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Home Ideas Library Collectivism and Consumers at the ‘Bottom of the Pyramid’ in South Africa
10.13007/290
Ideas for Leaders #290
Collectivism and Consumers at the
‘Bottom of the Pyramid’ in South Africa
Key Concept
Despite their poverty and limited purchasing power, people at the ‘bottom of
the pyramid’ in South Africa increasingly attract the attention of marketers. At
more than one third of South Africa’s population, they represent a significant,
or potentially significant, market for companies. But they will not be ‘reached’
by conventional approaches — or by applying the individualistic perspective
of the developed world. At the bottom of the pyramid in South Africa,
communities are different — and collectivism still counts.
Idea Summary
"Umuntu ngumuntu ngabantu" – A person is a person through other persons.
(from the humanist African philosophy Ubuntu)
The ‘bottom of the pyramid’ (BoP), the world’s poorest socio-economic group,
as defined by business thinker C. K. Prahalad and his colleagues, has
received much attention from marketing academics and practitioners in the
past 10 years, both globally and in South Africa. So far, however, the themes
have been quite limited, the focus quite narrow.
Most studies in the marketing literature have taken a highly individualised
approach, using, for example, the individual consumer not the household or
the family as the unit of analysis, and theories such as ‘self-determination’ as
part of the frame of reference. In other words, they’ve tended to see BoP
consumers as individuals acting in a social vacuum rather than as people
bound by ties to wider groups.
New research adopts a different perspective. It takes as its starting point the
decades-long distinction between individualism and collectivism that
separates the developed and the developing world. (Individualism is mainly
associated with richer societies and countries such as America, Australia and
the UK; collectivism is mainly associated with poorer societies and countries.)
Building on two earlier studies, researchers from the University of Pretoria
and the University of New Mexico hypothesise that collectivism is a key
determinant of BoP classification in South Africa, and they test their theories
through analysis of archival data from the All Media and Product Survey
(AMPS), carried out by the South African Audience Research Foundation
(SAARF).
The results show that collectivism and four proxy indicators of collectivism —
income, lifestyle, community and race — can accurately predict whether or not
a South African is part of the BoP. All hypotheses, in other words, are
Authors
Chipp, Kerry
Corder, Clive
Kapelianis, Dimitri
Institutions
University of Pretoria Gordon Institute of
Business Science
University of New Mexico Anderson School of
Management
Source
Management Dynamics : Journal of the
Southern African Institute for Management
Scientists
Idea conceived
March 2013
Idea posted
January 2014
DOI number
Subject
Globalization
Emerging Markets
Global Operations
confirmed. The researchers found that:
The income of the ‘most primal in-group’, i.e. the household or family, is a better predictor than
personal income of classification at the BoP.
A traditional lifestyle focused on community and community gatherings is more common at the
BoP.
Members of the BoP are more likely to live in small communities — i.e. those of fewer than
4,000 people.
The vast majority of the BoP (75.4 per cent according to the study) are black.
This last finding reflects the legacy of apartheid and South Africa’s long years
of racial discrimination and inequality. Why is it also a proxy indicator for
collectivism? Because if you’re black in South Africa you are much more likely
to follow Ubuntu, the humanist philosophy, whose postulates include “I am
because you are and you are because we are”. Together with the other
results, it shows collectivism is a defining characteristic of life at the bottom of
the pyramid in South Africa.
Business Application
Several managerial implications are highlighted in the study. They include
the need for:
Marketing that understands the importance of the household and the role that various family
members might play in the decision-making process.
Supply chains that ‘connect’ with dispersed communities through extensive use of wholesalers
and spaza shops (informal convenience stores set up in people’s homes to sell everyday
household items).
Advertising media that provide optimal reach: radio and outdoor, according to the AMPS survey
data, will be more effective than print in targeting the BoP.
Initiatives that ‘elevate’ the community and the household — for example, schemes to help fund
stokvels (savings and investment societies that provide lump sums in return for regular
contributions), sponsor choral competitions or provide small schools in rural areas with
supplies. (The traditional lifestyle means consumers might be alienated by a business
approach that doesn’t take their wider group into account.)
The researchers also underline the importance of adaptability, agility and
vigilance. South Africa is changing. People at the bottom of the pyramid
‘today’ may not be there ‘tomorrow’. Urbanisation is likely to lead to vast
increases in demand for items such as TVs, cell phones, fridges/freezers,
DVD players and electric stoves. And companies will want to make sure
demand does not outstrip supply.
Further Reading
The role of collectivism in defining the South African Bottom of the
Pyramid. Kerry Chipp, Clive Corder & Dimitri Kapelianis. Management
Dynamics: Journal of the South African Institute for Management
Scientists (March 2013).
Further Relevant Resources
Kerry Chipp’s profile at GIBS
The Gordon Institute of Business Science’s profile at IEDP:
© Copyright IEDP Ideas for Leaders 2014
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