Marketers have been warned that they are not adequately reaching the 4.2 million-strong – and rising – black middle class in South Africa, either through advertising or other brand activity.
South Africa’s black middle class has more than doubled over the last eight years, growing 250% from 1.7 million South Africans in 2004 to an estimated 4.2 million by 2012, with a spending power of R400 billion per annum.
This dramatic growth has been revealed by new research conducted by the UCT Unilever Institute of Strategic Marketing. The Unilever Institute’s latest study on the black middle class, entitled 4 Million and Rising, has found that the annual spend of the black middle class began pulling ahead of their white middle class counterparts in 2008.
The market of the future reflects a “normalisation trend”, with increasing numbers of black South Africans being born into the middle class.
These were the key takeouts of the study released this past week in Johannesburg and Cape Town:
- Future marketing success will depend on attracting younger black customers (says the former marketing director of a major bank).
- The black middle class spending power has overtaken that of the white middle class (R380 billion), to R400 billion.
- Black middle class families are defined by their aspirations more than their income.
- Purchasing of household assets results in mass entry into upper LSMs (8-10).
- Driving growth in this important segment is ambition, along with education. Only 14% of the black middle class don’t have a matric. Nearly half have a post-matric qualification and since 2004, the number of black middle class members with a tertiary qualification has grown by 1.25 million.
- 70% of the black middle class claim to have weathered the recession.
- Because the black middle class is often supporting extended families, household size is relatively large, with nearly 40% of households with five or more individuals.
- Over 90% say they are more cautious with spending since the recession and many are trying to save more.
- Over 50% of the black middle class say they buy fewer branded goods.
- Assets owned by the black middle class, include a dishwasher (4%); computer in the home (45%); DVD player (63%); washing machine (58%); and microwave (92%).
The black middle class dream entails unlimited freedom for self and others, a big house in the right area, their own business and their dream car. They are highly motivated to make it happen and 68% are more optimistic than five years ago (compared to 30% of whites), that they will be able to achieve their goals.
They are ambitious and education is seen as the key to unlocking future opportunity: 60% send their children to ex-Model C or private schools, but 70% are not happy with the standard of education in government schools.
They will use credit to play catch up and achieve the standard of living they desire. Securing the future of their children is very important as they don’t want them to “suffer” like they did. There is also a strong desire to give back.
Opportunities for marketers in this segment:
- 80% have never travelled by air.
- Owning a car is an imperative as they don’t want to travel by taxis again and black middle class car ownership is up by 1.1 million since 2004 (45%): 23% own a Toyota; 19% a Volkswagen; 8% a Nissen; 7% a Ford; and 6% a BMW.
- Investment in appearance is considered essential and the black middle class shop mostly at Edgars, followed by Woolworths, Mr Price and Truworths.
- The mall is becoming the playground of the black middle class.
- Brands considered “hot” and which are speaking to the black middle class are: FNB, BMW, Mercedes, VW, Hyundai and Samsung.
- DSTV is seen as a must have status amongst the black middle class.
- Feedback shows that few ads and programmes are aimed at this segment and few ads have “real” resonance.
- Cellphone usage is up from 36% in 2004 to 95% in 2012: top brands are Nokia (58%); Blackberry (16%); Samsung (14%).
- Internet usage has risen in this segment from 10% in 2004 to 42% in 2012 and nearly 58% have a Facebook profile and 75% are logging on at least once a day.
Their biggest fear is slipping back, these are first generation middle class and their families sacrificed much for them to be here.
“Despite setbacks caused by the recent recession, South Africa’s black middle class continues to rapidly expand and is more influential and powerful than ever before,” said Unilever Institute director, Professor John Simpson. In contrast, the white middle class has remained fairly stagnant over same period, with its adult population growing from 2.8 million in 2004 to 3 million in 2012.
Simpson, who led the ‘4 Million and Rising’ study, said it was important for business and industry to better understand this market in order to facilitate the provision of goods and services to meet its needs.
“That this market continues to grow and prosper is crucial to the health and future of the economy. The black middle class is helping create a vibrant and stable society by increasing South Africa’s skills base, deepening employment, and widening the tax net.
“As this market has matured, it has become much more complex than marketers and advertisers have assumed. Marketers are not adjusting fast enough to meet the needs of this rapidly transforming market segment. This new order demands new strategic thinking from businesses and manufacturers; from how they both create and sell products, to the way they distribute and market,” Simpson added.
Source: UCT/Unilever Institute of Strategic Marketing “4 million Rising”
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