Viewpoint -- A Powerful Latino Market Cannot Be Ignored

Almost 7% of the nation's 23 million firms are Latino-owned -- the largest percentage of any minority group.

Latinos' commercial influence continues to grow as well. Almost 7% of the nation's 23 million firms are Latino-owned -- the largest percentage of any minority group -- with growth three times the national average for all businesses. These companies are spending in excess of $200 billion annually on procuring goods and services.

The 47 million-plus Hispanic population in the U.S. accounts for 15% of the total U.S. population and have spending power of $850 billion. Projections show that figure is likely to exceed $1 trillion by 2010. From 2000 to 2006, their purchasing power climbed more than 63%, to $798 billion. By 2011, it will top $1.2 trillion, according to the University of Georgia's Selig Center for Economic Growth.

It is a market that cannot be ignored or treated like "business as usual," and a number of firms have found great success addressing it. Yet, many American companies still seem reluctant to fully invest in promoting their brands and capturing share. Major manufacturers and service providers have only taken baby steps at shifting investments toward the Latino market

Latinos' commercial influence continues to grow as well. Almost 7% of the nation's 23 million firms are Latino-owned -- the largest percentage of any minority group -- with growth three times the national average for all businesses. These companies are spending in excess of $200 billion annually on procuring goods and services.

Why so? It could be a lack of corporate commitment to strategically target the Hispanic market or perhaps a resistance to the requirements of marketing to Latinos. It could be a simple fear of the unknown.

Still, there are many attractive elements of this market that many businesses can leverage. For example, Latino demographics skew younger than the U.S. population -- with a particularly strong youth market. Latinos also comprise a substantial urban population concentration that allows relatively easy geographic and age-group targeting.

According to the Association of Hispanic Advertising Agencies, the industries that are leaders in marketing to Latinos are food and beverage products, food services, telecommunications, personal care and insurance. The laggards are pharmaceuticals, auto makers, travel/entertainment, software, computer makers, securities/financial services and specialty retail.

Those who are anxious to tap the market but inexperienced at reaching it must not make the easy mistake of "selling to the Hispanic bloc" -- the assumption that a Cuban thinks like a Mexican thinks like a Puerto Rican. Each of the 22 Latino nationalities has its own cultural nuances, idioms and assimilation. Businesses need to understand these factors, which include a connection to home country; multi-generational households; mistrust of institutions; a belief in fate; respect for the elderly; the influence of community leaders; the role of faith; and the upholding of tradition, celebrations, humor and cultural icons.

Along with this, businesspeople need to take a holistic approach, which requires a deeper understanding and delineation of Hispanic customers, along with a realization that local and regional efforts are as effective as national programs. If anything, local marketing events and real community involvement can produce a greater return on investment. Whether it is sponsoring a favorite soccer team or celebration, honoring community leaders, showing off new products, or supporting professional, social and charitable organizations, savvy businesspeople bend over backwards to make connections not only with Latino customers, but with those who surround them.

As important, the Latino world has seen explosive growth in online and social media. Word-of-mouth communication is the most powerful channel in the Latino world and helps explain the surge in online social networks among Hispanics. Simply put, Hispanic consumers are best influenced by their peers, and businesses need to reach them where they live, work, worship, play and shop -- and not just electronically.

What does all this tell us? Simply, that the path toward reaching Latino businesses and consumers is multi-faceted and must lead to an emotional bond. Latinos tend to be very loyal to a brand they trust and feel cares about them as customers. They need to be invited into a business's offer. The approach must be rich and varied, reflecting the fact that Latinos across the nation are a powerful, still-evolving stew of language, culture and custom.

Peruvian-born Esther Novak is the founder and CEO of New Brunswick, N.J.-based VanguardComm (www.vanguardcomm.com), a multi-cultural marketing communications firm. She currently serves on the New Jersey Governor's Council for Economic Growth and the Board of the Association of Hispanic Advertising Agencies.

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