According to the Selig Center for Economic Growth at the University of Georgia, African American, Asian and Hispanic purchasing power will grow more rapidly than that of white Americans, and dramatically so for the next five years. Purchasing power is defined as the amount of income, after taxes, available to spend on goods and services. The growth for these groups is attributable to many factors including increasing population, higher than average birth rates, advancement in education, careers and earning potential and other variables.
What does this mean for minority business owners?
Plenty.
What does this mean for businesses in general who want to grow their sales?
Even more.
Many minority owned businesses cater to their specific ethnic market. While I always recommend diversifying your client base as much as possible, the fact remains that many businesses would not survive without their highly targeted market. In some cases it's because of the very specialized nature of the business, for example, ethnic food products or native housewares, clothing, etc. In other cases, there may be language specific reasons, many customers prefer legal, financial, or medical services in their native tongue.
The message for businesses in general that want to further penetrate specific ethnic markets is two-fold: depending on your products and services, you may be able to grow your sales to both consumers and minority business owners. For example, jobbers, distributors, sales reps, even professional services providers may be able to increase their market share by adding appropriate bilingual resources or other sales materials to their mix.
Focusing on the Hispanic market as an example, consider these findings:
* According to a study by Global Insight Inc., of Waltham, Mass., reported in the Wall Street Journal recently, Hispanic spending will grow more than 9% a year, on average, for the next 13 years. The national growth rate forecast is 6% for the same period.
* The study also forecasts that Hispanic spending for most consumer sectors, durable and non-durable goods, housing and transportation, will out pace the national average.
* Fast food purchases by Hispanics will grow close to 8% a year for the next ten years. That is twice the rate forecast as the national average.
* Non-Hispanic purchases of new cars and light trucks will grow about 1.4% a year. The rate for Hispanics is 5.4% - more than triple the non-Hispanic rate.
* According to the Selig Center, Hispanics spend significantly more than the national average for groceries, telephone services, furniture, men's and boy's clothing and footwear.
Similar data are available for the African American and Asian markets. I will cover those markets in future columns.
So what are my recommendations?
First, if you are a minority business, you want to take advantage of the 'insider' information you have about the buying habits, motivators and needs of your target market. Make it a priority to obtain the demographic and psychographic data you need to ensure you can address your customers' needs. Need to know more about demographic and psychographic data? Don't worry I'll cover those in subsequent columns also. Tailor your sales pitch, collateral materials and other sales tools (including your sales staff) to promote the specific benefits you offer.
In most cases you'll be selling the same products as your competitors. Can your service, price, quality or customer care differentiate you?
Second, regardless of who you are, if you want to capture more market share among specific ethnic groups, do your homework. The suggestions I made above apply to you too. Additionally, consider strategic alliances as a way to fill in the expertise and experience you lack. Given the research, learning more about the specific ethnic groups you want to do business with may wind up paying off in both the short and long-term.