Hispanic-Americans and Consumer Behavior

by Mike McCombe

Introduction

The Hispanic-American subculture in the United States is increasingly becoming more significant in the field of consumer behavior and marketing in general. The Hispanic-American subculture is a very different and diverse segment of the population, made up of many nationalities, including Mexicans, Puerto Ricans, Cubans, and many of the Central-American countries. However diverse, Hispanics are united in some important ways. The Spanish language, for example, is "the primary motivating factor behind Hispanic marketing," according to Roger Sennott, general manager for Market Development in San Diego (Braus). Hispanics are also united by their location within the United States.

Hispanic-Americans do have different preferences, values and attitudes towards a large variety of consumer products, compared to the "average" U.S. consumer, ranging from clothes and food to automobiles and housing. Hispanic-Americans also exhibit many different and unique purchasing patterns. Hispanic-American purchasing decisions are influenced due to different levels of education, income, and status. With this knowledge, marketing specifically towards the Hispanic-American market has become a very practical and profitable practice for many companies and organizations. "If you don't try to market to them, you're not going to get a share of that growth," according to Sennott (Braus).

Explanation of the Topic

With the collective purchasing power exceeding $350 billion, Hispanic-Americans are the fastest growing ethnic group in the United States, as of 1997, at 28.6 million people and rising (Hernandez). With this rising number of Hispanic-Americans, a rising number of marketing opportunities follow. Hispanic-Americans, while unique individuals, as a target market they have many similarities, such as location, purchasing habits, and certain values.

Fast growing and geographically concentrated. Marketers can reach Hispanic-Americans relatively easily. 90% are concentrated in only eight states, and 55% live in only two states - California and Texas (Braun). According to the Census 2000 figures released, California has now become the first big state with no racial majority. This means that the non-Hispanic white population has gone below 50%. Since 1970, the state's Hispanic population has more than quadrupled from 2.4 million to 10.9 million (USA Today). This shows how Hispanic-Americans tend to locate together to form and retain cultural communities. "Population data available on 41 states so far shows that the average non-Hispanic white lives in a neighborhood that is 6.3% Hispanic," Logan says. "But the average Hispanic lives in a neighborhood that is 44% Hispanic. Such disproportion runs deep in metropolitan areas," (USA Today). With such rapid growth in the Hispanic-American population, and its highly concentrated population within the country, ignoring this market segment could be costly. "Any transcultural research firm wishing to compete in the 21st century will need to reflect the changing competitive landscape in the Hispanic-American market. The face of Hispanic-American consumers is changing at an exponential rate, and the transcultural research companies of the future will need to keep pace with that change" says Juan Faura, research manager, business development at Cheskin Research, a marketing research firm based in Redwood Shores, California (Faura).

Family-oriented values. Hispanic-Americans tend to be very family orientated consumers, with good reason. A full 47 percent of these consumers live in households with an average of two persons under the age of 18(Braun). This is well above the national average. Laura Teller, chief executive officer of Miami-based Demo-Graph states "Grocery and clothing expenditures are higher due to the size of the households" citing the fact that minorities have more family members in the average households. Multicultural households also have more people contributing to the family income, especially Hispanic homes, she added (McGuire).

Younger than the general population. The Hispanic-American consumer also tends to be younger than the average U.S. consumer. According to census figures, Hispanics are the youngest consumer segment-more than 60% of Hispanic consumers are younger than 44 years of age (Faura). As of 1997, the 25-year old median age of the entire Hispanic-American market is younger than the general consumer market of 33 years (Hernandez).

According to Robert Hernandez, there are six main marketing preferences of Hispanic-Americans:

	They prefer bilingual messages to all-English, even when English is perfectly understood. Even all-Spanish messages only work if the target has a high concentration of Spanish speakers.
	They are fiercely brand loyal, much more so than Whites or African-Americans. Similarly, Hispanic American attitudes include strong belief in self-determination that your own hard work makes your success.
	At 10% of the U.S. population, this is a market proud of its ethnicity, but responsive mainly to messages and images emphasizing family, heritage and consumer value.
	They do not respond well to multicultural marketing campaigns that lump them in with other ethnic categories. This is a problem for ad campaigns that are politically correct, presenting equal representations, which are regarded by Hispanics with some disdain.
	Hispanic-Americans are more likely to respond strongly to direct mail and other less traditional media. In a recent Direct Marketing Association Council study, more than 40% of respondents made purchases offered by mail, because it was less threatening than in-store consumption. Many Hispanic-American consumers dislike the pressure they feel from salespeople in face-to-face situations.
	Word-of-mouth recommendations take on heavy importance in a group where marketing efforts rarely target them directly. Family has heavier-than-usual effect in this demographic. Parents and grandparents have a major influence on the products their children will buy as adults (Hernandez).

Examples

The First Consumers National Bank in Beaverton, Oregon, has targeted the Hispanic-American target market and has come up with a new affinity card called "Adelante" targeted to the Hispanic-American community. The bank designed the card to provide Hispanic-Americans with a bankcard specifically designed to meet their needs by offering competitively priced credit products. In addition to providing both secured and unsecured credit card programs, the bank is committed to funding Hispanic scholarships with earnings from the card. The First National Bank will make a donation to Hispanic scholarship funds for each approved account and make contributions from program revenues. The bank has also set up a dedicated toll-free number that will be answered by bilingual customer service representatives for this program (Bank Marketing).
Many major clothing retailers are also marketing specifically towards Hispanic-Americans stores like Nordstrom and J.C. Penney have recognized the Hispanic consumer and go out of their way to market to them. Both do a lot of Spanish language advertising in radio, Television, and print. J.C. Penney has a line called "Selena" for the Hispanic shopper. "We tailor our merchandise to Hispanic women in areas of the country that have a heavy Spanish concentration," says Theda Page Whitehead, spokesperson for J.C. Penney (CottonInc.)

Relevant Web Sites

The following web sites contain relevance to the Hispanic-American Subculture and/or are mentioned in this tutorial.

Austin Business Journal
http://austin.bcentral.com

Census
http://www.census.gov

Cotton
http://www.cottoninc.com

Hispanic Online
http://www.hispaniconline.com

J.C. Penney
http://www.jcpenneyinc.com

Latina Style
http://www.latinastyle.com

Nordstrom
http://store.nordstrom.com

References

Anonymous (1993) "Banks use co-branding to win customer loyalty, sell products," Bank Marketing v25n6 P19 (June 1993)

Anonymous (2001) "Hispanic Growth Reveals Isolation Trend Might Take Place," USA Today [Online](March 26, 2001)
http://www.hispaniconline.com/article.html?SMContentIndex=2&SMContentSet=0

Anonymous (2001) "Calif. Racial Data Shifts Becomes the First Big State with No Ethnic Majority," USA Today [Online] (March 30, 2001)
http://www.hispaniconline.com/article.html?SMContentIndex=0&SMContentSet=0

Braun, Harvey D. (1991) "Marketing to Minority Consumers," Discount Merchandiser v31n2 P 44-46, 74 (Feb 1991)

Braus, Patricia (1993) "What Does 'Hispanic' Mean?" American Demographics [Online](June 1993)
http://www.marketingtools.com/publications/ad/93_ad/9306_ad/ad204.htm

Cotton (1998) "Latina Clothing Lovers" Sept. 10, 1998 [Online]
http://www.cotton.com/wwd/homepage.cfm?PAGE=864

Faura, Juan (1999) "Transcultural marketing no longer an afterthought," Marketing News v33n1 P16, 22 (Jan 4, 1999)

Hernandez, Robert (1997) "Tapping growing Hispanic market means understanding the culture," Austin Business Journal (Nov 7, 1999)[Online] http://austin.bcentral.com/austin/stories/1997/11/10/smallb5.htm

McGuire, Tom (1998) "Ethnics outspend in areas," American Demographics v20n12 P 12-13 (Dec 1998)

Test for Understanding

1. The first big state with no ethnic majority according to the 2000 Census is:
A. Alaska
B. California
C. New York
D. Texas

2. Compared to the average age of the U.S. population, Hispanic-Americans tend to be:
A. Younger
B. The same
C. Older

3. According to Robert Hernandez, Hispanic-American consumers respond to this:
A. Family
B. Heritage
C. Consumer Value
D. All of the above

4. As of 1997, the total purchasing power of Hispanic-Americans was:
A. $350 thousand
B. $350 million
C. $350 billion
D. $350 trillion

5. This nationality is included in the Hispanic-American Subculture:
A. Mexicans
B. Cubans
C. Puerto Ricans
D. All of the above

scroll down for answers....

keep scrolling....

Answers: B, A, D, C, D