Does the Hispanic market play an important role in luxury brands? Absolutely. Affluent Latinos grew over 200% over the last decade. Based on the latest census, Hispanics with a household income of $100K+ represent over 12% of total U.S. Hispanic households. It is also estimated there are only 8.5 million people in America with a household income of over $200K+.
Besides the household income, acculturation plays an important role to define affluent Latinos. Acculturation is the process of learning a new culture while maintaining the values and behaviors of the original culture. The Spanish language remains a strong connection to Hispanic heritage. However, as U.S. Hispanics become more integrated into mainstream culture and society, English becomes more important in work and education. Spanish is spoken at home for the majority of U.S. Hispanics, but less than half speak Spanish in their work places.
There are 4 segments of affluent Latinos in the U.S.:
Small Business Owners:
Annual Sales over $750K, first generation Americans, they are less acculturated and Spanish-language preferred, ages 35-65.
$150K+ annual income, immigrant educated outside the U.S., in executive or entrepreneurial roles, acculturated, conservative, age 45-70. You will find a lot of them in the Miami area. Some of them are wealthy people from Central and South America running from the economic turmoil in their countries. They are ready to invest in the U.S.
$175+ annual income, first generation Americans, mobile, highly educated and acculturated, age 35-50. These people usually are the ones who take over the Hispanic family business. They have a more Americanized point of view to run the operation without an emotional attachment as their parents do. They have an eye towards either selling it or bringing new investors for expansion.
$250k+ annual income, second generation Americans, ages 50-70.
The Latino Business community is full of entrepreneurs. In 2010, they represented close to 3.2 million Hispanic businesses in the U.S., worth over $465 billion in revenues. This proves Latinos have the power to influence the entire U.S. economy in the coming years. They already started by impacting the last presidential election.
American Business is just beginning to tap into this market and has not been very successful. Decision makers don’t always understand that accessing the Latino community requires an understanding of the culture and behaviors that goes beyond advertising. Corporate America usually makes the assumption that since the affluent Latinos are bilinguals, the English campaign will engage and resonate better to them because this person is more Americanized. The missing point—and it’s a big one—is that this group is acculturated and even though they feel comfortable speaking English, that doesn’t mean that the message is culturally relevant to them. It won’t make them feel emotionally connected to the brand.
Success not only requires an understanding of the Latino culture and behaviors, but also the implementation of business strategies that actually address the Latino needs. It is important to any company interested in reaching this target audience to start taking a look at the characteristics of this group and find a way to meet those needs. This strategy sounds simple and realistic. However, until one realizes that marketing strategies are failing because American businesses expect Latinos to adapt to their standards and practices instead of the other way around, success won’t be knocking on their doors anytime soon.