LSM 4-7 is not one amorphous market but a segment of the population that has considerable variety and nuance, writes Wayne Bishop.
I took a fleeting look over the Johannesburg skyline and rapidly translated the growth, the rehabilitation and the newfound trendiness of the city into a realisation of how far South Africa is on its journey of hope.
The development of this city mirrors the growth of the middle class across the country. We have witnessed the construction of new roads and malls. These were built to service the expanding neighbourhoods in our valuable emerging markets – those with expanding purses.
Since the early days of the 21st century, we have been reading headlines to this effect: “The black middle class is on the rise”, “Retail to focus more on the emerging middle class” and “The emerging middle class and urbanisation are driving the growth of our country”. To marketers, the default ‘audience’ for this segment is simply LSM 4-7.
According to the All Media and Products Survey (Amps) 2013, almost 24 million adults fall into the LSM 4-7 group. I would like to crack a whip here… have marketers and advertisers been careless in assuming LSM 4-7 is targetable as just one group? How well have we researched the nuances within LSM 4-7? Do we truly understand this market? It may not be one simple key segment, one middle class. The more we look at it, the more we can see it is a spectrum of 24 million shades of grey.
When we segment, we divide a broad target market into subsets of people who have common needs and priorities. But I would like to argue that this market is not a homogenous group.
Firstly, the LSM 4-7 segment is spread out geographically:
- 23% Gauteng
- 17% KZN
- 12% Limpopo
- 11% Western Cape
- 11% Eastern Cape
- 9% Mpumalanga
- 8% North West
- 6% Free State
- 2% Northern Cape
There is no dominant language group in the segment across the provinces:
- 61% of Limpopo residents speak Northern Sotho at home;
- The mother tongue of 27% of Gautengers is Zulu;
- 48% of those in the Western Cape speak Afrikaans at home; and
- The Eastern Cape’s emerging market is 86% Xhosa speaking.
Education levels differ vastly across the segment. Of the LSM 4-7 population living in Gauteng, 44% have matric, while only 23% of Eastern Cape’s LSM 4-7 have matric.
The Ehrenberg-Bass Institute for Marketing Science in Australia has warned marketers about segmentation. What is important when defining a target audience is to ask yourself, “What is the best way to group data to represent who I need to reach?” and not to assume a predefined target market is the correct grouping.
Depending on what you are selling, targeting a Northern Sotho-speaking person in LSM 4 in Limpopo with no matric could be very different to targeting a Zulu-speaking matriculant in LSM 7 in Gauteng.
If you are not convinced that this market differs significantly, look at the income spectrum – the LSM 4-7 could be anywhere between R3 268 and R13 225 average household income per month. The difference R10 000 can make is evident in the dwelling variances. Those in LSM 4 typically live in shacks, whereas the LSM 7 segment lives in urban areas in houses or townhouses. How often have you re-looked at the LSM definitions to ensure that you are defining your market correctly?
A few examples of the shades of grey across the emerging market include:
- In Limpopo, 27% fall into LSM 4. This means that they have electricity, water and a non-flush toilet, television sets, electric hotplates and an Mzansi bank account.
- In Western Cape, 22% fall into LSM 7. This means they have full access to residential services, have savings accounts and they own durables and a motor vehicle.
- In terms of media, most of those in LSM 4 have limited options. They tend to watch SABC1 and listen to African-language radio stations.
Those in LSM 7, however, have a wide range of commercial and community radio. They watch high volumes of TV across a variety of channels, including SABC1, 2 and 3, e.tv, M-Net, DStv and community TV stations. They consume all types of print media and 34% have accessed the internet in the past seven days.
It is another world. So, as tempting as it may be to use a predefined target market, interrogate whether it is truly your market.
To tie-up the 24 million shades of grey, what is most important is to understand the mechanics of your business, inside out. Who shops at your store or buys your brands? Do you have stores only in particular regions? Is your brand appealing to those who can afford to make the purchase? Can you adapt your advertising to the languages that are prominent in your areas of operation? A one-size-fits-all approach could handcuff your strategy.
In the end, it’s not the product that will kill the business, it’s the marketer. So let’s appeal to the marketer in the only way we know how, through the immortal words of EL James, author of Fifty Shades of Grey in saying, “Know it inside and out, know every detail”.
Wayne Bishop is managing director of PHD in Johannesburg.
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