How to Market to Hispanic Customers

March 20, 2012

Do your business’s marketing efforts target Hispanic customers? If not, you could be making a costly mistake. With $1.2 trillion in spending power in 2011, Hispanics are one-sixth of the U.S. population and the nation’s fastest-growing ethnic group. In California, Hispanics account for at least one-third of the population in every county and make $246 billion in consumer purchases annually. “The statistics speak for themselves as to the value of the Hispanic customer,” says SBDC Business Advisor Monica Rayes.

Within the overall Hispanic market, what are some important subcategories business owners should know about?
The U.S. Hispanic market is made up of over 20 Spanish-speaking countries spanning Central and South America, the Caribbean and Spain, with the majority (63 percent) of Hispanics of Mexican descent. In addition to heritage, Rayes notes, there are also generational differences to consider. Native-born Hispanics (born outside the U.S.) primarily speak Spanish and tend to patronize businesses that specifically cater to Hispanics with Spanish-speaking staff. First-generation Hispanics (the first generation in their families born in the U.S.) are usually bilingual, but still very much in tune with their heritage and strongly influenced by older generations. “Second- and third-generation Hispanics are typically bilingual and fully acculturated to the U.S.,” says Rayes. “However, their Hispanic roots still play an influential role in their lives.”

How can a small business owner assess the Hispanic population’s potential as a market for his or her product or service?
Use market analysis and research to assess the Hispanic population’s market potential and determine the marketing methods that will resonate with this audience, says SBDC Business Advisor Johanna Hulme. “Test your product or service with focus groups to evaluate demographic messaging recall, consumer association and brand connection with messaging,” Hulme suggests.

Once a small business owner decides to target Hispanic consumers, what are the first steps to take?
Understanding your target demographic is the most important first step. “For example, if the demographic you are targeting is primarily from Central America or South America, it would be wise to learn a bit about that particular culture and adapt your marketing strategy accordingly,” Hulme says.

How do the particular subcategories you are targeting influence your marketing tactics?
It’s important to identify your target market and the subcategory they belong to. “If your audience is native born, the ads should be in Spanish and include references to heritage and culture that are important to that demographic,” explains Hulme. A U.S.-born Latino, by contrast, will prefer bilingual or “Spanglish” ad campaigns. Regardless of generation or country of origin, says Hulme, “all Latinos share profound characteristics such as the importance of family, product value and consumer loyalty.”

What mistakes do small businesses make in marketing to Hispanic customers?
The most common error is underestimating the buying power of the Hispanic customer, says Rayes, adding that Hispanic household incomes average more than $100,000 and are growing at twice the rate of the general population’s incomes. “In addition, the Hispanic consumer is willing to try new products and services, with a tremendous level of loyalty and influence on their family members’ and friends’ purchasing decisions,” Rayes adds. Another common misconception is that Hispanics are only interested in “Latino” products or brands. In reality, they want to be offered both “Latino” and “American” products so that they can make an informed purchasing decision.

Which marketing or advertising channels work best in reaching the Hispanic consumer?
This depends on your specific target market, says Hulme. Native-born consumers respond to print ads, direct mail, in-store promotions and events where they can sample products or services and learn about them face-to-face. “Relationship building is vital with this audience,” Hulme explains. First-generation consumers prefer email, radio and TV, while second- and third-generation consumers respond to social media, email and TV. (Consider advertising on Spanish-speaking TV station Univision, the number-five network in the United States.)

Is marketing to Hispanic customers something small business owners can do on their own, or should they get professional help?
“If the business owner feels comfortable targeting this audience, or has direct input from the demographic they are targeting, hiring a professional may not be necessary,” says Rayes. However, she acknowledges that often, business owners feel intimidated and fear alienating consumers if they lack awareness of cultural nuances. If you don’t have a good understanding of the target market, Rayes says, consider seeking help from a resource such as the SBDC. With the right approach, “marketing to the Hispanic consumer is not as frightening or mysterious as one might think.”

Rieva Lesonsky is founder and President of GrowBiz Media, a media company that helps entrepreneurs start and grow their businesses. Before launching her business, she was Editorial Director of Entrepreneur Magazine. Follow Rieva at Twitter.com/Rieva, read her blog at SmallBizDaily.com, and visit her website SmallBizTrendCast.com to get the scoop on business trends and sign up for free TrendCast reports.