Hispanic Marketing: Shifting Dynamics Lead to Growth in Finance, Nesting and Luxury Goods and Services
What consumer categories are seeing increased demand from Hispanics? We talked to Packaged Facts’s Daniel Grandson, Ana Crandell of OMD Multicultural and Isabella Sanchez of Zubi Advertising to find out.
1.Latinos Are Increasingly Adopting Financial Tools
A recently published study by research firm Packaged Facts has revealed data that should serve as further incentive to allocate significant time and money to targeting Hispanic consumers. One of the biggest takeaways from the report is that Hispanic consumers are increasingly adopting financial tools like credit cards. Packaged Facts analyst Daniel Granderson noted that “Hispanic consumers have recently registered an exceptionally high increase in credit card ownership, when historically they had a below-average tendency to own and use credit cards.”
US-Hispanics are also buying life, health and automobile insurance at a faster rate than non-Hispanic households. In fact, “Latino households were responsible for 65% of the growth in the number of households with automotive insurance, 52% of growth in the number of households with health insurance and 31% of growth in households with life insurance,” Granderson added.
2. Hispanics Buying More in ‘Nesting,’ Less in Household Products Categories
When it comes to allocating effort and budgets to reaching Hispanic consumers, Ana Crandell, Group Account Director at Optimum Media Direction (OMD) Multicultural (foto), asserts that she has seen increased interest in prioritizing Hispanic consumers across a wide range of sectors: “It really has been across the board, though I would say the retail and CPG categories seem to be the ones that are starting to allocate more of their marketing dollars toward this segment.”
Crandall’s observations go along with the Packaged Fact's study findings, as Granderson highlighted that a “noteworthy pattern in recent spending shifts on the part of Hispanic households is an increase in spending on goods and services, such as furniture and in-home entertainment equipment, that fall in the category of ‘nesting.’”
Hispanics have also increased spending on personal services like childcare, and are buying new instead of used cars at an increasing rate, reversing a long-standing trend.
3. Hispanic Americans’ Households Are Growing - Quickly
If we look at the math, Granderson says, it’s easy to understand why the Hispanic consumer has become a priority for any marketing strategist.
I would consider 2010 to represent the tipping point, when marketers finally started to proactively acknowledge the business opportunity this segment represents to their respective brands. This latest set of data just further validates this.
“Hispanic households have had and are likely to continue to have an outsize impact on growth in consumer spending in a wide variety of areas,” Granderson says, because Hispanic households are growing at a faster rate than non-Hispanic households, at 8.1% vs. 3.0%.
This is also true of the rates of spending when we look at Hispanics vs. non-Hispanics: while Hispanics still spend less than non-Hispanics, on average, between 2012 and 2015 average annual consumer expenditures by Hispanic households grew at a higher rate (9.7% vs. 8.6%). So this translates into a higher rate of growth in aggregate spending among Hispanics vs. non-Hispanics.
Crandell adds, “We started seeing a substantial increased interest in this particular segment immediately following the release of the last census, 6 years ago. In fact, I would consider 2010 to represent the tipping point, when marketers finally started to proactively acknowledge the business opportunity this segment represents to their respective brands. This latest set of data just further validates this."
4.Luxury Brands Want in on the Action
Isabella Sanchez, VP of media integration at Zubi Advertising (photo), affirmed that there is usually "renewed or refreshed interest" in Hispanic consumers whenever a census comes out. This particular report, Sanchez says, and its focus on Hispanics' increasing income, "is great affirmation to the diversity of the Hispanic market."
But that increasing income also means that luxury brands, which had operated under the assumption that Hispanics could not afford their products, have started singing a different tune.
The Hispanic market is not such a minority market anymore. Hispanics are the dominant market for the population segment in certain cities, and as companies look to grow their business, they’ve reached a point of saturation in the general market and may be as penetrated as they’re going to be. So the Hispanic market is the most logical...that’s where the growth is in every industry.
Sanchez highlights the case of Lincoln Motors, who turned to Zubi for support in a Hispanic marketing strategy to support their general campaign to compete with popular German brands like Mercedes-Benz and BMW.
Zubi's work for Lincoln has been "very successful," and serves as proof of the fact that Hispanic consumers are now a crucial demographic in the luxury market. Before, "luxury was under the impression that Hispanics could not afford these types of things, and that if they could, they could be reached with the general market advertising," Sanchez remembers. Not anymore.
Are Marketers Really Paying Attention?
While marketing professionals, agencies and brands have generally recognized that the Hispanic consumer represents a key demographic, it has been difficult to keep up with the evolution of Latinos in America today.
Marketing professionals that target Hispanics still seem to have an incomplete understanding of who those in this demographic really are and how they make their purchasing decisions, which is why marketers that specialize in multicultural or Hispanic targeting find significant demand for their services.
Zubi Advertising's Sanchez points out that the interest in the Hispanic consumer is nothing new, but that the key is that "the Hispanic market is not such a minority market anymore." Today, Hispanics comprise "the dominant market for the population segment in certain cities, and as companies look to grow their business, they’ve reached a point of saturation in the general market and may be as penetrated as they’re going to be. So the Hispanic market is the most logical...that’s where the growth is in every industry."
Crandell echoes that sentiment: “This is a very dynamic segment that is unlike any other and marketers are therefore continuously looking for a way to get a full grasp of what exactly it is that makes them so – and, more importantly, how to best engage with them.”
But she adds: “That said, I have definitely witnessed increased willingness among marketers to spend the necessary resources to gain a better understanding of them.”