A few days ago, I was invited to speak to undergraduate business students about the state of the Hispanic segment opportunity in a marketing class. During the Q&A session, someone asked how brands should approach Hispanic marketing in a polarized election year.
I believe that the student's question could reflect similar concerns marketing and business leaders may be asking themselves this year, given the challenges facing programs associated with Environmental, Social, and Governance (ESG) or Diversity, Equity, and Inclusion (DE&I).
Here's what I answered. First, I greatly respect ESG and DE&I efforts, but it's necessary to distinguish between these and multicultural marketing (I wrote about this topic here at Forbes a while back. Here's a link to that article).
For decades, businesses have been using segmentation to drive incremental sales and profits by identifying consumer cohorts with something in common (e.g., age, gender, geography, income, education, lifestage, shared hobbies among others). With the growth of the diverse ethnic segments, led mainly by the Hispanic consumer segment, it is unsurprising that brands have been demonstrating a higher level of interest and have been increasing their investments in this segment. Selecting Hispanic consumers as a growth priority segment is just another segmentation approach marketers can use to maximize profits.
While the Hispanic consumer segment has changed over the decades, most of its members still retain a significant level of affinity for Latino culture, even though the majority of US Hispanics are now US-born. The idea that most Hispanics would naturally assimilate and behave like the "rest of the country" (aka the failed concept called Total Market) is not happening, as several studies have shown over the past decade.
This can be illustrated by a compelling study commissioned by the We Are All Human Foundation in partnership with Nielsen a few months ago. In this study, one of the questions asked was, how much of the Hispanic consumer's values are reflected by brands? Surprisingly, only 45% of the respondents indicated that those values are reflected by brands, a decline of 9 percentage points compared to a previous version of the same survey conducted in 2018.
These results are more concerning when one looks at the answers from Gen Z Hispanic respondents, as only 41% believe Hispanic values are reflected by brands, down from 59% in 2018, a 19 percentage points decline in only five years.
They may also reflect a disconnection between what Hispanic consumers expect from brands when recognizing them as part of a broader society and individuals with a rich and proud culture. A common mistake in several marketing plans is to assume that just because most Hispanic consumers are born in this country, speak English well, and connect with the Anglo culture, they have necessarily abandoned their connection to their Hispanic heritage.
I spoke with Claudia Romo Edelman, founder and CEO of the We Are All Human Foundation, and asked her about the conclusions of their study:
'The 2023 Hispanic Sentiment Study showed that, five years after we first fielded research in the community, we are seeing an enormous upsurge in Latino unity and pride. More and more Latinos are embracing our Latinidad — we are leaning into our values, heritage, optimism, resilience, love of family, and our language. And increasingly, despite our diversity, we see ourselves as a united community. We are transmitting our culture, telling our own stories, understanding our economic and political power, and learning how to leverage it.
With so much positivity, the disconnect with major brands is startling. Latinos want to see diversity. We are watching more Spanish media. We want to see ourselves represented authentically, and we don't think we are there yet. I think the most important insight on brands, however, is that brands that engage directly with the community, supporting Hispanic progress in ways that are appropriate for the community and true to their brand, will gain loyalty, often for a lifetime. Grassroots marketing is critical and a huge opportunity for brands.'
Leveraging Hispanic heritage and culture provides significant opportunities for brands and advertisers to approach the Hispanic consumer segment and offer a nuanced view of their existing plans, what we call a "wink" in the industry, elements that can further enhance the brand's message appeal, increasing the probability of higher awareness, consideration, and purchase. Moreover, culture can also impact the way consumers shop for products and services, and by tapping into cultural and heritage backgrounds, brands can unlock growth that otherwise would have been harder to capture.
Now more than ever, it is essential for brands to recognize the gap observed above and work to create marketing and business plans that combine the idea of including Hispanic and other ethnic minorities into their plans without just treating them as part of a one-size-fits-all approach. Brands that ignore the need for specific Hispanic marketing plans risk over the years to disengage the segment that represented 51% of the country's population growth, according to the last census results.
And that risk brings me back to the question mentioned at the beginning of this article. The idea of investing in Hispanic marketing transcends politics; it is, first and foremost, a business decision.
Both major political parties understand this, and that's why politicians from both sides of the aisle have actively engaged with specific marketing efforts, in language and in culture, to connect with Hispanic voters. Brands and corporations that ignore this fact may risk limiting their growth prospect today and for years to come.
