When targeting the multicultural market, race and ethnicity are becoming less important than education, income, home ownership, age and lifestyles. Hispanics, African-Americans and Asian-Americans are moving to middle-class suburbs and prosperous neighborhoods, and are identified more by their lifestyles and spending habits than by their ancestry.
The composition of the Hispanic population is shifting. Hispanics now account for 13.7% of the total population. The “new dynamics” of the Hispanic market hinge on the emerging second and third generations, native- and foreign-born differences, and broad geographic growth.
The Hispanic Consumer now constitutes the largest minority group in the United States, according to the U.S. Census Bureau, comprising 13 percent of the population, or 39 million people. Moreover, their buying power has nearly tripled, from $222 billion in 1990 to $653 billion in 2003, according to a University of Georgia report.
The spending power of the U.S. Hispanic Consumer is also increasing. The median income of Hispanic households rose 20 percent from $27,977 to $33,565 between 1996 and 2001, while the median for all U.S. households climbed just 6 percent.
“Whether a Latino household wants to buy a lawn mower has less to do with their ethnicity than if they happen to be homeowners,” says Michael Mancini of Claritas. The two great forces, age and diversity, have rendered the traditional marketing categories irrelevant in many cases.
One of the most common mistakes advertising executives make when marketing to a Hispanic consumer is assuming that the U.S. Hispanic population is homogeneous.
As National Hispanic Heritage Month is underway to recognize the impact of Hispanic culture in the United States, the Nielsen Company provides insight into the shopping behavior of Hispanic consumers, a collective buying power of nearly $1 trillion.
Hispanic Consumer Shopping Behavior Insights
“It is critical for retailers and marketers to understand the wide range of factors driving Hispanic consumers’ shopping behavior,” said Tim Kregor, president, Nielsen Consumer Panel Services. “By understanding what Hispanic consumers are buying, where they’re buying it, how they’re buying it and why, retailers and marketers can adapt product offerings and promotions to ultimately better satisfy this rapidly growing and diverse consumer segment.”
Hispanic Consumer Shopping Behavior Insights on Brand Loyalty
Nielsen Homescan research across multiple product categories shows that as Hispanics become more acculturated, there is less evidence of brand loyalty. For example, select brand/flavors of carbonated soft drinks shows that 33 percent of English language-only/preferred Hispanics met their needs with a particular cola, while nearly 70 percent of Spanish language-preferred homes fulfilled their carbonated beverage requirements with the identical brand. Similar trends were noted for other categories, such as laundry detergent, cereal, toothpaste and beer. In this example, language serves as the primary measure of determining acculturation level, which influences Hispanic consumers’ brand loyalty and shopping habits.
“When it comes to brand loyalty and the Hispanic consumer, the key learning for marketers is understanding the importance of building a brand relationship during the initial stages of acculturation and maintaining this connection as Hispanics’ integration to American life increases,” said Kregor.
Hispanic Consumer Shopping Behavior Insights: A Touch of Home
Nielsen finds there is a preference among Hispanics to shop at stores that resonate with the sights, sounds, smells and sensibilities of their homeland. This sense of nostalgia helps create an important connection with the Hispanic consumer. Retailers can create a familiar sense of community and comfort zone for consumers through product assortment, importing specialty lines and stocking items with bilingual packaging, hiring bilingual employees, posting bilingual signage and distributing bilingual coupons.
Hispanic Consumer Shopping Behavior Insights: Shopping a Family Affair
For Hispanic consumers, shopping can be a family affair, an outing for all ages from abuelos (grandparents) to ninos (children). Retailers wanting to attract the attention of the Hispanic consumer would benefit from creating a family-friendly atmosphere, such as balloons and providing rest areas for seniors. And, while respect is a fundamental of customer relations across the board, there is a certain reverence extended to elders within the Hispanic culture that should be reflected in staff dealings with older shoppers. “This can be as simple as offering an arm to an unsteady patron navigating the aisle, or selecting hard-to-reach items for their cart.”
In addition to maintaining tight-knit family units and neighborhoods, many Hispanics make a concerted effort to keep in touch with those living in their homelands. According to Scarborough Research, a service of The Nielsen Company, Hispanics of all language preference are heavy users of phone service, 95 percent more likely than the average consumer to have spent $100 on long distance, and 18 percent more likely to have rung up a cell phone bill of $150 or more during the last month. Searching for a more favorable deal, Hispanic consumers are more likely to plan on switching cellular providers during the next year, and 11 percent more likely to use a prepaid cellular plan.
When it comes to Internet purchases, Scarborough Research finds that roughly 25 percent of Hispanic Internet users purchased airline tickets, books and clothing/accessories online in the past year, with six percent spending more than $2,500 online during that time.
Hispanic Consumer Shopping Behavior Insights: Media Views
Between 2000 and 2007, Nielsen Media Research estimates the number of Hispanic TV households expanded by one-third, from 8.7 million to 11.6 million. Concurrently, all demographic groups decreased slightly for Hispanics, except adults ages 18 and up, which increased slightly. While cable and pay cable gained popularity among Hispanic viewers, VCR ownership slipped.
TV usage habits parallel that of the average household, with Hispanic homes tuning in 58 hours and 39 seconds per week, slightly more than the 57 hours and 39 seconds of the composite finding. Hispanics scored lower on viewing per TV households as well, for every measure except children ages 2 – 11, who watched a mere one minute more than the composite result per week.
Source: Hispanic PR Wire
Hispanic travel increased by 20 percent from 2000-2002, outpacing other minorities and growing 10 times the overall rate for the traveling population as a whole. As the Hispanic population grows, so does their amount of travel. They are taking more trips, spending more money. Airlines, hotels, convention and visitor bureaus have all caught on and are starting to work to attract Hispanic consumers. Hispanics are interested in learning more about other cultures and have money to spend. While before, they may have traveled closer home and taken more low-key vacations, today they seem to be traveling more and farther to explore and broaden their horizons.
• Hispanic travel volume was up 20 percent from 2000 to 2002 (increasing from 64.1 million to 77.1 million person-trips), much higher than the two percent growth of travelers overall
• A majority of Hispanic person-trips are for leisure (77%), of which visiting friends or relatives is the ultimate goal for many (43%)
• Entertainment trips (16%) and outdoor recreation (8%) make up smaller shares of Hispanic person-trips
Hispanic Travel Market Research
• The states that attract the greatest number of Hispanic travelers include California, Texas and Florida. Nevada, Arizona, and New Mexico are also popular destinations
• Hispanic households spend an average of $480 on a trip, excluding spending on transportation to their destination
• One third (33%) of trips by Hispanic households include children under 18 years old, significantly higher than for overall traveling households in the U.S. (24%)
I find it interesting that some market research agencies recently discovered what Hispanic marketers have known for quite some time. Give Hispanics a product to be rated, and you will get much better marks than with non-Hispanics. Ask them to tell you what is wrong with it, and you may end up getting a list longer than a mile! That is the reason many good Hispanic Market research specialists will add open-ended questions to help qualify the close-ended ones or take different approaches to research altogether.
Why the contradiction? It’s in the culture. Read more about it in the following article:
Results Could Have a Significant Effect on the Products Targeted to Hispanics in the Future.
Hispanics, especially those who are more recent arrivals, give higher ratings in product surveys than their non-Hispanic counterparts, according to a study designed by Jeffry Savitz, President of Savitz Research Companies and Professor of Marketing Research at the University of North Texas. The study found that Hispanics rate products significantly higher than what they may actually feel. In the study, Hispanics and non-Hispanics were asked to assign a numeric value to five rating labels using a scale of 0-100 with 100 being the best. The rating labels, “Excellent,” “Very good,” “Good,” “Neither Good nor Poor” and “Poor” are common in survey research. Hispanics consistently gave higher marks than their non-Hispanic counterparts to each label except “poor.” The average difference was 5.9 making it statistically significant.
In this landmark study, Professor Jeffry Savitz a graduate of Columbia University, found that Hispanics rated Tylenol 85.7, significantly higher than non-Hispanics at 80.6 implying Hispanics favor the brand. However, after the adjustment of 5.9 points, the ratings were at parity. Among cellular providers, ratings of Verizon, 65.4 and 68.1, were similar. After the adjustment was applied, however, the ratings indicated that Hispanics do not like this provider nearly as much, 59.5 versus 68.1. In the soft drink category, Hispanics rated Fanta 80.0 versus non-Hispanics at 57.6, a highly significant difference. Even after the adjustment the result was still significant implying Hispanics are more favorable toward Fanta.
Hispanics Rate Products Significantly Higher than non-Hispanics
The results of the study have significant implications on multicultural advertising and marketing as well as which products and services should be offered to Hispanics. “This study finally sheds light on the reason some Hispanic research ends up with faulty conclusions or results. This ‘cultural lift’ must be taken into account,” says Juan Faura, author of two books on Hispanic marketing. “Hispanics are taught from an early age that it is in poor taste or inappropriate to openly criticize or berate when asked their opinions.” Savitz says, “The article discusses levels of acculturation, consumption of Hispanic media and country of origin, but more research is needed to measure the effect of the ‘cultural lift’ on various categories and other factors.”
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The rapid expansion of Hispanics into American suburbs presents sizable opportunities for marketers who understand the rich cultural diversity and purchasing attitudes of this segment, according to the latest Consumer Dynamics study from Acxiom® Corporation.
The study, titled “Getting Into the Market Share Race With the Emerging Hispburbanite Market,” taps into the explosive growth centered in 10 markets.
Emerging U.S. Hispanic Market:
Little Rock, AR
The study reveals:
Hispanic suburban expansion is projected to continue.
The Hispanic market encompasses four distinct Hispburbanite groups.
Marketers have above average growth opportunities in areas with high concentrations of Hispanics.
Marketers should segment this culturally diverse group for maximum marketing impact.
The study shows Hispburbanites differ from Hispanics living in the main port-of-entry cities of New York, Los Angeles and Miami as they tend to be younger, more acculturated, single and wealthier. They tend to fall into four distinct groups:
Upstarts and Upbringing – Made up of some of the younger Hispanic households, this is the most acculturated of all groups. They primarily speak English away from home and are a mix of singles and recently married couples, some with young children.
Trendy Traditions – A somewhat younger mix, this group is mostly single and childless. Though slightly less acculturated than Upstarts and Upbringing, this group prefers American name brands and brand-name bargains.
Recent Arrivals –The least acculturated of all groups, these households more frequently comprise immigrants who have resided less than 10 years in the United States. They prefer to speak Spanish at home and away, and are primarily single renters with low to middle incomes.
White Picket Fences – A married and single mix of adults with above-average income makes up this group. Often owning their own homes, these households are more comfortable with financial institutions than other groups and are building net worth. This group is primarily English speaking and while they do save, their incomes allow for plentiful shopping, especially for jewelry and business clothing.
Overall, Hispburbanites tend to be mostly second- and third-generation Hispanics with increasing consumer buying power. “This market represents tremendous opportunity for companies across industries,” said the Acxiom’s senior manager for analytic, geospatial and segmentation products. “Segmentation allows marketers to target initiatives that encompass cultural preferences based on the characteristics of the defined consumer groups.
“Intelligent marketing decisions will maximize results, greatly improving return on marketing dollars spent,” he added. “At a time when marketers are under intense scrutiny to produce measurable results, this study provides invaluable consumer insights.”
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Hispanic Marketing Blog is an initiative of Target Latino, a Hispanic Inbound Marketing consulting firm. Research, Social Media, Culture, SEO, Conversion & Pinterest Strategies.
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