WHY LSM is being replaced by SEM

The marketing segmentation tool, LSM, is quickly being replaced by SEM ­– and this updated tool displays exactly how disproportioned South African communities are.

In the late 80s, when television advertising was placed on high priority and Cable TV was growing popular in America; South Africans were still getting used to having colour TVs and our country was still under the heel of Apartheid. Marketers across the country invested big bucks into print and TV advertisements to reach their target audiences, but for many advertisers, the country’s political status made communication with their audiences all the more difficult.

With the aim of helping marketers define their target audience more precisely, the South African Audience Research Foundation (SAARF) developed a unique marketing segmentation tool that grouped people according to their degree of urbanisation and ownership. This tool was called the Living Standards Measure (LSM), which has been the marketing model used across the country for nearly 30 years. Since 1989, when LSM descriptors were was first published, there have been several changes to descriptions in order to further homogenise groups rather than alienate them.

Here are the most recent LSM descriptors, of which 14 descriptors were again updated in 2004.

2001 SAARF UNIVERSAL LSM® DESCRIPTORS

1 Hot running water 16 Less than 2 radio sets / household #
2 Fridge/freezer 17 Hi-fi/music centre
3 Microwave oven 18 Rural outside Gauteng/W.Cape #
4 Flush toilet in/outside house 19 Built-in kitchen sink
5 No domestic in household 20 Home security service #
6 VCR 21 Deep freezer #
7 Vacuum cleaner/floor polisher 22 Water in home/on plot #
8 No cellphone in household # 23 M-Net/DStv subscription #
9 Traditional hut 24 Dishwasher #
10 Washing machine 25 Electricity #
11 PC in home # 26 Sewing machine #
12 Electric stove 27 Gauteng #
13 TV set 28 Western Cape #
14 Tumble dryer # 29 Motor vehicle in household
15 Home telephone

 

SAARF 2004 SU-LSM Descriptors

Excluded New
Traditional hut House/cluster house/town house
Electricity Metropolitan dweller
Gauteng DVD player
Western Cape 1 cell phone in household

 

The racial debate surrounding LSM

According to Dr Paul Haupt, SAARF’s CEO, LSM is a wealth measure based on living standards rather than income. Even though our country is diverse, Dr Haupt believes that certain identifiable commonalities such as how many household appliances people own, can help marketers determine whether we will be interested in their advertised products or not.

The distinguished concern surrounding the use of LSMs were that the segmentation tool was racially profiling audiences with descriptors such as ‘traditional hut’ which can be debated as merely a customary living standard rather than a measure of poverty. LSMs also came under fire since most of the lower LSMs audiences (1-6) were black, while the higher LSM audiences (6-10) were largely white, coloured and Indian. In response to the criticisms, Dr Haupt said that the segmentation tool, which had received the ‘Media Innovation of the Year’ award in 1993, was never created to obscure race but that it unfortunately reflects the circumstances of our country as a result of Apartheid.

LSM’s successor

Is it sensible to be measuring wealth by what we have in this day and age? Billionaires across the globe like Bill Gates and Mark Zuckerberg are sporting minimalist lifestyles and the trend to own less unnecessary clothing, gadgets, and appliances is becoming more popular in South Africa. Not to mention the diversity of cultures and customs in our country, where people share different beliefs about owning things. Instead, “we should be targeting audiences by how they live,” says Peter Storrar, from Kantar TNS, the research team behind the latest marketing segmentation tool, Socio-Economic Measure (SEM).

Why SEM is better

The SEM tool is said to be a more accurate reflection of how South Africans live, and it provides marketers with better insight to solve technical and statistical concerns. The tool depicts South Africans’ lifestyles by getting respondents to answer questions about where they live and what the structure of their homes are like.

The idea of focusing on living conditions rather than cars and household appliances relates to how the latter can be easily obtained and discarded but that one’s ability to afford and maintain residence is a more solid lifestyle measure.

In an article by the Publisher Research Council, Gordan Muller shares his forthright view on the racial bias of LSMs. “Given that the median age of whites is 39 and blacks 24, LSMs have been inherently racially biased as it takes about 15-20 years to accumulate all these durables and the white population have had an additional 15 years to do this. For example, LSM 9 and 10 – the top 16% of the market – was only 38% black, whereas the real top 16% of the market in terms of Household Income is 60% black. LSMs racial predisposition would thus skew advertising towards the white market.”

Here’s the list of SEM descriptors which equate to less than half of the 29 LSM descriptors:

With this in mind, Kaleidoscope has released a list of market segmentation descriptions based on the SEM model which identifies the people who would typically be found in areas that have been allocated to a segment. Find your segment here: https://bit.ly/2wNNVFy