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The adoption of new technologies by particular consumer segments can be misunderstood by marketers who hold preconceived notions of what buyers want and can afford. These assumptions are based on demographic factors such as ethnicity, age, homeownership status, affluence, and place of residence.

However, market behavior is not always logical or determined by cold, hard data. The 2022 report Smart Home Tech: An Opportunity for Growth Lies in Multicultural Consumers sheds light on this fundamental market segment’s needs and wants in the United States.

What is smart home technology?

Smart home technology comprises a domestic infrastructure of wireless and hardwired systems that allow homeowners to control appliances, thermostats, alarms, lights, and other devices remotely using a mobile device, such as a smartphone or tablet. Smart home systems could involve, for example, checking a home’s internal temperature remotely and turning on the air conditioning or heat before arriving, or controlling lighting, curtains, or blinds.

Smart home technologies need a solid infrastructure of high-speed Internet to operate seamlessly, which is why the market is concentrated in urban and suburban areas with readily available broadband connections. A recent report from My Code’s Intelligence Center sheds light on the perception of smart home technologies among multicultural consumers and how other considerations, such as cultural and family values, play out when making tech purchase choices.

The United States multicultural market is primarily urban and suburban, which fares well for smart home technology consumption.

Multicultural consumers consist of mainly three groups: Blacks, Hispanics, and AAPI (Asian Americans and Pacific Islanders). Ninety percent of consumers with a multicultural background live in urban or suburban areas, which means they mostly have the high-speed Internet infrastructure needed to adopt smart home technologies. The report concludes that this concentration in urban and suburban areas is a driving force behind the potential of multicultural buyers from the smart home sector.

Homeowners are a considerable driving force in the smart home market, but this is not the whole story for multicultural consumers.

When assessing or predicting smart home tech consumption, homeownership is often a key factor. Because of the rules and restrictions imposed on rental properties and the sense of belonging to a place, homeowners are perceived to be more likely to invest in smart home automation. However, most homeowners belong to an older demographic, and unless younger family members live at home, they could be more resistant to technological change.

According to the report, multicultural consumers have a higher rate of renters compared to the whole of the US population, with Black individuals having the highest percentage of renters (an index of 162, where 100 is considered average). Even though the homeownership index among multicultural consumers is lower than the average of the whole US population, among AAPIs, it is almost on par (an index of 91, where 100 is considered average).

These numbers might make one think that interest in smart home technologies will be low among the multicultural segment, but this is not necessarily the case. This is an assumption that can limit marketers’ perspectives and hinder the potential market growth.

Access to the Internet is not as universal among multicultural consumers as one might think, and this has implications for the adoption of smart home technologies.

The most crucial factor that determines smart home adoption is Internet access. One might assume that Internet access is universal in the United States, but there are still significant gaps between different subgroups of multicultural consumers.

Among them, for example, Hispanics are least likely to have wired Internet access home, with an index of 120 of no-Internet access, where 100 is considered average. This means that 20% more Hispanics lack home Internet connections compared to the overall population.

By contrast, Black and AAPI communities have a higher Internet access than the general population, but Black households are less likely to have fiber optic broadband (the fastest Internet solution). Key in the study is the finding that Wi-Fi is almost universal among multicultural homes, irrespective of whether users own or rent a home.

It all comes down to obsession and making tech desirable for tech adoption.

Markets sometimes act unpredictably, as emotions play a prominent and determinant role in consumption habits and turning potential buyers into customers. Home technologies are associated with values such as class, accomplishment, luxury, comfort, belonging, and newness.

It is no surprise, then, that cold facts such as homeownership indices do not always fully correlate to spending choices and consumption habits. According to My Code’s report, renters are more interested in smart home technology than one would assume. There are a few factors that inform this trend, such as age. As mentioned, homeowners tend to be older and a little less open to new technologies.

But the report found something quite interesting when asking multicultural respondents how interested and obsessed they were with technology on a scale of 1 to 100. While the overall US population’s average rating was 68, multicultural segments were placed in the 69-73 bracket.

Similarly, the proportion of respondents who indicated tech interest in a range of 90-100 was higher among multicultural consumers, with the Black segment being the most “tech-obsessed.” The AAPI cohort is the least tech-obsessed among multicultural consumers, on average.

Even though homeownership and Internet access are essential factors when determining the potential of a market segment in the technology market, they are not definitive as emotional aspects sometimes override marketers’ assumptions. In the innovative home sector, obsession is king. As a segment, multicultural consumers are a significant, fertile ground for tech market expansion, and products and campaigns need to talk to and harness diversity.

Contact us today to learn more about our report on smart home technology.