Over 315 million people and counting! That is the approximate population of the United States, which has increased by nearly 100 million people in the past 30 years. And while this comes with little surprise, there is no denying the demographics of our population are on the move.
Again, this should come as no surprise. We know the US population is changing. Caucasians will become the minorities, baby boomers are reaching retirement age, and the definition of a traditional family is undergoing revision. The same trends are also visible in the Canadian population.
But what does that mean for business? How will these trends affect your business planning and strategy? The implications are rather straight forward, but a closer look at the numbers might make for a more compelling case. Today’s topic is the US Hispanic market.
Hispanics are here to Stay
The US population is changing from Caucasian-dominant to minority-dominant. The United States Census Bureau estimates that…
By 2043, the US population will be composed of a majority of minorities instead of a majority of whites.
This growth can be attributed to immigration and a growing birth rate for minorities. Last year the number of minority births surpassed the number of Caucasian births in the US for the first time, with over 50% of births in the US now coming from minorities.
The largest population increase will come from the Hispanic group, which numbered about 53 million last year. This population is expected to more than double by 2060, to nearly 130 million people. To put this figure in perspective,
1 out of 3 people in the United States will be of Hispanic descent.
In the last decade, over 50% of the US population growth can be credited to Hispanics. From 2011 to 2016, 60% of the growth in US population will be attributed to Hispanics.
This growth has been and will be seen mainly in states with large existing Hispanic markets: California, Texas, Florida, New York, and Illinois. However, the Hispanic population is growing quickly in many other states as well, such as Washington, New Jersey, and Colorado.
Did you know?
1 out of every 4children in the US is of Hispanic descent, almost a 40% increase during the last decade.
Simply put, the growing Hispanic population translates to the fastest growing consumer market in the US. Victor Paredes, vice president at the advertising agency LatinWorks, puts it clearly:
“If one in four kids is Hispanic, that’s not a business opportunity, that’s a business imperative.”
The same minority growth trends are also visible in Canada, except the majority of minorities are of Asian descent rather than Hispanic descent. Even so, in the next 20 years, the proportion of Canadian minorities is expected to rise from 16% to over 30% of the entire population.
Although Canada is a relatively small country speaking in terms of population, there are ample opportunities for increased commerce, in both the US and Canada, if we understand and take advantage of these trends.
For example, 2/3 of all population growth in Canada is fueled by immigration today. 20 years from now, that number may be closer to 80%.
Increase in Purchasing Power Warrants Attention for Marketers
Companies are already taking advantage of the opportunities the increasing Hispanic population presents, and are specifically targeting Hispanics because of increased purchasing power.From 1990 through 2013, the purchasing power of Hispanics is expected to increase by over 550%, compared to only a
bout 230% for the rest of the US population. By 2015, this purchasing power of Hispanics in the US will amount to approximately $1.5 trillion USD.
Big marketers are already well aware of the growing Hispanic population and spending power, and have been ramping up their efforts of late. According to AHAA, Hispanic advertising is growing at a rate 4 times faster than all other advertising sectors.
In a single month last year, Hispanic Ad-Spend Growth rates increased by over 20%, compared to less than 2% for non-Hispanic markets.Even CNN is getting in on the action. Later this month, the news giant is scheduled to launch a new channel CNN Latino, aimed at the broad Hispanic population. This is an addition to CNN espanol, which is an active fulltime newscast in Spanish.
Did you know?
1 out of every 4new businesses in the United States is of Hispanic ownership. This means that the opportunities for sales exist not only in Hispanic consumer markets, but also in business to business (B2B) markets.
Different Spending Patterns
Hispanic spending patterns differ from traditional American spending patterns. According to Nielsen, the average Hispanic consumer is only 28 years of age, almost 10 years younger than the US average of 37 years.
Hispanics are actually very tech-savvy consumers, partly due to their relatively younger ages. They seem to adopt technology well, as nearly 60% of Hispanics own smartphones, compared to less than 50% for the rest of the US population. It is estimated that Hispanic smartphone users also watch an average of 70% more online videos compared to non-Hispanic whites.
In addition, 16% of Hispanic consumers make purchases on their mobile devices, compared to only 10% of Caucasians.
Nielsen also reports that “Latinos exhibit distinct product consumption patterns and are not buying in ways that are the same as the total market. Hispanics make fewer shopping trips per household than non-Hispanics, for instance, and spend more per trip.”
So What Can Your Business Do?
The time to look at your options isn’t tomorrow, it’s today. By being an early accommodator of Hispanic needs and desires, could your business take off in a whole new direction?
A recent blog on the New York Times highlighted a major problem that businesses, and in particular marketers, are having: apprehension or indecisiveness when reaching out to the Hispanic community.
Juan Tornoe, writer of marketing blog Hispanic Trending and CMO of Cultural Strategies, says that businesses shouldn’t be apprehensive when reaching out, and shouldn’t feel conscious about advertising only in Spanish.
The fact is that the majority of Hispanic growth is now coming from 2nd, 3rd, and 4th generation Hispanic-Americans born in the US, many of whom may actually be offended if you only try to interact with them in Spanish.
Rather than using all-out Spanish advertisements, Juan suggests making subtle but meaningful changes to English versions of the ad that will mesh well with Hispanic ideals. He gives an example of a particularly well-done commercial by Volkswagen, titled Vamonos. It’s important to understand that advertising in Spanish is not imperative!
Simply reaching out to the Hispanic community is the 2nd step.
This is the 1st step
If you’re genuinely interested in tapping into the Hispanic market for larger profits, then I strongly suggest learning about the Hispanic culture. The same goes for any cultural market you are trying to approach.
Cultural competence will pay off in this case – knowing your market is the most important thing you can do. Learn about the Hispanic market, speak with Hispanics in your community, and understand their lifestyles and family structures.
Like any market segment, by better understanding the Hispanic community, you can angle your products and services to better meet their needs. A recent blog post about effective communication in global business is also pertinent to the Hispanic market in the US.
What do you think? Was there something I missed or something you’d like to add? Please leave a reply or contact us on social media. @antvibes @jonvisaisouk
This is part 1 of a series titled “US Population Trends Affecting Business”.
Photos: http://www.joshrimer.com, http://www.theperezfactor.com, http://politicker.com