Profit or Prejudice? Race Sensitivity Creates New Marketing Risks

When Pepsi-Cola President Walter Mack recognized his company could sell more product to black Americans in the 1940s, he initiated a racially-targeted marketing effort to increase sales. It worked and the company’s market share rose dramatically in just a few years. The strategy was so successful, some inside the company were concerned it might be off-putting to white consumers, prompting Mack to declare that Pepsi would not, “become known as a n—-r drink.”

This infamous racial slur, unapologetically stated in the presence of African-American ad executives, ran through my mind after reading media reports about the racist emails from Atlanta Hawks basketball team owner Bruce Levenson in 2012. For many black-owned small-business owners like myself, it sounded infuriating. Here was another rich, entitled, white man using his business as a cover to demean the black customers who fueled the resurgence of his NBA franchise, not to mention his fortune. The emails were such that Levenson was compelled to surrender ownership of his property.

But the media coverage reflects very little of Levenson’s actual correspondence. Although parts of it are uncomfortable to read, nothing struck me as racist or out of line. This was no repeat of Mack’s characterization of black Americans; Levenson’s sin was to recognize the fact that different groups of people have different levels of discretionary income to spend on pro basketball.

The team was facing a problem that many businesses face; a demographic shift in their customer base. At the time of Levenson’s email, Atlanta’s population was about 55% black and 40% white. However, roughly 75% of all disposable income rested with whites. Levenson speculated that those with the most disposable income were turning away because the games included music and other events that those people didn’t want to see.

Levenson specifically stated that his, “theory is that the black crowd scared away the whites.” If you stop reading there, one could easily think that Levenson’s remarks are racist. But the next sentence gives away his heart and shows that his correspondence was all business. “Please don’t get me wrong,” he wrote. “There was nothing threatening going on in an arena back then. I never felt uncomfortable, but I think southern whites simply were not comfortable being in an arena or at a bar where they were in the minority.”

He went on to call characterizations of Philips Arena as dangerous or in the wrong part of town, “racist garbage,” adding that he doesn’t care about the color of the artists providing entertainment during the games, just that the music needs to be familiar to 40-year-old white guys. Yes, it was uncomfortable to read and Levenson acknowledged as much writing, “This is obviously a sensitive topic, but sadly I think it is far and away the number one reason our season ticket sales are low.”

Levenson’s email repeatedly called into question profits and low ticket sales and never once did he refer to the culture or team as being too black. All he wanted to do was increase sales. If anything, his email revealed his thoughts about Southern whites not what he thought should be happening. He was observing the reality on the ground.

How are Levenson’s observations any different than what Hollywood does in deciding which films to produce? You may recall director and producer George Lucas telling Jon Stewart that behind closed doors in Hollywood, it was decided that nobody wanted to spend hundreds of millions of dollars to produce a movie about the Tuskegee Airmen, featuring an all-black cast. Ticket sales could not support the film’s budget.

Take a close look at the next Apple commercial on television. How many black mothers are shown sitting with their daughters in front of that silvery smooth Apple device? Zero. This isn’t racism; it’s recognizing demographic realities. Just because someone responds to them does not make them racist.

Still not convinced? Drive through any city and flip through the radio dial. You won’t hear Nicki Minaj or Nas on the same station as Paramore or John Mellencamp. There’s a reason for that; they are marketing to different demographics. But after Levenson’s divestiture of his share of a professional sports franchise, we’re a giant step closer to the Thought Police driving fundamental marketing decisions out of the board room.

Worse yet, we’re cheapening the meaning and impact of true racism that harms society while ignoring real problems in the black community. We’d be a lot better off hearing solutions to black-on-black crime and the inequity of black incarceration rates than the forfeiture of a person’s property for having the audacity to acknowledge the economic facts of the marketplace.