As consumers, people of color long were ignored by large corporations, such as those that operate in the beauty sector. The massive consumer goods companies often dismissed the hair and skin care needs of people with curly hair textures and distinct skin challenges (see also our previous abstract, “Moving Beyond Skin Color to Comprehensive Skin Care in the Cosmetics Industry”). In response, various entrepreneurs have developed dedicated product lines, and many of these companies proudly identify themselves as black-owned businesses.

Consumers have flocked to the appropriately targeted products offered by such companies, leading many of them to greater success and demand than they might have anticipated. Accordingly, the big consumer goods companies started paying more attention and then seeking to acquire the smaller firms, to expand their own product lines and benefit from the appealing offerings they had established. Such a collaboration often makes sense for the entrepreneurial firm too, which gains access to financial resources, expertise, and vast distribution networks and channels.

Yet some growth pains also result from such expansions and mergers. For consumers who embrace an ethical view that says they should buy explicitly from minority-owned companies, the purchase of their favorite brand by a faceless, massive conglomerate creates a dilemma. Do they continue buying the products, which they know and like, or do they stop, because their purchases no longer go to benefit and support small business operations?

In some cases, the large consumer goods companies and small enterprises seek a compromise option, in which they commit to keeping the entrepreneurs in leadership positions. For example, even after being acquired by Procter & Gamble, Walker & Co. Brands will continue to be led by Tristan Walker, the entrepreneur who started marketing single-blade razors, as more effective tools for men whose curly or coarse beards make multiple-blade razors unappealing. Similarly, Unilever left Richelieu Dennis in charge of Sundial Brands, and their purchase agreement also includes contractual clauses that require Unilever to commit at least $100 million to developing and supporting companies owned by women of color and expanding supply chain operations in Africa.

But even with these concessions, some consumers simply prefer to devote their money to companies that they perceive as needing support. Determined to shop local, small, and black-owned, they are unwilling to allocate more of their purchases to international companies that, historically, have failed to attend to their needs. For entrepreneurs, these responses also create a dilemma, in that they likely want to grow and expand, to make sure their products are available to as many people as possible. But in expanding their reach, they also might be alienating the loyal customers who have been with them from the start.

Discussion Questions:

1. How might big consumer product brands like Unilever and Proctor & Gamble convince consumers that buying from them still supports black-owned businesses?
2. Why is reliability a difficult feature on which to base a comparative advertisement?

 

Source: Aisha Al-Muslim, “Big Beauty Taps Black-Owned Startup’ Loyal Customers,” The Wall Street Journal, March 11, 2019