It is often said that in life there are those who know what is happening; those who don’t know what is happening; and those who don’t know anything has happened at all.
Remarkably, the media industry’s response to the re-calibration of the 10 LSM model into 14 New LSM segments in AMPS 2008 encompasses all three states of awareness. The realisation in 1997 that the original 8 LSM model was no longer sensitive enough to differentiate the increasingly complex media and product consumption patterns of the upper middle class and top-end consumers, led to the initial recalibration of the original LSM 7 and LSM 8 segments, creating the 10 LSM model in use until 2008.
Accelerated change in the South African marketplace, and society at large, has essentially recreated the same set of circumstances that precipitated the 1997 split. The top end of the market and the burgeoning middle class can no longer be effectively segmented by a simplistic 10 LSM model.
Analysis of AMPS reveals that whereas, in 2001, LSM 1-3 constituted 39.5 percent of the adult population, by 2008 that had been eroded to 21.5 percent. Correspondingly, LSM 4-8 now constitutes 64.2 percent of the adult population (up from 50.7 percent in 2001).
That’s good news for the country and great news for marketers and media owners. That translates into over 4-million economically active consumers moving into the product and media consumption zone. These facts presented a clear case for the further sensitisation of the LSM model and the only debate of any value which remains is how to use these new insights to create better advertising campaigns and better return on media investment.
One application of the 14 LSM model, which would provide value through consensus and ultimately common practice, is to create a firm, quantifiable definition of so-called “Black Diamonds”.
The first significant efforts to identify black consumers as a homogeneous consumer community, with massive buying power, can be traced back to the “AMPS 1981 New Consumer Report” and whilst all the interesting insights that have been created around Black Diamonds recently have re-energised the search, planners in South Africa are still no better off in terms of finding a commonly accepted working definition and location for this market segment in AMPS.
One technique for unpacking the insights is the clustering of LSM segments, and the early 8 LSM model offered three such clusters.
• Supergroup A (Established Achievers): LSM 6, 7 and 8
• Supergroup B (Emergent Market): LSM 3, 4, and 5
• Supergroup C (Less Privileged): LSM 1 and 2
Initially insightful as they were, from a media planning perspective, using the Supergroups was rather like trying to dissect a piece of sashimi with a set of garden shears, and the Supergroup Cluster model soon fell into disuse.
With AMPS 2008 now demarcating 14 LSM segments, once again clustering of LSMs provides a very effective means of managing the segmentation and creating practical, commonly applied, market and media consumption insights. The Muller Cluster Model offers one such option.
This macro-segmentation cluster model, based around a mid-point analysis of population and household income suggests the following clusters:
• Traditional Market (LSM 1-3)
21.6 percent of the adult population, contributing 4.4 percent of household income
• Transitional Market (LSM 4-5)
30 percent of the population, contributing 11.9 percent of household income
• Middle Class (LSM 6-7 Low)
22.7 percent of the population, contributing 19.6 percent of household income
• Upper Middle Class (LSM 7 High-10 Low)
22.7 percent of the population, contributing 51.1 percent of household income
• Elite (LSM 10 High)
3 percent of the population, contributing 13 percent of household income
It lies outside the scope of this submission to articulate the process of data analysis, but from a pragmatic planner’s perspective the model is a sensitive differentiator of both media and product consumption. So, can the model isolate Black Diamonds as a segment and more importantly, from a media planning perspective, does it identify unique media consumption patterns for that segment?
Nobody has debated the volume contribution of black consumers in the South African market place for 40 years, so let’s assume Black Diamonds is a reference to above average consumption and value. Simplistically then, we can eliminate the Traditional and Transitional market segments (LSM 1-5) as having below average buying power: 51 percent of the adult population generating only 16.3 percent of total household income.
Similarly, the Middle Class (black or white) are not diamonds because of their average buying power. Call them Cubic Zirconias if they need a gemological name.
Elite consumers represent only 3 percent of the adult population, but their obvious wealth and conspicuous consumption clearly identify them as a distinctly demarcated market segment, making them more valuable in isolation than simple diamonds. Let’s call them something uniquely African. Call them Tanzanites.
By process of elimination, all that remains is the Upper Middle Class segment: 23 percent of the total population accounting for over 50 percent of total market value. They are bench-pressing more than twice their mass and that’s a pretty valuable contribution. That’s why the lock-forwards in a rugby team are called the engine room. Black consumers represent 36 percent of this economic powerhouse and if you need to give them a name, then Black Diamonds will do.
Like all Upper Middle Class households they are, of course, heavy consumers of all media forms. But do Black Diamonds have a unique pattern of media consumption, which distinguishes them from their immediate neighbours? If we examine the Gauteng region, which accounts for 35 percent of the Upper Middle Class and 44 percent of Black Diamonds, we can discern very clear points of variance in terms of media selection and consumption.
Whilst there are points of crossover, Sunday Times being the most significant example, it is quite clear that different segments in the Upper Middle Class manifest widely varied media preferences. Having eliminated income as a catalyst, it is not unreasonable to conclude that, particularly with respect to broadcast media, the issue of home language communication is critical.
We all understand that when we are in Rome we are to do as the Romans do. That presumably would include speaking Italian. When it comes to advertising, we can only wonder why it is that this rule is not universally applied to Upper Middle Class consumers in South Africa. Maybe when it comes to cultural awareness, as media planners, we need to admit that we just don’t know our ayobaness from our Eita! Hola!
Gordon Muller is an independent consultant and an editorial advisory board member of The Media.
- This article first appeared in The Media magazine (March 2009).
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