Multicultural consumer opportunities

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Hispanics make up the largest ethnic minority group in the United States, and those numbers continue to grow. With a buying power totaling $1.4 trillion, the Hispanic consumer carries significant economic clout. To benefit from this demographic, the green industry needs to ditch the heavy Caucasian influence on the hobby of gardening and make it multicultural.

According to Simmons Research, in 2017, 17.4 percent of Americans aged 6 years and older identified as Hispanic or Latino, up from 15.3 percent in 2010. The Hispanic population is increasing across all age groups, with nearly a quarter of Americans age 6 to 34 today being Hispanic, compared with about 10 percent among those age 50 and older. This points to the continued growth and influence of this segment on the American economy.

In 2016, U.S. Hispanic buying power was larger than the gross domestic product of Mexico, according to “The Multicultural Economy,” a report from the University of Georgia Terry College of Business published by the Selig Center for Economic Growth.

“As America grows more diverse, minority groups are reaping great economic dividends, and business owners would do well to pay attention,” says Jeff Humphreys, director of the Selig Center. “Minority buying power is growing at a faster pace than the white consumer market for a number of reasons, such as demographics, increases in educational attainment and entrepreneurial activity.”

The report states that more than one in six Americans claims Hispanic origin, which helps explain rapid gains over the past few years. From a buying power estimate of $495 billion in 2000, that number has jumped 181 percent to $1.4 trillion in 2016. That accounts for nearly 10 percent of total U.S. buying power in 2016 and means the U.S. Hispanic market is larger than the GDP of Mexico and bigger than the economies of all but 14 countries.

The report provides national buying power estimates for seven selected groups of Hispanic consumers, with Mexican-Americans representing the largest group and accounting for $797 billion worth of buying power, followed by Puerto Ricans, who account for $146 billion.

While each of these subset groups has a distinct purchasing trend, their growth has some things in common, Humphreys says.

“The most important trend in favor of Hispanic buying power growth is favorable demographics,” he adds. “The Hispanic population is growing much more rapidly than the total population, thanks to natural increases and strong immigration. The population is also increasingly better educated and has increased its entrepreneurial activity.”

U.S. Hispanic buying power is more geographically concentrated than that of non-Hispanics. In 2016, California alone accounted for 26 percent of Hispanic buying power, and just 10 states accounted for 78 percent. The states with the largest Hispanic markets in 2016 were California with $359 billion, Texas with $269 billion, Florida with $144 billion, and New York with $101 billion. New Mexico, Texas, and California had the highest Hispanic shares of buying power with 33 percent, 22 percent and 20 percent respectively, according to Nielsen.

Make the connection

Businesses and brands willing to benefit from this demographics’ spending power must design ads that align with their values, culture and purchasing behavior.

To connect with the U.S. Hispanic population, businesses are launching multiethnic or multiracial marketing campaigns targeted at the bilingual, Latino and English-speaking community, according to Ultim Marketing. But it’s critical to understand that appealing to the Hispanic community goes way beyond translating English ads or social media posts into Spanish. That’s a shallow attempt at connecting with this demographic.

According to Ultim, here are some persuasive reasons to adopt a Hispanic marketing strategy.

• An average Hispanic household is usually young and large — made up of at least two generations i.e. nuclear family, grandparents, cousins — and will spend at least $96 daily compared to $95 or below spent by non-Hispanic families (i.e. Whites, African-Americans, Asians).
• Hispanics spend more time online surfing the web socializing, buying and viewing videos on their phones and tablets. This means they are exposed to more mobile ads and online content which turn into leads and higher site traffic.
• Since Hispanics spend more time exposed to ads, they are easily influenced by compelling advertisements. This means they buy more stuff online than other races in the U.S. Online store owners or service providers interested in having increased Hispanic patronage should consider creating a multilingual site.
• If you want devoted Latino or Hispanic customers, communicate with them in Spanish, create your product ads in Spanish and provide Spanish customer service. Hispanics are proud of their heritage, and are naturally drawn to brands that promote their culture — even third-generation U.S. Hispanics.

Nielsen’s “Latina 2.0” reports that Hispanic women are strongly influenced by celebrities, designers, trends and media, but they are also brand influencers in many regards, including being early adopters, rating or reviewing products online, and recommending products to others.

To truly win over the Hispanic consumer, marketing ads should have an authentic appeal to the Hispanic consumer’s unique behaviors and tastes by employing unique products and marketing strategies, according to an IBM Market Indicator report. Some multicultural ad campaigns that are popular within the Hispanic community by notable companies include the Pepsi NEXT campaign, Wendy “Mucho mejor” ad, Domino Pizza “power of simpatico” campaign, CVS Pharmacy “CVS y más” initiative, as well as ads by McDonald’s and other top brands, according to Ultim.

Understanding language preferences will help businesses and brands create better marketing campaigns. According to Simmons Research, among all Hispanics there is about an even split between the percentage who prefer to speak mostly or only English versus only or mostly Spanish. However, when we look at Hispanics by generation, those born outside the United States (first generation) favor speaking Spanish by a wide margin. Among second-generation Hispanics, those born in the United States to at least one foreign-born parent, a clear majority prefer to speak either all or mostly in English. Even though 48 percent of third-generation Hispanics, those born in the United States to American-born parents, say they prefer to speak only in English, the remainder say that they still prefer to speak Spanish at least some of the time.

Charts courtesy of Refuel Agency

Advertising in Spanish matters, even among English-dominant Hispanics, reports Simmons Research. Hispanics, even many English-dominant Hispanics, still have emotional ties to the Spanish language that carry over to companies that advertise in Spanish. For instance, 49 percent of Spanish-dominant Hispanics and 27 percent English-dominant Hispanics say, “When I hear a company advertise in Spanish, it makes me feel like they respect my heritage and want my business.” Spanish-language advertising can drive purchase decisions and brand loyalty for this group.

Bridget Behe, professor of horticulture at Michigan State University, conducted research about 10 years ago that examined the role of ethnicity on gardening purchases and satisfaction. The research revealed that a greater percentage of Asians participated in gardening with fruits, vegetables and herbs compared with African-Americans. A greater percentage of Hispanics participated in outdoor water gardening compared with Caucasians, African-Americans and Asians. No persons of Asian descent purchased trees or shrubs in her study, but substantially more persons of Hispanic descent did, compared with Caucasians and African-Americans. In her research she concludes, “Ethnicity could be used as a basis for market segmentation, and differences are indeed present. This could be a result of different ethnic groups having common characteristics and perceptions about gardening. For example, it could be the case that a great deal of African-Americans and Hispanics are most comfortable with vegetable gardening as a way to produce vegetable crops than flower gardening. This may indicate a need for greater advice and communication about flower gardening practices or a better use of positioning vegetable gardening. If Caucasian consumers are the most targeted consumer and the variability of knowledge and education varies for these mainstream customers, imagine the same frustration with the variability of other ethnic consumers. More could be done to improve the level of satisfaction and reduce regret among non-Caucasian customers.”

Since that research was completed, Behe has witnessed the continued impact and influence that Hispanics and their subcultures have had on American culture.

“It only takes some simple research to understand some key demographics in your own backyard,” she says. “Businesses can use American Fact Finder, enter a ZIP code, and get some key information. Then ask yourself, ‘I wonder what plants these communities are interested in or could be interested in.’”

She cautions not to single anyone out, but instead be welcoming and understanding with your marketing message.

“For far too long gardening has been a Caucasian activity. And expanding your marketing message shouldn’t end with the Hispanic community. The green industry could and should be serving other ethnic communities,” she says.

Photo: IStock

Behe’s research, “Evaluating the Role of Ethnicity on Gardening Purchases and Satisfaction” can be found in HortScience Vol. 42(2), April 2007.

The female consumer

The Hispanic female population in the U.S. is not only expanding in influence, but in sheer numbers as well, according to Nielsen’s report. Their population grew 37 percent between 2005 and 2015 compared to 2 percent for non-Hispanic white women during the same time period. There are now 28 million Hispanic females living in the U.S. (17 percent of the total U.S. female population and 9 percent of the total U.S. population) and 77 percent of their growth over that 10-year span came not from immigration, but from Hispanic girls being born in the U.S. Almost half (45 percent) of U.S.-born Hispanic females are under the age of 18, with 94 percent of Hispanic females under the age 18 now being U.S.-born. A full 25 percent of all U.S. females under the age of 18 are now Hispanic. This increase in U.S.-born Hispanic females represents not only a dramatic shift in culture within the Hispanic community, but within the nation and its future workforce (and future consumers), as being ambicultural and bilingual from birth become more prevalent.

As the Hispanic female population grows rapidly in many communities across the U.S., their impact and influence is becoming the primary driver of consumer behavior in an expanding footprint, Nielsen reports. In many cities in California, Texas, New Mexico and Arizona, for example, Hispanic females are now the majority of the total female population. Six states are home to more than 1 million Hispanic females. California has the most at over 7.5 million, followed by 5.3 million in Texas, and more than 2.5 million in Florida. Hispanic females in California and Texas represent 38 percent of the total female population in each of those states. Los Angeles and New York are the metropolitan areas where the most Hispanic females live, with 3 million+ and more than 2.4 million, respectively. In Los Angeles, Hispanic females are 45 percent of the total female population and in New York they are 24 percent of the total female population.

At 3.23 people per household, Hispanics have the largest average household size of any ethnic or racial group in the nation, meaning they are appealing consumer targets for many industries. In comparison, non-Hispanic white households have an average size of 2.30, Asian households have 2.92, black households have 2.47, and the nation, as a whole, has 2.49. Although the average Hispanic household is larger, more likely to be multigenerational and more likely to contain a married couple, the average household income is at just over $65,000 per year. However, the average Hispanic household income has grown 29 percent since 2005, slightly ahead of the national average. One reason for the lower household income is that Hispanics are relatively younger than other ethnic and racial segments, so for the majority, their careers are still in the growth phase, according to Nielsen.

Sources: Nielsen; University of Georgia’s Selig Center for Economic Growth; Simmons Research “The State of the Hispanic-American Consumer;” Refuel Agency “2017 Hispanic Explorer;” Ultim Marketing, Bridget Behe; Michigan State University