The Changing Economy and How African Americans are Taking a Lead Role in This Transformation

African Americans have had a uniquely difficult history in America, one that has been marred by obstacle after obstacle. Not too long ago they were even considered to be two-thirds of a person and were prevented the essential, inalienable rights that we all enjoy today.

Due to great strides made by the African American community and its allies, this is no longer the case. Today, the African American demographic is increasingly making headwinds into higher education, the economy, politics, and virtually everywhere else imaginable. So, many of you are probably wondering, “what are the implications for the United States given that African Americans are slowly, but steadily closing the gap on inequality?”

First, let’s have a look at these demographic statistics coming from the Nielsen Corporation:

• From 2000 to 2014, the nation’s Black population grew 35% more quickly than the total population and at more than double the 8.2% growth rate of the White population.
• By 2060, the Black population will increase from 45.7 million to 74.5 million, comprising 17.9% of the population.
• The percentage of Black high school graduates enrolled in college jumped last year to 70.9%, exceeding that of Whites and Hispanics.
• African American income growth rates outpaced that of non-Hispanic Whites at every annual household income above $60,000.
• The average age of African Americans is 31.4 years compared to 39 years old for non-White Hispanics.

Upon examining these numbers, it should be fairly evident that the African American demographic is one of the most dynamic demographic groups with a promising future in the United States. For the economy, this is quite beneficial. Given the fact that consumers tend to be younger and more influential to modern-day trends, this places African Americans in the driver seat of economic innovation. Companies and entrepreneurs must now compete for the attention of the African American consumer, needing to create a unique way to develop and foster relationships with them.

In order for companies to successfully target the African American demographic, however, they must understand the habits and trends taking place among the community. Look at this chart below that illustrates the growth of African American incomes in the United States.

What this chart tells us is that African Americans are increasingly becoming wealthier, meaning that they are more likely to undertake greater financial investments such as property acquisition, stock investment, and automobile purchases. In order for a company to design a product or brand image, they need to understand that they are dealing with a growing and sophisticated market base, not the stereotypical lower class that some people seem to think of.

For African Americans earning between $70,000 and $100,000, the annual basket ring (the average amount of money spent per household, per year) is $7,358 dollars which is 25% higher than the rest of the Black population. For companies, this is particularly useful because it helps to identify the most effective products that should be developed or focused on in order to turn a larger profit based on income level. Take a look at the chart below.

Breaking down the expenditures of the typical African American consumer, as shown above, the chart shows us just how important and wide-ranging of an impact Blacks have on the economy. African Americans who earn above $70,000 dollars are more likely to spend on housing, personal insurance, pensions, retirement, and apparel than the rest of the population. There are many misconceptions about the typical African American consumer so it is important to dispel any preconceived notions that may draw inaccuracies when developing advertising and marketing methods to attract black customers. This chart proves that point.

So, what are some ways that entrepreneurs and business executives can develop relationships with their African American customer base? Well, one of the most obvious ways this can happen is through the digital media outlet. Technology has played a major role in the dissemination of information and considering that most individuals own at least a television, cell phone, or computer, it would be very effective to reach out to customers in this way.

African Americans spend much more time using technology like smartphones, spending most of their time on Facebook, Instagram, and Twitter. This presents a wonderful opportunity for advertisers to reach out to the African-American consumer base by targeting these websites with their products or messages. Take, for example, the fact that brand affinity indices “show that people who tweet about Empire are 24% more likely to tweet about wireless provider brands than other brand categories or people who tweet about Black-ish are 38% more likely to tweet about travel services.” Understanding these behaviors can better allow marketers to target a specific demographic, but it also reveals how impactful social media and the internet can play on brand exposure.

In particular, African Americans are 96% more likely than non-Hispanic Whites to consider purchasing a product when the product is endorsed by a celebrity. Celebrities can have a major impact on the decision-making process for African Americans when buying products so it is in the best interests of companies to consider utilizing this to their advantage. Using celebrities to promote a brand can most certainly determine whether or not a product will ascend to the coveted status of success.

When we combine the spending habits of the African American consumer, as well as their deep involvement with media and celebrities, along with the increase in education levels taking place across the country, it is indubitable to state that African Americans are in the midst of a demographic renaissance. While there are still many issues with regards to the advancement of African Americans in American society, Blacks in this country are now becoming wealthier, more educated, and more successful than ever before. For companies and entrepreneurs, this revelation is just as critical in the sense that rapid change is being brought to the marketplace. For companies looking to maximize their growth and potential expansion, it is necessary to identify these growing trends and changes occurring in the economy because older methods of advertisement and brand recognition are beginning to become obsolete. In a changing world in which African Americans and technology are rapidly proliferating and becoming closely integrated, companies ought to begin looking at newer, more effective ways of reaching out to this particular consumer base because if not, they will all but surely miss out on a great opportunity for sustained business growth.

Featured Image via Flickr/Tracy O