How Race Affects Buying Power
By Leslie Walker No matter where you are or what you’re doing, you are bombarded with billboards, digital promotions, and other forms of advertising. Companies are constantly marketing their products to you in an attempt to draw you in as a consumer. But have you ever wondered why certain advertisements are always popping up around you? Well, one reason is because of your buying power. It’s an important statistic when it comes to how businesses market themselves. It’s the amount of money a consumer or group of consumers has to buy goods and services. In order to efficiently evaluate a demographic’s buying power, a business has to “identify a group that is interested in their product and has the means to buy said product,” (Candice Bonfiglio, Marketing Officer at Republic Bank). This affects the type of products offered and the way in which they are advertised, depending on the consumer’s buying power. There are many factors that play into a demographic’s buying power, like age, gender, employment, credit and class, but the largest factor is race. According to the Georgia Business and Economics’ study on the Multicultural Economy, the white population has the most buying power with over $11 trillion dollars as of 2014. Followed by Hispanics with $1.3 trillion, blacks with $1.1 trillion, Asians with $696.5 billion, and American Indians with $82.7 billion. Businesses, from luxury brands to convenient stores, will market their products more frequently to the groups with more buying power Studies show that buying power is increasing amongst minorities. For example, in 2014, it was predicted that non-whites would see an increase in their buying power (Statista Research Department, 2014) and those results yielded. Strategically, companies look at both current and projected buying power when deciding how to advertise. “A consumer may not have buying power now, but the potential is high that they will gain buying power later on in life,” says Kathryn Person, a microeconomics teacher at Walter Payton College Prep. So next time you are on Youtube and an ad for a new gadget pops up, just know that company wanted you to see it based on your current and potential buying power, along with other factors.