Latin beat

Entrepreneur, June, 1998 by Christy Haubegger

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.

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 litre 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 "Sabado 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.