Engage black consumers

Since 2000, the number of black households in the United States grew by 20 percent, while their aggregate household income increased by 45 percent – meaning blacks income multiplied 2.3 times faster than the number of black households, reports New York-based Nielsen in its September 2013 report, "Resilient, Receptive and Relevant: The African American Consumer." Additionally, Nielsen reports that black Americans buying power is forecasted to reach $1.3 trillion by the end of 2017.

Since blacks represent an increasingly valuable block of purchasing power, retailers might want to take a second look at how they understand, advertise to and interact with these consumers when it comes to store brand products. Though it might be more difficult to persuade this group of consumers to purchase store brands, it is not impossible.

Quality, image matter
Retailers first need to realize that black consumers are very conscious of brands and are loyal to national brands, explains Cynthia Perkins-Roberts, vice president of multicultural marketing for New York-based Cabletelevision Advertising Bureau and founder of the website ReachingBlackConsumers.org.

One reason for this loyalty is that black consumers associate a high level of quality with name brand products. For example, Perkins-Roberts points to research that states that surveyed black consumers were 9 percent less likely to agree with the statement "Generics/store brands are just as effective as brand-name products," and 11 percent more likely to agree that "Brand name is the best indication of quality."

Black consumers are often strapped for cash, states Tonya Roberts, multicultural analyst for global market research firm Mintel. And when in doubt as to the efficacy or the taste of a store brand product, they tend to be unwilling to take that gamble and purchase a product that might not perform. Furthermore, if they do purchase a store brand and have a negative experience, they will likely never buy a store brand product in any category from that retailer again, she says.

Another reason black consumers are loyal to national brands is that they feel the products they buy make a statement about who they are, Perkins-Roberts states. Thus, the black consumers desire to be associated with a national brand is really their desire to be associated with that brands image. However, as that national brands image changes, so does the black consumers relationship and loyalty to it – meaning that while blacks might be loyal to national brands, that does not mean that they will forever be loyal to any one particular national brand, states "In Plain Sight: The Black Consumer Opportunity," an April 2012 report put out by the Cabletelevision Advertising Bureau and Advertising Age.

"When it comes to their image, I also believe that black consumers associate national brands with being successful and associate store brands with being less affluent," Perkins-Roberts states. "Black consumers believe that a hallmark of their success is having name brand products in all aspects of their life."

Look for opportunities to engage
Retailers might seem to have an uphill battle when it comes to convincing black consumers that store brand products can be of equal quality to, or even better quality than, the national brands. But they can reach out to these consumers. For example, sampling and taste testing are critical, Roberts says. Running a promotion where the consumer buys the national brand product and gets the store brand equivalent for free could be another way to get this consumer to try the store brand risk-free.

Retailers could also study which private label categories rank highest among black consumers to gain insights into what makes store brand products in these categories more appealing to them. According to Nielsen, black consumers spend 18 percent of their annual retail dollars on store brands. When Nielsen indentified the top 20 private label category preferences for black consumers, it found that categories such as disposable diapers, paper products, milk/cheese and pet food ranked highest for store brand purchases. Other products in the top 20 mentioned above – prepared foods, frozen vegetables, bottled water, shelf-stable juices and drinks, nuts and sugar/sugar substitutes – were unique to black consumers (not found on other demographics top 20 lists).

One reason for a higher private label spend rate among black consumers could be that "these categories dont really make a difference," Perkins-Roberts states.

"For example, as long as a baby diaper keeps the baby dry and doesnt give them diaper rash, why buy the expensive national brand when youre just going to throw it out immediately anyway?" she asks.

Retailers could use this information for cross-category selling. If black consumers have a positive experience with one store brand product in a certain category, Roberts says, then they are more likely to try another store brand product in that same category. In the baby diaper example, retailers then have a better chance of selling store brand baby wipes to black consumers, as they are already purchasing the store brand diapers. And retailers also could run cross-category promotions such as "buy store brand diapers and get store brand wipes for free."

Receptive to advertising
Another way to address black consumers shopping habits and preferences is by gaining an understanding of how they are influenced both in and out of the store. According to New York-based Experian Marketing Services, black consumers are more likely than the average shopper to say that they always refer to marketing efforts such as promotional displays, lighted graphics or video displays, in-store announcements and demos/samples when searching for and choosing items to purchase. Specifically, Experian found that black consumers are 83 percent, 52 percent and 50 percent more likely to refer to advertising on a shopping cart, on the floor and on the radio/public address system, respectively, than the average shopper. This information could help retailers make positive in-store marketing changes.

When it comes to out-of-store influences, blacks also are highly receptive to advertising in a variety of formats. For example, Experian found that compared to the average shopper, black consumers are 28 percent more likely to purchase a product they see advertised on a social sharing/networking site and 86 percent more likely to be interested in receiving advertisements on their cell phone.

And television advertising is also very effective for reaching black consumers, Roberts says, as they watch more television per month than other consumer groups and are less likely to switch channels when commercials come on.

Celebrity endorsements, too, are especially effective among black consumers. Perkins-Roberts points to research that found that 52 percent of blacks are more likely to agree with the statement that "A celebrity endorsement might influence me to consider or buy a product." As retailers learn more about black consumers, and how they are influenced by advertising, they might want to reconsider where they are spending their advertising dollars to better connect with this group.