CEOs know the old adage, “Demographics is destiny.” But, when companies invest billions of dollars each year targeting a consumer group whose initial conceptualization no longer aligns with today’s demography, the cost of operating on an outdated strategy[1] can be devastating.

Today, Hispanics are the largest ethnic group in the U.S. with a population of almost 60 million,[2] and rank seventh in the world in GDP (between India and Brazil).[3] Corporations around the globe have long recognized their potential in buying power and contribution to their business. For brands operating in the U.S, marketers have relied on three strategic tenets to drive growth with the Hispanic consumer: (1) U.S. Hispanics prefer the Spanish-language; (2) Hispanics are culturally different from their White (Anglo) counterparts; and (3) Spanish-language television is the best way to reach them.[4]  In 2017, corporations spend more than $9 billion targeting U.S. Hispanics in Spanish-language media, 60% of which was on Spanish-language television.[5] This is the paradigm that has governed U.S. Hispanic marketing since the mid-1990s.

Almost thirty years later, these tenets have become obsolete. A newer and more accurate conceptualization of U.S. Hispanics emerges when the measurement of acculturation is deconstructed and used to view an increasingly multicultural country. Acculturation deals with social and psychological change in which there is continuous contact and interaction between individuals from different cultures.[6] The construct was initially conceptualized as linear—suggesting that a person had to lose attachment to his/her ‘country of origin’ in order to integrate into the ‘host’ (U.S.) culture.

This assimilationist view of acculturation has been replaced with a “bidimensional” view in which acculturation is measured across two cultural domains—the country of origin and the U.S.[7] This new conceptualization allows for the co-existence of two cultures, and eliminates the “zero sum game” assumptions on which earlier definitions of acculturation were based. Many of today’s acculturation scales, including the PAS-4, tend to measure language (i.e., language spoken at home, language of the survey taken) and a number of demographic variables, including nativity (place of birth), and the proportion of life lived (years) in the United States.[8]

The deconstruction of the PAS-4 lead us to develop the Nativity-Based View (NBV) which uses nativity—one’s place of birth—as a way to measure the differences within a demographic group (i.e., Hispanics).[9] The NBV can be operationalized by comparing “U.S.-born and foreign-born” or “first-, second- and third-generation” consumers. Using the NBV, a new U.S. Hispanic reality emerges: more than 65% of Hispanics are born in the U.S. (approximately 39 million in population) who are characterized by a duality in cultural values and beliefs; 60-90% prefer to speak English at home (not Spanish), and the overwhelming majority of U.S.-born Hispanics do not watch Spanish-language television.[10] The NBV provides a worldview that challenges the basic tenets upon which U.S. Hispanic marketing was founded more than thirty-years ago. Our recent research on the NBV found that between 71-79% of Spanish-language television did not reach Hispanic Millennials—a primary target audience for most corporations today.[11] Extrapolating this finding to the overall investment level of Spanish-language television in the U.S., the NBV estimates that corporations are misallocating an estimated $4.5 billion annually targeting Hispanic Millennials in Spanish-language TV.

In closing, the Nativity-Based View is a new methodology that has the potential to be the paradigm shift in Hispanic marketing, and help companies drive marketing ROI in the 21st century. The Nativity-Based View is built on the principle of ‘following the customer,’ instead of following an industry model which has over-simplified Hispanic Marketing for decades. For brands, the cost of nothing can be high. But the cost of adopting an outdated model can be even higher. Companies seeking short-term and long-term growth must adopt a strategy that aligns with a 21st century landscape and a new mental model that is focused on customer-centered growth with Hispanics at its core.

 

[1] Casadesus-Masanell, R. and Enric Ricart, J. (2010). From Strategy to Business Models and onto Tactics, Long Range Planning. Vol. 43. p 195-215. (Strategy is defined as  the choice of business model through which the firm will compete in the marketplace. p 196)

[3] International Monetary Fund World Economic Outlook, April 2018. http://statisticstimes.com/economy/projected-world-gdp-ranking.php (for ranking of GDP by country). Latino Donor Collaborative, 2018. http://latinodonorcollaborative.org/latino-gdp-report/ (for ranking of U.S. Latino GDP).

[4] Korzenny, Felipe and Korzenny, Mary A. (2005). Hispanic Marketing: A Cultural Perspective. Elsevier, Inc.

[5] AdAge’s Hispanic Fact Pack. (2018). p 6.

[6] Ward, C. And Geeraert, N. (2016) Advancing acculturation theory and research: the acculturation process in its ecological context. Current Opinion in Psychology. Vol 8. April 2016. p 98-104.

[7] Marín, G. and Gamba, R. (1996). A New Measurement of Acculturation for Hispanics: The Bidimensional Acculturation Scale for Hispanics (BAS). Hispanic Journal of Behavioral Sciences. Vol. 18, Issue 3. p. 297-316.

[8] Cruz, T., Marshall, S., Bowling, James M., and Villaveces, A. (2008). The Validity of a Proxy Acculturation Scale Among U.S. Hispanics. Hispanic Journal of Behavioral Sciences. Vol. 30, No. 4. p 425-446.

[9] Beniflah, J. and Hughes, B. (2016). An industry response: There is a better way to target the US Hispanic television audience. Journal of Cultural Marketing Strategy, Vol. 1, Issue. 2. p. 170–179.

[10] Ibid.

[11] Beniflah, J., Hughes, B., and Carrasco, M. (2018). Nativity-based view: A new audience measurement standard that drives television return on investment for U.S. Hispanics. Journal of Cultural Marketing Strategy, Vol. 3, Issue. 2 p. 43–59.