by Added Value project direct, Thuli Motaung
It is time the market research industry came to terms with the fact that the Living Standard Measure (LSM) questionnaire on its own does not cut it when it comes to defining target markets and compiling research groups. The industry, and the marketers it serves, must identify ways to define target market segments in a more holistic manner that encompasses both intrinsic and extrinsic variables.
In the early 1990s when I started working in market research, there were huge disparities in the market in terms of acquisitions and it made sense to use a system based on household acquisitions to segment it.
Today, however, field recruiters often complain they can’t find households matching the LSM 1-2 criteria, even LSM 3-4 households are difficult to locate. And, with much of the South African population falling into the LSM 5-7 bracket, there is danger of homogenising consumers if marketers rely on LSM alone to segment this market.
- Then and now
I remember walking into a home in a rural area in KwaZulu-Natal about 10 years ago on an ethnographic immersion. The place was a true reflection of a LSM 2 dwelling: there was no electricity or running water, the house was built from mud and had a thatch roof, and it was sparsely furnished with an old couch, a table, a paraffin stove and shining stainless steel pots and pans.
A recent return visit highlighted the impact access to basic services, as well as urbanisation, has had on residents’ lives … and their LSM score. Some 94% of South Africans now have access to electricity (AMPS 2014:B) and young city-dwelling family members often hand down their modern appliances to rural relatives, so microwaves, fridges and cellphones are readily found in a mud hut.
Similarly, the material possessions that were traditionally known ‘to be for’ the elite and upper class (often white) have become more accessible to the lower, predominantly black consumer. For example, the motor industry 15 to 20 years ago featured high prices and limited ranges. Fast forward to early 2000s: it now offers value and quality at entry level prices making it possible for many defined as ‘mass market’ to own cars for the first time.
Likewise DSTV, which once was a premium offering exclusively for the elite. With DSTV Compact, a consumer can now install a satellite dish and enjoy quality viewing for as little as R30 a month. Not surprising, AMPS reported a growth of DSTV penetration from 33.4% to 35.7% amongst LSM 1-7 (AMPS 2014).
As a result of these changes, consumers who would have previously fit the LSM 1-4 bands are ticking more and more boxes on the LSM grid and moving into the LSM 5-7 bracket.
So, there is a growing need for measurements that go beyond LSM, that differentiate consumers attitudinally and psychographically to take into account geographic location, education level, lifestyle, attitudes to life, attitudes to products and brands, and so on.
For example, consider these two consumers:
Lerato is a 30-year-old single female from a new development area in the North Western part of Johannesburg called Cosmo City. She lives in a small 2-bedroom house with her uncle and two children, works as a supervisor at a call centre and commutes to work by bus on a daily basis because she is not yet comfortable driving her second-hand Toyota Tazz. Lerato loves to watch in awe as her children complete their school work on the tablets she bought for them on credit at Edgars (she is a huge techno phobic) and hopes that one day they will have university degrees that she could not have. Rather a shy person, Lerato spends most of her time indoors with her children watching movies on DSTV, playing games on their tablets, going to church and visiting family in Alexandra.
June is a 30-year-old single female from North Riding, a mere five kilometres from Cosmo City. She lives alone in an upmarket complex, has recently been promoted to a managerial position (thanks to having completed her MBA degree) and bought herself a new Audi A3 to celebrate. June loves to travel both for work and leisure, and is a fun-loving person who is always entertaining guests. June lives in the digital world and has a huge social media following, loves the convenience of shopping online as well as connecting online with people locally and internationally.
Both these women fall within the broader LSM 8-10 definition, yet they differ considerably in attitudes to life, life-stage and general outlook.
In light of this, when seeking to understand this target market, marketers must use a more granular approach that taps into a holistic view of who these consumers are beyond their personal material acquisitions. There are richer variables that define a consumer far more succinctly than does their TV set, car or refrigerator – attitudes being just one.
- Typology to the rescue
By using typology to segment the brand’s target market, marketers are able to tap into the bull’s eye consumer and align the brand to their core needs. Intimate variables such as values, attitudes, lifestyle, personality traits and behavioural traits can go a long way to ensure the best respondents are recruited and groups are as homogeneous as possible.
This means that each piece of research needs to be treated as unique based on project requirements, brand or product challenge, and target consumer. Recruitment questionnaires need to be tailor-made accordingly.
Thuli Motaung is currently a Project Director at Added Value South Africa and has over 15 years’ experience in social and consumer research