Tapping a Minority ’s Buying Power
by Bridget McCrea

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THE FIRST THING YOU’LL NEED to know is that not everyone of Latin descent wants to be called ‘Hispanic.’ In fact, the subject can be so sensitive that it’s probably better to cover the bases and refer to this growing group as the ‘Hispanic and Latino’ population, just to be safe.

Next, you’ll want to know just how powerful and sizable this sector of the population is, not only nationwide and statewide but also right here in the Tampa Bay area.

If the 2000 U.S. Census opened Corporate America’s eyes to the buying prowess of the nation’s Hispanic-Latino population, they were peeled back even further with a June 2003 population report. The U.S. Census Bureau now counts 38.8-million Hispanic-Latinos living in the U.S., representing 13.5 percent of the nation’s population. That’s up by 3.3 million in three years.

In Florida, census data shows that the state’s Hispanic-Latino population increased by more than 1 million during the 1990s, which means Hispanics and Latinos now out-number African-Americans statewide. In the Tampa Bay area, about one out of every five persons (19 percent) is of Latin descent, with Puerto Ricans, Mexicans and Cubans representing the largest segments.

No longer a homogeneous society, the U.S. has become a multicultural melting pot of diverse races, ethnic backgrounds and religious beliefs, and businesses are beginning to take notice. Moving quickly to the front of the pack is the Hispanic-Latino segment, whose estimated purchasing power is expected to reach $764 billion by 2005 (up 27 percent from a current $600 billion), according to the Selig Center for Economic Growth. The center predicts the group will control 9.4 percent of all U.S. buying power in 2007, an 80-percent jump since 1990.

Celia Szelwach has tracked the trends carefully, and says companies in the Tampa Bay area need to do more to reach out to these diverse markets. As president of Bradenton-based Creative Collaborations Consulting Inc. (www.creative-collaborations. com), this Mexican-American entrepreneur specializes in executive/management coaching, leadership and workforce development and diversity training. A graduate of the U.S. Military Acadamy at West Point, Szelwach founded her company in 2000 after leaving Tropicana. She spoke with the MADDUX BUSINESS REPORT about the opportunities that local companies are missing out on by not reaching the Hispanic-Latino market, and what they can do right now to start tapping it.

Maddux Business Report: In your opinion, are Tampa Bay businesses doing enough to reach out to Hispanic and Latino consumers? Are any segments or industries doing better than others?

Celia Szelwach: There are definitely opportunities for improvement, based on my experience as a Hispanic-Latino consumer and as a businessperson attempting to do business with them. Local organizations like TECO and Verizon participate in the Florida Minority Supplier Development Council (FMSDC is a group that provides major corporations and government agencies with easy access to minority-owned and -operated businesses). But there are still many more mid-sized and large organizations that don’t really participate in these types of programs. Because of this, they often lack the diversity programs needed to reach out to the Hispanic-Latino and other multicultural markets.

I’ve seen the greatest amount of improvement in the service sector, with large retailers like Big Lots and Wal-Mart carrying more ethnic brands like Goya, for example. Still, one need only look at some of our region’s lifestyle magazines and notice that everyone pictured is usually blonde and light-skinned to know that they could be doing a better job of representing the population.

Q. Where do companies go wrong when it comes to reaching out to multicultural customers?

A. The mistakes are made when companies assume Hispanics can be lumped together into one customer segment. There’s been a lot of debate, for example, over whether the population wants to be called Latino or Hispanic. The important thing for businesses to understand is that the U.S. Census lumps all of us into one group of ‘Hispanics.’ But not everyone within the population wants to be called Hispanic (a word that derives from Spain and Portugal) versus Latino (or Latina, for women), which is from Latin America. Here in the Tampa Bay area we have 20 different countries represented within the Hispanic-Latino population, so companies can’t afford to make assumptions. Instead, they need to understand those cultural nuances and shift their marketing efforts accordingly.

Companies also have to consider the degree of English language use and the length of U.S. residency. I was born and raised in the U.S., so I predominantly speak English, although I read Spanish and enjoy seeing Spanish advertising. Then you have people who may have migrated to the U.S. within the last 10 to 15 years and who use their own language and prefer advertising to be completely in Spanish. Companies need to make that distinction and factor those trends into their marketing efforts.

Q. What risk does a firm take when it chooses to ignore this customer segment?

A. Put simply, business will miss out on the chance to shape the Hispanic consumer and the business customer’s buying habits. That includes both ultimate consumers and business-to-business consumers. There are opportunities right now to shape the behaviors and purchasing habits of both groups, but if a company doesn’t take the task seriously, it could end up missing out on a major opportunity. The purchasing power of the Hispanic- Latino population is both significant and growing, and the companies that learn early how to reach out to it will be able to gain market share and gain influence in this very important segment. Those that don’t will miss out.

Q. What are the key challenges of marketing to the Hispanic and Latino community, and how can a business overcome these obstacles?

A. The first is definitely understanding and adapting to the cultural nuances. Because the cigar industry had such a significant presence in Tampa, some companies might assume that they can market to the entire Hispanic-Latino population in the same way, but they can’t. Within each segment there are different cultures, different political views and other nuances that have to be taken into consideration. For example, if you’re advertising in Spanish, there are some specific differences between how Cubans speak Spanish and how Puerto Ricans speak Spanish. To truly understand who you’re marketing to and learn about these differences, companies can partner with an advertising agency that focuses on this market segment and has experience dealing with it. Another good way to immerse yourself in the culture is by attending or sponsoring cultural events, or by joining a group like the Tampa Bay Hispanic Chamber of Commerce. Staying visible within that community will evoke loyalty to those brands and companies that the Latino-Hispanic market feels represents them the best and understands their specific needs.

Q. What are the rewards of reaching out to such customer groups?

A. Their purchasing power is significant and expected to reach $764 billion by 2005, which translates into increased market share and higher profits for those companies that reach out to the markets now. Hispanics and Latinos are very loyal consumers who look to build trust and relationships, so they tend to stay with the brands that serve them well. Perhaps even more importantly, they’ll tell others about it. If one of my Latino friends tells me about a good experience she had at a local Mexican or Cuban restaurant, for example, chances are good that I’ll try it.

Q. What should companies know about the future growth of the Latino and Hispanic markets in the bay area?

A. Aside from the growing population numbers reported by the U.S. Census, companies in our area can also expect to see more Hispanics and Latinos throw- ing their hats into the political ring in the future. That will lead to changes in the political landscape and procedures, affected by more of these individuals running for public office. Because they have large voting power, the area’s Hispanic- Latino population will be a major force to be reckoned with in the future. Household income within the population is another measure to watch. According to the U.S. Census’ 2003 report, 12.4 percent of full-time, year-round U.S. Hispanic workers make $50,000 or more annually, while 26.3 percent make $35,000 or more. The numbers are growing, and the perception that Hispanics are either migrant or service workers is fading. The key to reaching them is to pay attention, get involved and learn the segment well because there’s no doubt that it will play a key role in the years to come.