‘Understand the middle class before investing in markets’

Produce marketers have been cautioned to first come to grips with the complexities of the middle class segment of the population before investing in marketing campaigns.

Dr James Lappeman, head of projects at the University of Cape Town’s Marketing Institute, said that while a growing middle class was good for the economy, as this group was responsible for the bulk of spending, ‘middle class’ as a concept was complicated. “There is no clear cut and dried section of people who have disposable income.

“There is also a difference between organic middle-class growth and a new middle class. Both groups may be earning the same income, but the former has far more assets because they have been accumulated over time. The debt ratios are also different. So, even if you use income as a measure, in reality, the wealth journey starts at different levels, and so too does the ability to spend.”

He noted that while there was healthy growth taking place in Africa, it was important to understand that each country had a different point of wealth, and concept of what was considered middle class.

“There is not enough data to figure out how much money there really is to spend in Africa. But, we do know that while sub-Saharan Africa currently only has 10% of the world’s working-age population, by the end of the century it will grow to 40%. Populations in Africa are urbanising and this brings more prosperity and more buying power. Some 13 African cities will have a combined income of US$13 trillion [about R194 trillion] by 2030.”

Lappeman said the middle class needed to be properly understood before making investments in certain markets and expecting a huge uptake. “Understanding consumer behaviour will always be at the heart of marketing.” – Lindi Botha