Mike Stopforth

There’s a theme emerging from my conversations with clients, fellow marketers and consumers. It’s becoming more and more apparent that the tools available to us for market segmentation perhaps omit a key characteristic of the evolving digital citizen that we would do well to take note of.

In South Africa one of our leading market segmentation tools are Living Standards Measurements (or LSM’s as they are more commonly referred to). The South African Advertising Research Foundation define the measurements on their website:

The SAARF LSM (Living Standards Measure) has become the most widely used marketing research tool in Southern Africa. It divides the population into eight LSM groups, 8 (highest) to 1 (lowest). LSM-7 and LSM-8 are divided into Low and High respectively.

The SAARF LSM is a unique means of segmenting the South African market. It cuts across race and other outmoded techniques of categorising people, and instead groups people according to their living standards using criteria such as degree of urbanisation and ownership of cars and major appliances.

SAARF was awarded the prestigious AAA “Media Innovator of the Year” award in 1993 for its contribution in helping marketers, advertising agencies and media owners define their target markets more precisely using the SAARF LSM groupings.

I have a fundamental concern with the following: “(LSM’s) groups people according to their living standards using criteria such as degree of urbanisation and ownership of cars and major appliances”. Now, I understand that the SAARF strongly recommends, to their credit, that LSM’s and other segmentation tools be used in conjunction with other measurements and trends in order to make informed calls about markets.

The problem here is that markets have evolved thanks primarily to developments in technology (the Web in particular). I can’t say it any better than Doc Searls and gang said it in their 1999 marketing manifesto to companies around the world, The Cluetrain Manifesto:

A powerful global conversation has begun. Through the Internet, people are discovering and inventing new ways to share relevant knowledge with blinding speed. As a direct result, markets are getting smarter—and getting smarter faster than most companies.

This word of mouth (or word of mouse) propensity of the Web has companies reeling as they try to keep up with the changes their markets are demanding of them. Traditional market segmentation tools simply don’t tell us enough about these new customer evangelists. What you own does not necessarily determine who you influence. I know people who clear R 2500 a month and have massive social influence and conversely, some who clear R 100 000 and keep very much to themselves. They’re not brand advocates, or even potentially brand advocates.

So the truth is that I don’t have the answer. Is this social Web phenomenon demanding that we find out which customers have Facebook, LinkedIn, MySpace and Flickr profiles, how many friends they have and whether they blog or not? Is it not logical to assume that we could sell to certain ‘influencers’ better if we only knew how influential they are? Or is it simply unethical and a downright invasion of privacy to seek out such information?

I’d love your thoughts…