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February 1, 2005

Emerging market strategies: Gil Zapataniche marketing, Hispanic market, minority population
Today, the United States is increasingly becoming a melting pot
and the home to people from all over the world. No mortgage
professional can afford to ignore the large and growing Hispanic
market. Miami's financial district along Brickell Avenue has become
the second largest "international" financial center after Wall
Street in New York and home to numerous multi-national banks and
financial firms as they follow the phenomenal growth of the
Hispanic population and Latin American trade. Historically,
Hispanics were considered a "niche" or minority population, but
with some 36 million people, they now account for 13 percent of the
U.S. population. So, one must wonder if the term "niche" still
applies. When reading this article, certain references may seem
like stereotypes or clichés, but the purpose of this
publication is to shed some light onto cultural differences that
are important to understanding this emerging market.
If you are interested in tapping into this market sector or if
you are already marketing to the Hispanic population, simply saying
"Buenos Dias" or "Se Habla Espanol" is not enough. As mortgage
professionals and as marketers, we need to examine this sector in
depth and develop more effective and efficient strategies to market
to Hispanics. It was after completing college and returning to
Miami that I realized that my Spanish communication skills would
not be enough for conducting business in Miami. As a Hispanic who
was raised in the United States, I found it quite difficult to
understand this market. Many professionals feel that hiring
Spanish-speaking staff members, having a Web site in Spanish or
advertising in Spanish is enough to capture new clients from this
market sector. Yet, nothing could be further from the truth. We
need to take into consideration not only the language barrier, but
also the other factors that play an important role in marketing to
this specific population group. Hispanics in the United States hail
from the Caribbean, Europe and about 20 other countries. As a
consequence, the political and economic views, and thus consumer
behaviors, are not homogenous within the Hispanic market. For
example, select a geographic location and determine the Hispanic
groups that live in that area. For instance, in Virginia and
Washington, D.C., there are large concentrations of Hispanics from
El Salvador; in New York, you have Dominicans and Puerto Ricans; on
the West Coast (California, Texas, Nevada), Mexicans; in Illinois
there are Mexicans and Colombians; and in South Florida,
specifically Miami, there is a large population of Cubans. In South
Florida primarily, you find Hispanics from the entire Latin
American region. Cultural differences affect the different ways
Hispanics speak the language. These differences can create barriers
even when communicating in Spanish. Thus, there are many factors
that must be taken into consideration before launching your
mortgage market strategy. To simplify matters, I classify Hispanics
into three major groups: the acculturation group, the immigrant
group and the foreign national group.
The acculturation group
Once you have selected your area and understand what country they
are from, you need to learn a little about their history. For
example, some Cubans, Nicaraguans and Dominicans have undergone the
phenomenon known as "acculturation." In other words, Hispanics born
in the United States or second-generation immigrants living here
for more than 10 years are more likely to culturally embrace the
"American" lifestyle. This includes acquiring "American" media
habits, which may mean buying over the Internet, watching
television in English, etc. However, even though they are more
assimilated into the American way of doing things, these Hispanics
tend to be very proud of their heritage and their cultural
background. They may be watching a football game and then watch a
bilingual ad on the same network. This tends to increase their
level of acceptance of the ad because of their cultural background.
Aside from their level of pride, this Hispanic group also tends to
retain cultural habits that are common among Hispanics. Family is
the number one priority for most Hispanics, ranking at the top of
the priority list. Hispanics are usually brought up to make
sacrifices for their children. It is the story behind almost every
Hispanic immigrant. Their ancestors washed dishes so their children
can go to college is a common story in Latin America. So, marketing
to Hispanics via advertising, Web sites and other marketing
channels, in my opinion, should be "family friendly" and revolve
around the importance of the family.
The acculturation group was educated in the United States; many
have college degrees and are employed in all professional fields.
This group is more apt to shop around and will ask informed
questions. The complex process of understanding mortgage financing
and all its relevant details will not be a major obstacle for them.
Also, completing phone applications and obtaining information via
fax, e-mail or the telephone will not be a major issue either. So,
when marketing to this group you also must think about what
products you will market to them. For instance, they will likely
search for sophisticated products such as 80/20 combos, home equity
lines of credit, interest-only programs, negative amortization
mortgages, variable rate products and ways to invest in real
estate. They can more easily understand these concepts than the
Immigration or Foreign National groups.
The immigration group
This group is comprised of those Hispanics who have been living in
the United States for less than 10 years and speak mostly Spanish.
This group may vary in age; it may be an older group or
first-generation immigrants. Generally, this group likes to obtain
all of their information in Spanish. And, they may have a certain
level of distrust of financial institutions due to historical
experiences with the underdeveloped and ill-functioning financial
sector in their countries of origin. They distrust complexity,
preferring simplicity instead. If they feel that it is to complex,
they will generally tend to shy away and withdraw from the
transaction. They like things to be explained fully and dislike
surprises. Their incomes are in the median- to low-income range.
This does not mean that they lack the adequate education because,
as first-generation immigrants, they have had to take jobs to
defend themselves as they try to improve their financial picture.
When you initiate your marketing strategy, it is important to:
"Make sure your ad and marketing campaign is in Spanish;
"Ensure that your applications and disclosures are in Spanish;
"Make sure you have a bilingual staff member who not only speaks
the language, but also understands their consumer habits. In one
instance, I was selling the good old "American" way by going full
speed at a client from Venezuela, only to have the client's friend
tell me to "Slow down, you are selling the American way."
Based on my previous experience, sub-prime products, 100 percent
financing programs and FHA loans have been the most common products
that fit with this group. Many of them have deficient credit, not
because they choose to but because they are not used to managing
credit. The credit system and the availability of credit in Latin
America is extremely limited, very expensive and usually available
to only certain sectors of society. Latin Americans tend to use
cash to purchase most items and rarely rely on financing as a
result. In America, on the other hand, credit is available to
everyone and is a prime motivator of the U.S. economy. In addition,
many Hispanics in this group do not have the disposable cash for
large down payments so programs that are attractive to them are the
ones requiring little or no money down. Also, a large percentage of
this group has assets in their country of origin due to restrictive
government regulations that prevent them from selling their
properties or pulling their money out of the country. Stated assets
and stated income programs are thus very common within this
The foreign national group
Another group that has similar consumer habits to the immigration
group is the foreign national group. Today, many mortgage lenders
have developed mortgage products for foreign nationals. Foreign
nationals are tourists who live in their native country, but like
to have a second home or an investment property in the U.S. This
group also includes those working in the United States with work
permits for multi-national companies, foreign agencies and
government agencies. The major difference between this group and
the previous is that foreign nationals tend to have the disposable
income and substantial assets in U.S. bank accounts, ranging from
$300,000 to $1 million on average. Moreover, foreign nationals know
the financial benefits of real estate investing as a tangible asset
very well. Foreign nationals usually tend to invest in real estate
before they invest in the stock market. They have a long history of
real estate ownership due to personal acquisitions and to family
inheritances that date back on average more than 20 or 30 years in
their native country. This group, however, still tends to remain
very cautious in their buying habits. Their level of distrust is
higher than that of the other groups, since they have witnessed
firsthand the Latin American financial sector exposed to banks
going bankrupt overnight, accounts being frozen by government
regulations to retain money in the country, exchange rate controls,
capital flight restrictions and fraudulent investment activity. So,
even though they have the disposable assets and incomes, money is a
very sensitive issue to them. Decisions made by these groups are
much slower in nature. A higher degree of patience is needed to
complete these transactions. This group likes a higher level of
customer service and treatment. They enjoy dealing with
conversationalists who can establish a friendship first and then
transition to business dealings. In addition, they enjoy talking
about business over lunch, dinner or a cup of coffee. They dislike
providing confidential information by fax, telephone or e-mail.
They prefer to provide personal information and documents in
person. You need to become familiar with foreign national mortgage
programs that usually require a higher down payment and lower
loan-to-value than for U.S. residents and citizens. In addition,
you will need to become familiar with certain legal and immigration
documentation, and be able to differentiate different types of
visas. Lastly, foreign nationals usually do not mind obtaining a
variable interest rate mortgage since in Latin America, most
mortgages are variable and are at very high rates. This market
segment is usually highly educated and has keen knowledge of the
different interest rates in the global economy.
Remember, family is numero uno
In conclusion, these groups have similarities. Again, family ranks
number one on their priority list. Many Hispanics will include
their spouses, children and extended family in the mortgage buying
process. They will want a relative on the mortgage or title. They
usually like joint ownership and hold joint bank accounts or
similar assets. So, when performing these transactions, be careful
with the asset requirements since in many cases you may have to
document gift money or justify full access to assets. Many of them
like to establish friendship first and then do business. It is only
after they can trust you as a friend that they can trust you with
everything else they have. Hispanics also like free promotions.
Yes, everybody likes free stuff but Hispanics seem to respond to
promotions in greater numbers than other groups. Try things like
sweepstakes, raffles and samples in your marketing campaigns. Last
but not least, if you can enter this emerging market, the
opportunities are endless. Hispanics are a great source of
referrals. If you gain their trust, they will refer you to their
friends, family, acquaintances and co-workers. These clients will
become a marketing machine for you.
Gil Zapata is CEO/managing partner of KGFA Capital Partners
LLC in Miami. He may be reached at (305) 379-4457 or e-mail