Together with research partners, Ramsay Media Research Solutions, and sponsors Clicks, Edcon, Glacier and Growthpoint, the UCT Unilever Institute explored this seldom-surveyed sector of the local market, focusing on adults living in top end households earning over R30 000 a month.
According to emeritus Professor John Simpson, director of the UCT Unilever Institute of Strategic Marketing, South African marketers could be missing some of the spending power of South Africa's wealthier consumers simply because they do not know enough about this segment, or how best to communicate with them.
"Traditionally this sector of the market has been difficult to research, surrounded as they are by high walls and security systems," explains Simpson.
With a sample of over 8000 respondents, the TopEnd study represents both the largest and the most comprehensive research project ever carried out on this sector and reflects over a year of intensive quantitative and qualitative research conducted across South Africa.
The full research findings will be disseminated at countrywide seminars in October; in Durban on 11 October, Johannesburg on 13 October and Cape Town on 14 October 2011.
"With a statistically significant sample and numerous focus groups, our results have revealed a great deal about both attitudes and consumer behaviour of the country's highest earners. Our findings have allowed us to create a much clearer and more nuanced picture about exactly who these top end consumers are and how various factors, including age and gender, influence their consumption patterns," he continues.
He refers to this segment as the backbone of the local economy. "We are not talking about the 'super rich' here, as they are only a tiny fraction of this 900 000-strong, mainly middle-class, group. We are talking about hard-working, productive citizens who comprise only 10% of the country's tax payers, but account for half of the entire country's taxable income."
With an estimated annual spend of over R300 billion, this group of individuals is of vital importance to the health of South Africa's economy and their influence cannot be ignored by marketers.
"Aside from their personal contribution to the tax base, they make a significant contribution through company and other taxes, as well as through social responsibility initiatives."
The majority of these well-heeled South Africans believe in giving back to society. Two-thirds of respondents reported an obligation to 'pay it forward' and cited 10% of one's income as an appropriate amount to donate to worthy causes.
The findings also show that transformation is making its mark on the composition of this tier of society. "Black South African's represent 37% of the entire segment, but have an even stronger representation at the entry level segment of the sample.
He maintains that across the spectrum, a clear pattern emerges with regard to wealth creation and that a simple recipe for wealth creation can be derived from the findings. "First gain a tertiary education and secondly invest 10% or more of your earnings."
Three-quarters of respondents had a post-matric qualification, with 40% having a university degree. Amongst the wealthiest individuals surveyed, the number of graduates increases to 55%.
A third key factor for creating and maintaining wealth had to do with entrepreneurial aptitude. A relatively high proportion of respondents worked for themselves or headed their own company.
Respondents were quizzed about their fantasies and fears. Despite their healthy financial status, the majority of participants listed financial security as their greatest concern and this influenced decisions around financial products and spending in general. "There is a definite correlation between wealth and risk-aversion with regard to one's personal finances. This manifests itself in several ways, most demonstrably through conservative investment choices."
When it came to leisure, 70% of those surveyed cited holiday travel their favourite pastime. Questions around business and leisure travel revealed interesting attitudes to flying.
"The economic slowdown may account for the fact that the vast majority of respondents reported only using low-cost airlines," reports Simpson. A mere 1% reported flying first class when travelling for leisure, with 96% preferring to fly economy class and the remainder flying business class.
Although this segment of the population was materially the least affected during the recession, the study also illustrates that consumer behaviour in this sector has fundamentally altered in the recession's aftermath. Respondents reported significant changes in their buying behaviour, with 80% of respondents saying that they were generally more cautious with their spending than in the past, and buying less branded and luxury goods than before.
For more, go to www.unileverinstitute.co.za.
