By Desi Tzoneva

On Tuesday, 23 February, the South African Advertising Research Foundation (SAARF) held a training session for industry members to inform them about SAARF’s products; services; history; and segmentation tools. The presentation started off with a discussion of the meaning of the living standards measure (LSM) - a marketing tool that offers insight into the local market.

To find out more about this market, SAARF undertakes regular research into the South African population, and training offered includes: a general overview of SAARF and all its products; information on AMPS, TAMS and RAMS; all segmentation tools; a trend booklet – which supplies all data by LSM over five years; a main AMPS CD – which includes all AMPS data (LSM 1-4); a branded AMPS CD; a segmentation CD; computer bureaus; and AMPS can be accessed online for tabulations.

An LSM was defined as a market segment obtained after breaking up the total market into sectors with common properties. These segments in turn represent a gross slice of the market. A market is a niche, which is a smaller, specially formed, segmented type of market segmentation taking into account: demographics; life stages; wants; and needs with multiple attributes, making up an LSM measure.

It was advised that over-segmentation on AMPS should be avoided, because breaking down the niche groups into ever smaller units leaves practitioners with very small sample sizes.

The SAARF LSM, however, is not the only type of segmentation tool, but is a stable and dependable differentiation.

Other measures include the SAARF Universal LSM target marketing tool, which is used to select appropriate media. Therefore, no media relevant variables are used in its construction. It also does not include personal attributes (except in the 1995 and in 2000 LSMs) used; and excludes income, which can be used as a filter, although it is not a variable.

The rationale for segmenting a market is based on observations that, while some behave differently, other people behave similarly, and this tool distinguishes between these different people. It is used to identify the target market and audience to reach 100% of a target market by trying to maximise reach with 0% wastage.

The traditional approach for segmenting markets included demographics such as race; gender; and age, but it did not differentiate between psychographics. While it was useful, it was not enough to offer an adequate picture and stimulated the development of the LSM.

Throughout the process of developing the LSM, the urban versus rural debate also impacted on the inclusion of these variables. It was initially perceived that rural areas should be treated as separate, but because people in the rural areas started gaining access to supermarkets and because the introduction of taxis facilitated greater access to products, the urban-rural divisions fell away. The community classification also fell away, because where previously, some publications were only available in certain areas; people now have more access to these. Another influencing factor was the Lever Brothers who called for a ‘need to think not in extremes, but outside of the box,’ as there was a growing international realisation that demographics are not strong differentials and LSMs should have broad application across the total market. It should also be simple and have the ability to be linked to other surveys, as well as be stable over time, but sensitive enough to register changes in a country.

As a result of such developments, approximately 100 AMPS variables were selected on logical grounds, and statistical methods were applied to the variables to establish (multi dimensionality). The principle component analysis and stepwise regression analysis, - which gives weight to variables - methods were used.

In 1995, LSMs were upgraded and the ‘non-household supermarket shopper’ became a ‘household supermarket shopper’. The ‘no water or electricity’ variable was also dropped. Another update to the variables took place in 2000, where the ‘non market shopper’ became ‘market shopper’, and the development of a new variable, the ‘rural metropolitan dwellers’ was included.

SAARF Senior Technical Support Executive, Claire Welch, said that there were a number of unforeseen difficulties and biases with older LSMs. The problems encountered included the fact that each time a variable was changed, the outcomes of the LSM changed; personal variables created gender and age biases; and there were difficulties with measuring households, as measuring children and adults within one household separately did not fall in line with measuring the LSM of a household, where children are said to have the same LSM standing as their parents. A further problem was that LSMs did not differentiate sufficiently at the top end of the market, and LSMs 7 and 8 were split into 7; 8; 9; and 10.

Of the 20 variables from the 2000 LSMs, 15 were kept. All personal variables that created biases were removed, and new variables differentiated more on the upper end of the scale.

As these improvements came into use, the new LSMs are now universally acceptable to all respondents and to all current and future SAARF surveys. This market segmentation was re-named the SAARF universe LSMs. Welch added that the benefits of the new variables means that LSMs remain updated and trendable, as well as sensitive and stable.

In 2004, four variables - traditional hut; Gauteng; electricity; and Western Cape - were dropped and nine new variables were introduced, including: house/cluster/townhouse; metropolitan dweller; DVD player; and one cell phone in a household.

SAARF Lifestyles 2009
Lifestyle LSMs based on attendance at and participation in 24 sports and over 60 activities has been developed. Other lifestyle groups include cell addicts; good living (which now has a variety of variables); gamers; outdoor; studious; traditionals; homebodies; bars and betters; show-goers; and gardeners.

SAARF Lifestages 2009A
The SAARF Lifestages 2009A LSM is based on an individual’s stage of life and includes age; living with parents; married; co-habiting; and dependent children. It is based on individuals’ current situation. The various groups are: at home singles; young independent singles; mature singles; young couples (5.8%); mature couples (8%); young family; single parent family; and a mature family.

SAARF Attitudes 2009A
This segmentation asks over 100 questions on attitude. Results are broken up into five groups; which can then be further divided according to topics; which can also be sub-divided according to statements. Data from the SAARF Attitudes survey is available at each of these three levels. The five attitude groups are: the now generation; nation builders; distants; rooted; and the global citizens.