Perspectives

LATINO(A), HISPANIC, OR LATINX

Sooner or later, every marketer has to come to terms with the reality of how to address the largest minority group in the nation, the one with the most influence in culture, and with impressive buying power: Latino(a), Hispanic, or Latinx.

According to the Pew Research Center, awareness of the term Latinx does not translate into a desire to use this term when referring to Hispanics. Despite the fact that about 1 in 4 of Hispanics have heard the term Latinx, only 3% use it. Of those aware of the term, 65% say it should not be used to describe the Hispanic population.

Hispanic is the preferred term to describe those of Hispanic origin in the U.S.

While younger and more acculturated Hispanics tend to be more likely to use the term, there is still much to learn about why the overwhelming majority has not warmed up to being called Latinx.

C&C, however, has recently explored this topic.

Through qualitative research, C&C has gauged respondents on this very issue. The reasons for why the term Latinx is not widely used are thought provoking.

• The term "Latino(a)" conjures feelings of recognition, respect, and cultural pride. It carries significant emotional weight, intertwined with the essence of one's identity and is often associated with a sense of cultural authenticity and appeal. The term has a long history and Hispanics have grown fond of it and connect with its identity.

• The term "Hispanic" also engenders a sense of cultural pride, it is often preferred because its perceived as neutral, carrying fewer political connotations, and being more universally accepted.

• While the term Hispanic is more widely preferred, Latino(a) appears to evoke a stronger emotional sentiment particularly as it relates to cultural pride.

• While some point to the benefits of a term that is LGBTQ-inclusive, others reject the term Latinx because it dismisses the gendered nature of the Spanish language.

Language is not isolated from our lived experiences, emotions, and memories. Presently, the term "Latinx" lacks the emotional resonance that is closely linked to the Hispanic experience.

We can only speculate whether this trend will change in the future as the nation seeks more inclusive terms. While research indicates that Hispanics may not fully embrace 'Latinx' as a self-descriptor, marketers should consider the potential impact on their brands when targeting Latinos. Ultimately, the journey toward more inclusive language should respect the identities and traditions of the diverse group it seeks to represent.

Synopsis by Cesar Carbajal

HISPANIC NEEDS UNMET BY MARKETERS

Over the past decade, Latinos have seen significant growth in their household consumption, reaching a total market value of $1 trillion in 2021. This growth represents a consistent annual increase of 6 percent over the past ten years. Despite their relatively high spending compared to other income groups, marketing efforts targeting Latinos often do not reflect their true market influence. Latinos are environmentally and socially conscious consumers who prioritize brands that value these aspects, making them more influential than their income levels might suggest.

If US Latinos were their own country, they would be third only to the GDP growth of China and India according to McKinsey & Company. It is estimated that Latinos have unmet needs of more than $100 billion but this will likely grow to $660 billion if the parity gap between Latinos and non-Latino Whites is addressed.

However, Latino consumers express a high level of dissatisfaction with the products available to them, particularly when compared to their non-Latino White counterparts. This dissatisfaction spans various product categories, including food, beverages, and financial products, indicating unmet needs that affect their daily lives.

Brands that address the drivers of this dissatisfaction, such as improving access and the value proposition of their products, have the potential to tap into a substantial market worth $109 billion, considering both current spending and the future potential if better products are offered.

The 2023 Hispanic Wealth Report analyzes with great detail the crucial role of homeownership, business ownership, and financial assets in wealth building, among Hispanics in the U.S. The report focuses on the these three pillars as integral to understanding wealth disparities and opportunities for growth within this demographic.

Challenges and opportunities surrounding each of these pillars are discussed, laying the groundwork for a comprehensive analysis of the Hispanic community’s economic status.

Here is a summary of that analysis:

Business Ownership

1. Wealth Driver: Latinos are establishing businesses at a rate almost double that of non-Hispanic whites, contributing significantly to wealth accumulation. There are now 375,000 Latino-owned businesses in the US. Self-employed Hispanic households have a median net worth five times greater than those employed by others.

2. Challenges: Most Hispanic-owned businesses are small, stemming from limited access to business loans and investment capital. In 2021, only 2% of all venture capital was invested in Latino-led startups.

3. Potential Impact: Increasing capital investment and access to opportunities for Latino businesses could add 5.3 million jobs and $1.5 trillion to the economy.

Homeownership

1. Correlation with Wealth: Homeownership is highly correlated with net worth, with Latino homeowners having a median net worth 27.4 times that of renters. The Hispanic community holds 54.1% of their total wealth in real estate.

2. Growth Opportunity: The Urban Institute predicts that Hispanic homebuyers will account for 70% of homeownership growth in the next 20 years.

3. Challenges: The current housing inventory and affordability crisis hinders homeownership. Solutions include improving mortgage credit access, increasing housing inventory, and boosting Hispanic participation in related industries.

Financial Assets

1. Wealth Multiplication: Latino families owning non-cash financial assets have a median net worth 10.6 times that of those who don’t. However, only 41.5% of Hispanic households invest in such assets.

2. Underutilization: Only 25.5% of Hispanic households own a retirement account, indicating a lack of engagement with diversified financial assets.

3. Opportunities for Growth: Increased outreach, culturally relevant financial services, and enhanced awareness about asset diversification can elevate the Hispanic community's engagement with financial assets, promoting wealth building.

A recent study from the Hispanic Marketing Council, reveals how the U.S. is experiencing a shift in cultural influence, with non-Hispanic whites increasingly embracing multicultural aspects.

This change has significant implications for marketing and advertising strategies, emphasizing the importance of embracing cultural diversity and authenticity.

Here is a synopsis of the findings.

• Traditional notions that Hispanic and Asian immigrants' cultural orientations would diminish as they "acculturated" have been proven wrong.

• Non-Hispanic white (NHW) 13-to-49-year-olds have been more influenced by Hispanic, Black, and Asian cultures.

• The concept of a white American "general market" is no longer valid.

• Gen Z and Millennials are normalizing and celebrating cultural diversity, influencing their consumption habits.