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Explanation of Living Standard Measures (LSMs)
For Africa

It had become apparent in 2004, that the traditional methods used by marketers for consumer targeting and segmentation, such as population density in the area of residence, income and socio-economic class were inconsistent, subjective or vague. In any country with third world characteristics where a large portion of the economy is informal rather than formal, targeting consumers effectively becomes a formidable challenge. Although the variables mentioned above are widely used to segment populations, it is generally accepted that no single one of these variables or loose grouping of three or four variables, can effectively sum up the overall consumer status or standard of living of an individual.

The challenge is even greater when a marketer is trying to create strategies and target consumers in the sub-Saharan African market where there is no single segmentation methodology that works uniformly in all countries.  Demography differs across countries and definitely across borders, influenced by the history, culture and socio-economic elements present in each area. To confound the issue, many African markets do not have current media information with which to reach the target audience even if it were known and approachable.

There was need for an essentially non-demographic segmentation tool developed in the same way for as many countries in Sub-Saharan Africa that could effectively stratify the markets, based on wealth or standard of living. In addition to this, was the need for basic current media information for countries where no industry based study like AMPS is in existence. 

These consumer segments must be relatively homogenous in terms of needs, in order for effective marketing strategies to be developed. Accordingly, marketers required a standard, but comprehensive segmentation criteria that could be used to effectively target, consumers. These segments must be homogenous, identifiable, accessible and large enough to be clustered into groups of customers and potential customers, with similar needs, hence, customer groups that are most likely respond to marketing mixes in the same way. 

Dr Tendai Mhizha has developed such Living Standard Measures for 14 African countries as the basis of her PhD thesis.  LSM 1 represents the poorest people in the population and the standard of living rises with each number. There are 17 Living standard groups and the distribution of wealth varies between each country.
The distributions of these LSM groups, their relative sizes and basic profiles in terms of media, durable ownership and product usage are included on an interactive   CD from Dr Tendai Mhizha, in order to assist the reader in understanding LSMs.

The predictor questionnaire should be added to each and every research questionnaire in order to analyse data at the processing stage within countries and uniformly across different sub-Saharan countries. It is not necessary for field interviewers to calculate the LSM group in field unless there is a quota sample in which case this is not very difficult to do and takes approximately 3 minutes. It is important to note that the predictor questionnaires use approximately 80 variables to predict an individual’s LSM group within their household. It is not the 22 items shown on the questionnaire that are being measured. It is important for every user to understand this.

The African LSM data and predictor questionnaire for us on sub-Saharan projects can be purchased from Dr Tendai Mhizha.  Currently marketers, research agencies, advertising agencies, media buyers, media owners, PR agencies, NGO’s, government departments, consultants, individuals and any other bodies are using the sub-Saharan LSM predictive questionnaire.

What are Living Standard Measures?

Successful brands are relevant brands. Regardless of industry, all companies are in business to meet consumer needs. The African consumer landscape is as complex as it is fertile, and therefore needs a research approach that is sensitive to its uniqueness and intricacy. As part of Integra Africa’s ethos of basing sound strategy on ‘glocal’ insights, we are passionate about fostering an insight-conscious culture among marketers in Africa. We manage your Pan African research projects to ensure the uniformity and quality of data and most essentially the deep mining of insights. The so whats.

Living Standards Measures (LSMs) are a way of segmenting or classifying the adult population (or population of domestic household units) of a country, based on access to and use of a wide range of goods and services.  An LSM is a composite index derived from a range of variables that sum up the consumption and affordability status (and hence the living standard) of an individual. LSMs are sometimes referred to as a measure of affluence.

LSMs are a very strong tool for grouping people for the purposes of target marketing rather than demographic segmentation.

 

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