Blacks reevaluate spending habits in a tight economy
According to data found in a new report, “The Buying Power of Black America,” now may be the most opportune time ever for businesses to develop a strategy for increasing their share of the black American market.
With the nation slowly recovering from a recession, black consumers represent the margin of profitability in most consumer product categories.
“What the recession did to black America’s buying habits is to give them a reason to re-evaluate how they spent the billions of dollars they earned collectively,” said Ken Smikle, president of Target Market News and editor of the report. “Before tight economic times, companies felt they could afford to take their loyalty — especially to top brands — for granted. That changed during the downturn. Price was a bigger factor driving purchasing decisions. Now brands have to earn the loyalty of black consumers all over again. Black consumers are asking brands, ‘What have you done for me lately?’”
For the past 17 years, Target Market News has published the only report that breaks down the impact of the black consumer market in dollars. Now approaching a trillion dollars in spending, the earned income of Black America is already the 16th-largest market in the world, and is on the verge of surpassing the gross national income of Mexico.
This 105-page report breaks down how much of black consumers’ $836 billion in income was spent during 2011 on clothing, entertainment, food, beverages, toys, consumer technology, cosmetics, autos, travel and dozens of other categories.
Another factor causing a shift in the loyalty of black consumers is social media and increased access to business information. The new edition of “The Buying Power of Black America” includes a section detailing the dollars spent by major companies on advertising in black media. It also compares the ad spending of companies by categories.
“African Americans can now rely on their own research about brands,” said Smikle. “This is one of the reasons why we added a section that tracks how much leading advertisers spent in Black-oriented media. There is a correlation between building and sustaining black consumers’ patronage and the dollars spent to reach them through advertising. That fact has not changed in this diverse media environment — it has become an imperative for brands that want success.”
Additionally, advertising is a key measurement of the economic relationship companies have with black consumers. “The largest single investment that corporate America makes in the black community is in advertising,” said Smikle. “That investment is about $2 billion a year, but it should be at least twice that amount given the importance of the market and the role these consumers play in any company’s bottom line.”
The spending of the top 80 advertisers in black media are detailed in the report. The No.1 company, Procter and Gamble, spent $78.9 million in 2011, while the No.80 company, Apple, just spent $1.6 million.
This article was originally published in the May 6, 2013 print edition of The Louisiana Weekly newspaper.