The minority underdog effect

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📝 Intro

In recent years - especially in the US - a growing number of businesses have made it part of their brand communication to share that they are minority-owned (e.g. Black-owned, women-owned).

Does it make a difference?

New research finds that most customers recognize the challenges faced by minority owners, and are more ready to cut them slack and support them.

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People are more forgiving of service and product failures from minority-owned businesses.

Topics: Brand & Strategy
For: B2C. Can be tested for B2B 
Research date: September 2024
Universities: University of Washington-Seattle, University of Louisville 

📈 Recommendation

If you’re a minority-owned business, you should clearly highlight this to customers (e.g. on your website, on your restaurant menus).

People will be more forgiving of service or product failures, rate you more positively, and be willing to pay more.

🎓 Findings

• When people know a business is minority-owned (e.g. Black-owned in the US), they are more forgiving of service and product failings, give better ratings, and are willing to pay more for the same product.

• As part of a series of 5 experiments and an analysis of 20,799 Google Maps reviews, researchers found that:

  • College students were 18.8% more likely to pay more for a gift card from a Black-owned business selling socks that tore after 1 month, compared to one when the owner was unspecified

  • People rated a minority-owned bandage business 35.8% more positively than a non-minority-owned business when the bandages wouldn’t stick properly to their skin and needed to be changed often

  • People rated a t-shirt brand 19.8% higher when it is minority-owned rather than a non-minority brand when the shirt had loose strings and was made from material that wasn’t durable

  • For 4-5 star ratings on Google Maps, people were 34.1% more likely to use a positive tone talking about failures at a restaurant displaying a label of being black-owned, compared to no label. For 1-3 star ratings, there was no impact of including the label

• The effect

  • Is stronger amongst people with a low social dominance value - those more sensitive to the impacts of structural discrimination

  • Disappears when looking at moral failings (e.g. company is abusive towards employees), compared to service failings (e.g. bad service or a faulty product)

🧠 Why it works

• When we find out a brand is minority-owned, we’re conscious of the structural disadvantages minority owners face, including gender and racial discrimination.

• This makes us see them as underdogs, making us more empathetic toward them.

• Some of us are more swayed by minority ownership than others, depending on how sensitive we are to the social inequalities that minorities often face.

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✋ Limitations

• When looking at racial minorities, the research focused on black-owned businesses in the US. This may limit how the findings would apply in other countries with different social dynamics and histories of race relations.

• Social identity and social justice discourse is very prevalent in the US - in less diverse countries or those with less emphasis on this discourse, the effect may not be the same.

• The study did not look at intersecting identities (e.g., a business owned by a black woman), looking only at one identity at a time. 

🏢 Companies using this

• Though not used specifically in times of service or product failures, minority-owned businesses are increasingly showcasing their ownership as a means to stand out.

• Google Maps introduced an option for minority-owned or led businesses to identify as such in their brand descriptions in June 2020.

• Online marketplace Miiriya focuses on showcasing black-owned businesses for customers to browse.

• Some SaaS companies showcasing their minority ownership include Calendly, Pindrop, and Flutterwave

Haircare brand Camille Rose prominently showcases its minority ownership in its Instagram page description.

⚡ Steps to implement

• If you’re a minority-owned business, highlight this in your company marketing and branding. This can include mentioning your founders or founding story on your website and social media, as well as through events or speaking opportunities for the business owners.

• While minority ownership may make people more forgiving of service failures, this needs to be authentically woven into your brand story - making your customers aware of your minority ownership after a service failure would likely backfire.

🔍 Study type

Lab and online experiments and market observation (analysis of 20,799 Google Maps reviews of 488 Black-owned restaurants in the top five cities in the United States by population, between January 2021 and July 2022)

📖 Research

The Minority Ownership Awareness Effect: When Promoting Minority Ownership Increases Brand Evaluations. Journal of Marketing (September 2024)

🏫 Researchers

• Esther Uduehi, University of Washington-Seattle

• Aaron J. Barnes, University of Louisville

Remember: This is a new scientific discovery. In the future it will probably be better understood and could even be proven wrong (that’s how science works). It may also not be generalizable to your situation. If it’s a risky change, always test it on a small scale before rolling it out widely.

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