Download The Effect Growing Ethnicities in the United States have on

The Effect Growing Ethnicities in the
United States have on Companies:
Asian and Hispanic
Eduardo Diaz and Alexander Crofoot
Introduction
According to the data gathered by the Census Bureau, the United States
has approximately 15.58 million Asian residents and 52.04 million
Hispanics residents (United States Census Bureau, 2012). The
population growth rate among Asian- and Hispanic-Americans has
decreased since the beginning of the decade, according to new census
estimates, and the recession appears to have slowed their dispersal from
traditional magnet metropolitan areas to other parts of the country
(Roberts, 2009).
Still, births outnumber deaths among Hispanic people by ten to
one, and the nation’s racial and ethnic minorities are poised to become
the majority among children under age five. Minorities inched up from
46.7 percent of those children on July 1, 2007, to 47.3 percent on July 1,
2008. The latest census estimates found that the minority population —
other than non-Hispanic whites — grew by 2.3 percent from July 1, 2007,
to July 1, 2008, compared with 2.4 percent the year before (Roberts, 2009).
Ethnic and racial minorities (mostly blacks, Hispanic, and
Asian people) now account for 34 percent of the nation’s population.
The Hispanic population grew by 3.2 percent and Asians by 2.7 percent
in 2008, a slight decrease from the year before. But those figures were
down sharply from the beginning of the decade, when the Hispanic
population grew by 4 percent and Asians by 3.7 percent, according to an
analysis by the Population Reference Bureau, a private research group
(Roberts, 2009).
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The impact of these ethnic groups poses a challenge for
marketers because they have become important consumer groups in the
market place. Marketers are challenged to understand the background
of these groups because they are the new consumers, having a large
portion of purchasing power. With these groups’ recent population
growth and immigration into this country, the marketer needs to have a
better understanding of the cultural norms and beliefs of both because
greater understanding of these ethnicities will shed some light on these
consumers’ preferences, needs, and wants stemming from their cultural
philosophies.
In today’s competitive business environment, one of the most
difficult things for companies to do is to gain market share in an already
saturated market. However, by shifting their target market to the rapidly
growing ethnic populations of the United States, marketers will be able
to target the increasing buying power of and gain brand loyalty from
Hispanic- and Asian-Americans. Much like all good marketing
campaigns, appealing to the Hispanic- and Asian-American populations
will require that a firm gain an understanding of its target market. More
specifically, marketers that develop a profound understanding of how to
read and predict consumer behavior in these groups are essential in
establishing market share in new or growing markets.
Consumer behavior is “the study of the process involved when
individuals or groups select, purchase, use, or dispose of products,
services, ideas, or experiences to satisfy needs and desires” (Solomon,
2011). Consumers use products to help them define their identities, and
marketers can take advantage of this desire by properly segmenting the
population into target markets.
Consumers can be segmented into multiple markets by such
factors as demographics, response time, product usage, and
psychographics (Solomon, 2011). Consumer Behavior can be attributed
to so many different things (i.e. culture, mass media) that the only way
to successfully market to a target group is to see the world they see it.
With the Hispanic- and Asian-American sectors growing much faster
than any other ethnic group in the United States, not just in number,
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but by purchasing power as well, marketers can capitalize on the
disposable income that these citizens will have, if they can market to
them correctly through an understanding of their consumer behavior.
The Importance of Studying Growing Ethnic Groups
in the United States
One of the many metaphors used to describe the United States of
America is “the melting pot.” This metaphor represents the unparalleled
diversity of the United States in terms of citizens from different races,
religions, cultures, and ethnicities. Of the many ethnicities found in the
U.S., it is the Asian and Hispanic populations that have grown at an
exceptionally quick rate. In 2010, the Selig Center for Economic Growth
predicted that Hispanic and Asian citizens within the United States
would soon experience rapid growth of buying power (Fahmy, 2010).
Furthermore, the United States Hispanic population is highly
concentrated in two states (28 percent California, 19 percent Texas).
The Asian population is the fastest-growing ethnic group in the United
States and is also very highly concentrated; it is estimated that one-third
of U.S. Asians live in California (Carmichael, 2011).
These facts show that slowly, but surely, a massive cultural
shift is taking place in the United States as the minority ethnic groups
are growing in number. As the United States Census numbers change,
and with that the make-up of the country, so should the strategies and
applications of marketers within the United States. It is important to
note that the current Hispanic- and Asian-American populations do not
hold the buying power to purchase higher-end products — at least not
yet. With that being said, marketers will need to figure out how to fill
the grey area of ‘how much is too much — what is the highest they can
pay for this product?’ By determining technical details such as price, and
many others, marketers can begin to develop the message they want to
send to the growing Hispanic- and Asian-American populations.
Another factor that marketers will need to consider in setting
their marketing strategy is which segment of these populations that they
should address. As mentioned previously, the Hispanic- and Asian3
American populations are highly concentrated in specific regions and
particularly in metropolitan parts of the country. This means that
marketers can focus on a huge target market in the ethnicity itself, or
they can choose to advertise to a niche sub-culture within the Hispanic
and Asian communities.
Another major component of marketing to these two increasing
ethnicities is the medium or channel of communication that marketers
choose to use. Do the majority of Hispanic- and Asian-Americans
consume mass media? Or do they prefer to watch channels specifically
for their ethnicity, in their first language? This research paper will
explore that impact that these ethnic groups have on the work of
marketers in today’s business environment and examine how to address
these ever-important growth markets based on demographic and
behavioral variables.
Multicultural Marketing
In an attempt to look past day-to-day business operations and marketing
practices, marketing researchers have stressed the importance of the
proper recognition and treatment of the growing Hispanic and Asian
populations within the United States. In particular, a considerable
amount of effort has been put into understanding the value of these
growing markets, and the purchasing power that members of these
groups will soon have.
Multicultural Marketing is the promotion of a brand’s product or
service to one or more targeted multicultural group(s), or to an ethnically
diverse consumer base. Therefore, multicultural consumers are either
those who claim multiple cultures in their background or those who are
part of a growing body of culturally diverse people who engage in
consumer behavior (Korzenny, 2008). The growth among major
multicultural categories is four times that of non-multicultural groups,
illustrating the growing diversity in America (Fuse Marketing, n.d.).
Now more than ever, contemporary United States markets are
becoming more ethnically diverse, and are displaying more unique
cultural values and customs (Cho et al., 2004). However, while minority
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populations have been growing rapidly, and account for over 25 percent
of the total United States population, only slightly more than a quarter of
all major companies have altered their marketing strategies accordingly
(Angell, 2000). Recent decades have seen an extraordinary shift in the
interest of the buying habits of ethnic and racial minority groups,
particularly Asian- and Hispanic-Americans (Stages of Innovation, 2000).
In part as a result of the increasingly noticeable shift in
ethnicities within the United States as well as technology, the latter half
of the twentieth century witnessed the fragmentation of mainstream
American media. The emergence of new television networks, social
networking, and mobile platforms, has given consumers more options
for news and information than what had been previously available
(Stages of Innovation, 2000). And while the recent boom in diversity
within America presents marketers with a great opportunity to capture
new target markets, it also presents problems. Today’s multicultural
American citizens are retaining their native cultures to a greater degree
than did their predecessors; a practice that has been reinforced by the
growth of foreign language in business and the media (Stages of
Innovation, 2000).
Capon has pointed out that ethnic marketing has been a
common practice for marketers for quite some time. However,
marketing specifically to ethnic groups has gradually risen in difficulty,
in no small part to the rise of technology and the multiple platforms
available to consumers and marketers (Angell, 2000). As a result, some
companies had to pull back from ethnic marketing because they
discovered their efforts were ultimately ineffective, and the resources
required were greater than the profits it produced (Angell, 2000).
Furthermore, there is a need for companies to learn how to
utilize multicultural marketing effectively, as the surge in ethnic
population is creating enormous opportunities with greater purchasing
power among ethnic markets (Cho et al., 2004). According to key
cultural theories, ethnic audiences feel more comfortable with culturally
accommodating messages and respond at a higher rate to specifically
culture-targeted advertisements (Cho et al., 2004). Therefore, in order
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for marketers to successfully capture the attention and favor of the
rising Hispanic- and Asian-American populations, they must develop an
understanding of cultural norms for these respective markets by
studying their values, wants, and needs (Cho et al., 2004).
Changing demographics, technological, social, cultural, and
media environments reinforce cultural diversity within the United
States. Recognizing the explosive growth of ethnic markets within the
United States, marketers can develop enticing messages that these
lucrative markets will quickly identify with (Cho et al., 2004). The effort
of Comcast Xfinity is an example of this. Early in 2011, Xfinity launched
a cross-platform en Espanol package. By taking this action, Comcast
sent the message to Hispanic consumers that it would continue to try to
improve programming for them (Martinez, 2011).
Comcast’s release of Xfinity en Espanol is just one of the many
efforts to better cater to a demographic that has become the nation’s largest
minority group (Martinez, 2011). According to the U.S. Census Bureau,
more than half of the total U.S. population growth from 2000 to 2010 was
due to the enormous 43 percent increase among Hispanics, from 35.3
million to 50.5 million by the end of the decade (Martinez, 2011).
Asian-Americans have been a particularly interesting segment
of the population for investment firms and financial institutions at large
(Angell, 2000). In contrast to the experience of the majority of members
of the Hispanic-American population, the Asian-American population
possesses the highest median income within the United States, which
means they are the most sought after customers within the financial
industry (Angell, 2000). These two industry examples show the
correlation between American companies’ future potential and success
and their development of a long-lasting relationship with minorities,
specifically Hispanic- and Asian-American. This is where increasing
cultural understanding leads to more effective marketing techniques
and strategies.
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Advertising
Advertising is believed to act as a mirror reflecting the culture of a society
by decoding, and then developing messages to transfer current cultural
meanings (Cho et al., 2004). Specifically, words, music, and video
advertisements are considered a form of social communication that
captures the cultural values of a society or target market (Cho et al., 2004).
Marketers must comprehend that advertising is not only
influenced by the cultural values of its target market, but also acts as an
agent of its own, capable of having significant influence over cultural
values (Cho et al., 2004). A member of an ethnic group can easily
misconstrue marketing targeted towards the general population;
cultural sensitivity (or attention to cultural detail) can make all the
difference when marketing to ethnic groups (Angell, 2000).
The issues that arise in marketing to ethnic groups include:
confronting a different cultural context, recognizing diversity within
minority groups, and addressing dynamic populations (Stages of
Innovation, 2000). Furthermore, while they are the largest minority
market within the United States, the Hispanic market is the most
complex due to the extreme variety in cultural backgrounds and
presence of subcultures (Stages of Innovation, 2000).
In marketing effectively to any audience, the identification and
incorporation of appropriate values is essential. Ethnic marketing,
however, introduces additional difficulties of having to address
fundamentally foreign value systems (Stages of Innovation, 2000). Some
of the aspects of Hispanic- and Asian-American societies that marketers
must study are family structure, religion, gender roles, and significant
cultural-historical events if they wish to develop effective advertisements
(Stages of Innovation, 2000).
Cho (2011) has explained that marketers can successfully reach
these growing minority markets by using the multicultural marketing
distinctiveness theory. Distinctiveness theory states that a person’s
distinctive traits in relation to other people in the environment will be
more salient to the person than universal traits. Application of this
theory dictates that marketing programs accurately reflect the
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distinctive cultural characteristics that have become more noticeable in
the United States. If marketers are able to make this a reality, and
convince members of the Hispanic- and Asian-American markets that
their distinctive traits are in the foreground of American culture, those
members will be more likely to be able to participate in and respond to
cultural marketing appeals (Cho et al., 2004).
Recognizing the importance of marketing to these growing
minority markets, many companies are using multicultural
segmentation and customized marketing strategies to appeal to ethnic
consumers. In fact, over half of the Fortune 500 companies were using
some form of multicultural marketing strategies by 2004, whether it was
customized advertising, customized promotional activities, culture
specific product lines, or unique packaging (Cho et al., 2004).
In addition to this, many companies have taken advantage of
the technological age by realizing that use of social communication
networks are strong within many ethnic communities (Stages of
Innovation, 2000). The strength of informal communication networks
provides additional avenues, and incentives, for companies to be
participants in ethnic community activities (Stages of Innovation, 2000).
Just as research has illustrated the need for United States’
companies to recognize the enormous growth in the Hispanic- and
Asian-American markets, it has also indicated some of the most
important steps necessary to determine an effective marketing strategy
to these minority groups. However, the increased number of media
platforms, and the existence of various subcultures within the Hispanicand Asian-American markets, has made it more difficult to both create
an effective targeted marketing message, and develop a long-lasting
relationship with ethnic consumers.
The Impact of the Research
In spite of the amount of research done on the growth of the Asianand Hispanic-American subcultures within the United States, many
marketers have done little to alter their marketing strategies accordingly.
This is not necessarily due to a lack of trying, but more due to the
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current technologies that have made it very difficult for marketers to
effectively reach these two subcultures. While implementing a successful
marketing strategy is not a simple task and many marketers have not
made the concerted effort to attract the Asian- and Hispanic-American
subcultures, those that have, have reaped the benefits.
The effectiveness of a marketing strategy depends on the
product or service that is being marketed to an audience. As an
example, you cannot possibly hope to sell laundry-drying machine to a
consumer in certain parts of Italy, because there is a cultural preference
to air-dry clothes in the consistently warm and dry weather. The point is
that marketers need to exercise due diligence in performing background
research on which subcultures would find the greatest utility in using
certain products, and then capitalize on these research findings.
Another interesting point made in current literature on the
topic of multicultural marketing is the notion that advertising is not only
influenced by the cultural values of a target market, but also acts as an
agent of its own, capable of having significant influence over cultural
values. Usually, when a brand becomes synonymous with a subculture,
it is because the subculture has begun to consume the product and
services instinctively, because their parents, friends, and siblings all use
the product or service as well. An example of this is the Barilla pasta
brand. Barilla has become the brand of pre-made pasta that most
Italian-Americans pick up in the food store, simply because that is the
pasta their parents made them when they were children. During this
time of unprecedented growth for the Asian and Hispanic subcultures,
companies have a great opportunity to develop a long-lasting
relationship with one of these subcultures, through a product or service
which could become part of that subculture.
However, for those companies that seek to attract more than
one subculture, a larger challenge looms. The previously mentioned
multicultural marketing distinctiveness theory is a strategy that
marketers can employ to assist in achieving this goal. This theory states
that a person’s distinctive traits in relation to other people in the
environment will be more salient to the person than are universal traits.
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Following this theory, marketers must once again perform a significant
amount of research to discover which traits each of their targeted
subcultures values most. From there, marketers have the option to
depict their product in multiple ways, each designed to attract distinctive
subcultures. Or the marketer can develop a singular message that
incorporates multiple distinctive traits to secure the purchasing power
and loyalty of multiple rapidly growing subcultures in the United States.
Returning to the Asian and Hispanic Markets:
The Next Generation
In order to understand the growth of the Hispanic community, it is
necessary to examine the sources of that growth. Johnson, a sociology
professor at the University of New Hampshire, has noted that “it is
striking that the Hispanic population could grow at such a rapid rate,
despite a 13.7 percent decline in immigration. During the first years of
this decade, natural increase accounted for approximately 50 percent of
Hispanic growth, but in the last year it accounted for more than twothirds’’ (Roberts, 2009). The implication of this is that marketers also
have the challenge of facing not only the first generation of Hispanics,
but also the second generation of this subculture.
Marketing to second generation Hispanics requires a different
approach. As noted by Johnson, this is one of the fastest growing
markets in the U.S., and unlike the more Spanish-speaking immigrants,
members of the second generation speak a lot of English, spend a lot of
time online, and have a lot of influence on the purchasing behavior of
their families. Microsoft’s MSM Latino and its partner, MRM Worldwide
have recognized that the old approach to marketing to Hispanics is too
simplistic and offer advice to marketers on how to advertise to this
second generation consumer group (Kang, 2008).
Researching the Culture
While there are a variety of possible marketing strategies and
techniques for marketers to employ in their goal to reach the
increasingly important subcultures in America, all revolve around
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one crucial theme — that research on the subculture is necessary. Failing
to do so can be catastrophic for a firm, and can result in negative
publicity rather than positive promotion of the product or service. An
example of this is the recent failure of KFC’s message to African
Americans regarding their chicken products, using the spokesperson
Mary J. Blige. Many African Americans interpreted this commercial as
racially insensitive; as a result, KFC withdrew the marketing campaign,
undoubtedly costing the company millions of dollars.
This necessary research on Hispanic- and Asian-American
subcultures can be founded on certain basics, already known about
these subcultures, including the following basic assumptions/
discoveries which can underlie a marketer’s message(s). The HispanicAmerican culture has been known for its brand loyalty, for being highly
concentrated geographically within the United States, for being very
media focused and savvy, and for being attracted by Hispanic
celebrities/actors who sponsor certain products.
The Hispanic market has a median age of 23.6, while the
United States as a whole has an average of 32. The average Hispanic
family contains 3.5 people, which is significantly larger than other U.S.
households. This larger family size implies that Hispanic families spend
more on groceries, they tend to regard children’s clothing as a matter of
pride, and are not interested in saving time if it means the job is not
getting done properly (United States Census Bureau, 2011). The role
played by the family is huge in the Hispanic culture, as they generally
prefer to spend time with family, which influences their consumption
activities. Religion and church also play a large role within the Hispanic
family (Carmichael, 2011).
On the other hand, Asian-Americans are characterized as the
most affluent and best-educated subculture in the United States. Unlike
Hispanic-Americans, the Asian subculture is the least brand loyal, but
the most brand conscious, and perhaps the most careful consumer. The
Asian-American subculture is geographically concentrated in New York
City, San Francisco, Houston, Los Angeles, and Seattle. Recent research
has found that their income is above the national average, and one-third
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of the population spends more than $100 a week on groceries. There are
also several problems that are encountered when marketing to AsianAmericans, including translating messages correctly to Asian media,
overlooking complex differences between various Asian subcultures,
being insensitive to cultural practices, and a lack of media available to
reach the average Asian-American (Solomon, 2011).
While, these may be very general findings regarding the Asian
and Hispanic-American subcultures, marketers would do well to start
developing their messages based on this research. One theory that can
be employed to assist marketers in reaching the Asian- and HispanicAmerican markets is the progressive learning model (Solomon, 2011).
This model assumes that people gradually learn a new culture as they
increasingly come in contact with it. However, Asian- and HispanicAmerican subcultures are insistent on continuing to practice their
traditional cultures even as they adapt to life in the United States. This
theory proposes that marketers take the time to examine the
acculturation process of both subcultures, to understand what parts of
mainstream society they identify with, and the parts to which they are
opposed.
Conclusion
In conclusion, because of the growth of these market segments it is
obvious that marketers can benefit from doing proper research, and
using the appropriate learning models to understand what is important
to Asian- and Hispanic-Americans subcultures. Success in these two
tasks can help guarantee the development of successful marketing
strategies to these groups with the objective of gaining brand loyalty
from the fastest growing subcultures in the United States. In order to gain
entry for various products and services within the culture of a group,
understanding that group, in all its variations, is a necessary first step.
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