Townships: their promise, their potential, their challenges

In the last two years, Infusion (formerly Culture Cruizing) has conducted continuous research in seven townships in order to better understand lifestyle trends and social dynamics in the townships. The research uses the community participatory research approach and explores topics such as:
* Money
* Shopping
* Media/Talk
* Culture
* Happiness
* Health
* Circles of influence
* Stuff (what people have in their households)
* Feelings about South Africa
* Feelings about safety
* Education/Career/Future
* General lifestyle issues

The study is conducted over a 12-month period and seeks the opinions of 5,000 people in seven townships on a monthly basis. The townships that currently form part of the study are Soweto, Tembisa, Mamelodi, Soshanguve/Mabopane, Khayelitsha KwaMashu, Mangaung. These townships were the first to be selected to pilot the community-based participatory research project as they were keen to participate and represent the types of markets that were targeted for development. Now that the pilot has proved itself successful, more townships will be incorporated into the study by the end of November 2007.

The findings of this research, which has to date seen the company speak to just over 100,000 people in a space of two years, explores opportunities and challenges that are presented by uneven development in the townships that are surveyed. Moreover, the findings challenge some of the commonly held beliefs about townships.
Key findings from the Infusion Lifestyle Research:

More townships should look at branding themselves in order to attract appropriate investment

* Of all the townships surveyed in this study, Soweto has attracted the most investment, in terms of commercial, retail and community development.
1. Several shopping malls have been opened in the last few years.
2. Parks and recreational facilities have been seriously upgraded.
3. These developments have had a major impact in terms of improving convenience and overall quality of life in Soweto.
* Mamelodi is the second township after Soweto that is slowly attracting investment.
* Soweto is renowned for its political history and clout in shaping developments in the country.
* Mamelodi has carved a niche for itself primarily as a “Jazz Capital”.
* Tembisa also offers a highly lucrative market that is several times overlooked or over-shadowed by the better known Soweto and Mamelodi.
* Without a unique story that is celebrated consistently, other townships merely fade into the background.

The study raises questions about what is the appropriate pace of investment

Although, from a commercial perspective, the retail developments in Soweto have given Sowetans endless options, there are question about whether all the retailers who have invested in Soweto will succeed given the dizzying speed and intensity at which retail and entertainment facilities have mushroomed.

This poses questions about whether all these offerings may suffocate rather than enhance the booming market in Soweto.

The major concern is that if some retailers don't succeed because of the investment approach taken in Soweto, it may create the belief that “If it didn't work in Soweto it won't work anywhere else” thus denying other townships investment opportunities.

The studies have shown that many retailers, however, do not succeed due to often unfounded assumptions about township markets, their believe that these markets are completely aspirational and that these markets react in a similar way that the markets operating in the first economy.

Uneven development in the various townships means that business cannot use the same approach when engaging with various townships

* The township residents who feel that they can get by on their salaries are in Tembisa (34%) and Soweto (29%).
* Those who feel most strongly that they cannot meet their basic needs are in Khayelitsha (66%), KwaMashu (65%) and Soshanguve (59%).
1. There is a general state of “despair” in Khayelitsha.
2. People in Khayelitsha are most likely to say that the money that they earn is not enough to cover basic needs.
3. Khayelitsha has the highest incidence of households that earn R2,500¹ and below.
4. People in Khayelitsha are most likely to make use of store credit and informal credit options (e.g. stokvels, microlenders, mashonisa) than they are to make use of formal credit options such as a credit card, bank loan.
5. As an example, people in Khayelitsha have the highest incidence of store credit (76%) as compared to only 26% in Soshanguve.
6. People in Khayelitsha are most likely to have a loan from mashonisa (17%), whereas people in Soshanguve are the least likely to have a loan from mashonisa (1%).
* Although Soshanguve has the highest incidence of households earning R1,400 and below, there does not seem to be the same extent of “despair” as in Khayelitsha
(Source: My Talk 2007)
¹All reported incomes reflect monthly household income

Observation: Often, an assumption is made that all townships are the same and that marketers can use the same marketing tactics to engage different communities. However, our research shows that different geographical areas reflect different behavioural patterns, attitudes, perceptions and values, and that these differences cannot be ignored when formulating localized marketing activation campaigns.

There are differences in terms of the choice of savings, investment and insurance products in the various townships

* KwaMashu has the highest incidence (55%) of short-term insurance whereas Mamelodi (10%), Soweto (12%) and Tembisa (12%) have the lowest
* Pension and provident fund is lowest in Khayelitsha (18%) and highest in Mangaung (80%)
* Unit trusts are highest in Khayelitsha (54%) and Mangaung (52%) and lowest in Mamelodi (8%)

The “items” that have cost the most money in the last 12 months

These items were listed as the ones that have cost the most money in the last 12 months
* School or education fees 42%
* Debt repayments 42% (which has become significantly more prevalent during the last year)
* Acquiring assets 41%

Stokvels are not popular in all townships

For years marketers have sought to capitalize on the strength of the networks created by stokvels. The reality is that stokvels are not equally popular in all townships.
* Participation in stokvels is high in
1. Khayelitsha 56%
2. KwaMashu 48%
3. Soweto 35%
4. Tembisa 23%
* Participation in stokvels is lowest in
1. Soshanguve 14%
2. Mamelodi 16%
3. Mangaung 22%

(Source: My Money 2007)

People who are unemployed or earn low incomes have a tendency to feel helpless or frustrated by ads

* When asked how they feel about ads, people who are unemployed, earn R1,400 or less, or stay in Khayelitsha were most likely to say that they felt helpless and frustrated by ads.
* Those who feel positive about ads are those who are able to respond to the temptations.
1. An income of R2500 appears to give people a passport to feeling happy about ads.
2. At R10000 p/month, people feel happier with ads.
(Source: My Talk 2007)

About Infusion

Essentially, Infusion (http://www.in-fusion.co.za) is a knowledge hub fusing the art and technique of market intelligence with the responsibility of social investment.

The company believes that the challenges facing South Africa require unique and relevant business practices that respond to the far-reaching challenges presented by the scale of underdevelopment in large parts of our country. In following this philosophy, the company has unpacked the concepts of market intelligence, ideas around intelligent businesses and challenges facing developing countries into the company's own business model, aimed at positioning the company as a social enterprise – conscious yet profitable.

Infusion specializes in establishing community-based information accumulation networks that provide continuous streams of insight, mostly into lifestyle issues, from the communities in which the company operates. It was founded 10 years ago by Melani Prinsloo in the form of GlueMetric (Corporate citizenship surveys) and subsequently a new business unit called Culture Cruizing (lifestyle research).

The company is being re-branded and is now known as Infusion and will officially launch in Johannesburg on 3 October, Cape Town on 4 October, Durban 8 October and Port Elizabeth 9 October 2007.