but almost half in this demographic buy more Hispanic foods and products than American ones. And let’s not forget they’re heavily digitally connected, even more so than other Millennials, as they are nearly 66 percent more likely to connect via mobile than non-Hispanic whites. How does this translate in term of purchasing power? If we take a closer look at the household income where Hispanic Millennials are head of the household, Nielsen reported a 10 percent increase in households earning more than $75K between 2003 and 2013, reaching 21 percent in 2013.
The evidence above highlights the spending power of Latinas, “Upscale Latinos” and Hispanic Millennials. Now we’re ready to examine a larger trend within the Hispanic segment that these three groups encompass – more Latinos see themselves as bicultural or “ambicultural.” They consider themselves 100 percent American and 100 percent Latino. This is key for marketers to internalize because it is not sufficient (or even effective) to simply use Spanish or throw in some “traditional” Latino customs into the marketing mix. The Latino audience is evolving. English is often becoming their primary language, especially among younger generations, which are mostly bilingual, with 70 percent speaking “Spanglish” with family and friends. Media consumption in English is growing as well, including comedies, documentary-style programming and children’s weekly programming. Nevertheless, Spanish-language is still preferred for media outreach and communications especially when it relates to special cultural events, sports and concerts. It’s important that you identify your segment audience, as one size does not fit all.
The marketers that understand (and internalize) the “ambicultural” nature of Latinos – how we move back and forth from “American” to “Hispanic” as we seek to embrace the best of both worlds – are the ones that will win over our hearts and minds.