From the June 1998 issue of Entrepreneur

Successful entrepreneurs are always looking for new opportunities--those elusive untapped markets. So what would you do if you learned of a country with a population larger than Canada's? And what if this country's population was growing at a rate six times that of the United States and boasted consumer spending power of more than $273 billion? Even better, it's nearby, and there are no costly tariffs or import taxes. Surely forward-thinking small-business owners would want to introduce products or services there.

Welcome to Latino U.S.A., the most exciting marketing opportunity in America today. Here are some vital statistics about this dynamic market:

  • It's large. With a total Latino population of about 30 million, the United States has the fifth-largest Latino population in the world, smaller only than those of Mexico, Spain, Colombia and Argentina.
  • It's fast-growing. Between 1995 and 2000, U.S. Latinos will account for 37.5 percent of the total population growth in the United States. By 2005, Latinos will outnumber African-Americans as America's largest minority group. Most of this growth will be due to a natural increase (births over deaths) as opposed to immigration, as many mistakenly think.
  • It's young. On average, Latinos are younger than the general population. With a median age of 25 (as compared to 34 for the general market), the Latino market is poised for even more growth. By some estimates, more than 40 percent of the babies born today in California are Latino.
  • It's geographically concentrated. More than 70 percent of the U.S. Latino population lives in just four states: California, Florida, New York and Texas. More than 45 percent of the population lives in just five cities: Chicago, Los Angeles, Miami, New York and San Francisco.

Latino U.S.A. is not just one behemoth, homogenous group, however. Understanding both the obvious and subtle diversities within the Latino market is your key to success.


Christy Haubegger is the founder and publisher of Latina magazine in New York City.

Parts Of The Whole

The words "Latino" and "Hispanic" refer to a broad spectrum of people with vastly different histories. Indeed, Latinos are not a racial group but an ethnic group. As such, they are defined by the common ancestry and derivative culture of not only Spain, but indigenous America and Africa as well.

The Latino market is comprised of various segments. Divided by nationality, the largest group of U.S. Latinos is Mexican.

  • Mexican-Americans make up 64 percent of the total U.S. Latino population and reside predominantly in the Southwest, California and Texas.
  • Central and South Americans comprise the next-largest segment, numbering about 4.5 million, or nearly 15 percent of the total U.S. Latino population. They primarily reside in Southern California but are emerging in other areas, such as Washington, DC, as well.
  • Puerto Ricans, who represent about 10.5 percent of the total U.S. Latino population, are concentrated in New York and New Jersey. There are close to 4 million Puerto Ricans living on the island of Puerto Rico; there are nearly 2 million Puerto Ricans living in New York.
  • Finally, Cubans, concentrated in Florida, represent about 4.7 percent of the total U.S. Latino population.

There are significant differences between groups of varying national origin, ranging from tastes in food and music to political and demographic differences. For example, Cuban-Americans tend to be older and more likely to vote Republican than Mexican-Americans.

Differences in national origin may not be as significant to marketers as acculturation differences, however. Acculturation is the process of adapting to another culture while keeping one's original culture intact. Generational, linguistic and cultural differences among at least three Latino subgroups can be described in terms of varying degrees of acculturation: unacculturated, partially acculturated and completely acculturated.

Unlike other immigrant groups throughout U.S. history, there has been little significant erosion of Hispanic culture among Latinos, even across generations. This is due to several factors, especially the proximity and accessibility of native countries, which allows for a near-constant infusion of culture, food and music from Latin America. At the same time, the geographic concentration of Latino communities in the United States helps to maintain Latino culture.

Nonetheless, there are degrees of acculturation you must understand to determine a market's readiness for your product or service. Acculturation differences explain why a second-generation Mexican-American who grew up in Dallas has more in common with a third-generation Puerto Rican from New York than with a Mexican who arrived from Jalisco last year.

A Mexican-American from Dallas and a Puerto Rican from New York grew up watching both the "Brady Bunch" and "Sábado Gigante." But because they both graduated from American high schools and are likely bilingual to English-dominant, they are as acculturated in their identities as other Americans.

Contrast that with the recent arrival from Jalisco who is completely unaccustomed to the culture of the United States. He is not yet likely to be proficient in English and, as such, may not have many choices in the way of employment. He may be focused on sending money back home to his family, whereas the person from Dallas has most of her family in the same city. You would not necessarily market the same products to both people. And if you did, you would use different methods and messages to reach each of them.

Three Degrees Of Acculturation

As the above example shows, while you can't ignore differences in national origin, relying on those differences alone to segment the Latino market can be a costly error. Acculturation, too, must be taken into account. Here's a closer look at the three key acculturation groups:

1. Largely unacculturated (28 percent): The unacculturated Latino market is the group that has generally spent the least amount of time in the United States, usually fewer than 10 years. Generally born outside the United States, this audience is largely Spanish-language-dependent. (The longer the person has been in the United States, the more likely he or she is to be proficient in English. English proficiency develops especially quickly in those under age 30). The unacculturated group tends to have lower incomes and relies almost exclusively on Spanish-language media.

2. Partially acculturated (59 percent): Partially acculturated Latinos were born in the United States or have spent more than 11 years here. Overwhelmingly bilingual, this group often speaks English at work and Spanish at home. Most likely to be middle-income, this group has one foot planted firmly in each culture. They access information through both Spanish- and English-language media.

3. Highly acculturated (13 percent): Some 4 million Latinos in the United States don't speak Spanish. This group is overwhelmingly U.S.-born and raised. As such, while their parents may fall into the "partially acculturated" category, this group is overwhelmingly bilingual, if not English-dependent. They are more likely to be upper-income than the rest of the Latino market. Nonetheless, they generally remain culturally Latino when it comes to values and traditions, even if they use English to communicate those values.

Effective marketing depends on understanding four key differences among acculturation groups.

1. Income differences. Given the expanded educational and employment opportunities available to more acculturated Latinos, these individuals tend to be significantly more affluent than their less acculturated counterparts. If you're selling premium products, it would probably not be wise to target the entire Latino market. If you're selling a mass-market household product, on the other hand, it makes sense to target the whole group. In fact, because less acculturated Latinos are targeted by fewer media, there may be even greater opportunities to sell your product to this group--at a lower marketing cost.

2. Motivational differences. Recognize possible differences in values and aspirations among acculturated and unacculturated Latinos. According to a 1998 survey by the Yankelovich Hispanic Monitor, a majority of acculturated Latinos agree with the statement "I like to buy brands that make me feel I've `made it.' " Less than half of unacculturated Latinos or non-Latinos expressed this sentiment.

3. Experiential differences. Since acculturated Latinos are likely to have been born in the United States or to have spent more than 11 years here, they are familiar with most U.S. products and services. Less acculturated Latinos are more likely to be loyal to brands that were available in their native countries.

4. Cultural differences. Unacculturated Latinos are much more likely to identify themselves by their countries of origin. This gives you an opportunity to reach these prospects by "customizing" your marketing message with music, photographs or other references to their native countries.

Seize Your Opportunity

Is the Latino market right for you? To analyze your product or service's potential with the U.S. Latino market, first look for any natural demographic or cultural affinity that might give you an advantage. For example, if you sell children's clothing, the fact that Latinos tend to have more children than the general population might mean there's tremendous potential for your product. On the other hand, if your product is an electronic denture cleaner, the fact that Latinos tend to be younger than the general population might suggest your opportunity is limited.

Second, do your homework. The following are a few examples of the kind of information that can be easily found in a library or on the Internet:

  • Latinos tend to use more personal-care items (especially cosmetics and fragrances) than non-Latinos.
  • Latinos tend to have larger households than non-Latinos. This means the primary shopper generally shops more often and buys larger quantities.
  • Latino parents tend to outspend other parents when it comes to their children, particularly on clothing.
  • Latinos spend a great deal of time (and money) keeping in touch with their families back home. Probably for this reason, they outspend their non-Latino counterparts in such areas as long-distance calling, air travel and wire money transfers.

One key to successfully targeting Latino customers: Don't make assumptions. If your product targets a relatively affluent group, such as a home improvement product targeted at homeowners, it would be a mistake to assume there's no opportunity in the Latino market. Almost 60 percent of Latinos in Dallas own their own homes. Where are they buying their home improvement products? Your opportunity might be enormous if you find that no one has addressed this group before--and you step forward to become their home improvement company.

Reach Out

Marketing and selling to the U.S. Latino audience is often easier and less expensive than reaching the general market. A variety of strategies can be effective in reaching this audience.

  • Advertising. Latino and Spanish-language media reach their audiences more comprehensively and more intimately than mass media for two reasons. First, there is relatively little media targeting this market. The general market's attention is courted by five national networks and an average of 60 cable TV channels. In print, the general market has more than 500 magazines to choose from. For the Latino market, in contrast, there are just two national broadcast networks, Univision and Telemundo; a few cable channels, such as Gems Television; and only a handful of magazines, including Frontera and Latino Link. Consequently, the Latino media that exist deliver at a much higher penetration rate than non-Latino media.

In addition, Latino media usually have a more intimate connection with the reader, viewer or listener. Isabel Valdes, president of The Market Connections Group of Cultural Axis Worldwide, a research marketing firm in Los Altos, California, that helps clients develop marketing strategies to reach Latinos, notes that for Latino audiences, Spanish-language networks serve as a replacement for the culture of their native countries. As a result, Latino audiences welcome advertising as a good source of product information. Quite simply, the trust level associated with Spanish television can boost your advertising message.

Advertising in Latino media is considerably more economical than general-market advertising. The cost of a national TV ad may be prohibitive, but the price of a local cable or network spot may be cheaper than you think. Print advertising, too, is less expensive on a cost-per-thousand basis than comparable advertising in general-market print media.

Whether your ad should run in English or Spanish depends on the acculturation level of your target market. For example, the number-one radio station in San Antonio, Texas, has a bilingual format called "Tejano." The disc jockeys speak English, or a mixture of Spanish and English called "Spanglish," while the music is entirely in Spanish. An ad in either English or Spanish would likely be effective in this bilingual, acculturated city.

In Latina magazine, clients advertise in either English or Spanish. Because of the magazine's bilingual, acculturated audience, you can run your general-market ad without worrying that the audience won't understand it.

However, in Los Angeles, if you choose to advertise in the Spanish-language newspaper La Opinion or on Spanish radio station KLAX, you must advertise in Spanish.

Keep a few caveats in mind before running a Spanish-language ad. First, if you can't serve customers in Spanish--whether over the phone or in person--advertising in Spanish-language media may be ill-advised. Second, it's rare that a literal translation of your English-language advertising message truly "translates." If you can't afford to use a Spanish-language focus group or other method to test your advertising campaign, run your Spanish translation by the publishers or broadcasters you're using. They're usually happy to be your proofreaders (or even your translators) because it isn't in their best interest to have you run an ineffective or insulting ad that garners no business and causes you to stop advertising with them.

  • Direct mail. Direct mail can be one of the least expensive and most successful ways to promote your product or service for a few reasons. First, most Latinos have one of a few thousand common Latino surnames. This means any database can be examined and the Latino surnames culled, creating a new Latino database.

Numerous companies rent lists for as little as $50 per thousand names. The more specialized a list, the higher its cost and the smaller the number of available names. You can also ask your list rental company to sort names by ZIP code to help you hit a specific geographic target.

Latinos tend to be more responsive to direct mail than the general population, perhaps because they receive, on average, less direct mail than other Americans. Direct mail in Spanish can be even more effective. According to Rick Blume, general manager of Database Management, a division of Stevens-Knix and Associates Inc. in New York City, Latinos are more responsive to direct mail because they get one-tenth as much direct mail in Spanish as whites get in English (fewer than 35 pieces a year, compared to 350). "When Hispanics receive direct mail," Blume adds, "they open it to see what it is. And every direct marketer knows that getting someone to open the mail is half the game."

  • Promotions. Most Latino communities hold events throughout the year, such as parades, cultural fairs and concerts, that attract large groups. For example, the New York City Puerto Rican Day Parade held every June typically attracts more than 1 million spectators. This is one of the advantages of the geographic concentration and cultural affinity for family activities that makes reaching the Latino audience easier.

Most cultural fairs and parades have low-cost sponsorship opportunities that allow you to set up a booth or distribute samples. Supporting the Latino community's activities will raise your profile and give you concentrated access to the market. Contact the nearest Hispanic Chamber of Commerce or community center to find out what events take place in your area.

  • Public relations. There are publicists who specialize in the Latino market; they can help your product or service get coverage from the Latino media. The Los Angeles-based Hispanic Public Relations Association is a good place to start your search.

Targeting the Latino market takes time, patience and sensitivity. However, if you make the effort to learn about the Latino audience, examine how your business can serve this market and avoid making assumptions, you may just find that your new Latino customers turn out to be your most valuable.

Leading Role

By Michelle Prather

The was one of the Ms. Foundation for Women's Ten Role Models of 1997. "NBC Nightly News with Tom Brokaw" dubbed her one of the Most Inspirational Women of 1996. These are just two of the many distinguished titles Christy Haubegger, president of Latina Publications LLC, has earned in her 29 years.

A Mexican-American, Haubegger was adopted by a white family when she was less than a year old and grew up in Houston. Being raised by a non-Latino family never threatened her knowledge of Mexican culture, however. "I grew up in a household that emphasized the importance of my own heritage," she says. "[My parents] made me speak Spanish." She's fluent as a result.

Attending racially and ethnically diverse schools, Haubegger never fell victim to the notion that being Latino was a "bad" thing. But the media's images of Latinos--or lack thereof--during her childhood could have easily conjured such ideas in the mind of an impressionable youngster. Surprisingly, Haubegger is grateful for the absence of media coverage and advertising targeting Latino audiences in the United States. "That [absence] showed me what an opportunity there was," she says.

Before launching Latina, the first bilingual magazine geared exclusively toward Latino women in the United States, in May 1996, Haubegger did plenty of homework. She researched which audience within the Latino market would benefit most from a fashion, beauty and lifestyle magazine. Latina is geared toward acculturated Hispanic women, but its bilingual editorial and advertising format crosses over to all levels of acculturation. "Those of us who are very acculturated want to keep in touch with who we are and maintain our values and interests and learn about what other people like us are doing," says Haubegger. "At the same time, people who are less acculturated use [the magazine] as a tool [to become more acculturated]."

Haubegger hopes advertisers will attempt to understand the subtleties of the Latino market, rather than let stereotypes guide their marketing decisions. "I think there is a tremendous opportunity," she says, "and if you don't heed [this] advice, your competitors will."

Next Step

  • Hispanic Marketing Handbook by Isabel Valdes (Gale Research) is available for $69.95 by calling (800) 877-GALE.
  • Database Management, (212) 388-8830
  • The Hispanic Public Relations Association, (626) 793-9335
  • Hispanic Business magazine and Latina magazine are available at Barnes & Noble stores nationwide.

Contact Sources

Cultural Connections Group of Cultural Axis Worldwide, 5150 El Camino Real, Ste. D-11, Los Altos, CA 94022, (650) 965-3859

Database Management, (212) 388-8830, fax: (212) 388-8855

Latina Publications, LLC, (800) 274-1521 http://www.latina.com