LSM

LIVING STANDARD MEASUREMENTS (LSM)

Income alone does not give a good indication of a household’s wealth so marketing experts in Africa have developed and adopted living standard measurements that look at a wide range of indicators to establish the real buying power of people. Initially there were 11, now 17.

We hope that the latest review of LSMs will be unveiled at the PAMRO Media Research Conference at Victoria Falls on August 21-24 2016. Be there….

Professional market researchers like Joe Boniaszczuk, Piet Smit and Eddie Schultz developed lSMs because they felt that assessing people’s spending power and wealth based on income and money in the bank distorted the picture.

Initially the new measures were divided into 11 brackets, with LSM1 representing the poorest sector of society and LSM 11 the richest. Following research by Tendai Kadenhe Mhiza, these were expanded to 17 different lifestyle measurements.

LSM 1-6

People falling into the first six LSMs are mostly operating outside the cash economy

LSM 1 

Members mostly live in traditional structures comprising three, separate rooms that are owned or constructed by the household. There will be a pit latrine and a protected well apart from the house and the average household will be four adults. The breadwinner is often single and economically active: other members are either unemployed or retired. Formal education is rare. Most have access to radio but only see TV or printed media when visiting shopping centres or more affluent friends. They live on basic, staple foods.

LSM 2

Typically a family with five members, the breadwinner is single and has primary school education. The home has three to four rooms in a compound. They are generally subsistence farmers. They prefer natural, traditional food and just over half can afford to eat meat in small quantities regularly. Clothing is only bought for children. Their life values are based on self-preservation with little hope of advancement but they will occasionally indulge in goods that add value to their lives, such as lotion and mayonnaise.

This group survives mainly on money from relatives. Characteristic goods would be a radio, bicycle, a wheelbarrow and a paraffin stove.

LSM 3

Five adults on average live in a three-room house constructed in part of farm bricks or cement blocks. They have enough land for a few cattle, chickens and a goat and the highest level of education is part secondary school. More literate, they have access to more media and a limited number have TV.

They have a slightly higher income and eat much more basic food. This consumer is concerned with cleanliness and so buys more toiletries—but they are not too concerned with appearance and will buy cheaper alternatives to branded lines.

Most income comes from informal trading, supplemented by money from relatives in bigger towns.

LSM 4

The chief wage earner will be self-employed and educated up to mid-secondary school. S/he heads a household of five adults, living in a plain, four-roomed brick house that they, like the previous LSMs, own. They have one or two acres of land and a few may have an older model vehicle, most likely not in good working condition.

They have access to more media and just over half of them have a black and white TV. Radio listenership is again high and there is more access to print media, preferably daily papers.

This group buys fewer multi-purpose products—for instance they buy more washing powder than laundry bars. Limited expenditure on clothes for the whole family. They prefer to pay cash although a minimal number have access to credit and savings accounts.

LSM 5

Typically this LSM household of six adults owns a four-room, brick house with a corrugated iron roof and electricity. It is self-sufficient in basic food and the breadwinner has mid-secondary school education, owns his own business and is driven by the hope his children will have a better life.

Most listen to the radio, one-third watches TV and one-tenth read the printed press, particularly the dailies. This LSM is exposed to outdoor advertising and they use more basic commodities—many drink tea and/or coffee. Typically they shop twice a week.

As their incomes are irregular, few use financial services—but they do understand that banks are there to help them.

LSM 6

This average household has seven members, including children. They are mainly literate with the highest level of education being middle secondary school. One third are tenants, most have sufficient land for livestock, maize and vegetables. They do not have flush toilets but they do have electricity. Water comes from an outside tap.

Typical items in the home are a small colour TV and a radio cassette player. They enjoy a wider spectrum of programmes than the lower LSMs and some have access to satellite. A minimal number attend cinemas. There is some print readership, primarily of daily newspapers with emerging exposure to weekly and monthly press. Access to the Internet is negligible and about a third have cellphones.

In formal employment, they see outdoor advertising and will visit family or friends over the weekend. They buy breakfast cereal, canned foods and soft drinks but do not demand specific brands. They are concerned with presentation and self-improvement and will buy items like deodorants. They shop once a week, preferably in chain stores but, despite their higher income, they are not interested in financial services.

 

LSM 7 households generally comprise six people, most of whom are literate and more than one will be working. They normally own the house, which will have six rooms, be made of brick and electrified although most do not have indoor toilets. Close to 15% of these households have domestic servants

Goods that characterize this LSM include a small colour television set, a radio, an electric stove and a deep freeze.  They are regular television viewers and listen to the radio, preferring local stations. Newspaper readership and cinema attendance are low.

LSM 7 consumers buy mainly basic commodities but occasionally indulge in breakfast cereals, soft drinks, fruit juices and fabric softeners. They choose the cheapest. This economizing segment will give pets leftovers from the household meal and LSM 7s are the main consumers of opaque beer.

Less than 10% use financial services: savings are kept at home and payments are in cash. They strive to improve their standard of living and believe in setting aside money for their children’s education.

LSM 8 and 9 form the transitional LSM groups who are aspirational and so prioritise certain durables and luxuries over what could be called sensible basics. In LSM 8 the house is similar to LSM 7 but it will have an indoor or outdoor flush toilet. They will take out short-term insurance, hire security guards or join a neighbourhood watch to protect their property.

LSM 8 are regular TV viewers and increasingly have access to satellite television. The majority listen to radio and are interested in some foreign stations. They read a relatively wide range of newspapers and magazines and use the Internet, mostly in cafes, mainly for personal communications. More people have cellphones than fixed lines.

They are relatively easy to access, having access to diverse media including road shows, outdoor advertising and cinema. This group is concerned with appearance and self-improvement and consequently buys more toiletries. They shop in product-specific stores and are brand conscious.

Mostly they use public transport: about 20% own cars. A few have had the opportunity to travel by air, mainly on local flights for business.

LSM 9 mostly live in six-room brick houses that they own. They have either electricity or solar power and running water. About 20% have domestic servants. The majority of breadwinners have secondary or tertiary education and are mostly single and in full-time employment. About 30% are acquainted with the business language (English) but they communicate in their local language.

They are exposed to a wide range of media, including some access to DStv, the Internet (mainly at work for business), and email. Half have vehicles, either belonging to them or the company.

Typically they buy groceries once or twice a month in a chain hypermarket or supermarket and can afford a variety of the less essential items like washing powder, fabric softeners, household cleaners, breakfast cereals, pasta and mayonnaise. They are conscious of quality and are prepared to pay more for it.

About a third of this LSM have accounts with commercial banks, although most transactions are done with cash. They believe in saving their money in the bank.

LSM 10

An average of four live in full brick houses, usually with six rooms. There is at least one vehicle per household and some 40% employ domestics. The majority are single and almost all claim to be Christians with only a few practising African traditional religions.

Around 40% have diplomas and degrees and they value education and the future of their children, putting aside money for their education. They are well acquainted with English but communicate mostly in their local language.

Almost all have access to radio, television and print media while about a third use the Internet, email and DStv. Less than 10% have personal computers and typically they have fixed telephones as well as cellphones.

They shop once a month for groceries at chain hypermarkets and supermarkets. The LSM 10 diet comprises basic staples as well as “luxuries” like breakfast cereals, pasta, fruit juices, mayonnaise, ice cream and chocolate. They value quality and are prepared to pay more for it.

About a third have current accounts—but most purchases are cash.

LSM 11 also have smaller households—four or five people—and mostly own their full brick homes with an average of seven rooms, running water and inside flush toilets. About 50% employ domestic servants and about half are single. Most have completed A levels and half their income is derived from formal employment.

Most have refrigerators, radios, colour TVs, CD players and music centres. Typically they have both fixed telephones and cellphones, over a third have access to DStv, Internet, mostly at work and for business, and email.

This group has a high exposure to outdoor advertising, particularly billboards. They are particular about what they buy and prepared to pay for quality. They are brand loyal and buy supplementary items like chocolates, fruit juices, skin, hair and home-care products.

About 70% gave bank accounts with commercial banks and believe strongly that banks exist for their benefit—but they don’t always agree that couples should have joint bank accounts.

LSM 12 are relatively young and upwardly mobile. An average of five people live in full brick houses, most of which are owned, with eight rooms. They have hot water from a geyser or solar power and are security conscious. Almost all employ domestic servants

Two-thirds are in permanent employment, mostly in unregistered businesses. About 30% have completed diplomas and degrees and over 70% are able to communicate in English.

The LSM 12 household contains all the major durables and white goods, including microwaves. About 60% are exposed to the Internet and email with almost half watching DStv. This segment is very aware of outdoor advertising.

They are particular about quality and do not shop for the lowest prices or special offers. They shop in hypermarkets or supermarkets once or twice a month and buy many premium products like deodorants, body lotions, creams and washing powder.

The group has fixed telephones and cellphones with working lines. It has at least two vehicles per household. It thinks the health and banking sectors provide good services. Half of LSM 12 have saving accounts. They are optimistic and believe they will be better off in five years’ time.

LSM 13

This group consists mainly of young professionals in the corporate world who are serious about career advancement. Similar numbers of people live in similar houses to LSM 12—but the house is often mortgaged. Other financial services they use are car insurance, medical aid cover, funeral insurance and cash loans. Over half have bank accounts.

They are well educated and most have degrees or diplomas. About 95% access the Internet, mostly at work but also on personal computers at home. About half have satellite dishes and they are all frequent consumers of television and radio. They are disposed to try new things and are very fashion-conscious.

LSM 13 buy more premium products and easy-to-prepare foods. In addition to what LSM 12s buy, they shop once or twice a month for instant coffee, all kinds of snacks, herbal or rooibos tea bags and bottled water. They often shop for clothes and can afford to pay for high quality.

Much of their daily travel is in their private cars and once in a while they fly within Africa for business or leisure. LSM 13s believe the future is bright and they strongly believe in saving part of their money.

LSM 14

The head of these households tend to be older than LSM 12 and 13 and the home comprises four people on average. These are similar to LSM 13’s. Most are in full time self employment in informal-sector businesses. They hold tertiary education qualifications and senior occupations range from teachers, accountants, nurses, soldiers and farmers.

They are avid TV viewers and radio listeners and very aware of all outdoor advertising. They use the Internet and email, usually at work. Over a fifth own computers.

Grocery shopping is done once a month at hypermarkets, supermarket chains and wholesalers. They can afford quality and there is high in-home incidence of premium products, snacks and ready-made food. They shop for clothes mostly in department stores and clothing chains.

Almost all have cellphones and some have fixed phones at home. There tends to be at least two vehicles per household. Most have bank accounts, some have medical aid cover and funeral insurance.

LSM 14 believe strongly in saving part of their money in banks to educate their children.

LSM 15

There is a sharp increase between this living standard and LSM 14. Four or five people live in an average of nine rooms and they have all the household amenities including a microwave, vacuum cleaner, floor polisher, washing machine, dishwasher, pressure cookers, personal computer and generator. Their homes are protected by security guards, neighbourhood watch, rapid reaction units and alarm systems.

Post-graduate qualifications are not uncommon. Almost all use the Internet and email, both at work and at home for personal information gathering. They are heavily exposed to television, including DStv, radio and print media.

More have cellphones than fixed phones. Most travel by private car and some households have three vehicles, one or more owned by their company. Half this group has travelled by air.

LSM 15s are totally committed to quality and keeping up with the latest fashions. They do a monthly bulk grocery shop, purchasing specialized foods and toiletries. They buy products like disposable nappies, sanitary towels and pet food.

They believe that banks and other financial institutions exist for their benefit and use the full spectrum of financial services. They have medical aid, funeral insurance, pensions, whole life policies, study loans and car insurance.

They feel it is very important for their children to have a better education and they save for that. They believe the future will be better.

LSM 16

There are almost equal numbers of married and single people in this group and their households are similar to LSM 15. So are their media and Internet habits.

86% use cellphones and 76% use fixed telephones. Each household has between two and three cars, three-quarters of which they own. Half of them have travelled by air.

Shopping habits are similar to LSM 15, with a heavy emphasis on quality.

They also believe that banks and financial institutions are there for their benefit and about 78% have savings and current accounts as well as credit cards. Most of their purchases are cash with over a third using cheques, a quarter using credit cards and 13% using debit cards.

They use the same financial services as LSM 15.

LSM 17

On average five people live in a 10-room house and, in addition to the amenities enjoyed by LSM 16, they have a home theatre system, video camera, camcorder and multiple colour television sets. A fifth have amenities like swimming pools and tennis courts. They live in high security homes and employ private security guards. They have car and house insurance policies.

There are both employees and business people in LSM 17. Most employees are bankers, lawyers, managers, engineers and ICT specialists. They are well educated and at least half have post-graduate degrees.

Virtually all watch television, including satellite, and listen to the radio. The programmes of most interest to them include soap operas, international sport and local and international news bulletins. They read a broad range of newspapers and at least 50% read magazines. They are very award of outdoor advertising, particularly billboards, neon signs and posters.

All LSM 17 have access to the Internet and email at home and work and prefer broadband, which they use for communication and research. 86% have cellphones and 80% fixed telephones.

They mostly travel by private car: all members own one car and 40% have two vehicles. Air travel for business and pleasure is common, both within Zimbabwe, throughout Africa and internationally.

LSM 17’s consumer habits are expensive. They consume things like cheese and yoghurt regularly and use hair care and skin cleansing products frequently. They often select the finer products preferring, for example, wine over opaque beer and are prepared to pay more for better quality.

They do not hesitate to buy clothes and shoes and always make a special effort to keep up with the latest fashions. They shop in hypermarkets, supermarket chains, pharmacies, exclusive shops and department stores.

Over 80% have accounts with commercial banks. After the hotel industry, they consider the banking sector to be the best service provider. They believe strongly in saving money each month and put aside money for their children’s education. They are driven by a strong desire for self-enhancement and a sense of self-direction. They believe they will be better off in five years’ time.