6 Things to Know When Targeting African-American Customers
Americans might be equal as far as rights and protection under the law are concerned, but as customers, specific demographic groups often behave very differently.
Whether measured by how their socio-economic standing is changing, how their shopping habits are transforming or how their use of media to access entertainment and communicate with others is evolving, different economic groups tell different stories about the state of the American customer.
Savvy marketers and customer experience leaders, therefore, know to approach assumptions about the American marketplace with caution. They also know that they might need to convey a very different message to the various components of their target audience.
One group that underscores the importance of evaluating audiences by demographic segment is the African-American population. Already on the radar for many consumer-oriented companies due to their vast growth in terms of purchasing power, socio-economic standing and educational status, African Americans are also showing unique trends in their response to changes in media, communication and shopping.
Nielsen Media Research discusses "The State of the African-American Customer" in a new report. Call Center IQ breaks down six key-takeaways for those hoping to target the group.
African-Americans Are Becoming Wealthy—At a High Volume
Fact: As years pass, household income generally trends upward. But that upward trend is significantly steeper for African-Americans than the overall American population—between 2000 to 2009, the number of African-American households earning $75,000/year or more increased by 63.9%, a rate 12% better than that of the population-at-large.
Opportunity: Across-the-board, African-Americans are gaining purchasing power and thus becoming more viable as potential customers. Particular opportunity exists for those whose products are strategically-designed for middle, upper-middle and upper classes, since African-American households are rapidly moving into these economic thresholds.
African-American Women Make the Decisions—And They Know That
Fact: Cultural conventions and significant growth in the education and employment of African-American women has solidified them as the key decision-maker within the household. In many cases, they are the head of household, outright.
No matter what the product category, women see themselves as the primary decision-maker—ranging from 77% female to 23% male for health/beauty products to 47% female to 41% male to 12% both for personal electronics.
Opportunity: Women need to be the focus of African-American-targeted branding. Since they are the decision-makers even on stereotypically-male products like electronics and automobiles, product development, advertising and customer-service needs to be geared towards the empowered female (ie, a computer brand targeted to African-Americans might consider aiming for the professional female over the tech-savvy male).
African-Americans Watch Far More TV—And They Watch It Live
Fact: Media buyers often complain of two notions regarding television habits—viewers are watching less television, and when they do watch it, they are increasingly relying on time-shifting tools like DVR, which reduces the impact of messages conveyed in commercials. African-Americans, however, remain significant TV-watchers—their households average 7 hours and 12 minutes of daily viewing, as compared with 5 hours and 11 minutes for the population at large. At an average of 20 minutes a day, their DVR viewing is slightly less than the 24 minutes a day for all households.
While black-targeted shows like "The Game" and "House of Payne" have proven immensely popular with African-Americans, particularly in the coveted 18-49 age demographic, the race’s viewing habits remain quite broad. Shows like "American Idol," "Dancing with the Stars," "Grey’s Anatomy," "CSI: Miami," "NCIS," "Criminal Minds" and "Law & Order: SVU" are also popular with African-Americans.
Opportunity: Television remains a great medium for attracting African-American households. Networks like BET, which directly target the group, obviously make for valuable ad buys, but insofar as African-American television interest is broad and includes many shows without an obvious racial-skew, media buyers should consider whether their ads on major shows like "American Idol" and "NCIS" will be attractive to the demographic.
African-Americans Have Smart Phones—And They Love Using Them
Fact: The smart phone explosion has gained particular footing within the African-American community; as of Q1 2011, 44% of African-Americans had one, compared with 36% of the overall population. For younger demographics, penetration is over 50%. Nielsen specifically attributes African-American smart phone interest to women, who it contends are especially-likely to adopt new technologies that improve life.
Phone ownership is not the only point of differentiation. African-Americans are also significant mobile device users—their monthly talk time is a whopping 1298 minutes, whereas White Americans only average 606. They are also big texters (averaging 907 texts sent or received) and frequently use their mobile devices for email, web, social networking, applications, games and text-alerts (more than 30% penetration for each category).
Opportunity: The potential to seize upon this reality is significant. Mobile companies obviously have an open door to the African-American market, and based on the demographic’s heavy cell phone usage, those who base their value propositions on unlimited plans can make a serious splash.
All companies, meanwhile, should be using mobile media to engage their target customers in the African-American community. Marketing and CRM activity built into SMS text alerts, social media and mobile applications should have significant impact.
African-Americans Have a "High Degree of Brand Loyalty"—The Auto Industry Is Making a Big Play
Fact: Big brands resonate with African-American consumers. Nielsen, which says that members of the racial group tend to exhibit a "high degree of brand loyalty," reveals that commercials for Pretzel M&Ms and the McDonald’s Real Fruit Smoothies stood as African-Americans’ most remembered promotions.
Recently, companies within the auto industry have made a big push towards African-American customers. While quick service restaurants, department stores and motion pictures, all known for spending a lot to target customers within the race, decreased their ad spend in 2010, automotives increased theirs by 10% to become the biggest targeter of African-Americans. Auto insurance companies increased their African-American ad spend by a whopping 125%.
Other industries that increased their targeting of African-Americans were wireless phones, pharmaceuticals and supermarkets.
Opportunity: A continued presence on the radar of African-American customers should pay dividends. They are loyal to those big brands with reputations for value and consistent quality. Those who should be in that class (for instance, those who compete with big African-American advertisers like Procter & Gamble, General Motors, L’Oreal, AT&T and McDonald’s) have ample reason to make a promotional push for more African-American customers, while those developing organizations need to combine simple marketing with consistency in product value and customer service to emerge as a trustworthy brand. Quick gimmicks are not the answer for targeting African-Americans.
African-Americans Spend Less Per Shopping Trip—But Are They Disenfranchised?
Fact: One potential reservation some might have about aggressively-targeting African-American customers stems from the fact that despite shopping more frequently than members of other racial groups, they spend less per trip (and less total), averaging $37 vs. $45 per trip and $6138 vs. $6883 for the whole year.
Nielsen, however, speculates there might be some sort of disenfranchising effect on African-American spending. Though the methodology creates some reservations, Nielsen contends the fact that lack of transportation and lack of major retail development in urban areas might have an adverse effect on shopping trip spending.
It points to the fact that African-Americans with household income over $100,000 behave more like members of the other racial groups—they make less trips but spend more per trip (with the presumption being that they have greater access to all-inclusive stores, which allows them to buy many things in a single trip). In fact, compared to similarly-wealthy non-African-Americans, high-income members of the racial group spend far more money per trip at major chain—a fact that is especially true at premium stores like Whole Foods.
More evidence for the accessibility argument comes from the fact that African-American customers are more likely to frequent discount establishments (dollar stores, for example) and yet less prone to deals. This indicates that frugality is not the only driver behind the lower spend per trip or the frequency of attending discount stores—factors like convenience and accessibility very likely contribute.
Opportunity: It again seems to tie back to the big brands theory—African-American customers will look to those offerings that consistently meet expectations for value and quality; knowledge that the establishment commonly offers value seems a sufficient alternative to specific "deals" offered to shoppers.
Yet proximity and accessibility matter—and until major retailers and high-end chains make themselves more convenient for larger chunks of the African-American population, they risk losing some customers, particularly urban ones, to convenience and discount stores that result in lower spending per trip. As Nielsen notes, if the major establishments want to target the powerful African-American customer market, they should consider a geographic rollout more friendly to urban areas.