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How minority ownership labels influence brand evaluations

In an era of increasing calls for diversity, minority ownership labels like "Black-owned" have become more than a point of pride—they are a strategic tool for branding. A new Journal of Marketing study how promoting minority ownership impacts consumer perceptions, especially during crises.

The study, titled "The Minority Ownership Awareness Effect: When Promoting Minority Ownership Increases Brand Evaluations" and authored by Esther Uduehi (University of Washington) and Aaron Barnes (University of Louisville), examines the "minority ownership awareness effect." Findings reveal that disclosing minority ownership leads to more favorable brand evaluations after product failures because consumers empathize with these businesses.

"Highlighting minority ownership doesn't just signal diversity—it fosters trust and loyalty," says Uduehi. "Our research shows that transparency can create resilience during challenging times."

Key findings

The authors analyzed 27,000 Google reviews of Black-owned businesses and conducted experiments with nearly 4,000 participants. Their findings show:

• Empathy drives consumer forgiveness: Minority ownership labels elicit empathy by framing brands as underdogs that face unique challenges. This narrative encourages consumers to be more forgiving when product failures occur, such as quality issues or delivery delays.
• Motivation to avoid prejudice: Consumers who are motivated to avoid appearing prejudiced are especially likely to react positively to minority ownership labels during product failures.
• Limits of the effect: The study finds that this forgiveness does not extend to moral failings such as unethical behavior or discriminatory practices. Consumers are less tolerant of such issues, regardless of ownership.

"This study underscores the power of empathy in branding," says Barnes. "However, brands must be mindful of the limits of this effect. Transparency works best when paired with consistent ethical practices."

Implications for marketers

The findings provide actionable insights for businesses seeking to differentiate themselves in competitive markets:

• Strategic use of minority ownership labels: Brands should consider incorporating labels like "Black-owned" or "woman-owned" into their marketing strategies. These labels can foster emotional connections with consumers and build trust.
• Navigating product failures: During crises, highlighting minority ownership can soften consumer backlash. By framing challenges as part of a broader underdog narrative, businesses can maintain loyalty and trust.
• Maintaining ethical standards: While minority ownership labels can mitigate product-related issues, they do not shield brands from ethical scrutiny. Businesses must prioritize consistent ethical practices to avoid eroding trust.

Broader impact

The study also highlights the potential for minority ownership labels to drive broader societal change. By promoting inclusive branding practices, businesses can contribute to reducing systemic inequities in the marketplace.

"Transparency about minority ownership isn't just about individual brands—it's about fostering a more inclusive economy," explains Uduehi. "When businesses embrace this practice, it benefits both consumers and society."

For policymakers and industry leaders, the research offers a roadmap for encouraging greater transparency and inclusivity in the business world.

The minority ownership awareness effect offers a powerful tool for businesses navigating competitive markets and product challenges. By leveraging transparency and empathy, brands can differentiate themselves while fostering stronger consumer relationships.

"This research provides a win-win for brands and consumers," says Barnes. "When businesses embrace inclusivity and transparency, it creates better outcomes for everyone."