The U.S. Hispanic Market
Huge: Hispanic population is projected to nearly triple, from 46.7 million to 132.8 million from 2008 to 2050. In other words:
- The U.S. Hispanic population share will double, from 15% to 30%.
- Thus, nearly one in three U.S. residents would be Hispanic.
Diverse: U.S. Hispanics come from more than 22 different countries and, although there are cultural similarities between the sub-groups, there are also differences in attitudes and behaviors that marketers need to acknowledge to best serve the interests of these consumers.
Language Use Differences: The use of Spanish is of course an obvious difference between the U.S. Hispanic market and the mass market. However, the use of Spanish vs. English varies within the Hispanic markets. Some Hispanics only speak Spanish; others choose to speak Spanish over English; others prefer English; and others almost exclusively speak English.
Cultural Differences: An important element often overlooked with respect to the U.S. Hispanic market is the differences that exist between the sub-groups that comprise this segment of the market. These differences include country of origin, differences in Spanish use and dialect spoken, differences in food, music, holidays celebrated, etc.
Acculturation Differences: The process of acculturation has a major impace on these market segments.
A Multidimensional Process
Malaghan cites a 2004 dissertation by Cecilia Alvarez from Florida International University titled The Acculturation of Middle Income Hispanic Households in which she notes that acculturation is a multidimensional process. Individuals change along various dimensions of social functioning. Alvarez defines consumer acculturation as:
A dynamic selective process generated by the contact of a consumer with a different consumer cultural orientation via acculturation agents or facilitators, through which the consumer adapts to the new culture. This adaptation is expected to be reflected in the consumers’ behavior, affect and values.
Acculturation generates changes in three levels of functioning:
- Behavioral – includes behaviors like language use, customs, food consumption.
- Affective – includes emotions that have cultural connections; for example, the individuals’ feelings towards their country of origin or towards the U.S.
- Cognitive – includes individuals’ belief systems and fundamental values
So, how does acculturation affect consumer behavior and the approach to targeting and servicing this segment of the market? Let’s look at the 3 levels of acculturation.
Why Acculturation Matters
- Past generations of immigrants had their children leave old world customs behind for the process of assimilation.
- Acculturation is the process of incorporating or acquire a new culture without foregoing another one.
- Hispanics do not “assimilate”, they “acculturate” without letting go of customs and/or language
3 Levels of Acculturation
The three segments by Acculturation Levels are:
- Non-Acculturated: Persons that only navigate within the Latino culture. Most of them have recently immigrated to the U.S. and prefer to speak Spanish
- Acculturated: Persons born in the U.S. of Hispanic descent. They prefer to speak English and can navigate into the Latino culture
- Semi-Acculturated: People that can navigate in both cultures.
How fast will the market acculturate?
The speed at which this will take place depends on these three major factors:
- Time: the longer they live in the US, the longer they are exposed to a new culture and are able to incorporate it into their everyday lives.
- Education: the higher their education level, the easier the understanding of another culture will be.
- Socio economic status in country of origin: the higher the socio economic status they enjoyed in their country of origin, the higher the likelihood that they have been exposed to other cultures, thus enabling a faster and smoother transition
A Rapidly Evolving Market
Situational Acculturation: It is important to bear in mind that acculturation can also be “situational.” Companies truly interested in segmenting the Hispanic market can further defining the situational acculturation levels of their consumers. Some people can be considered unnaculturated/bilingual/acculturated 100% of the time while others can go through these different states throughout the day.
For instance, a person can be fully acculturated at work where he or she behaves and consumes products very much in line with the general population, but at home speak Spanish. Yet he may watch both Hispanic and English-speaking television and consume non Hispanic products.
Suburban Hispanics: A Consumer Dynamics study from Acxiom Corporation shows that the Hispanic segments are changing rapidly. For one thing, the rapid expansion of Hispanics into American suburbs presents opportunities for marketers who can better understand the rich cultural diversity and purchasing attitudes of this segment. The study reveals:
- Hispanic suburban expansion is projected to continue.
- The Hispanic market encompasses four distinct Hispburbanite groups.
- Marketers have above average growth opportunities in areas with high concentrations of Hispanics.
- Marketers should segment this culturally diverse group for maximum marketing impact.
Generational Factors: Hispanic Millennials bring a new set of characteristics to the mix. Since Latinos will account for more than 80% of the growth in the population of 18- to 29-year-olds over the next few years, they are now a key demographic for marketers, who will need to take into account the rapid changes under way in the composition and characterstics of the population of the Hispanic youth.
- English Language TV Preference: Since they are for the most part are now the children, grandchildren or even great-grandchildren and beyond of Latino immigrants, 73% of 18- to 29-year-old Latinos watched English-only television or a combination of English and Spanish language television in the past seven days, and only 4% watched Spanish-language television alone.
- Highly Connected: Hispanic millennials are nearly 66% more likely to connect via mobile than non-Hispanic Caucasians, and nearly twice as likely to own a tablet such as an iPad. They are just as likely as other millennials to be heavy Facebook users but almost twice as likely to use YouTube.
- English Language Reading and Online Preference: When Millennial Latinos read magazines or visit websites, English predominates. They are more likely to read English-language magazines alone then they are to look into a combination of English and Spanish magazines (28% vs. 21%). Online, 18- to 29-year-old Latinos are even more likely to choose to visit English-language websites alone rather than both English- and Spanish-language sites (38% vs. 25%).
- Close Cultural Ties: Still, Hispanic millennials maintain close ties with their cultural heritage. The Pew Hispanic found that among the U.S.-born children of Hispanic immigrants, country of origin is still important. Hispanic millennials are also more likely to still be living in their parents’ home due to the economy and delayed marriage and children trends, as well as the fact that Latinos in general are the most likely to live in multi-generation homes.
Marketers targeting Hispanics therefore need to develop complex and sophisticate marketing strategies to reach this very complex market.
Marketing and Service Implications
Essentially, the more exposed Hispanics are to behavior and beliefs of the host country, the more similar they become in consumption patterns of the mass market. However, Alvarez reminds us that acculturation can be bilinear, which means that a segment of the market may choose to be Hispanic with respect to certain behaviors and beliefs and in sync with the U.S. mass market in others. This presents marketers and customer service managers with challenges and opportunities to serve their unique needs.
Generational Segmentation: One way to segment the U.S. Hispanic market is by generation: there are new immigrants, first-generation U.S. , second-generation, etc. This approach assumes that the longer a person has been in the U.S. , the more their lifestyle choices, and response to marketing stimuli, and purchasing decisions should reflect those of the mass market consumer.
Multidimensional Segmentation: This fails to factor in the bilinear multidimensional aspect, resulting in the 3 levels of acculturation: low, high, and bicultural. Developing more in-depth segmentation categories allowing for the bilinear multidimensional influences, coupled with research, will provide marketers an added advantage over companies that segment solely by the generational approach.
Trans-adaption Capabilities: Once the Marketing Department has advised Customer Service where a consumer falls anywhere on a continuum from new immigrant (unacculturated) to bicultural/multicultural (acculturated), they may choose to speak Spanish, English, or switch between the two on service calls.
Bilingual Capabilities: To effectively serve the segment, companies need to deveop a bilingual customer service infrastructure. Best practices, cited by Malaghan, provide the following:
- Testing language skills to recruit competent and fully bilingual staff
- Bilingual training and certification for appropriate “Business Spanish”
- Certification of bilingual call center operations to benchmark and delivering services to best practice standards
Case Study: Banks Face Acculturation Challenges
Latino banks spend more than a year teaching their underserved Hispanic customers how to use the ATM machines because most of their customers have never used one. The bank needs to play a role in acculturating them into American society.
The following chart shows some key differences in the bank services that different Hispanic customers would be inclined to use, by acculturation level.
Snap! principle of Hispanic Market Segmentation:
In targeting and retaining U.S. Hispanic customers, companies must be willing to 1) invest in the market intelligence required for successful segmentation and 2) provide the servicing infrastructure to gain a competitive advantage in these segments.