The fastest growing segment of the United States population in the 21st century is ethnic consumers. Recent demographic projections from the U.S. Census Bureau indicate that ethnic consumers will compromise the majority of the nation’s population by 2042 – eight years earlier than previous estimates.
In the not-too-distant past, multicultural and mass marketers generally referred to this consumer group as “minorities.” Historically, the term refers to a group that differs – especially in terms of race, religion or ethnic background – from the majority of the United States population.
Fast forward to today. Within this large “minority” demographic, there is a growing subset of upper middle class and wealthy consumers that we call Royaltons™. Royaltons™ is a term coined by Andrea Hoffman of Diversity Affluence to describe people of ethnic backgrounds who earn a minimum of $75,000 annually as individuals or at least $150,000 as a household. We do not use the term “minorities” when referencing Royaltons™ as is only serves to perpetuate stereotypes and does not reflect their economic status.
The Landscape of Opportunity
Within the Royalton™ segment are African American Royaltons™, or AARs, who represent not only an exciting new opportunity for marketers, but also a consumer group that has the potential for a high return on investment (ROI). But first, let’s look at the overall African American consumer population and its economic clout. The African American consumer market has a population exceeding 39 million, and their purchasing power is projected to exceed $1.1 trillion in 20123. Beyond Barack and Michelle Obama exists a large group of peers that are not black celebrities, ball players or hip hop artists…..
Currently, the purchasing power of African Americans is calculated at $892 billion. Clearly, African Americans are a critical part of the American consumer economy. Focusing on the affluent segment, a 2008 Packaged Facts report found there are 2.4 million affluent African American households that have an annual income of $75,000 or more. Interestingly, with the average annual income of those households at $122,000 (only 17% of all African American households), the affluent segment has an influential grasp of 45% of the total purchasing power in the African American market.
Within the population of 39 million, the market segment of this market has gone unnoticed – until now. African American Royaltons™ (AARs) alone represent well over $87.3 billion in purchasing power. While some marketers and industry experts, including Packaged Facts, still define “affluent” as households earning $75,000 annually, Diversity Affluence redefines affluence as individuals earning a baseline annual salary of $75,000; a more relevant figure for today’s economy. Therefore, we believe every marketer should intentionally seek to engage the AAR segment of this audience, which can no longer be ignored.
