Futurecasting the U.S. Hispanic Market
February 3rd, 2011
Posted by Jose Villa
Being successful in any commercial, philanthropic, or government enterprise requires anticipating future changes and positioning your organization to address them successfully. These changes can come in many forms, such as changing regulations, techn
ological advances, or changes in consumer demand. One tool I have used over the years for mapping out and understanding such changes is called “Futurecasting.”
Futurecasting is a heuristic technique that helps envision future consumers, products, industries, competitors, challenges, or opportunities; by combining forecasting and imagination to model future states. Web Personas are commonly “futurecasted” by digital agencies to help plan out long-term digital investments – such as large-scale Websites with enterprise functionality (e.g. e-commerce, personalization, etc.) – so they are adaptable to changing user behavior and motivations. Futurecasting is a flexible business modeling tool and can be applied in various ways. I have found that Futurecasting can be particularly useful when “disruptors” are factored in – exogenous shocks or changes that cause a significant change in trend lines. A classic example is World War II and the resulting “baby boom,” a disruptor that changed U.S. demographics for 50 years when thousands of GIs returned home and started having larger families.
One of the most dynamic segments of U.S. society and business is the U.S. Hispanic market. The last 10 years in particular have seen significant growth, driven by a rapidly growing population and its effects on American culture and business. An interesting question that I think about a lot is how the U.S. Hispanic market will look in the future… in 2, 5 and 10 years for example? One way to think through this question is to futurecast the U.S. Hispanic market.
The first step in futurecasting is to start with basics trend lines and see where things are heading. Let’s look at the Hispanic market across four broad trend lines: Population, Acculturation, Media Consumption, and Technology usage.
Population – The 2010 Census figures coming out in a few months will not doubt show a continued upward trend in Hispanic population. The only question is how close the final Hispanic population figure will get to 50 million (up from 35 million in 2000 and 45.5 million in 2009). We also know that Hispanics have spread out from traditional gateway states in the Southwest into the Midwest and South in increasing numbers. I expect those population dispersion trends to continue, and potentially accelerate, with states like California, Nevada and Arizona still reeling economically from the current recession. We also know that Hispanics are getting younger – currently 50% of all U.S. Hispanic are under 26. In fact, the largest age cohort among Hispanics is ages 2-11 (making up 21% of the population). There is no reason to think that Hispanic birthrates will slow down, particularly with a growing population base. So we can assume more Hispanics that are younger, and spreading out living in other parts of the country.
Acculturation – The Hispanic market has generally been viewed thru the prism of the 3-part acculturation model (acculturated, partially acculturated and unacculturated). Currently, roughly 50% of the market falls into unacculturated, 30% are acculturated, and 20% are partially acculturated. Moving forward, with such a
large and young U.S.-born Hispanic population, trends point to a redistribution towards partially acculturated and acculturated. Looking into the future we can assume more acculturated and partially acculturated Hispanics, both in absolute terms and as a percentage of the population.
Media Consumption – Hispanic media consumption has begun to change with the overall growth and increased adoption of digital media, albeit slower than in the general market. One result of this gap (in 2009 only 58% of Hispanics had access to the Internet vs. 71% of those in the general market), is that there will be a “catch-up” effect, particularly as the price of electronics and broadband access continues to drop. Looking towards the future, we should see a dramatic shift in Hispanic media consumption – either by increasing the overall time they spend with media (by adding digital media) or as a shift away from traditional media.
Technology Usage – Acculturated and partially acculturated online Hispanics already show a strong propensity to be early adopters of new technology. However, as AOL’s 2010 Hispanic Cyberstudy discovered, less acculturated Hispanics are actually more likely to be early adopters of new technology. Looking into the future, there is no reason to expect that behavior to change, particularly with falling technology prices.
Put these trend-lines together and we start getting a pretty interesting picture of Hispanics in the next 2-10 years:
• A younger population, that is more acculturated
• A geographically diverse market – that is quickly growing in the South and Midwest
• A group of consumers that is spending more and more time consuming digital media (in many cases for the first time)
• And a consumer base that is pushing the technological envelope, leading the adoption of new devices such as tablets, 4G smartphones, and emerging gaming platforms.
But things get really interesting when we start looking for potential disruptors and the resulting shifts and opportunities. Here are a few for you to ponder:
Retro-acculturation – The retro-acculturation trend within the Hispanic market is nothing new – 2nd and 3rd generation Hispanics actively reconnecting with their Hispanic heritage and culture by learning Spanish, listening to Latin music, and looking for authentic “Latin” experiences. Just look at the growing cottage industry of Spanish-language children’s books to get a sense of what’s happening. Now consider a huge US-born “Hispanic” millennial population that is starting to have their own children. I can see retro-acculturation splintering that nice and clean 3-part acculturation model. I could imagine at least one additional segment appearing (“retroacculturated”) – maybe more. This disruptor could also have a profound impact on what kind brand experiences these future Hispanics look for. A desire for Latino authenticity seems like a natural next step, which could threaten some established “cross-over” brands that are no longer viewed as real (think of popular Mexican food chains or shelf-brand salsas).
Changing Diets – If you don’t think American’s are changing what they eat, just visit your local McDonald’s – greasy egg sandwiches are giving way to granola and fresh fruit. As Americans as a whole become increasingly health conscious, the trend will likely reach all segments of the Hispanic population. What happens when those high fructrose corn syrup filled tortillas and preservative –filled canned frijoles don’t cut it for Hispanic consumers? Hispanics may not start flocking to Whole Foods tomorrow, but there might very well be a need for something in between that and the discount Hispanic grocery chains that dominate the market today.
Mixing of new cultures – What happens when Mexicans and other Hispanic groups start settling in places in like Tennessee, Ohio, Alabama, and Georgia? I think that the potential changes would be more significant than the appearance of new Spanish language media in those markets (especially over 5-10 yearsCan you imagine the inevitable fusion that results when guisados meets soul food? Imagine country and Spanish boleros forming new genres – it’s actually already starting to happen. How long before soccer becomes a popular sport outside of the Southwest and East Coast? Lots of new products, genres, and demand for products and entertainment that probably don’t exist today.
A “Hispanic Baby-Boom” – Finally, there is a potential “baby” baby-boom coming from within the Hispanic market that could have a profound effect on the Hispanic and overall U.S. population. With close to 20 million Hispanics at or entering child-bearing age over the next 10 years, the potential for a new baby boom is real. The resulting demographic shifts could reverberate across U.S. culture and commerce for the next 50 years.
Regardless of whether some or all of these disruptors come to pass, futurecasting paints a clear picture of a fundamentally different Hispanic market than the one we know today.
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