The LSM 4-6 consumers are the biggest grouping and are vital to advertisers. Gordon Patterson explains why they are so important and what they want.
Over the years, a great deal has been written about the changing socio-economic fabric of our population. AMPS presentations, almost by tradition, reflect the transformation seen when our population is tracked over time.
Over the past decade we see the shift growing from the base of LSM 4, gaining momentum then peaking in LSM 6. But what does this mean, who are these people and why are they important to marketers?
Simply put, we have a veritable tidal wave of potential new consumers about to take centre stage in our economy as 52.4% of our adult population live in LSM 4-6 households. This group must represent the low-hanging fruit for many markets looking for growth but who are questioning the value return on campaigns and attempting to squeeze more return on investment from within the higher LSM segments.
They are still peri-urban with significant numbers living just outside the major provinces. These provinces, reflected below, could be termed the ‘roaring 70%’ as over 70% of the population are within LSM 4-6.
These regions are becoming critical economic development zones as industry and big business strive to increase productivity and competitiveness.
Age-wise, the average person is 36 years old. This is important as it will influence the life stage needs associated with maturity. Products addressing these needs will quickly find favour.
In terms of household income, the significance of the transition becomes clear. The average household income for this segment is R4 967 per month. That said, the increase from LSM 4 to 5 is up 38% and from LSM 5-6 it leaps by 60% to R6 709 pm.
These increases reflect the increases in education and therefore economic attractiveness of the segments. Currently some 35% of LSM 4-6 people have achieved at least a matric qualification and within LSM 6 this grows to almost 45%.
Product wise, over 90% access to electricity is a huge enabler to product purchasing. Also, the growing number of banked individuals demonstrates the developing formalised saving habit present within this group.
Some 49% of individuals with savings accounts are within LSM 4-6, yet only 52% of of these adults have savings accounts. The opportunity to ‘bank the unbanked’ has never been better.
Many product categories already have meaningful support from this segment and include:
Personal jewellery over R700 – 39% of all adults making this purchase fall into LSM 4-6, representing only 4.6% of this LSM group.
Watches costing over R700 – only 3.9% of this LSM 4-6 has done this and this number accounts for 38% of the total adult population.
Fridge and freezer ownership is growing in popularity.
Five percent of LSM 4-6 people have travelled on holiday and stayed with friends. This accounts for 48% of the total. This demonstrates that travel is well supported and suggests that with further economic rewards, commercial holiday packages could become well supported.
If I were to gaze into a crystal ball I’d expect growing support in the following sectors:
- Adult education and self-improvement;
- Healthier living;
- Clothing and store credit cards;
- Small electronic home appliances such as sound systems and personal computers;
- White goods such as economical washing machines;
- Digital televisions, as prices drop and the desire to take control permeates this critical transition segment; and
- Holidays and travel within South Africa.
From our perspective, what is pleasing is the positive disposition to advertising and the whole shopping experience. According to the latest AMPs, some 85% of LSM 4-6 adults appreciate the role of advertising. Eighty percent claim to be loyal to well-known brands and enjoy shopping. Eighty percent feels that their life would be better if they could own certain products. Further, 98% claim to be literate and from a media perspective, they’re easily contactable. Some care, however, needs to be exercised to ensure that messaging respects the language diversity.
In conclusion, we’ve reviewed the data currently available and based on the momentum gained and the numeric pressure generated over the past 10 years, there can be little doubt that lifestyles of LSM 7 and beyond are now well within reach of this middle market. Prosperity and the promise of new consumers await those marketers smart enough to begin the conversations now – but remembering that media consumption habits often lag behind socio-economic improvements.
LSM 4-6 are the next wave of ‘prosumers’ who will define brand wellbeing, dictate brand personality and deliver (or not) on the future of many brands.
This story was first published in the August 2012 issue of The Media magazine.