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The African-American population is being recognized as an important market in its own right: that is, a market which needs to be segmented and reached in unique ways, with attention being paid to the messages in ads and to the products being offered. In fact, attention to all the details critical for successful target marketing is necessary.

According to the latest population estimates of 2002 provided by the U.S. Census, currently there are almost 37 million African-Americans, representing 12.7% of the total population of 288.4 million. And Census Bureau projections indicate that the share of African-Americans will grow to 13.3% in 2010, and 13.8% a decade later.

One of the most important demographic changes in this population is the large improvement in the socioeconomic profile of African-Americans. Results from the 2000 U.S. Census show that the median income of African-American households was $27,910, the highest ever recorded (though still less than that of the total population). And among married couples, more than half have incomes of at least $50,000.

In large part, the higher incomes of married couples have been achieved through both spouses working.

In part, these higher incomes are due to a sharp increase in education levels over the past several years. Today, a record eight in 10 African-Americans age 25 or older have graduated from high school, and 17% have achieved at least a bachelors degree. And about a million African-Americans have earned an advanced degree.

Incomes have also increased because of the economic boom of the 1990s. For African-Americans there has been a “bonus” effect as well: More than half of African-Americans (55%) live in the South, where the economic boom has been the strongest. Increasing incomes have also resulted in more African-Americans moving to the suburbs of large cities.

In addition, it is important to note that the African-American population is considerably younger than the population as a whole–the median age is 30.1 years, just over five years younger than the median of 35.5 years observed for the total population. And, like the total population, the African-American population is aging. In 2010, the median age of African-Americans is projected to increase to 32.3 years compared to 37.4 years for the total population.

What are some of the implications? Clearly, African-Americans (like the general population) cannot be treated as one homogeneous group. There are different segments within the African-American market.

For example, black women can be specifically targeted, not only because they head a third of all family households, but also because within married-couple households they tend to be the decision-maker.

Middle- and upper-income African-Americans need different marketing approaches. This is because this is the first generation of African-Americans to reach middle-class status in large numbers–and along with this economic success come aspirations for higher standards of living.

Advertisements probably will be more successful if they touch on the issues of success, achievement and aspirations for becoming more affluent.

Increasing education levels imply that blacks probably will be more demanding consumers and will need financial information on how best to manage their money.

The Ariel/Schwab Black Investor studies conducted annually for the last few years indicate the need for financial information. For example, the surveys conducted in 1999/2000 indicate that three-fourths of high-income blacks who did not invest in mutual funds cited the lack of financial knowledge as a key reason for not investing.

Increasing income levels imply that African-Americans need (and can afford) services like financial and retirement planning, and financial products like mutual funds.

Marketing strategies will need to reach out to blacks living in the suburbs. Many of these suburbs are in the South, which has seen an increase in upwardly mobile blacks who have migrated to the South from other regions.

One-fifth of these “migrants” are college graduates and almost a third are professionals. These segments will need financial information, financial advice, financial planning including retirement planning, and planning for their childrens college education.

The growing number of affluent black households where both husband and wife are working implies a need for sufficient life insurance coverage on both spouses.

Marketing to African-Americans will require different marketing strategies. In the past, it was assumed that this market was a low-income market and was adequately served through debit (or home service) agents. But such strategies will no longer work.

Recent data clearly reveal the growing middle- and upper-income segments among African-Americans. And companies will need to change their strategies to reach out to these segments effectively.

Nilufer R. Ahmed, Ph.D., is a scientist in LIMRA Internationals Market Research Center. She can be reached at nahmed@limra.com.


Reproduced from National Underwriter Life & Health/Financial Services Edition, September 8, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.