The lower end of the market is well researched and understood, but how much do we really know about the middle class and up? By Brandon de Kock
Economic inequality is a much documented fact of life in South Africa and, arguably, our most pressing concern as a nation. But in the world of profit and loss, it is equally undeniable that the majority of total consumer spend lies in the hands of an elite few at the top of the wealth/income pyramid. How much do we really know about them?
According to a 2014 Credit Suisse report, there are 63 000 South Africans with an NAV in excess of US$1 million – a group that spearheads the sobering statistic that the wealthiest 10% of our population holds 75% of the country’s wealth. In late 2013, the UCT Unilever Institute punctuated the importance of the upper end of the market when they concluded, as part of their rising black middle class roadshow, that 30% of income earners are responsible for 86% of consumer spend. After that, however, the trail starts to cool. While establishment surveys paint very acurate pictures of those lower down the economic ladder, credible lifestyle data about this elusive 30% is hard to collect: it’s a tough job getting past a security gate or electric fence when you’re armed with a clipboard and asking for half an hour of someone’s time.
This information gap is where BrandMapp steps in. Expanded, renamed (from TopEnd) and now in its fifth year, it is a unique, online survey of 24 500 individuals – approximately half of whom are members of the 20% of the population living in middle class households. The other half are ‘TopEnders’, belonging to the elite 10% who live in households earning more than R30 000 a month.
The latter speak for themselves, but ‘middle class’, one of the more moveable feasts in socio-economic discourse, may need clarification. Technically speaking, it is nothing more than a linguistic label used to describe that social group who exist between the obvious ‘workers’ and the obvious ‘elite’. And for obvious reasons, the metrics used to define such a group will differ from one instance to the next and from country to country. Finding parameters that will work as well for Monaco as they will for, say, South Africa is a very hard task. A common approach is to calculate the actual ‘middle of the household income’ spread, but in a country such as ours, burdened by gross inequality at either end, it instinctively feels like too blunt an instrument.
In practice, we believe a more intuitive method is appropriate. In other words, we selectively define a broad income band lying somewhere between survival and affluence, where such things as paying off a car or being approved for a home loan etc. start moving from dreamland into more tangible realities. As a result, we typically frame a ‘middle class’ of adult individuals who live in households earning between R10 000 and R30 000 per month in gross income. In old school terms, that is approximately LSM 7-9. Our upper class or TopEnd is thus LSM 10+. These two groups are the focus of the BrandMapp study.
At its core lies a belief that if we understand the needs and perceptions of consumers, we can begin to understand their behaviour – and since a primary task of marketing is to influence consumer behavior, the survey results are powerful weapons. Yes, it is fascinating digging around in the data to reveal what brands people prefer, where they bank, how much they invest in unit trusts, whether they play golf, carry a Smart Shopper card or like to take photos on a beach holiday, but the most valuable insights that result from the study every year are those that inform potentially game-changing conversations. Like, for example, a new and improved theory as to how, when, where and why the top 30% of the market wants to communicate with the world – and wants marketers to communicate with them.
Let us begin by establishing what they don’t want. ‘Print is dead’ they say, but is it true? Well, for magazines in general, the numbers are not great. Only 25% of the middle class are buying magazines ‘the same’ or ‘more’ as last year and for the TopEnd, that figure goes up to 33%. Considering that more than 39% and 31%, respectively, aren’t buying magazines at all – and that almost a quarter aren’t reading any magazines – and you start to understand why the quarterly ABC announcements are such a cause of angst in old-media houses. For newsprint, the story is worse; 44% of the entire sample group don’t buy newspapers at all and only a third are buying the same or more.
Radio remains a vibrant medium (at least in drive time, we assume) and as for television, although the leisure medium of choice, the negative impact of PVR systems on advertising value is a ticking bomb: 78% of TopEnders subscribe to satellite TV, of them 60% have PVRs and of those, 83% use their machines to avoid watching ads! The middle class, are only 10% less likely to hit the fast-forward button, so they are marginally more open to ‘invasive marketing’ than their wealthier counterparts, but it still begs the question: what is driving this behaviour?
The ‘big’ answer, we believe, is explained in a simple word: relevance. Media isn’t dying but irrelevant media is what’s bleeding to death. When 100% of the information you want is a mouse-click away, anything you’re not interested in is a waste of money. And the wealthier you are, the more access you have to increasingly finer filtration systems and the more inclined you are to avoid noise, clear clutter and find people, products and services that provide you with precisely what you want. That’s what we mean by ‘relevant’.
Is this simply educated ‘navel-gazing’ or are there clues in BrandMapp that lend credence to the idea? Well, we know that the top 30% of the market is armed for the digital age. 88% have smartphones, 50% own tablets and they effectively all have access to the Internet. So it comes as no surprise that digital information plays a big part in their lives. 80% are on facebook, 36% use twitter and even the ‘new kid’ on the social block, instagram, enjoys a 26% penetration. But what may be surprising is that 49% of TopEnders and 43% of the middle class subscribe to three or more email newsletters a week – 28% to five or more!
We also know 44% have stopped buying newspapers altogether, but 72% ‘occasionally or often’ read local community newspapers – from the middle class all the way to the über-wealthy. The content may be parochial, but that’s why it works: like bookmarked websites, invite-only social media and e-mail newsletters, community newspapers offering unique geospecific content are exceptionally relevant forms of communication.
So, apparently, two of the most effective ways to reach upmarket individuals are by flooding their inboxes and advertising in ‘knock-and-drops’. For media agencies and hotshots, that is about the least ‘sexy’ plan imaginable – indeed, it’s the sort of thing we were all warned against when ‘spam filter’ first entered the lexicon. But it illustrates the crux of the matter: people’s habits are changing, none more so than the affluent, and consumer-centric thinking needs to take precedence over creative indulgence.
What the data shows is that trying to change consumer behaviour by ramming messages down throats is an increasingly futile strategy: an outdated, interruptive approach that only survives in the most traditional media. Rather try to understand your consumers’ needs and perceptions and formulate appropriate campaigns that allow your brands and products to align with the natural flow of their jam-packed lives. And that journey is best begun in a vehicle fuelled by data and driven on insight. After all, without a deep and accurate understanding of the playground, you’re just a guy with a plan pretending to be a strategist.
Brandon de Kock is an editor, speaker and director of storytelling at WhyFive – the insight-driven research company behind the annual BrandMapp survey.
IMAGE: Luxury hotel, the Ellerman House Villa
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