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What is relationship between price and ROI in townships?

30 Apr 2015


Ask Afrika shares insights from its recent Kasi Star Brands survey about how return on investment (ROI) is calculated in townships and what relationship this has to price. The research showed that ROI is synonymous with value. Kasi shoppers are hybrid consumers who shop across the price spectrum and the relationship between price and income is not linear. Value is about balancing of price and benefit.

Successful Kasi Star Brands provide a wider range of choice at affordable prices.

“We must not confuse ROI with quality. It is what it can do for ‘me’ as a Kasi shopper. I’m not saying quality is irrelevant. It depends on who you are. But, it is always about what it can do for ‘me’, linked to what is important to ‘me’. For example, ‘I can cook, so I can fix most things I cook with. Cleaning products need to work, I am not going to overspend on something that is not giving me a tangible benefit’,” says Sarina de Beer MD at Ask Afrika.

The Kasi Star Brands survey revealed the power that brand names hold for this market, 5% more Kasi consumers, when compared to the national average tend to buy well-known brands for household products. Nine percent more than the national average believe that well-known brands are better than a shop’s own brands, and 4% above the average indicated that it is worth paying more for quality products. The majority of the spend, 51%, is spent on groceries in townships, compared to 28% in other urban areas.

The Kasi consumer buys where they get the best deal. They are often part of a Stokvel which helps them save for Christmas and Easter, and it helps to share and shop in bulk and transport goods together.  Forty-eight percent use taxis to transport goods bought, only 10% have access to personal or family transport. Townships are often not home, but where many people live, they will save to take supplies home.

They look out for promotions, but these are not always timed conveniently to fit in with their lifestyle. Foreign based spazas often provide good prices and credit.

“Retailer’s success in townships is largely dependent on proximity and the route to market, this should be a key component of brand strategies, making access to shops convenient and close to the consumers’ homes,” says de Beer.

Key elements that marketers should take into account are accessibility, affordability and an in-depth understanding of how the Kasi consumer lives, avoiding stereotypes. There is a complex system of calculation and planning in the buying behaviour of this target market.

Retailers should offer products in quantities that suit the consumers’ needs, both in terms of available budget and also to ensure that there is no wastage. Often the consumers do not have fridges, so small amounts of perishables need to be bought on a regular basis. Malls are perceived to be expensive but convenient. The Kasi consumer will use all shopping avenues depending on their immediate needs, but they plan to ensure their ROI.

Townships dwellers’ money needs to work for them, and they do save. Status carries a high value and if this is the driving force the consumer will find a way, spend is calculated. If a product carries a high status in this environment, even if it is expensive, it supplies the required ROI.

One cannot think of township residents as walking demographics. Proximity does not create homogeneity, it is important for brand owners to understand how to deliver the best ROI. Marketers need to understand the complex levels of planning, calculated living in the township environment, where purchase decisions are often less impulsive and spontaneous. Ask Afrika can assist marketers in co-planning.

Ask Afrika interviewed a total of 6,763 Kasi consumers, and the Kasi Star Brands survey represents the views of 9,694,666 million Kasi consumers living in South Africa.  It represents 73% of the overall South African township population.  Face-to-face interviews were done within Kasi-households.  To make sure everything is correct an external company BDO and Dr Neethling audited the results.  In this year’s survey 24 Kasi Star Brands were identified, followed by winners across 163 product categories.  These are the brands and products you are most likely to find in a South-African Kasi-household.

To find out more about Ask Afrika’s KASI Star Brands™, to order a report, please contact: Maria Petousis, TGI Director at Ask Afrika, Maria.Petousis@tgi.co.za, or Julie-Anne Terblanche, Client Services Executive at TGI/Ask Afrika, Julie-Anne.Terblanche@tgi.co.za, +27 12 428 7400.


About the Ask Afrika Group:
Over a period of almost two decades, Ask Afrika Group has grown to be the largest independent South African market research company. The company focuses on local relevance, benchmarked against the global context. Ask Afrika is a member of ESOMAR. Apart from its large South African footprint, Ask Afrika Group also operates in a dozen African continental territories.

Ask Afrika Group is well known for delivering strategic and large scale field projects and for creating benchmarks for industry. With regards to service excellence Ask Afrika Group is the preferred research partner across industries to co-craft customer service strategies through meaningful research methodologies across the value chain and customer service touch points.

TGI research, for which Ask Afrika Group  owns the South African copyright, has an annual single source sample of 15 000 locally and 800 000 globally. It has a global geographic coverage of 70 markets, and measures services, products, media, and brands. Ask Afrika’s knowledge of brands is extensive and as owner of the local TGI license, it is the leader in brand expertise in South Africa. TGI can provide a commercial alternative to industry media measurements. It is the perfect vehicle for brand positioning. 

The Ask Afrika Groups’ exclusive product suite includes the Ask Afrika Orange Index®, the Trust Barometer™, Radio Moods™, TGI (Target Group Index), Ask Afrika ICON Brands™ and TGI Township, the Digital Barometer, the Lite Data Collection, the Behavioural Sciences Package and Gateway. Ask Afrika is proud of its exceptional service delivery, with offices based in Pretoria and Stellenbosch. For more information please visit the website: www.askafrika.co.za

Issued on behalf of Ask Afrika by Stone Soup Public Relations

For further information, please contact Daya Coetzee
daya@stonesoup.co.za, (011) 447 7241