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DIVERSITY 2005 | A Special Advertising Section

As both the populations of Georgia and U.S. become more diverse, new challenges - and opportunities - arise for businesses to reach waiting buyers.

Minorities in Georgia and the U.S. - especially African Americans, Asians, Native Americans and Hispanics - definitely share in the nation's economic success, and together wield formidable economic clout, according to a report by Jeffrey M. Humphreys, director of the prestigious Selig Center for Economic Growth at the University of Georgia.

Humphreys says that as these groups increase in number and purchasing power, their growing shares of the U.S. consumer market draw attention from producers, retailers and service providers.

Their buying power, coupled with the differences in spending by race or ethnicity, should tell business people that one general advertisement or product geared for all consumers will miss many potentially profitable opportunities.

As the U.S. consumer market becomes more diverse, advertising, products and the media must be tailored to reach each market segment.

So how is a business to know where this latent buying power is, and how to reach it?

The Selig Center study shows that the nation's buying power - the amount of money all of us together have left after taxes to buy things - leapt from $4.3 trillion in 1990 to $7.2 trillion in 2000, and again to $9.1 trillion in 2005. He says it will reach $11.8 trillion in 2010.

That's a phenomenal 177 percent increase in 20 years, far outgrowing 58 percent inflation in the same time.

Although buying power is growing across the nation, it is growing much faster in the South and Mountain West states.

Georgia ranks 5th in the country for projected growth in buying power over the next four years at 129 percent - that's how much faster income is outpacing inflation.

Buying power growth is also remarkably good for minorities in the state and nation.

Humphreys estimates that in 2010, the combined buying power of African Americans, Asians, and Native Americans will be $1.7 trillion - more than triple its 1990 level of $454 billion, a gain of 268 percent.

Over this 21-year period, the percentage gains in minority buying power vary considerably by race, from a gain of 397 percent for Asians to 251 percent for American Indians to 222 percent for blacks. All of these target markets will grow much faster than the white market, where buying power will increase by 177 percent.

Of course, these huge gains are in part a reflection of how far behind white buying power these minority groups were at the start of the study period.

The combined buying power of these three minority racial groups will account for 14.1 percent of the nation's total buying power in 2010, up from 10.6 percent in 1990. This 3.5 percent gain in combined market share amounts to an additional $411 billion in buying power per year by 2010.

That is a very significant amount of money, especially to marketers, says Humphreys, because the higher a group's market share, the lower the cost of reaching a potential buyer in the group.

Black Buying Power

In 2005, African Americans constitute the nation's largest minority market, and their economic clout will energize the U.S. consumer market as never before.

The Selig Center study projects that the nation's black buying power will rise from $318 billion in 1990 to $761 billion in 2005, and to $1 trillion in 2010, up by 222 percent in 21 years.

In 2010, the nation's share of total buying power that is black will be 8.6 percent, up from 8.4 percent in 2005 and up from 7.4 percent in 1990. Nationally, African-American consumers will account for almost nine cents out of every dollar that is spent.

Of all the diverse supporting forces, one of the most important is the increased number of jobs across the nation. Compared to 1990, employment

opportunities have improved for everyone, including African-Americans. The increasing number of blacks who are starting and expanding their own businesses also contributes to the gains in buying power.

The Survey of Minority-Owned Business Enterprises released by the Census

Bureau in 2001 showed that the number of black-owned firms increased almost four times faster than the number of all U.S. firms, although their receipts grew more slowly than the others. Still another positive factor pushing up the group's buying power is that African Americans are benefiting from rising levels of education. Census data show that the proportion of blacks with high school diplomas rose by 10 percent from 1993 to 2003, and that gain was the largest reported for any group.

Georgia ranked 5th in the country in the size of the African-American market in 2003 with $48.8 billion, and 5th in the U.S. in the their share of the state's total buying power at 19.4 percent. South Carolina is 6th in that category at 19.1 percent.

Some tips for marketers from the study:

Despite their lower average income levels, African Americans spent a higher percentage of their income than non-blacks on natural gas and electricity, telephone services, children's apparel, and footwear. Also, blacks spent a higher proportion of their money on groceries, housing, and women's and girls' clothing.

These findings strongly imply that utilities, telecom firms, and clothing and shoe stores would do well to market themselves directly to black consumers.

Blacks and non-blacks spent about the same for household operations, housekeeping supplies, men's and boys' clothing, public transportation, reading materials, and tobacco products. Blacks spent a smaller percentage on eating out, vehicle purchases, health care and entertainment.

There is a substantial gap in homeownership rates, which suggests a possible opportunity for market expansion in the years ahead. The 2004 data indicates that 49 percent of blacks are homeowners compared to 73 percent for whites. A decade ago, only 42 percent of blacks owned homes.

Native American Buying Power

The Selig Center projects that the nation's Native American buying power will rise from $19.7 billion in 1990, to $51.1 billion in 2005, and to $69.2 billion in 2010 - an increase of 251 percent in two decades.

But in spite of this rapid gain, Native Americans will account for only 0.6 percent of all U.S. buying power in 2010.

Georgia ranks 5th (278%) and South Carolina 10th (231%) in the rate of growth of Native American buying power.

There are several reasons why Native American buying power is on a dramatic rise.

Employment is improving dramatically for the group and the population is growing much faster than the total population - by 51.4 percent from 1990 to the projections of 2010.

Native Americans are forming new businesses at a rate more than twelve times the national average and receipts from those businesses grew by more than four times faster.

Asian Buying Power

In 2010, 15.3 million Americans - 4.9 percent of the country's population - will claim Asian ancestry.

That is up from 3 and 4 percent in 1990 and 2000, giving Asian Americans

"enormous economic clout," attracting more attention from businesses and advertisers, according to the study.

The Selig Center projects that their buying power will nearly quintuple, climbing from $117 billion in 1990 to $397 billion in 2005, and to $579 billion in 2010. Education, entrepreneurship and population growth are all feeding this rapid growth of Asian buying power. Another factor contributing to Asian buying power is that nearly all Asians are urbanites. Data show that 95 percent of Asians lived in metropolitan areas.

The study tells businesses that there are many opportunities in targeting Asian consumers, and because the group includes so many national ancestries, languages and cultures, that firms that target specific subgroups - such a Chinese or Filipino, for example - may find niche markets particularly rewarding.

The Asian population is growing more rapidly than the total population, mostly because of strong immigration, a trend that is expected to continue. In 2010, the Asian population will reach 15.3 million, or more than double its 1990 base of 7.5 million.

The 2000 census reported that 44 percent of Asians in the country over the age of 25 have a bachelor's degree or higher, compared to 26 percent for the total population. Asian owned businesses have increased by more than four times faster than the pace of all U.S. firms in the study period.

The increasing number of successful Asian entrepreneurs also helps to increase the group's buying power. According to the 2001 Survey of Minority-Owned BusinessEnterprises, the number of Asian-owned businesses - which mostly center on business services, personal services, and retailing - increased more than four times faster than the number of all U.S. firms. The 2002 Survey of Business Owners indicates that 5.9 percent of U.S. business owners are Asian, which is much higher the group's 4.4 percent share of the U.S. population.

Ranked by the rate of growth of Asian buying power from 1990 to 2005, Georgia was 5th with 481 percent and the state has the 14th largest Asian market in the country, making it among the nation's rapidly emerging Asian markets.

Except in Hawaii, where Asians are in the majority and already account for 50.6 percent of buying power, their share of markets will increase in every other state over the next five years.

Thanks to their higher average income levels, Asian consumers spend more than the average U.S. household on food (groceries and dining out), housing, household operations, telecom services, household appliances, children's

clothing, public transportation, education, and personal insurance and pensions.

They spend much less of their budgets on electricity, vehicle purchases, health care, tobacco products, and entertainment.

There also is a moderate gap in homeownership rates. According to 2004 data, 60 percent of Asians are homeowners (up from 52 percent in 10 years) compared to 73 percent for whites.

Hispanic Buying Power

Humphreys says, "The immense buying power of the nation's Hispanic consumers will energize the U.S. consumer market as never before."

The 2000 census showed that more than one person in eight in the U.S. was of Hispanic origin, and their numbers will continue to grow at a rapid pace, reaching one in six by 2010. Between 1990 and 2010, the Hispanic population will increase by

118.9 percent compared to 14.8 percent for the non-Hispanic population.

Hispanic economic clout will rise from its 1990 level of $222 billion to $1.08 trillion in 2010! That is a 413 percent increase - higher than any other group. Hispanics will account for 9.2 percent of all U.S. buying power by 2010 and will exceed African American buying power by the year 2007, the study predicted.

The increasing number of Hispanic business owners is another potent force powering this consumer market. The Survey of Minority-Owned Business Enterprises released by the U.S. Department of Commerce showed that the number of Hispanic firms is growing more than four times faster than the number of all U.S. firms, and that their receipts also rose more quickly than those of all firms.

This jump in entrepreneurial activity, coupled with a rising level of educational attainment, illustrates Hispanics' upward mobility.

The U.S. Census Bureau indicates that, in 2003, 57 percent of Hispanics

over age 25 had a high school diploma, up 4 percent in a decade. The proportion with a bachelor's degree increased from 9 percent to 11 percent.

However, levels of educational for Hispanics are lower than those for non-Hispanic whites, blacks, and Asians largely because of the vast number of less educated foreign-born Hispanics. Only 45 percent of foreign-born Hispanics have a high school diploma compared to 74 percent of U.S.-born Hispanics.

In 2005, Georgia has the 10th largest Hispanic market at $10.6 billion.

The top ten states, as ranked by the rate of growth of Hispanic buying power over 1990-2005, are North Carolina (882 percent), Arkansas (868 percent), Georgia (696 percent), Tennessee (668 percent), Nevada (641 percent), Alabama (569 percent), Minnesota (547 percent), Kentucky (527 percent), North Dakota (499 percent) and South Carolina (498 percent).

In market size, Georgia, Nevada, and North Carolina rank tenth, eleventh, and fifteenth, respectively, so, these states are three of the most attractive

Hispanic markets in the nation.

Between 1990 and 2005, the share of buying power controlled by Hispanic consumers will rise from 5 percent to 8.1 percent, and the group's share will rise in every state.

Despite lower average income levels, Hispanics spend a higher percentage of their incomes on groceries, phone services, furniture, small appliances and house wares, children's' apparel and footwear. Also, a higher proportion of Hispanics total spending was concentrated on restaurants, housing, vehicle purchases and gasoline.

Compared to the total population, Hispanics spent substantially less money on health care, entertainment, reading, education, insurance, cash contributions, pensions and tobacco.

Hispanics' spending patterns already help to determine the success or failure of many youth oriented products and services.

Also, 2004 data show that only 48 percent of Hispanics are homeowners (up from 41 percent a decade ago) compared to 72 percent of non-Hispanics.