An underserved market

Roger’s discourse on the not-yet-dead Esso trademark, owned by what used to be Standard Oil of New Jersey and is now ExxonMobil, ends with this fascinating tale:

In 1936, a “Harlem postal employee and civic leader named Victor H. Green” developed The Negro Motorist Green Book: An International Travel Guide … abbreviated, simply, as the “Green Book.” Those who needed to know about it knew about it. To much of the rest of America it was invisible, and by 1964 [when the Civil Rights Act was passed], when the last edition was published, it slipped through the cracks into history…

“The 15,000 copies Green eventually printed each year were sold as a marketing tool not just to black-owned businesses but to the white marketplace, implying that it made good economic sense to take advantage of the growing affluence and mobility of African Americans. Esso stations, unusual in franchising to African Americans, were a popular place to pick one up.”

Mr Green was on to something. Nicholas Dreystadt was in charge of Cadillac service for General Motors during the worst days of the Great Depression, and he advanced what was then a novel theory:

Cadillac was after the prestige market, and part of its strategy to capture that market was its refusal to sell to African-Americans. Despite this official discrimination, Dreystadt had noted that an astonishing number of customers at the service departments consisted of members of the nation’s tiny African-American elite: the boxers, singers, doctors and lawyers who earned large incomes despite the flourishing Jim Crow atmosphere of the 1930s. Most status symbols were not available to these people. They couldn’t live in fancy neighborhoods or patronize fancy nightclubs. But getting around Cadillac’s policy of refusing to sell was easy: They just paid white men to front for them.

Dreystadt urged the executive committee to go after this market. Why should a bunch of white front men get several hundred dollars each when that profit could flow to General Motors? The board bought his reasoning, and in 1934 Cadillac sales increased by 70%, and the division actually broke even.

One thing about old Jim Crow: he wasn’t worth a damn as an economist.



  1. Roger Green »

    15 August 2012 · 12:43 pm

    You may also be interested in this WSJ story, which I excerpted, about Pepsi:

    BTW, my spellcheck sees the word underserved and “fixes” to undeserved.

  2. Baby M »

    17 August 2012 · 10:57 am

    “members of the nation’s tiny African-American elite” appeared also on the roll of owners of Duesenberg supercars, including Bill “Bojangles” Robinson (Shirley Temple’s costar) and pre-television televangelist Reverend M. J. Divine. Duesenberg was an early proponent of racial equality–as long as your money was green enough, that was good enough to make you a customer.

RSS feed for comments on this post