Marketing to the multifaceted Black consumer

To attract Black consumers, brands must demonstrate quality, social mission, and good value.
Video

Despite the unevenly distributed human and economic devastation of the COVID-19 pandemic, Black consumers’ collective economic power is set to expand dramatically, from about $910 billion in consumption in 2019 to $1.7 trillion in 2030. To authentically serve Black consumers, companies must make holistic investments in meeting their needs. In this video, McKinsey partner Shelley Stewart, coauthor of “Black consumers: Where to invest for equity (a preview),” outlines the opportunities and action items companies can take to increasingly—and more effectively—serve diverse customers.

Edited transcript

Defining the Black consumer

The really interesting thing about Black consumers is that they’re not a monolithic group. In fact, if you do an attitudinal segmentation for the Black consumer, which we did, you find two additional segments that get muddled if you do a broader segmentation of consumers in general. So if you’re working from [the standard] five-segment view of the world, you’re missing the nuances and therefore an opportunity to better tailor your products and services to Black consumers.

Today, they [Black consumers] spend around $900 billion a year, and by 2030, we expect that number to grow to around $1.7 trillion. If you look at granular data around where Black people live, and at the forward trend and trajectory of their consumption, Black-consumer spend is actually projected to grow faster across various census tracts than [the spend of] other segments of the population. This has to do with dynamics around the demographics of the Black population, its higher educational levels going forward.

We found in our research that Black consumers are much more likely to seek out and place emphasis on brands that are trustworthy, have a clear social mission, appeal to their cultural values, and generally have credibility among the Black community. In some consumption categories, we also found that there is a real emphasis on clean and/or healthy products that are priced well for good value. Our research found that for Black consumers, key buying factors are quality, customized products or the ability to customize, and (again) the credibility of brands.

Another interesting finding is that Black consumers are more heavily weighted in the trend-setter segment, which includes around 30 percent of Black consumers. So these are folks who discover new products and services and proactively share them with their peers. This presents a real opportunity. If you can win these Black consumers as customers, they’re going help you expand the recognition of your brand through their network and beyond.

How brands can get smarter about marketing to Black consumers

There really is a huge opportunity to leverage the data that’s out there as well as create new data as part of companies’ market research and market-insights process that’s specific to the Black consumer. The good news is that some work that we’ve done can give a bit of a head start.

We’ve spent significant time understanding the different attitudinal segments that exist in the Black-consumer market. We have a pretty granular view of the demographics at a ZIP-code level. And so there’s increasing fidelity and granularity around the Black consumer and what that opportunity is. We’ve turned some of those data into tools and assets that we think can really help accelerate opportunities to help better serve these consumers.

The good news for companies that want to get serious about serving the Black consumer is that there are some good examples of companies that have been doing it successfully for quite some time and have reaped the economic benefits of being early.

For an example, there’s an apparel brand that currently has an 85 percent satisfaction rate among Black respondents, which is significantly higher than the brand’s satisfaction rate among its broader customer base. The company has a history of publicly supporting Black cultural figures. It is actively investing in Black communities through various initiatives supporting youth in underserved communities. It’s also tying executive compensation to achievement of company workforce-diversity and inclusion goals.

The last example I’ll cite is a beauty brand. Its products were purchased by 50 percent of Black respondents that we surveyed in the past year, 30 percentage points higher than non-Black consumers. They’ve really spent time optimizing their products, really being clear about the price-to-value relationship, and thinking about what their channel strategy is. They’ve centered their social mission. The CEO of the brand is a Black woman, and they just continue to be at the forefront of committing their philanthropic dollars and their supplier-diversity spend to really make clear their commitment to this community.

Channel-specific strategies and policies companies should consider

Brands can ensure that they have a full range of products that offer good value for money. Another way to better serve the customers, to make sure you have products that resonate with them, is by stocking your shelves with products made by Black-owned and Black-led businesses.

Companies should ensure that the in-store staff is diverse and representative of the populations they wish to serve and that they can speak knowledgeably about their products because this is something that Black consumers really value.

E-commerce presents a really exciting opportunity to address some of the challenges that Black consumers face today. We know that they are disproportionately dissatisfied with the in-store experience. We also know that there are geography-based issues with respect to access and availability. Many Black consumers have concluded that online shopping is better. They are more likely than non-Black consumers to engage directly with brands online, browsing their sites, social media accounts, and even written reviews. E-commerce can be a very useful tool for companies to offer affordable products to Black-consumer markets where they don’t have a physical-store footprint, all while appealing to the segment of Black consumers that prefers to source their products and services online which, again, is a significant segment of that population.

How brand strategy, hiring, and operations can earn Black consumers’ interest

To authentically serve Black consumers, companies must make holistic investments in meeting their needs. They can think about this in three main ways.

One is by looking at their workforce. It’s important that the workforce is representative of and connected to the communities the company wishes to serve. More important, companies should place Black workers in decision-making roles that can influence how the organization actually serves these communities.

Two is by looking at how the company operates and instituting policies and guidelines—again, that ensure that the Black community is treated fairly and with dignity. This includes everything from how Black people appear in your advertisements to how they feel walking through your stores to working with Black-owned businesses to source culturally resonant products and services.

And lastly, by looking at their commercial strategy. Companies should consider opening stores and distribution points in Black communities and aligning their R&D activities and dollars to developing culturally resonant products and services. We’ve also found that catering to Black consumers can help brands better serve all customers, particularly as the demographics of the country become more diverse. Developing a perspective on how to serve diverse customers is something that all companies need to be thinking about.

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