07/30/2013 12:30 pm ET Updated Sep 29, 2013

Beyond the Hispanic Mindset -- A Contemporary Approach to American Latino Consumers

For years, there has been an ongoing dispute surrounding the use of the term "Hispanic" or "Latino." What's the big deal some might say? After all, these are just names used to identify certain ethnicities, and what's really in a name anyway? The short answer to this question -- more than you know.

The 2010 census defines a Hispanic or Latino as "a person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin regardless of race." While we often see these descriptors used interchangeably, they carry different connotations.

The term Hispanic is an outdated label that was not originated from within the culture but rather imposed from outside of it. The word Hispanics carries the stigma that those associated with it are not legitimate citizens, are of strong ethnic culture and do not have a diverse background. Referring to someone simply as a Latino suggests that this person has no cultural ties to the United States, is fluent in only one language, and is disenfranchised.

Believing that the term Hispanic imposes a cultural barrier, we conceived The American Latino Initiative in 2008. Through this social movement, our goal was then, and remains today, to expunge or "kill" the word "Hispanic" from the American Lexicon, break down existing stereotypes that have affected more than 42 million people in the United States, and uncover the rapidly changing behaviors and rituals of this group.

From 2006 through 2012, my company, Greencard Creative, conducted close to 400 interviews across the United States to discover new insights about the American Latino people. Our ethnographic research spanned a variety of demographics including country of origin, language spoken, and number of years in the U.S. What we found was that many of the interviewees considered themselves to be hybrid individuals, possessing both Latin and American cultures.

In contrast to native-born Americans, American Latinos are more conscious of their identity and are constantly evolving as a result of that. The realization of this 'new self,' empowers them to seek out and embrace American cultures and values while adopting new behaviors. They blend their traditions and heritage with the historically American values of change, success and entrepreneurism, and no longer want to be characterized with these static labels. A Pew Research study found that half of Hispanic adults most often identify themselves by their family's country of origin, rather than solely "Hispanic" or "Latino."

American Latinos are the next generation of U.S. consumers. As such a prominent and influential market, it is surprising how few brands out there are focused on trying to reach and connect with these consumers. Only a small number of those brands are doing so in an impactful and successful manner. Brands need to recognize the new identity of the American Latino, stop defining them based only on demographics.

An effective marketing and advertising campaign that would reach and connect with the fastest growing ethnic segment in our country would recognize American Latinos as hybrid individuals beyond the Hispanic mindset. By creating a dialogue beyond demographics and stereotypes of language, acculturation, traditions or country of origin, brands can cross the surface of nationalism, traditions and the "Hispanic" mindset.

Brands trying to connect on a deeper level with American Latino consumers should consider the following shifts in the marketplace:

Hispanic Versus American Latino -- The term American Latino reflects their hybrid identity that is simultaneously American and Latino. The term "Hispanic" assumes a static and one-dimensional mindset, not a growing and changing group of consumers. They have a new sense of identity that blends values and characteristics of their original Latina American culture with traditional American traits. "American Latino" not only represents the evolving, multidimensional and multicultural mindsets appropriate for this market, but also takes into account its true identity that connects with a brand, product or category on a personal level. It's not static, but evolving.

Internal Migration -- One trend within the American Latino consumer group is their expansion across the U.S. outside of major cities and locations where immigrants have typically settled in the past. In 2000, 61 percent of U.S. Hispanics lived in California, Texas, Arizona and Florida. Ten years later, nine states -- Alabama, Arkansas, Kentucky, Maryland, Mississippi, North Carolina, South Carolina, South Dakota and Tennessee -- saw the populations of Hispanics more than double ("Very Hot, But Out Of The Comfort Zone," Portada Magazine). According to our in-house ethnographic research surveying more than 450 people, the main reason why American Latinos are moving is because they are looking for cities where they can find more American values.

Shift in Language Towards English -- Language trends among American Latinos, particularly second and third generations, have continually shifted towards an emphasis on English both in and out of the home. According to a Pew Research study, nearly nine in 10 Hispanic adults believe it is important for immigrant Hispanics to learn English in order to succeed in the U.S. Second generation Hispanics are also less likely to seek content specifically for their ethnicity; only 27 percent will visit Hispanic targeted news websites, while 72 percent of first generation Hispanics still do, according to the New Generation Latino Consortium. Also among this younger subset, advertisers are seeing a shift towards English-language programming. News21 reports that Latinos 18 to 24 years old are now more likely to watch comedies and to view them in English.

Preference for American Stores -- With an estimated purchasing power of $1.2 trillion in 2012, according to the Selig Center for Economic Growth, American Latinos are an increasingly influential consumer purchasing group in the U.S., even outspending the general market (Latina Retail Shopping). Retail trends are also showing that they are more willing and likely to shop at large, American brand name stores than specific ethnic stores. Hispanics visit shopping malls more than any other ethnicity; 17 percent reportedly shop five or more times per month, according to Mintel. American Latinos are also typically very brand loyal. According to a survey by NorthStar, 61 percent of Hispanics said that once they find a brand they like, it is not easy to convince them to switch to another.

Increased Luxury Purchases -- Because change happens from the outside-in, American Latinos tend to be concerned about their appearance and style. U.S.-born Hispanics ranging in age from 18-29 are more likely than non-Hispanics in the same age group to enjoy keeping up with the latest fashions, with 43 percent choosing to do so versus 37 percent, according to Tr3s original analysis of Simmons data on attitudes about apparel among adult Hispanic Millennials. Luxury brands have not failed to recognize these trends. High-end handbag designer Coach reports "significant gains in brand ownership by affluent Latinas," and Gucci Group recently commented that U.S. Hispanic customers "are a very important target group both for the overall luxury business and for Gucci Group brands."

American Latinos live in a world of a heightened sensory appeal when it comes to music, food and celebrations. Through these sensory experiences, they build their own personal identities. But this multilayered sense of aesthetics lays in hibernation due to of lack of means or access in their home countries. The United States, with its pervasive pop culture and modern view on education, design and the arts, provides the means to reinterpret their traditions and to act on their innate sense of style. They are empowered both by being given the choices to choose a lifestyle that they most identify with and by being the driving force behind cutting edge products. This is valid for both people who were born abroad and passed to the new generations born here. American Latinos are able to marry the past with the future.

The American Latino market is full of interesting niches, innovations and business opportunities. The time is now for brands to consider how American values, culture and language play a role in the evolving and transformative identity of the American Latino individual and take a contemporary approach to their marketing and advertising campaigns.