Hispanic Affluence by State - Implications for Marketing

The American Community Survey (ACS) of the US Census Bureau provides important insights into the lives of Americans. Friends of mine frequently ask me about the level of affluence among US Hispanics. Those households with incomes of $75,000 or higher are generally considered to be affluent. What states have higher percentages of affluent Latinos?  How do Latinos compare with the overall population in terms of affluence across States?

In order to try to answer these questions I obtained 5 year estimates from the ACS (2006 - 2010) for household income and compared Hispanics with the overall population by State, then created an index of Latinos as a percentage of the overall population in terms of household income. The latter index I thought would help us visualize which States have a larger gap as compared with others.

The following Table contains the States, including the District of Columbia and Puerto Rico, with the lowest disparities in terms of the percentages of Latino households with incomes of $75K+, compared with the corresponding percentages for the overall population for each State.  The last column represents an index of disparity.  The larger the index the better, comparatively, Hispanics do in that State.  The index was created by dividing the Latino percentage over the overall percentage of those with household incomes of $75K +.



The above table shows that the States with lower disparities of percentages of households with incomes of $75K per year or more are either those that have generally lower incomes, or those that have unusual economies with higher incomes overall such as Alaska, and Hawaii. Regardless of overall economic trends in these States, it is interesting to observe that Hispanics are generally doing quite well across the board as the proportion of affluent Latinos suggests that generally about 25% of their households earn significant incomes.

The table below shows the States with the largest disparities.




The States with the largest disparities between Latinos and the overall population show a trend similar to that in the above table. In States with higher proportions of high earner households overall, Latinos tend to do proportionally less well, for example California, Arizona, Delaware, Texas and Utah. At this lower end of the disparity distribution, however, even those States that have lower proportions of affluent households also show a sharp contrast when compared with their Hispanic household component. These States are exemplified by Alabama, South Carolina, Tennessee, Montana, Kansas, Arkansas, Oklahoma, and Idaho.

The big lesson is that generally speaking Hispanics seems to be doing quite well in terms of having a relatively high representation of high earning households overall.  There are gaps that are due to economic conditions and opportunities but for marketers, the lesson is clear. High earning Latino households are abundant and their significant presence points to their potential for enhancing the bottom line of many marketers that realize their potential. Be these opportunities cars, homes, recreational vehicles, vacations, travel, education, restaurants, etc. savvy marketers can start taking action when they see that they may not be culturally addressing an important part of the potential customer base.

Online Courses on Multicultural and Hispanic Marketing Communication

Starting the last week in August The Florida State University will offer for the first time, online, a course on Multicultural Marketing Communication. It is available to anyone interested in continuing education or just for the sake of learning. Students in academic programs can get academic credit and those not in academic programs get a certificate of completion. The course is asynchronous, so students can participate when they have the time. Click here for more details.

Also starting the last week in August is our well known online course on Hispanic Marketing Communication now using our new book "Hispanic Marketing: Connecting with the New Latino Consumer." This course is also available to anyone interested. Click here for further details.

We have also added to our online course rotation Account Planning in the Summer. For inquiries about any of our courses and to register please contact: Inquiries@campus.fsu.edu

ROI in Hispanic Marketing

I am fully in favor of having every investment return a profit. Not only a profit that is commensurate with the investment but better than other alternatives would have provided. Lately, however, ROI, or return on investment, has become a fixture in marketing parlance but it has been loosing force and significance. Looking at ROI, Costumer Lifetime Value, and other measures of profitability one notices that one needs to have a baseline or history, or one has to make assumptions.

That is the problem. In Hispanic marketing we need to make assumptions most of the time because we do not generally have historical data. ROI becomes a roadblock more than a value proposition in Hispanic Marketing programs. Why? Because lacking historical data, high level managers can also say that lacking substantive data to figure their return on investment they prefer the status quo. That is a sad state of affairs. ROI, can in fact become the argument against Hispanic marketing programs.

It is sort of a circular problem. Without prior data we cannot reliably calculate future return on investment, and without ROI calculations Hispanic marketing programs do not get funded. In my opinion marketing creativity suffers because of this. Most successful entrepreneurs follow their intuition when starting their ventures. It is also true that many fail. But without taking risks, how can anyone succeed.

My editorial is that we should always try to calculate how much a Hispanic marketing program can return to the company/brand, but when such calculation is more of a figment of our imagination than reality, then let us talk about entrepreneurship. Let us not stifle innovation and growth in a new marketing era because we can not come up with solid calculations. You know the story of the pendulum. ROI was totally ignored in the late 90's and now it is dogma. Should not there be a middle ground?

The New Hispanic Family

Marketers are mystified by Hispanics in the United States. Many still use outdated segmentation approaches that depend exclusively on acculturation variables.

Why is acculturation segmentation becoming outdated? Because the largest wave of Hispanic immigration to the United States happened between 1980 and 2000, from 10 million to 40 million in twenty years. While growth has continued the portion due to immigration has slowed down and the portion due to births has surpassed immigration. That is why we are dealing now with a different Hispanic/Latino market.

While individuals still have different levels of language proficiency, the typical family has changed dramatically and with it the sources of information used by different family members. What does this family look like these days?

A typical Hispanic/Latino family these days has two to four children, depending on their family formation stage. The children are more likely than ever before to speak English at home, with friends, and at school, even if their parents prefer to speak Spanish. Depending on many factors the mother is more likely to prefer the Spanish language for communication, but is also likely to understand some English. The father, is likely to be proficient in English and can be also a Spanish speaker. A grandmother that lives with the family is most likely monolingual in Spanish. A cousin that recently arrived from Mexico or another country is also more likely to be dependent on the Spanish language.

Is this a complicated family? It is very complicated particularly for marketing purposes. Each of these family members will likely be exposed to commercial messages in different media and in different languages. They will have dinner together and talk about their experiences and the products they think are best. In some cases they will be confused because the messages some of them saw in English will be different from the messages some of them saw in Spanish. In other cases their decisions will be reinforced by the confluence of similar strategic messages coming from different sources.

Further, this family is more likely to be influenced by the children's opinions because they generally have a lot more access to messages from more diverse sources. The influence of kids can be fundamental in the adoption of a product or service particularly in this type of family. The credibility of children is augmented by their deeper knowledge of the consumer environment. It is as if children are subverting the traditional flow of influence in Hispanic families.

Should we start thinking about segmenting Hispanics/Latinos by type of family as opposed to by individual traits? Families with different lifestyles?