Does the Hispanic market play an important role in luxury brands? The answer is yes. Affluent Latinos grew over 200% over the last decade. Based on the latest Census, Hispanics with a household income of $100K+ represents over 12% of total U.S Hispanics 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, shared with family and community, but as U.S. Hispanics become more integrated into mainstream culture and society, English becomes more important in work and education situations. Spanish is spoken at home for the majority of U.S. Hispanics, but less than half speak Spanish in their work places.
It is estimated there are 4 segments of affluent Latinos in the USA. This includes:
Small Business Owners: Annual Sales over $750K, first generation Americans, they are less acculturated and Spanish-language preferred, ages 35-65.
Immigrant Entrepreneurs: $150K+ annual income, immigrant educated outside the USA, in executive or entrepreneurial roles, acculturated, conservative, ages 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 economy turmoil in their countries ready to invest in the USA.
Young Professionals: $175+ annual income, first generation Americans, mobile, highly educated and acculturated, ages 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.
Heavy Hitters: $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 of Hispanic business in USA worth over $465 billion in revenues. So, Latinos have the power to influence the entire U.S. economy in the coming years. They already started by impacting the last presidential elections.
American Business is in the nascent effort 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 as the affluent Latinos are bilinguals, the English campaign will engage and resonate better to them because this person is more Americanized. The missing point 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 and also makes them feel emotionally connected to the brands. 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, their needs and find a way to meet those needs. This strategy sounds too simple and realistic but until one realizes that marketing strategies fail because American businesses demanded Latinos to adapt to their standards and practices instead of providing a path for that to happen. Success won’t be knocking on their doors anytime soon.