Marketers get a "C" grade for their attempts to reach the African-American market

By Melody McDowell | April 1, 2003

Reading time: 6 minutes

Abstract

Last year, corporations and retailers reported some progress reaching the African-American consumers but, in the main, failed to devise compelling strategies to reach this market. This article examines the conclusions of Pepper Miller, president of the Chicago-based Hunter-Miller group Inc., who tracks and analyzes ethnic marketing trends.

Research Topics:: Diversity Equity & Inclusion (DEI) | Ethnic Research
Industry/Market Focus:: African-American
Content Type: Research Methodology

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Merely average

Editor’s note: Melody McDowell is president of Chicago communications firm Melody’service.

Last year, corporations and retailers reported some progress reaching the African-American consumers but, in the main, failed to devise compelling strategies to reach this market. This occurred, in part, because marketers did not identify and/or exploit industries where African-Americans either dominate or display high activity; nor did they effectively cultivate market segments that spend money and wield enormous influence. Consequently, many marketers were unable to tap into the $572 billion annual spending power of African-Americans and, by extension, did not reap the financial bonanza that reaching out to this market would have yielded. These are the conclusions of Pepper Miller, president of the Chicago-based Hunter-Miller Group, Inc. (HMG), who tracks and analyzes ethnic marketing trends.

Miller gauged corporations’ advertising and marketing trends and strategies geared at the African-American marketing during the past year and, for their limited efforts, awards them a “C” grade. Miller concludes that more comprehensive market research, and the deployment of more relevant strategies, would yield significant peaks in corporations’ bottom lines in the future.

Miller notes positive trends as well as disturbing indicators. Advertising, public relations and marketing firms took a financial hit in 2002. However, the ethnic market enjoyed an 8.3 percent increase in advertising versus a 22 percent decrease in general market advertising.

Despite the upward trend, Miller maintains that this figure is somewhat deceptive. “While the ethnic market recorded an overall 8.3 percent increase in spending in 2002, monies were funneled in disproportionate numbers to the Hispanic market,” she says, attributing this to Census 2000 figures that reported a whopping 58 percent population boom among Hispanics.

However, Miller found it encouraging that, although the amount was slight, there was some increase in funding within the African-American market as contrasted with the dramatic falloff within the general market.

This may be due to demographic trends pertaining to African-Americans revealed by Census 2000 data: they are becoming better educated, they are earning more money and, 50 percent of African-American adults are between the ages of 18 and 34 — the younger age group that Ad Agencies strive to reach.

She also attributes increased spending in 2002 to a heightened segment buzz. This resulted in monies being pumped into the ethnic/urban/multicultural segment primarily by new industry participants.

Miller, however, observed a disturbing trend in 2002: a continuing tendency by “old guard” major marketers to devalue the African-American market.

HMG also noted a variety of indicators that could factor into a devaluing of the segment and possibly a slashing of African-American marketing budgets in the future. These signs were:

1) The explosion of the hip-hop culture. Hip-hop is a powerful means of expression for ethnic musicians. However, its overall image has also pigeonholed the entire African-American Gen-X (18-34) segment as “hardcore hip-hoppers.” According to Yankelovich, 27 percent are African-American Gen-Xers who are “thrillseekers,” while 20 percent are defined as young professionals who earn high incomes, are well educated, and live upscale lifestyles yet are habitually overlooked by marketers.

2) The emergence of the Hispanic population. As marketers prepare their budgets, the dramatic increase in the Hispanic population prompted them to reevaluate their marketing schemes to African-Americans.

3) The assimilation of the African-American market into the general market culture. According to the 2000 Census, African-Americans are mainstreaming into the general market and a new profile of African-Americans has emerged: African-Americans are living in suburbia, traveling abroad, earning graduate degrees and earning upwards of $75,000 in household income. Because this lifestyle mimics the general market, marketers have decreased budgets to the African-American market and turned to general market strategies to reach this emerging market. Miller says marketers fail to understand that, despite their elevated status, Blacks remain true to their African-American culture and are prompted to buy products whose messages appeal to their traditional values.

Additionally, says Miller, corporations and retailers eager to reach the African-American market failed to capitalize on genuine opportunities to reach African-Americans by not identifying fertile industries where African-Americans’ buying habits and lifestyle tilt heavily. This prevented marketers from reaping a marketing bonanza. For example:

Retailers - It is widely held that African-Americans drive fashion trends at every spectrum of the societal ladder from moderate to upscale buyers. According to the Yankelovich African-American Monitor, 60 percent of African-Americans use shopping as a form of entertainment versus 35 percent of whites. They are willing to pay more to maintain their fashion edge. However, retailers have not “fashioned” an effective campaign to effectively reach this shopping-conscious market.
Health and beauty aids (HBA) - General-market HBA advertising campaigns that simply replace white models with African-American models miss the opportunity to talk about HBA issues relevant to African-American beauty needs. African-Americans spend almost $200 million a year on hair care alone and more than three-fourths of that is spent on hair-care products, a $173.9 million industry.
Finance/investments - While banks and insurance companies increased their ethnic marketing outreach, there has been little activity from investment firms. Census data reveal that African-Americans are now earning more and, by extension, are valuable investment prospects. However, says Miller, marketing strategies in this industry continue to be dominated by messages aimed at the general market.
Technology - Studies show that young and upscale African-Americans are active users of online services and heavy purchasers of computers and other technological products and services. In fact, African-Americans have a stronger desire than whites (73 percent to 66 percent) to learn more about and keep up-to-date on the latest technologies. However, corporations fail to acknowledge this heavy use by African-Americans in their marketing messages.
Pharmaceuticals - Despite revelations that African-Americans are medically challenged in disproportionate numbers to their population numbers, pharmaceutical companies failed to tailor messages to African-Americans. Miller says Pfizer and Merck are two exceptions because these firms crafted marketing strategies geared to African-Americans. Miller predicts that this type of outreach will yield positive results.
Travel - Even though the Sept. 11 disaster devastated the entire travel industry and put it in peril across the board, African-Americans continue to outpace other ethnic groups as travelers. Yet marketers failed to exploit this trend.

Additionally, HMG found that marketers did not cultivate the following emerging segments:

Black females - According to HMG, black females are active, involved consumers who are brand-centric. Compared to white females, African-American females have higher life aspirations in terms of the importance of education (52 percent vs. 28 percent), being entrepreneurs (38 percent vs. 15 percent), having the latest technology (41 percent vs. 18 percent) and perceiving themselves to be more sophisticated and sexier (36 percent vs. 12 percent and 34 percent vs. 9 percent).
Black Baby Boomers (35-54) - This powerful segment represents the highest income segment of all African-American consumer groups and has a spending power of $200 billion.
African-American GLBTs (gays, lesbians, bisexuals and transgenders) - With higher incomes and a spending power of $64 billion, skewed younger, and being more politically active, this is a segment that merits a standalone outreach campaign.

Gotten it right

While the 2002 effort yielded only a “C” grade, Miller singled out Wal-Mart, Coca-Cola, McDonald’s, and more recently, State Farm Insurance, as companies that have gotten it right in reaching out to the African-American market. “These companies are good corporate citizens who respect the African-American market and have among their marketing team African-American agencies that have the pulse of the African-American market. They earn an ‘A’ grade.”

Miller also praised new industry entrants, like pharmaceutical companies, the finance industry and not-for-profit cultural institutions, for seeing value in the segment by seeking out new opportunities within the African-American market. She predicts that, if marketers heed the advice of market researchers and others who understand the dynamics of the African-American community, they will be able to reach, penetrate and grab a significant share of this valuable market.