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[7 comments]

Missed Opportunities in the African American Market

November 8, 2012

Nielsen's September 2012 analysis of African American consumer buying habits and trends highlights consumer opportunities for businesses. It also points out possible shortcomings on the part of marketers.

Produced in collaboration with the 72-year-old federation of 200 Black community newspapers, the National Newspaper Publishers Association (NNPA), this was the second of three annual installments of a report on Black buying power, consumer behavior and lifestyles. African Americans comprise "a consumer group which continues to experience population growth, has unique generational behavioral trends and characteristics and are still a viable market segment full of business opportunities," according to the report.

Nielsen's predictions were largely consistent with those made by the Selig Center in 2010 regarding African American consumers' spending habits. Nielsen projects buying power of $1.1 trillion by 2015 compared to Selig's forecast of $1.31 billion in 2017.

The Selig Center for Economic Growth produces reports and commissioned studies. Jeff Humphreys, its director and the report's author, said African Americans had increased their buying power over the past decade by some 60 percent. The study forecast that minority markets would continue growing faster than the majority market, where buying power increased by 49 percent over the past decade.

Defining buying power as disposable income, or money available after taxes, Mr. Humphreys added, "the report provides businesses with a valuable planning tool for judging start-up or expansion opportunities and for tailoring advertising, products and media to individual market segments."

Nielsen's insights include analysis of advertising spend in Black media and percentages of Blacks believing Black media is more relevant to them as well as what Black households purchase and use. Age and family composition were broken down along with estimates of where people shop, how much time they spend in various outlets and media used.

Of those insights, perhaps the most significant is the relatively small amount spent on targeted advertising — only one percent of that spent on mainstream audiences — this "despite the fact that Blacks are more brand loyal, watch more TV and less time shifted (DVR) programming than any other demographic group."

Discussion Questions:

How important is it that brands and retailers design marketing targeting African American consumers? What do you think of the argument that that behavior-based targeting trumps demographic-based targeting?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

How likely is it that demographic-based targeting treats consumers stereotypically rather than based on their actual behavior?

Comments:

Brands and retailers should target all currently-defined consumer groups within their trading area ... but do it in such a way that does not exclude prefix-Americans from also being "All American."

The way a consumer behaves is the target key to winning sales, providing it's not trumped by some other decision-making factor within the consumer mindset.

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Gene Hoffman, President/CEO, Corporate Strategies International

Many retailers have already determined that marketing to African American consumers makes sense. Those that service areas with high populations have figured out product preferences and seasonal trends and advertise and stock accordingly. Mainstream brand marketers not so much! There is plenty of opportunity to study behavior and market accordingly.

Savvy marketers have already started down the behavior path, however, the size of the opportunity needs to be understood before diverting too much of your marketing dollar pot to this activity.

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J. Peter Deeb, Managing Partner, Deeb MacDonald & Associates, L.L.C.

This reminds me of the post election republican laments about not focusing more attention on the Hispanic voter. Monday morning quarterbacking; always late, never wrong.

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Ed Rosenbaum, CEO, The Customer Service Rainmaker, Rainmaker Solutions

Behavior-based (including context) targeting is the way to identify the right audience and the right product/offer. The right message/creative to this audience can be informed by other types of data as well as behavior including demographics. Executing at a personalized 1:1 level combining these drives the best outcomes.

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Matthew Keylock, Senior Vice President, New Business Development and Partnerships, dunnhumbyUSA

Specific target marketing to minority communities often emphasizes stereotypes. This leads to backlash. The best way to avoid the backlash is to avoid target marketing. That is one reason brands and retailers don't do well marketing to minorities. They simply choose not to for fear of offending.

Ignoring a specific minority group, you run the risk of offending by ignoring. By actually implementing a target marketing program, now you increase the risk of offending exponentially.

David Livingston, Principal, DJL Research

To give a good example of this, it's 12:15 eastern time right now and only 4 other BrainTrust panelists have responded. That tells me the others have chosen not to contribute for fear of offending. Those of us who have responded have now run a greater risk in offending our minority readers. Those who haven't, are out of sight and out of mind, and will not risk any backlash. Most of us who have responded most likely have no minority customer base, are our own bosses, and can't be fired.

David Livingston, Principal, DJL Research

The question here I think is whether African Americans really constitute a distinct market, and, if they do, the best way to reach it (there is no small amount of self-interest in an analysis produced a "for 72-year-old federation of 200 Black community newspapers"). Certainly we don't have the language barriers that exist with Hispanic or Asian markets. If there are differences at all between African Americans and "other" groups, I think they diminish as income and education levels rise...thus the question becomes very product-specific (like most every other marketing issue).

'notcom'

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