Investment by Racial and Ethnic Minorities Essay

Marketing research is vital in any business environment that needs to understand its consumers. According to Bova and Sun (n.d.), market research is collecting, evaluating, and interpreting data about a market, product, or service available for purchase in that industry. Moreover, and about ancient times, present, and prospects customers for the item or service; investigations into the traits, spending patterns, destination, and wants of your company’s target audience, the sector as a whole, and the specific competitors you face. In a nutshell, it is gathering and studying information regarding a good or service and clients’ sentiments toward it. There are several factors to consider when deciding how researchers will collect this data. Before acquiring and analyzing data, marketing researchers must consider several factors, including ethics, methodology, and tactics. Ethics refers to the moral principles that direct the responsibility of carrying out and analyzing research by professionals. Ethics are fundamental when conducting marketing research as they ensure the process is carried out without bias or deception and the data’s authenticity. The methodology entails the research methods and procedures utilized in the data collection process to ensure credible results are derived from a study. Tactics refer to the techniques that are used in the identification of participants and collection of data for the research.

Hypothesis and Major Research Question

Studies show that minorities make much less investment than whites. According to a Chicago Tribune article, 57% of minorities and 76% of whites participate in stocks or stock mutual funds (MarksJarvis, 2020). The report also revealed that almost half of black Americans avoid the stock market and save considerably less for retirement than white Americans (MarksJarvis, 2020). The poll found that a third of minority investors thought equities and mutual funds were the most significant overall investments. Failing in real estate was favored by 50% of those polled, even though it typically offers returns far lower than those of equities (MarksJarvis, 2020). Disparities in investment habits are caused by education and cultural barriers. We want to understand why this is the case and how we might persuade more Black, Latino/Hispanic, Native Americans, and Asian Americans to make more significant investments. Additionally, the research seeks to evaluate how investment activities among individuals with high school-level education can be improved.

Hypothesis

1. Racial and ethnic minorities in the United States are less likely to invest because of a lack of financial capital and distrust of intangible investments like stocks.
2. Individuals with high school-level education do not invest due to poor knowledge and information on the stock market and other investment opportunities.

Primary Research Question

Why are racial and ethnic minorities in the United States (African-Americans, Hispanics, Native Americans, Asian Americans) and people without college education less likely to invest, and what can be done to improve investment activity among them?

Ethics in Marketing Research

A study by Praveen Aggarwal, Rajiv Vaidyanathan, and Stephen Castleberry investigated how marketing research specialists have a terrible image. They assess the ethical perspectives of marketing researchers and look at how attitudes and views in this field have changed over time (Aggarwal et al., 2012). The trio discovered throughout their inquiry that marketing professionals are frequently viewed as unethical and dishonest. Due to their many research strategies and scandalous exploitation of research data, market researchers have been identified as the main offenders. Although perceptions about marketing research procedures have evolved since these tests were conducted forty years ago, the general contempt for marketing researchers has generally not altered.

The Marketing Research Association created the Code of Marketing Research Standards to encourage an ethical culture in the marketing research industry. The MRA states that the profession’s success is supported by honesty, professionalism, fairness, and secrecy (Insight Association, n.d). This code is meant to provide the moral behavior benchmark for MRA members. Our marketing research strategy will incorporate the MRA’s code of ethics to ensure we behave honorably, honestly, and ethically. The regulation mandates that members respect the general public’s rights as respondents and foster trust in the validity of research to increase participation. The code also covers marketing researchers’ obligations to one another, the general public, and anybody who stands to gain from the study and the actions that result from it. We shall ensure always to conduct ourselves professionally and treat participants with the utmost respect. The freedom to decline to participate in any step of the study process is one of the rights we will uphold for participants. Thus, applying the ethics outlined in the above-mentioned professional code guides researchers to ensure they produce authentic and credible findings that reflect the market or business environment. We will refrain from trying to sway the participants’ ideas and respect their right to privacy by keeping any information and data we gather privately.

Qualitative Research Methods

A focus group is a small group of 10 individuals or fewer who have agreed to participate in a discussion about a product or concept so that researchers may gather information based on their responses. We may collect information and data on these groups using various qualitative research techniques to understand why they invest at a lesser rate than educated white individuals. Each has benefits and drawbacks, and I will talk about the three most common approaches so we can choose the one that will work best for your company. Though effective for gauging customer reactions, focus groups lack the depth of one-on-one interviews (Writing, 2017). The method is less effective overall, and the respondents to the poll may be swayed by what their peers think. Additionally, it is more expensive than polls or questionnaires, and biased moderators may unintentionally influence the discussion’s conclusion.

Direct, one-on-one interaction is required for the qualitative data-collecting technique known as depth interviews. These are some benefits of this approach:

• Building a positive relationship with participants so they feel more at ease and can express their ideas and opinions more deeply.
• It allows the interviewer to ask any follow-up questions, giving them a chance to learn more.
• The one-on-one engagement diminishes any peer pressure that a person would experience in a group situation.
• Interviewers can assess participants’ tone, body language, and facial expressions.
• The data and samples gathered are often of higher quality.

Even though it has numerous advantages, conducting depth interviews takes time and money. Participants may also be prejudiced and hope to get compensation for participating in the study. A qualitative approach to data collection and analysis called observation involves seeing individuals in a simulated or natural setting. Data is less corrupted since researchers may see their subjects in their natural habitat. Participants’ willingness to participate in the study is not considered; observation techniques are affordable and help get untampered findings. Participants are also not influenced by the person watching them. Although this approach may yield the most reliable results, it can be time-consuming and shallow.

Additionally, with modern technology (in the form of video conferencing), researchers can conduct in-depth interviews without physically meeting the interviewees. This enables them to save time and resources. The Observational Research Method, which entails monitoring respondents in their natural context to provide more reliable data and legitimate conclusions, is something I strongly endorse. The Observation approach has drawbacks, much like the other methods we have studied, but they are outweighed by the value of the data it produces and its affordability. Additionally, some observation techniques may induce researchers to behave unethically or negligently, prompting subjects to file legal claims.

Likert Scale and Exploratory Research Methods

This study aims to learn the honest opinions of African Americans, Native Americans, Asian Americans, Hispanics, and non-college graduates. We created a Likert Scale questionnaire to understand these minority groups’ views and opinions and how we may encourage them to become more enthusiastic investors (Dobronte, 2017). We have chosen a 9-point scale for this survey, ranging from “I strongly agree” to “I strongly disagree.” The 9-point scale was determined because, by providing more alternatives, it more appropriately captures the attitudes and opinions of the public.

Before delving into our customers’ thoughts regarding investing, we want to identify trends in their demography. We have chosen to employ nominal and ordinal measures for this survey. The poll would ask for information on gender identity, race and ethnicity, age, location, income, and the most significant level of education attained before asking about our nominal scale.

For this questionnaire, examples of questions and statements include:

• I like getting my money’s worth right away.
• I am familiar with the nuances of stock and company investment.
• Minority groups in the United States have less opportunity to accumulate money.
• I believe in the economy and am sure my investments will pay off.
• Making investments is a better strategy for growing my finances.
• Educating youngsters about money matters will increase their propensity to make investments as adults.
• Economics and financial lessons ought to be taught in elementary schools.
• I think minority groups do not trust stocks and company investments.
• I believe most minorities do not have sufficient knowledge and information on stocks and other long-term investments.

The first phase in our research methodology is the Likert Survey. For the Likert survey, the participants will be required to answer/ respond to the above questions on a 9-point scale ranging from “strongly disagree” to “strongly agree.”After analyzing the data, our marketing research team will conduct one-on-one interviews with 100 survey respondents. The 100 participants will discuss their thoughts, views, and worries regarding investing with an interviewer. Although these individuals will be picked randomly, they will have “opted in” to future research contact.

The samples obtained from this kind of qualitative data-collecting approach are of the highest quality, even though conducting these in-depth interviews can be time-consuming and expensive. The reason in-depth interviews are effective in gathering data is that interviewers may establish a relationship with the participants, examine body language, and ask follow-up questions without worrying about a person giving in to social pressure or falling victim to groupthink. To make conducting the in-depth interviews much easier, the participants can choose to participate in the discussions via Zoom. Zoom will allow the interviews to be completed online without needing the participant’s physical presence. At the same time, it will ensure the interviewer interviews in real-time and allow for the interview to be recorded in the future where appropriate. A version of the video conferencing service is free also means that any participant can use it.

A combination of surveys and in-depth interviews will be employed to determine why minorities are investing at a lesser rate and how we might try to increase their investment rate. All of the techniques we will use abide by the criteria and code of ethics established by the MRA. Our dedication to ethical research and the methods we use to collect and analyze data will help us better understand the issue above to launch our marketing campaign specifically aimed at this market. The above market research can be used in the future to help companies to attract investments from racial and ethnic minorities who are currently reluctant to invest, especially in intangible assets. Additionally, the report will prove helpful in promoting investment among people without a college education.

Methodology

As mentioned, the study will utilize surveys and in-depth interviews to explore why minorities are investing at a lower rate than white people in the country and also understand measures that can be employed to promote investment among minority groups. To gather the relevant data, the sample population will consist of 100 participants from minorities in the country, specifically Latin Americans, African-Americans, Asian Americans, and Native Americans. The above racial and ethnic groups make the most recognizable minorities in the country, and it is correct to say that their views and data can accurately depict the investment attitudes of minorities in the U.S.

The focus groups for the racial and ethnic minorities can be identified by visiting neighborhoods dominated by such groups and asking those who want to participate in the study. On the other hand, the focus groups for the participants without a college education can be identified from the already available respondents from the minority groups. In this case, the minority communities’ focus group can be asked to state their level of education, and those with high-school level education will be identified. It is essential to create a different category of those determined to have high-school level education as they are likely to respond differently to the questions and interviews on why they do not invest and what can be done to improve their investment activity.

The parametric and nonparametric tests will analyze and describe the data. The parametric test makes assumptions regarding the underlying population from which the research data is derived, normally that the resulting information is usually distributed. On the other hand, the nonparametric test does not assume that the data is typically distributed and tend to be less powerful than the parametric test. Additionally, nonparametric tests require larger sample sizes to match the reliability of the parametric test data.

Because of the unreliability of various descriptive statistics such as means and standard deviations when working with data that has Likert scale responses, the median will be the most appropriate measure of central tendency to use in the research. Consequently, the chi-test frequency will be applied in the study primarily because it does not necessarily require interval data to produce credible results. The parametric test will only be used to analyze the Likert scale responses, while the chi-test will describe the data. The chi-square statistics will be used to compare the actual responses of the participants to the questions in the survey with the expected outcomes and answers to evaluate the statistical significance of the given hypothesis. Hence, the greater the difference between the actual and anticipated responses, the higher the chi-square statistic, where the degree of deviation shows how much less the study results fit the given hypothesis.

Design and Procedures

The study will start with the Likert scale survey, where 100 participants will be required to answer all the questions outlined in the questionnaire. The Likert poll will be conducted first because it is easier and less time-consuming. The participants must indicate the relevant demographic data to group their responses properly. After the data for the survey is obtained, the next step will entail in-depth interviews. As noted earlier, the in-depth interviews will be more open-ended and will be conducted via Zoom for convenience. Each consultation will be approximately 10-minute long to allow the participant to give adequate information that can be used to draw credible conclusions. The data will then be analyzed once the survey and interview results are obtained.

One threat to validity might involve instrumentation, where the changes in the instrument, the observer, or the scorer can alter the outcomes. The above threat is likely to occur in in-depth interviews mainly because the different observers have varying skills in connecting with the participant and interpreting body language, tone, and other essential cues. Differences in the ability to communicate with the participant and interpret their techniques can lead to differences in the interpretation of interview results affecting uniformity.

Summary of Expected Outcomes

The expected outcomes for the above research encompass the major reason why minorities in the United States have lower investment activity compared to whites, including causes such as:

1. Financial capital constraints-The most significant factor that causes lower investment among minorities is the lack of sufficient capital and savings. Minorities attend to be poorer than white people in the country for reasons such as lack of opportunities and job connections, systemic racism, and forms of discrimination that have caused inequalities in wealth distribution. Research has shown that the wealth levels of white people in the country are 11 to 16 times higher than those of minorities like African-Americans, meaning they have more disposable income and savings needed for investment (McIntosh et al., 2020). Thus, the lower levels of wealth and liquidity affect the minorities’ ability to invest.
2. Lack of knowledge and information on investment opportunities-a significant percentage of racial and ethnic minorities lack sufficient expertise on long-term assets such as stocks, hence, their lower investment activity. For example, most Blacks report that their families do not talk about long-term intangible investments, and the limited exposure has affected their investment activities in such assets (Chetty et l., 2020). The above factor is also expected to be why individuals with a high school education have less investment activity, as they tend to have limited knowledge and exposure to investment strategies and available opportunities.
3. Lack of trust in the system– Minorities have also historically lost their property and assets and faced other injustices that have made them distrustful of investments. For example, Native Americans lost their land and property to the settlers during the country’s formation, which left mistrust of white people (Darity Jr et al., 2018). Hence, the historical injustices faced by most minorities in the country have given them a reason to fear investing in companies, most of which are owned and controlled by white people. Hence, they are less likely to invest in intangible assets as many perceive they will be taken away. Additionally, a limited number of minorities, unlike whites, have inherited wealth through generations, making them wary of risky investments leading to financial ruin.

Implications of the Findings on the Minorities

The low participation in the stock market and other long-term investments by minorities continues to widen the wealth gap in the country to the detriment of minorities. Hence, to enhance wealth equality in the country, minorities and people without a college education should recognize that they do not have to take the fall into the stock market alone. They should consider taking investing classes and hiring certified financial planners to help them in their investment journey. Additionally, minorities should also strive to join investment clubs and other educative programs that can enhance their knowledge of the most viable investments to help them build their wealth Chetty et l., 2020). It is also essential for the above group of people to understand that they stand to lose by remaining fearful of investing, as wealth remains one of the few ways they can bridge the gap with the rich people. Effective investing is possible because the above communities can be open-minded and willing to learn.

Consequently, minorities should realize that they cannot avoid investing in the intangible if they plan to retire successfully. Currently, the country has seen a decline in employer-funded pensions, which has forced many workers to increase their reliance on individual contributions in market-based investments, for example, individual retirement accounts, employer-sponsored retirement accounts, and personal investment accounts such as brokerage (Darity Jr et al., 2018). The fact that minorities are more likely to work in the low-paying jobs most affected by the above issue means they stand to lose the most and need to take serious investment actions. Therefore, to ensure a comfortable life in retirement, it is inevitable for minority communities to learn and practice the behaviors of wealthy and successful people in the country. Some of the effective ways that can help overturn the perceptions of minorities regarding investment into informed belief include:

1. Evaluating what they already possess-The, minorities should consider assessing their retirement statements and savings and identify their investments. The retirement fact sheets on investments can help individuals understand the strategy behind the investment and represented markets.
2. Encouraging a saving culture-saving is the most crucial initial step toward investment. The saving culture among most racial and ethnic minorities in the U.S.A is below average. For example, reports have shown that three-quarters of African Americans do not have adequate savings to cover emergencies beyond three months, leaving alone investment Chetty et l., 2020). Hence, minorities should improve their savings to gather sufficient capital to invest gradually. Savings increases a person’s flexibility to take risks and do more things. Examples include investing in the stock market and other intangible assets.
3. Staying informed-individuals from minority communities wishing to invest should assess the companies they have an affinity for and at least create an online brokerage account that has no investment minimum and minimal trading costs. From this point, they should invest an amount they can do without, as this can gradually compound into massive amounts. Moreover, stay current on the activities of the chosen investments to constantly evaluate whether they are still suitable investments or not.
4. Learning how to spread the risk-It is advisable for individuals without investment experience to consider investing in mutual funds and exchange-traded funds in their brokerage accounts (Darity Jr et al., 2018). Owning personal investment accounts along with retirement has numerous benefits in building wealth and enhancing financial security. For example, any stock sales loss can offset a person’s taxable income. Additionally, withdrawals are not subject to an early withdrawal penalty.

Implications of the Findings on the Organization

The expected outcomes outlined earlier in the report indicate that organizations can do more to attract investments from racial and ethnic minorities and those without a college education, which is beneficial to both the organizations and the individuals. Some of the actions that organizations can take include:

1. Offering financial education-As explained earlier, most minorities and individuals without college-level education lack knowledge and information on investment. Everyone loves to build wealth, and once such individuals gain the relevant knowledge on the benefits of investing and how to invest in intangible assets, they are more likely to start their investment journeys. Thus, organizations can offer financial education to such individuals to enhance their investment appetite (Chetty et al., 2020).
2. Offering investment incentives to racial and ethnic minorities and people without college education-organizations can foster investment activities among the above groups of people by providing them with incentives to encourage them to invest. For example, companies can offer an additional share for a certain number of shares bought by a member of the above group (Darity Jr et al., 2018). Such incentives can indeed be costly to companies. However, the advantage is that they can help build loyalty among minority communities, which is beneficial in the long run. Such individuals are likely o refer their friends, family members, and other members of their communities t any organization that offers them favorable investment opportunities.
3. Initiating community-based programs among minorities– Organizations can start community-based programs that help minority communities to familiarize themselves with the people and attract investments. Many minority communities fear investment because they lack trust in organizations and the system (Darity Jr et al., 2018). Thus, starting community-based programs such as rehabilitation centers, sports sponsorship, and education scholarship can appeal to minority investors.

References

Aggarwal, P., Vaidyanathan, R., & Castleberry, S. (2012). Managerial and Public Attitudes toward Ethics in Marketing Research. Journal of Business Ethics, 109(4), 463–481. Web.

Bova, D., & Sun, C. (n.d.). Market Research Definition – Entrepreneur Small Business Encyclopedia. Web.

Chetty, R., Hendren, N., Jones, M. R., & Porter, S. R. (2020). Race and economic opportunity in the United States: An intergenerational perspective. The Quarterly Journal of Economics, 135(2), 711-783. Web.

Darity Jr, W., Hamilton, D., Paul, M., Aja, A., Price, A., Moore, A., & Chiopris, C. (2018). What we get wrong about closing the racial wealth gap. Samuel DuBois Cook Center on Social Equity and Insight Center for Community Economic Development, 1(1), 1-67. Web.

Dobronte, A. (2017). Likert Scales vs. Slider Scales in Commercial Market Research. Web.

McIntosh, K., Moss, E., Nunn, R., & Shambaugh, J. (2020). Examining the Black-white wealth gap. Washington DC: Brooking Institutes. Web.

MarksJarvis, G. (2020). The Racial Divide in Savings. Web.

Insight Association. (n.d.) MRA Code of Marketing Research Standards | Insights Association. Web.

Appendix: Questionnaire