Academic journal article The McKinsey Quarterly

Marketing to the Hispanic Consumer

Academic journal article The McKinsey Quarterly

Marketing to the Hispanic Consumer

Article excerpt

Step one: find your language

Then recognized the "acculturated" segment

The best marketers create a bond through their products

In marketing its Nova sedan in Latin America, Chevrolet overlooked the fact that in Spanish, "no va" means "doesn't go." And when the US Milk Board translated its "Got milk?" campaign for Hispanic consumers, it accidentally asked them if they were lactating. People rarely make such embarrassing mistakes twice. Yet in their pitches to the United States' large Hispanic population, marketers continue to make an error that is more fundamental and more costly than simply mistranslating advertising copy.

Every year, US marketers lose millions - perhaps billions - of dollars in sales by misunderstanding their country's Hispanic market and clinging to a simplistic notion of its structure. Many see the market as comprising two groups: an isolated segment that speaks only Spanish, and an assimilated English-speaking segment whose preferences are barely distinguishable from those of the general consumer market. Adherence to this "bipolar" view causes marketers to overlook the vast majority of consumers who speak both English and Spanish and make up a third, acculturated segment (Exhibit 1).

[TABULAR DATA FOR EXHIBIT 1 OMITTED]

The acculturated segment is the largest and fastest-growing of the three groups, currently accounting for 57 percent of the Hispanic market and on course to take 67 percent by 2010 [ILLUSTRATION FOR EXHIBIT 2 OMITTED]. To serve it, marketers must approach it in a way that considers its particular needs and preferences. Above all, they need to project an identity that is Hispanic and American in equal measure.

Sizing up the market

Why target the Hispanic market? For most marketers, the reasons are size, growth rate, geographic concentration, and purchasing power:

Big, and getting bigger. There are almost 30 million US Hispanics, 11 percent of the total population. This proportion will rise to about 14 percent by 2010. Hispanics are expected to account for 40 percent of US population growth between 1995 and 2010.

Young. Almost 70 percent of US Hispanics are under 35, compared with less than 50 percent of non-Hispanics. Their median age is 26, against 35 for the rest of the population. Their relative youth is likely to furnish growth opportunities for marketers of "young" products such as music, entertainment, fashion, and fast food, and, as they age, of "life-stage" products such as minivans and home improvement items.

Rising income. Although median household income is 30 percent lower for Hispanics ($27,000 against $38,000), the gap will shrink as the percentage of Hispanics of working age increases and the proportion of those born and educated in the United States rises in relation to the proportion who arrived as immigrants. Over the past five years, Hispanic purchasing power has risen at a compound annual growth rate of 7.5 percent, compared with 4.9 percent for the rest of the population. Total US Hispanic purchasing power exceeded $350 billion in 1997 - greater than that of any Latin American country except Brazil.

Geographic concentration. Hispanics are tightly concentrated geographically. The 12 metropolitan areas they most favor accommodate 70 percent of all US Hispanics, but less than 30 percent of the total population. In fact, more than half of US Hispanics live in two states, California and Texas. These dense concentrations make it easier for them to maintain their own culture and institutions. They also make marketers' jobs easier.

Understanding the consumer

Some marketers view the Hispanic market as a monolithic entity that can be reached simply by advertising in Spanish. While this tack may work for certain products with immigrant Hispanics, it does not work with the majority of US Hispanics who were born or reared in the United States.

The bipolar view of the market is more sophisticated in that it recognizes variations in levels of assimilation. …

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