1. The SAARF Universal LSM ® "YOUR WINDOW TO THE WORLD OF RESEARCH"

2. Industry Presentation On The SAARF Universal LSM ® 2006RA By Michelle Boehme Tshifhiwa Mulaudzi Paul Haupt Paul Haupt

3. SAARF UNIVERSAL LSM3 Contents - Introduction - History/development of LSM ® - Early LSM ® - 1993/1995/2000 LSM ® - New SAARF Universal LSM ® - Conclusions - Introduction - History/development of LSM ® - Early LSM ® - 1993/1995/2000 LSM ® - New SAARF Universal LSM ® - Conclusions

4. SAARF UNIVERSAL LSM4 The Tripartite Nature Of SAARF SAARF Marketers Media Owners CINEMAINTERNETOUTDOORPRINTRADIOTV Advertising Agencies

5. SAARF UNIVERSAL LSM5 SAARF Living Standards Measure (LSM ® ) - 1 The SAARF LSM is just one type of segmentation tool based on wealth, access and geographic indicators Because wealth is a very stable and dependable differentiator and the AMPS variables are particularly suited to this, this approach was retained in the design of the new SAARF Universal LSM ®

6. SAARF UNIVERSAL LSM6 The SAARF Universal LSM ® and its predecessors are Target Marketing Tools that are also used for the selection of appropriate media, therefore, no media related variables are used in its construction No personal attributes (except in 1995 and 2000 LSMs) Income never used SAARF Living Standards Measure (LSM ® ) - 2

7. SAARF UNIVERSAL LSM7 Rationale For Segmentation WHY CLASSIFY PEOPLE ?  Some people tend to behave in a different fashion from others  Some people tend to behave in similar fashion Thus  Try to group similar people together  Try to distinguish between different people

8. SAARF UNIVERSAL LSM8 In Statistical Terms  Maximise variation between groups  Minimise variation within groups

9. SAARF UNIVERSAL LSM9 For Advertising/Marketing Purposes  Identify the target market / audience as accurately as possible  Aim is to reach 100% of target market, i.e. Maximise reach  With 0% (minimum) wastage Therefore  Important to know your target market  Important to know which tools are available

10. SAARF UNIVERSAL LSM10 Traditional Approach  Single variables, usually demographics (profiles) Shortcoming ?  Useful, but often not strong differentiators on their own

11. SAARF UNIVERSAL LSM11Solution?  Find the best Combination of variables to: group people with similar behaviour together group people with similar behaviour together distinguish between people with different behaviour distinguish between people with different behaviour  LSM index developed to find the best combination of variables from AMPS ®  A Multivariate differentiator

12. SAARF UNIVERSAL LSM12 Important Stimuli  The urban/rural debate  Community size classification  Lever Brothers’ experience  Technological developments - sophisticated hardware/powerful software  AMPS ® data not fully utilised – mainly single variable cross tabulations were used  UK and USA - realised importance of variables other than demographics

13. SAARF UNIVERSAL LSM13 It’s Not Just About Demographics Admap December 1990

14. SAARF UNIVERSAL LSM14  Develop an index which differentiates better than any single demographic plus  It must have broad application across the total market  Must be simple to use, easy to link to other surveys  Must be stable over time, but sensitive enough to register changes changes Main Aim Of The SAARF LSM ®

15. SAARF UNIVERSAL LSM15 SAARF LSM ® – National % 1993 LSMs Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

16. SAARF UNIVERSAL LSM16 SAARF LSM ® – Gauteng % 1993 LSMs Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

17. SAARF UNIVERSAL LSM17 SAARF LSM ® – KZN % 1993 LSMs Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

18. SAARF UNIVERSAL LSM18 SAARF LSM ® – Western Cape % 1993 LSMs Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

19. SAARF UNIVERSAL LSM19 Common Misunderstandings  Income not an LSM ® variable  LSM is not a political construct but harnesses the power of multivariate statistics  Only AMPS variables are used  It is a misconception that income is a better differentiator than wealth.  That LSM ® on its own is the only differentiator required for effective segmentation

20. SAARF UNIVERSAL LSM20 SU-LSM ® – Monthly Magazines SAARF AMPS 2006RA 2001 LSMs

21. SAARF UNIVERSAL LSM21 Age – Monthly Magazines SAARF AMPS 2006RA 2001 LSMs

22. SAARF UNIVERSAL LSM22 Gender - Monthly Magazines SAARF AMPS 2006RA 2001 LSMs

23. Bought Lottery Tickets By SU-LSM ® – Past 4 Weeks SAARF AMPS 2004, 2005RA & 2006RA Population, all South Africans 16+: 30 903 000 % 2001 LSMs

24. Cellphone Penetration Within SU-LSM ® % SAARF AMPS 2006RA AMPS 2006RA AMPS ® 2006RA

25. % Listenership: SU- LSM ® 1-5 Gauteng (1) Source: RAMS Wave 6 2006

26. % Listenership: SU-LSM ® 1-5 Gauteng (2) Source: RAMS Wave 6 2006

27. SAARF UNIVERSAL LSM27 % Listenership: SU-LSM ® 6-10 Gauteng (1) Source: RAMS Wave 6 2006

28. SAARF UNIVERSAL LSM28 % Listenership: SU-LSM ® 6 -10 Gauteng (2) Source: RAMS Wave 6 2006

29. SAARF UNIVERSAL LSM29  Approximately 70 AMPS ® variables selected on logical grounds  Analysed multi-dimensionally by applying: principle component analysis principle component analysis stepwise regression analysis stepwise regression analysis LSM ® Input Variables

30. Looking At The Sky

31. SAARF UNIVERSAL LSM31 Early SAARF LSM ®  LSMs were stronger differentiator than any single demographic BUT  Variables and weights were adjusted annually Consequently  Trending not possible

32. SAARF UNIVERSAL LSM32 1993 SAARF LSM ®  Decided to keep variables and weights constant from year to year  1993 and 1994 SAARF LSM ® comparable

33. SAARF UNIVERSAL LSM33 1993 SAARF LSM ® Variables 1.Fridge/freezer 2.No water or electricity 3.Polisher/vacuum cleaner 4.Non-Supermarket shopper 5.No car in hh 6.TV set 7.Microwave oven 8.Rural dweller (not PWV & W.cape) 9.Hi-fi/music centre 10.No domestic worker worker 11.Washing machine 12.Sewing machine 13.Metropolitan dweller dweller

34. SAARF UNIVERSAL LSM34 1995 SAARF LSM ® In 1995 the list of variables was expanded to 20 to include some personal variables, namely:  Non supermarket shopper  No financial services / insurance used  No credit facility

35. SAARF UNIVERSAL LSM35 1995 SAARF LSM ® Variables 1.Flush toilet 2.Fridge/freezer 3.Hot running water 4.Polisher/vacuum cleaner 5.Non-Supermarket shopper (personal) 6.No car in hh 7.TV set 8.Microwave oven 9.No financial services used 10. No insurance policy White = personal White = personal 11.Rural dweller (outside Gauteng & W.Cape) 12.Hi-fi/music centre 13.No domestic worker 14.Washing machine 15.Sewing machine 16.Metropolitan dweller 17.Household supermarket shopper 18.No credit facility 19.Hut dweller 20.Home telephone

36. SAARF UNIVERSAL LSM36 2000 SAARF LSM ® Variables - 1 1. Built-in kitchen sink 2. Flush toilet 3. Polisher/vacuum cleaner 4. Supermarket shopper (personal) 5. Fridge/freezer 6. No car in household 7. No financial services used 8. Hot running water 9. No insurance NOTE: New variables in white

37. SAARF UNIVERSAL LSM37 2000 SAARF LSM ® Variables – 2 10. Hi-Fi/music centre 11. Home telephone 12. Electric stove/hotplate 13. Video cassette recorder 14. Sedan car 15. Credit/retail card facility 16. TV set 17. Microwave oven 18. Washing machine 19. Hut 20. No domestic worker 10. Hi-Fi/music centre 11. Home telephone 12. Electric stove/hotplate 13. Video cassette recorder 14. Sedan car 15. Credit/retail card facility 16. TV set 17. Microwave oven 18. Washing machine 19. Hut 20. No domestic worker

38. SAARF UNIVERSAL LSM38 NEW SAARF UNIVERSAL LSM ® AUGUST 2001

39. SAARF UNIVERSAL LSM39 Shortcomings Of The 1995 And 2000 SAARF LSMs Some of the variables used in the 1995 and 2000 SAARF LSMs introduced Gender and Age biases Young adults and females were less likely to use financial services and have credit facilities than Males Equally Males were less likely to be supermarket shoppers

40. SAARF UNIVERSAL LSM40 Other Shortcomings Of The 1995 And 2000 SAARF LSMs The 1995 and 2000 SAARF LSM’s could be used for AMPS/RAMS, where only one person per household is interviewed For TAMS, where households rather than individuals are sampled, only household variables could be used (1993 SAARF LSM) This meant that the LSMs used in AMPS/RAMS and TAMS were not comparable.

41. SAARF UNIVERSAL LSM41 2000 SAARF LSM ® Variables Not Carried Forward Personal Variables: Supermarket shopper (personal) No financial services used No insurance policy Credit facility including retail card Other: No car in household

42. SAARF UNIVERSAL LSM42 Other Factors That Influenced The Design Of The New SAARF Universal LSM ® Conflict between the need for trends on the one hand, and sensitivity to change on the other Concern that the LSM does not differentiate sufficiently at the Top end.

43. SAARF UNIVERSAL LSM43 New SAARF Universal LSM ® - The Brief The new SAARF Universal LSM ® was designed to: Make it a more effective segmentation tool, Make it a more effective segmentation tool, Remove known biases, Remove known biases, Make it universally applicable Make it universally applicable to all SAARF products, and to all future AMPS/RAMS/TAMS ® surveys

44. SAARF UNIVERSAL LSM44 New SAARF Universal LSM ® – The Process  Extensive analysis by Prof Jacky Galpin - presented to the joint SAARF Councils during July 2001.  The councils decided to implement the new SAARF Universal LSM ® as from SAARF AMPS 2001A  The SAARF TAMS panel implemented the new SAARF Universal LSM ® in August 2001

45. SAARF UNIVERSAL LSM45 Naming The New SAARF LSM ® The design of the new SAARF Universal LSM also lead to the new name: 1. It applies universally to all respondents, i.e. it is designed so that all respondents 16+ can be fairly indexed with no biases 2. It is designed to be universally applicable to all of SAARF’s products, AMPS, RAMS and TAMS 3. It is designed to be universally applicable to all future surveys, i.e. it will not be necessary to have a new LSM every second or third year like in the past

46. SAARF UNIVERSAL LSM46 New SAARF Universal LSM ® – The Improvements - 1 In the design of the new SAARF Universal LSM ® a number of improvements have been built in: 1.To allow finer differentiation, the number of variables has been increased to 29 2.Variables have been carefully chosen to avoid biases being introduced and to ensure that they are universally applicable to all respondents

47. SAARF UNIVERSAL LSM47 New SAARF Universal LSM ® – The Improvements - 2 3.The variables have been chosen such as to be universally applicable to AMPS/RAMS/TAMS 4.The scale has been extended to 10 groups to allow finer segmentation 5.The groups at the top end of the scale from LSM 7 and up has been made smaller to allow finer segmentation of this important market segment

48. SAARF UNIVERSAL LSM48 New SAARF Universal LSM ® – The Improvements - 3 6.As South African society develops, the groups can be extended beyond 10. This will obviate the need for a new LSM every now and then 7.This new feature of the design will enable trending from one year to the other, even when new variables are introduced

49. SAARF UNIVERSAL LSM49 New SAARF Universal LSM ® – The Improvements - 4 8.The proven stability of the measure will thus be complemented with a sensitivity to the changing landscape Note: No comparisons should be made to previous LSM ® scales as this is a new benchmark.

50. SAARF UNIVERSAL LSM50 15 Variables From The 2000 LSM ® 1.Electric stove / hotplate 2.Microwave oven 3. Flush toilet in house or on plot 4. No domestic worker 5.VCR in household 6. Vacuum cleaner / floor polisher 7.Traditional hut 8. 1/more sedan cars 9. Washing machine 10. TV set 11. Home Telephone 12. Hi-Fi/music centre 13. Built-in kitchen sink sink 14. Hot running water 15. Fridge/freezer

51. SAARF UNIVERSAL LSM51 The 14 New Variables 1.Deep freezer 2.Water in home / on plot 3.Mnet / DStv subscription 4.Dishwasher 5.Electricity 6.Sewing machine 7.Gauteng 8.Western Cape 9. No cellphone in household household 10. PC in home 11. Tumble dryer 12. Less than two radio sets in Household sets in Household 13. Non-urban outside Gauteng/Western Gauteng/Western Cape Cape 14. Home security service service

52. SAARF UNIVERSAL LSM52 SU- LSM ® Update 2004 Variables Dropped (4)  Traditional hut  Electricity  Gauteng  Western Cape New Variables (4)  House/cluster house, town house  Metropolitan dweller  DVD player  One Cellphone in household

53. SAARF UNIVERSAL LSM53 Weights Of Some Variables - 1  Built in kitchen sink0.133063  Electric stove0.130134  Hot running water0.176697  Motor vehicle in HH0.153706  Fridge/freezer0.119528

54. SAARF UNIVERSAL LSM54 Weights Of Some Variables - 2  No domestic worker - 0.291472  1 Cellphone in household - 0.115220  No cellphone in household - 0.213628  Less than two radio sets in Household - 0.289211  CONSTANT-0.230409

55. SAARF Universal LSM ® Groups : Significant decrease Penetration Average Household Income 2004 % 2005RA % 2006RA 2004 2005RA 2006RA SU-LSM 1 9.1 7.6 6.1 R878 R905 R1 003 SU-LSM 2 12.7 12.2 R1 075 R 1093 R 1 210 SU-LSM 3 14 13 12.6 R 1407 R 1417 R 1 509 SU-LSM 4 14.7 14.9 R 1783 R 1870 R 1 924 SU-LSM 5 13.1 13.5 R 2427 R 2495 R2 674 SU-LSM 6 14 14.5 14.4 R 4 063 R 4 207 R 4 400 SU-LSM 7 6.2 7.1 7.8 R 6 437 R 6466 R6 880 SU-LSM 8 4.8 5.2 5.7 R 8 458 R 9 247 R 9 304 SU-LSM 9 5.9 6.4 6.7 R11 516 R11 951 R12 647 SU-LSM 10 5.3 5.5 6.0 R18 664 R18 955 R19 974 : Significant increase

56. SAARF UNIVERSAL LSM56 Number Of People In Each SU- LSM ® LSM 1 LSM 2 LSM 3 LSM 4 LSM 5 LSM 6 LSM 7 LSM 8 LSM 9 LSM 10 Population 1 895 000 3 784 000 3 878 000 4 603 000 4 176 000 4 454 000 2 413 000 1 759 000 2 085 000 1 857 000 Respondents 499 499 1 178 1 646 2 469 2 954 4 260 2 921 2 428 3 281 3 177 % Pop 6.112.212.614.913.514.47.85.76.76.0 SAARF AMPS 2006RA

57. SAARF UNIVERSAL LSM57 Mpumalanga Eastern Cape Free State Gauteng KwaZulu-Natal Northern Cape North West Western Cape Limpopo Lsm 1- 4 Lsm 5 Lsm 6 Lsm 7 Lsm 8 Lsm 9 Lsm 10 % of Province that is Rural More than 60 % 31 to 60 % 11 to 30 % up to 10 % up to 10 % SAARF Universal LSM ® By Province SAARF AMPS 2006 RA

58. SAARF UNIVERSAL LSM58 LSM 1 (6.1%) DEMOGRAPHICSFemale 16 - 24, 50+ Primary Completed Rural Traditional Hut R1 003 per month MEDIA Radio a major channel of medium communication - Commercial radio; mainly African Language Services (ALS) GENERAL Minimal access to services Minimal ownership of durables, except radio sets Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) LSM 2 (12.2%) DEMOGRAPHICSFemale 16 - 34 Primary Completed Rural House/Matchbox house R1 210 per month MEDIA Radio: Commercial, mainly ALS GENERAL Water on plot Minimal ownership of durables, except radio sets and stoves

59. SAARF UNIVERSAL LSM59 LSM 3 (12.6%) DEMOGRAPHICS 16 - 24 Up to some high Rural House/Matchbox house R1 509 per month MEDIA Radio: commercial mainly ALS stations, Ukhozi FM, Umhlobo Wenene FM TV: SABC 1 OutdoorGENERAL Electricity, water on plot Minimal ownership of durables, except radio sets and stoves Activities – lottery tickets Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) LSM 4 (14.9%) DEMOGRAPHICS 16 - 49 Schooling up to some high R1 924 per month MEDIA Radio: commercial mainly ALS stations, Metro fm TV: SABC 1,2, ETV OutdoorGENERAL Electricity, water on plot, flush toilet TV sets, hi-fi/radio set, electric hotplates, fridge Activities - stokvel meeting, lottery tickets, eat and buy take away food

60. SAARF UNIVERSAL LSM60 Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) LSM 6 (14.4%) DEMOGRAPHICSMale25-49 Matric and higher, Urban R4 400 per month MEDIA Wide range of commercial/community radio TV: SABC 1,2,3, e.tv Daily/Weekly Newspapers, Magazines Cinema & Outdoor GENERAL Electricity, hot running water, flush toilet Ownership of a number of durables plus cell phone Participated in a number of activities LSM 5 (13.5%) DEMOGRAPHICSMale16-49 Up to matric, Urban R2 674 per month MEDIA Radio: commercial mainly ALS stations, Metro fm TV: SABC 1,2,3, e.tv Daily/Weekly Newspapers, Magazines OutdoorGENERAL Electricity, water, flush toilet TV sets, hi-fi/radio set, stove, fridge Activities: started exercising, painted interior of house, stokvel meeting, purchase take-away food, lottery tickets

61. SAARF UNIVERSAL LSM61 Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) LSM 8 (5.7%) DEMOGRAPHICSFemale35+ Matric and higher, Urban R9 304 per month MEDIA Wide range of commercial/community radio TV: SABC 1,2,3, e.tv, M-Net, DStv Daily/Weekly Newspapers, Magazines Accessed internet 4 weeks Cinema & Outdoor GENERAL Full access to services Full ownership of durables, incl. DVD, PC and satellite dish Increased participation in activities LSM 7 (7.8%) DEMOGRAPHICS25+ Matric and higher, Urban R6 880 per month MEDIA Wide range of commercial/community radio TV: SABC 1,2,3, e.tv, M-Net Daily/Weekly Newspapers, Magazines Accessed internet 4 weeks Cinema & Outdoor GENERAL Full access to services Increased ownership of durables plus motor vehicle Participation in all activities

62. SAARF UNIVERSAL LSM62 Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) Summary Of New SAARF SU-LSM ® Groups (from SAARF AMPS 2006RA) LSM 10 (6.0%) DEMOGRAPHICS Male, 35+ Matric and higher, Urban R19 974 per month MEDIA Wide range of commercial/community radio TV: SABC 2,3, e.tv, M-Net, DStv Daily/Weekly Newspapers, Magazines Accessed internet 4 weeks Cinema & Outdoor GENERAL Full access to services Full ownership of durables, Incl. PC, DVD and satellite dish Increased participation in activities, excluding stokvel meetings LSM 9 (6.7%) DEMOGRAPHICS Female, 35+ Matric and higher, Urban R12 647 per month MEDIA Wide range of commercial/community radio TV: SABC 2,3, e.tv, M-Net, DStv Daily/Weekly Newspapers, Magazines Accessed internet 4 weeks Cinema & Outdoor GENERAL Full access to services Full ownership of durables, Incl. PC, DVD and satellite dish Increased participation in activities, excluding stokvel meetings

63. SAARF UNIVERSAL LSM63 Conclusions - 1  Variation between groups is maximised.  Variation within groups is minimised. BUT  Respondents in one group do not differ in all respects from those in other groups.  Respondents in one group are not all exactly the same.

64. SAARF UNIVERSAL LSM64 Conclusions - 2  It’s clear that the new SAARF Universal LSM ® is a significant improvement on the previous one However  LSM is only one of many measures  Preferably, you should know about all these tools

65. SAARF UNIVERSAL LSM65 Conclusions - 3  Be aware of what is available and select the one that fits your purposes best  Develop your own or modify an existing one to suit you better  The market is not static but dynamic and changes can take place rapidly  A model which is useful now may soon be outdated if it is not revised regularly

66. SAARF UNIVERSAL LSM66 Conclusions - 4  Remember that there are many other powerful differentiators in AMPS that should be used in conjunction with the LSMs, e.g. Life-stages, Education, Mothers with children, Household purchaser, Large item purchaser, Occupation, Gender, Language, Family size and Age

67. THE SOUTH AFRICAN ADVERTISING RESEARCH FOUNDATION (SAARF) THANK YOU Visit us at www.saarf.co.za

68. % Listenership - SU-LSM™ 1-5 in KwaZulu-Natal Source: RAMS Wave 6 2006

69. SAARF UNIVERSAL LSM69 % Listenership - SU-LSM™ 6-10 in KwaZulu-Natal Source: RAMS Wave 6 2006

70. % Listenership - SU-LSM™ 1-5 in Western Cape - 1 Source: RAMS Wave 6 2006

71. % Listenership - SU-LSM™ 1-5 in Western Cape - 1 Source: RAMS Wave 6 2006

72. SAARF UNIVERSAL LSM72 % Listenership - SU-LSM™ 6-10 in Western Cape - 1 Source: RAMS Wave 6 2006

73. SAARF UNIVERSAL LSM73 % Listenership - SU-LSM™ 6-10 in Western Cape - 1 Source: RAMS Wave 6 2006

74. SAARF UNIVERSAL LSM74 SAARF LSM – Northern Cape % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

75. SAARF UNIVERSAL LSM75 SAARF LSM – Free State % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

76. SAARF UNIVERSAL LSM76 SAARF LSM – Eastern Cape % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

77. SAARF UNIVERSAL LSM77 SAARF LSM – Mpumalanga % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

78. SAARF UNIVERSAL LSM78 SAARF LSM – Limpopo % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)

79. SAARF UNIVERSAL LSM79 SAARF LSM – North-West % 1993 weights Sample size: 14 498 (’94), 35 069 (’00), 24 813 (’06) Population, all South Africans 16+: 24 539 000 (’94), 28 488 000 (’00), 30 903 000 (’06)