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    Differences between black and white consumption patterns

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    Are there really differences between black and white consumption patterns? Explain?

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    Are there really differences between black and white consumption patterns? Explain?


    There are many bases used for market segmentation, but demographic factors such as age, occupation, income level, educational attainment, and race are frequently used to identify key markets. Race has become increasingly important as a segmentation variable because it has been shown that race can influence consumption patterns and because racial minorities have come to represent a larger and larger proportion of the U.S. population. The sheer numbers of the largest minority group, African-Americans, and the improving economic status of many of its members, make this racial minority especially attractive. Nevertheless, relatively few studies in the finance literature have profiled differences in financial asset portfolio holdings of Black versus White households, or examined how these differences should affect the manner in which financial planners tailor their marketing efforts to meet the needs of different racial groups. In addition, Blau & Graham (1990) and Brimmer (1991) point out that Black consumers display a preference for holding tangible, non-financial assets that yield consumptive services, while White consumers tend to hold financial assets and income-producing non-financial assets. Given this evidence, Black consumers should display relatively larger investments in consumption-oriented real property, such as a personal residence and vacation property, and a relatively smaller investment in income-producing real property, such as rental property and commercial real estate, in their investment portfolios. The most notable difference between Black and White households, however, is unrelated to cultural considerations. The dollar value of virtually all asset holdings is substantially greater across White respondents. This gap reflects the wide net worth disparity between Black and White consumers reported by Scott (1998), Myers and Chung (1996), and a host of other researchers. Moreover, the gap does not appear to be related to the relative popularity of various asset categories, such as common stock versus real estate, across different racial groups. As Scott (1998), Lach (1999), and Badu et al. (1999) suggest, African-American households are particularly conservative in their investment style, preferring real estate assets and insurance ...

    Solution Summary

    Cultural differences in consumption patterns are stressed in this solution, which is provided in about 1,478 words with references.