The emerging black market may be a term bandied around by many, yet what does it really mean in a society where black people make up more than 70 percent of the South African population but earn only 44 percent of the total income?
Patience Muyambo, senior research executive for Research Surveys, found only one concise definition of the black emerging market after reviewing several articles, journals and publications.
It came from a specialist research company, Mictert, who referred to this segment of the consumer market as "buppies" (black upwardly mobile professionals) and defined them as young, black professionals who earn a minimum monthly salary of R8 000, own their own vehicles, do not live in townships and are employed in white collar positions.
"Many marketers would agree with this definition and yet, in the context of South Africa today, this definition represents only a small elite and niche market," said Muyambo.
The South African Advertising Research Foundation's all media and products survey (Amps) of 2004 said that this market numbers about 84 000 people.
So Muyambo extended the Mictert model to include young black professionals between 25 and 39 years old who work full-time or part-time, have some tertiary qualifications and fall within the living standards measure (LSM) of 7 or higher.
According to Amps 2004, about 256 000 people fall into this bracket.
However, the surge across most markets in the past two years has been too strong to be solely accounted for by just the "buppies".
Muyambo proposed that the real emerging black market is larger than the current definition.
She put the buppie at the top of the earning stakes, but included the entrepreneur, small business owner and young employee within her definition.
- Buppie: up-and-coming degreed young (25 to 35) professional who owns a house and a car and is in a white collar position.
- Entrepreneur: young (21 to 35), typically not well-educated, lives in a flat or could still be living at home and has own business such as the repair and sale of electronic goods.
- Small business owner: older than 35, not well educated, started own business and may employ up to six people in a business - like a taxi service, spaza shop or funeral home.
- Young employee: not well educated, stays at home with parents, works as apprentice or sales assistant, is studying part-time and wants to prove that a rags-to-riches story can come true.
"Interestingly, according to Amps 2004, there are approximately 2,6 million self-employed black South Africans of which a quarter are in LSM 6 or higher. It seems the entrepreneurial spirit is alive in South Africa," said Muyambo.
Possibly more than one million people fall into this category which could account for the boom in certain markets.
The combination of a favourable political and economic climate also has made more real income available to black consumers.
"This market is emerging from a state of asset deficit. Low penetration rates of assets such as household goods and furniture means there will be sustainable volume growth in years to come," said Muyambo.
Muyambo analysed findings from the qualitative component of the research to discuss the key themes which influence spending patterns in the emerging black market.
She noticed that branding takes a two-pronged path in the black market.
There are the status brands which tend to be more expensive and then the everyday, cheaper, tried-and-trusted brands.
For the low involvement categories, the people tend to fall back on habitual spending patterns but brand status is a big draw card for the more expensive goods.
The black market spends more on clothes as a proportion of total household expenditure than any other race group in South Africa and this pattern strengthens as you move towards the lower income groups.
Muyambo said the willingness to pay for brand image often leads to debt.
"Most participants in this study openly admitted that their friends and colleagues were heavily in debt and they dismissed paying exorbitant prices for clothing because it is for superior quality."
Popular status symbols include cars, designer clothing, property, the latest cellphones and mobile gadgets.
Muyambo said wealth creation is not a current priority for the black emerging market.
"They have a 'live for today' motto, rather than a more long-term outlook on life."
"Therefore, the investment and insurance markets are not yet relevant to them. Lack of information about what investment tools are available and how they can be accessed could also be accountable for this group's lack of participation," said Muyambo.
Amps 2004 showed that 44 percent of black people surveyed said they owned funeral insurance compared to 36 percent for life cover which is the next highest percentage.
- Muyambo, a senior research executive for Research Surveys, delivered a paper entitled Through the Eye of the Tiger: Dispelling the Myth of the Emerging Black Market at a recent South African Marketing Research Association conference.