Developing economies of scope: focus on Hispanic and African American markets: the ninth largest world market.

Author:Coronel, Francisco


The United States population of Hispanic consumers wields a formidable combination of fiscal optimism and buying power in excess of $1 trillion(Marketing Forecast, 2011) The rapid growth and economic power this "majority minority," has triggered the expansion of ethnic marketing efforts in many organizations. Although current efforts focus toward Hispanics, African Americans continue as a strong and important marketing category. Businesses now understand that people of color are a huge source of potential business, which live and think in ways that are in some areas different from the general market. Both minorities, Hispanics and African Americans, have different characteristics. Still, despite all the differences between them, there are opportunities to market the same benefits to both groups, therefore obtaining economies of scope through promotional activity such as advertising and sales promotion. This paper will reveal the rationale for opportunities for economies of scope when aiming at the Hispanic and African American markets through:

  1. Comparing the Hispanic and African American markets

  2. Examining American business response to bilingualism

  3. Examining American business response to the importance of the Hispanic and African American markets

  4. Exploring commonality in the Hispanic and African American markets


According to the Selig Center for Economic Growth at the University of Georgia, in 2008, minority buying was projected to exceed 1.5 trillion, triple its 1990 rate of $456 billion. This is a gain of $1.1 trillion or 231 percent, representative of "major economic strides among blacks and Hispanics" (Miller, 2003). From 1990-2008 overall buying power will increase 148 percent, while Hispanic buying power will increase by an astounding 357 percent and that of African Americans will increase 189 percent during that time period. Jeffrey M. Humphreys, director of the Selig Center also reports that the Hispanic population will increase 137 percent compared with 24.8 percent for the total population. He goes on to note that even if stricter immigration laws are put into practice, the Hispanic population will still grow faster than other groups because of its youth (Miller, 2003).

The Hispanic population growth rate is several times that of white Americans, blacks and other groups The U.S. Census Bureau estimated that 43 million Americans or one in seven, are Hispanic, which makes up about 14 percent of the population (Beirne, 2005). Within the next four years the number of Hispanics is expected to total more than 49 million, with nearly $1 trillion in buying power. Selig Center research indicates that estimates do not account for the 4 to 6 million undocumented Hispanics or the 4 million Hispanics living in Puerto Rico (Miller, 2003). J. R. Gonzales, chairman of the US Hispanic Chamber of Commerce, credits the growth of Hispanic owned businesses to the group's increase in buying power. He notes that "a Hispanic owned business tends to employ more Hispanics, and as the workforce grows, more of the workers move into better jobs, companies employ more people, and pay better wages," thereby strengthening the economic buying power of the Hispanic community (Miller, 2003). The latest numbers indicate that the Hispanic population reached 50 million in 2011, with a purchasing power of one trillion and expected to hit 1.3 trillion by 2015(Packaged Facts 1, 2011).


African American prosperity increased rapidly, most especially during the 1990's with growth in areas such as per capita income, education levels, and home ownership. High school graduation rates among this group now equal that of whites giving them increased opportunity for entry level jobs and higher wages (Miller, 2003). The African American population equals 40 million people, or about 13% percent of the total population, and total buying power of black Americans is close to one trillion in 2010(Packaged Facts 2, 2011). This buying power has doubled over the past two decades, and has grown 50 percent faster than that of the U.S. population as a whole (Miller, 2003). In spite of these accomplishments, the African-American consumer demographic is often overlooked or poorly understood. "A misconception stubbornly persists among retailers and others that black means 'poor'" (Pamplin, 2005). However, Selig Center research confirms that unlike other minority groups, African Americans frequently neglect to spend money in their own communities. James Clingman, founder of the Greater Cincinnati/Northern Kentucky Chamber of Commerce said, "It's not power when you spend your money and it doesn't bring...

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