Terry Soto, CEO of Burbank, California-based About Marketing Solutions Inc., helps clients deepen their understanding of the Hispanic market, and, in the process, boost their sales. Courier asked Soto to share her market insights and offer suggestions to leaders in the travel industry.
Courier: Why is it important to understand multiculturalism?
Soto: America’s population is rapidly becoming majority multicultural, by which I mean people with a heritage other than European. The fact that this dynamic has continued to unfold at such a rapid pace has huge social, political, economic and business implications for the travel industry. The U.S. multicultural population is over 120 million strong and increases by 2.3 million people each year, 191,932 each month, 6,310 every day and 263 every hour. The multicultural population represents 38 percent of the U.S. population and controls $3.4 trillion in buying power.
This market’s growing size, clout and buying power require thoughtful understanding of what they represent to an organization’s bottom line. The need for a culturally focused and strategic roadmap to this consumer has never been greater.
Courier: How does multiculturalism affect consumer trends?
Soto: The multicultural population is not only driving growth for dozens of products and services, but it’s exerting unprecedented influence on the attitudes and consumption habits of non-Hispanic white consumers, upending outdated assumptions and expanding the multicultural market opportunity.
While some worry about the effect that foreign cultures have on American culture, the truth is that America’s culture has always evolved and continues to change. America has its roots in divergent sets of immigrants whose cultures continue to make an indelible mark in modern society.
Courier: Can you give some examples?
Soto: When a multiculturally casted and messaged Broadway show like “Hamilton: An American Musical” can command $800 and up for one ticket—and be sold out for months—it becomes a leading indicator of change and multicultural influence.
Another example of cultural influence on an even broader market is Justin Bieber reaching out to Luis Fonsi and Daddy Yankee, two of the most celebrated artists in Latin America and among U.S. Hispanics, because he wants to be a part of their hit record, “Despacito.” On that recording, Bieber sang in Spanish for the first time in his career. Last spring the “Despacito” video reached one billion YouTube views in 97 days, becoming the second-fastest video to reach the milestone (behind Adele’s “Hello.”)
Keep in mind that a song in Spanish achieved such spectacular fame at a time when nativism is at an all-time high, and there is much concern over protection of borders.
Courier: What about influences outside of entertainment?
Soto: Food is another critical area in which multiculturalism has considerable influence. U.S. consumers have never been so curious about—and adventurous with—their food choices. Hispanic foods, the most ubiquitous in the U.S., is a $17.5 billion industry that is projected to grow to over $21 billion by 2020.
Consumers also can’t get enough of Asian foods, and demand for foods from Japan, Korea, Thailand and Vietnam catapulted to new heights in the past five years.
Younger consumers hunger for diversity in their everyday experiences, including their friends, their music and the countries they travel to—all in search of greater authenticity.
Capitalizing on the multicultural market opportunity isn’t easy. It’s disruptive. It requires effort and an investment of resources, and it doesn’t happen overnight. —Terry Soto
Courier: Does that put older leaders at a disadvantage for keeping an organization vibrant and relevant?
Soto: Many corporate leaders and business owners, including those in the travel and tour industry, are older boomer- and senior-aged non-Hispanic white individuals. Meanwhile, younger consumers make up a sizeable proportion of today’s economically vibrant consumer base, and they are considerably more diverse. This age and cultural gap creates challenges between older marketers and younger consumers.
Older generations often have a challenging time relating to and connecting with younger ideals, many of which are shaped and influenced by multiculturalism. They are set in their ways and have insulated themselves in homogeneity, which is reflected in where they live and with whom they socialize. This can hurt their businesses, though.
Younger generations, the most racially and ethnically diverse in history, see the world much differently. This population is comfortable with diversity and relishes cultural differences. In fact, it’s common for younger generations to choose where they live, shop, go to school, and travel and play based on their ability to access and enjoy diversity.
Courier: How, then, do older tourism professionals tap into younger markets?
Soto: Executives who engage me are typically challenged by multiple priorities and growth objectives, and they are asked to accomplish much with limited time, people and budgets. Many are keenly aware of demographic changes and expanded buying power among multicultural consumers, but their unfamiliarity with multicultural segments—and their own mindset constraints—often affects their willingness to build the internal capabilities necessary to understand and capture multicultural sales.
Many leaders find themselves in this predicament. They simply do not understand why or how they must align their organizations to accelerate sales among multicultural segments. As a result, they continue to ignore consumers in the very segments where growth requires attention and change.
Courier: What are some steps these execs can take?
Soto: Fear of the unknown and risk aversion are common distractors, especially when other priorities are tugging at them, but this is counterproductive. By the time a company asks for my help, they’re already feeling the impact on sales and can’t afford ignore market realities any longer.
I advise your members to work through the same exercise I offer clients who are truly interested in understanding their potential with multicultural segments—and in accelerating sales:
- Think about your company’s goals, your strategies and the profile of your typical customer.
- Determine if that type of customer is growing or declining in the markets where your company does business, and ask how that growth or decline will impact business if you do nothing to capture new customers.
- Identify which segments of multicultural populations are most like the customers you target.
- Define the size of high-potential segments and take steps to understand their attitudes, values and buying behavior regarding travel.
- Estimate the potential for new business and work to integrate promising multicultural segments into your planning, strategy development and execution.
At the very least, these steps should help you find out what the market is worth and what you can gain or lose by tapping—or ignoring—it.
Courier: How do people increase their understanding of other cultures?
Soto: Delivering value to customers requires a deep understanding of their needs and wants. Then it becomes easier to give customers what they value. I often tell my clients that we only do well by those people we take the time to get to know, and we don’t do well by people we know nothing about.
I encourage my clients to develop a “cultural sixth sense” to heighten their understanding of what would make their products and services relevant to and valued by multicultural consumers. This means taking the time to get to know those high-potential multicultural segments. They must do the homework.
As with any initiative that requires change, capitalizing on the multicultural market opportunity isn’t easy. It’s disruptive. It requires effort and an investment of resources (people, time and money), and it doesn’t happen overnight. It can take months and sometimes years, but once you’re on the right path, the results are often significant sales growth, high customer satisfaction and fierce loyalty.
Challenge your co-workers to overcome their hesitation and to take an objective look at the demographic, societal and economic impact of multicultural America on your business. It can catapult you into capturing the greatest sales growth accelerator of the 21st century.
Terry Soto is the author of “Marketing to Hispanics: A Strategic Approach to Assessing and Planning Your Initiative” and “Grow With America: Best Practices in Ethnic Marketing and Merchandising.” Her next book, “Finding Growth in Multicultural America: A Certainty for Global Businesses” is due out in spring 2018. For more information, visit her company’s website, aboutmarketingsolutions.com.
Top photo ©abbitt/Adobe Stock
