The 4 Lifestyle Levels
About LSM's
The SAARF LSM or SAARF Living Standards Measure, developed by the South African Advertising Research Foundation (SAARF) has become the most widely used market research tool in South Africa. The SAARF LSM is a unique means of placing the SA market on a continuum. 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.
History & Development of the LSM
In the late 80s, SAARF set out to devise an index using a combination of variables which would be stronger than any single variable and thus more useful to marketers for market segmentation. In conjunction with ACNielsen Media International, and their statistical consultant, Dr Jacky Galpin, they looked for variables already measured in the SAARF AMPS survey that would be strong discriminators which could be used to segment the population.
The LSM index was South Africa's first multivariate market segmentation index designed to profile the market into relatively homogeneous groups. It is based on a set of marketing differentiators which group people according to their living standards, using criteria such as degree of urbanisation and ownership of cars and major appliances (assets). Naturally, the LSM bands are not airtight pockets. LSMs bring together groupings of people out of the total population continuum into contiguous and sometimes slightly overlapping groups.
Essentially, the LSM is a wealth measure based on standard of living rather than income - in fact, income does not appear anywhere within the LSMs at all. Interestingly enough, variables such as income, education and occupation were tested as part of the first LSM but did not add anything to the strength of the measure.
Bigger, better SAARF Universal LSM®
Following extensive analysis of its much-used LSM during the latter half of 2000 and the first half of 2001, SAARF decided on the creation of an improved Living Standards Measure and simultaneously with the release of AMPS 2001A, launched the SAARF Universal LSM®. In the SAARF Universal LSM®, the population continuum was increased from eight to ten groups.
Out of the original list of 20 variables used to determine a person's LSM category in the previous LSM, 15 household variables were carried through to the SAARF Universal LSM®. In addition, the total number of variables increased to 29 to give finer definition to the scale.
Over the years since 2001, various changes have been made. In 2004, four variables of the 2001 LSM descriptors were excluded and four new variables were included, to better reflect the changing market place:
| Excluded | New |
| Traditional hut | House/Cluster House/Town House |
| Electricity | Metropolitan Dweller |
| Gauteng | DVD Player |
| Western Cape | 1 Cell Phone in Household |
In 2008 three further changes were made as follows, these three descriptors were dropped:
- Sewing machine
- No cell phone in household
- 1 cell phone in household
And replaced by these three:
- Home theatre system
- 2 cell phones in household
- 3+ cell phones in household
Respondents are given a positive or negative score for each of the 29 variables they have or do not have. After a constant is added they are then placed into one of the 10 LSM groups, based on their total score.
The full list of 29 variables can be found in the "calculate your own LSM section". And while you are about it, you may as well check out your own LSM!
From 10 to 14 LSM's
In 2008 LSM 7 to 10 were split into an upper and lower sections, which gives users more refinement. Whether you call them & 7 low and 7 high or LSM 7 and 8 on a 14 point continuum is not important, as long as they help you describe an analyse your market better is what is key. The 14 point continuum works as follows "OLD LSM 1-6" are identical. LSM 7-10 high and low are then numbered from 7-14. If your product is at the upper end of the SA market and you need further refinement and choose to use the 14 LSM scale, it is included in the ConsumerScope for your convenience.
Obviously you can also group any of the 10 point LSM's or 14 point LSM's into your own groups.
The New Lifestyle Levels
The Lifestyle Levels were developed by ConsumerScope to simplify the 10 LSM groups, and make analysis and trending easier.
We have renamed and redefined the 4 Lifestyle Levels from the previous version. They are now referred to as A, B, C & D as opposed to the previous 1-4. This now reflects international norms. In fact in AMPS 2008, with LSM 1-3 declining to 20% of households for the first time, we are now finally able to use such a breakdown.
COMPARISON VS. PREVIOUS LIFESTYLE LEVELS.
LEVEL D. The Poor. Is identical to the previous LEVEL 1. It comprises of LSM 1-3. Level one comprises of 20% of SA households, it accounts for only 4% of income and expenditure.
LEVEL C. LSM 4, 5 and 6. The Mass Market, Middle Class or Average. Previously LEVEL 2 was LSM 4 & 5 only . Due to increasing living Standards we have now had to include LSM 6 in this group, or the "average/mass" group would have been too small and hence not the mass. It accounts for 48% of households and 30% of expenditure.
LEVEL B. The Upper Middle Market. We have used the extended LSM's or the 14 point LSM in order to define this segment and arrive at 20% of households. It is now made up of LSM 7 and 8 and the bottom half of LSM 9. (Or LSM 7-11 if you prefer the 14 point scale). They comprise a fifth of households and account for a third of consumption. LEVEL 2 was previously LSM 6, 7 & 8.
LEVEL A. The Rich. Made up of the top half of LSM 9 & LSM 10. (LSM 12-14 on 14 point scale). They comprise 10% of households and account for around 40half the income and expenditure in South Africa.
