MANAGEMENT
An overview of the
LIVING STANDARDS
MEASUREMENT
Ilse Truter
Drug Utilization Research Unit (DURU)
Department of Pharmacy, Nelson Mandela Metropolitan University
Reference is often made in
the media to the latest
economic statistics and
frequently the terminology
“LSM” is used in these
reports. The Living
Standards Measurement
(LSM) is the most widely
used marketing research
tool in South Africa.1,2 Not
everybody is familiar with
the LSM, so the objective
of this article is to give a
concise overview of a very
useful South African tool
to segment the market.
52
Bases for segmenting the
market
Various variables can be used to seg-
ment a consumer market. Five catego-
ries of consumer characteristics are most
often used for market segmentation,
namely3:
• Demographic segmentation
• Geographic segmentation
• Psychographic segmentation
• Benefit segmentation
• Buying behaviour (or usage) seg-
mentation
The LSM is classified as a demographic
segmentation tool. In the late 1980s, this
index was developed using a combina-
tion of variables to group people accord-
ing to their living standard by using vari-
ables such as the degree of urbanisation,
access to services, and ownership of
assets and major appliances. 1,2,3 After
considerable testing of an initial list of 71
characteristics or variables, 13 were se-
lected for their combined power in differ-
entiating between respondents.2 This list
was further refined in subsequent years.
The Living Standards
Measurement
The Living Standards Measurement
SA Pharmaceutical Journal – October 2007
(LSM) was developed by the South Afri-
can Advertising Research Foundation
(SAARF) to measure social class, or liv-
ing standards, regardless of race and
without using income as a variable to
segment the market. 1 The LSM uses
wealth, access and geography as the
major indicators to segment the market.
Instead of approaching social class there-
fore from the point of view of obvious
demographic differences, the LSM yield
a composite measure of social class.3
It is said that the LSM differentiates the
market more accurately than any single
or specific demographic variable. An-
other advantage is that it has broad ap-
plications across a variety of media and/
or product groups.1 The LSM is the seg-
mentation tool used by the All Media
Products Survey (AMPS).3
The LSM divides the population into 10
groups (1 = lowest to 10 = highest) as
given in Table 1. Previously, eight groups
were used but this changed when a
newer version of the LSM, known as the
new “SAARF Universal LSM”, was intro-
duced in 2001. A weighting is assigned
to each variable, for example a weight of
0.130134 is given to the description “elec-
tric stove”, while “hot running water” has
a weighting of 0.176697.2
 MANAGEMENT

Table 1: Descriptions of the ten Living Standards Measurement (LSM) groups1

LSM Demographics** Media General

Groups*

LSM 1 Female16-24, 50+ years old Radio below but strongest medium Minimal access to services
(10.5%) Up to some primary education African Language Services (ALS) Minimal ownership of durables, except radio
Rural Activities: Gardening
Traditional hut
R777 per month income

LSM 2 16-24 years old Radio: ALS Water on plot

(14.0%) Up to primary school complete Minimal ownership of durables, except radio
Rural and stove
R885 per month Activities: Gardening

LSM 3 16-49 years old Radio: ALS, Radio BOP Electricity, water on plot
(14.3%) Up to some high school education TV: SABC1 Minimal ownership of durables, except radio
Rural Outdoor set and stove
R1 107 per month income Activities: Minimal

LSM 4 16-34 years old Radio: ALS, Radio BOP, Metro FM, YFM Electricity, water on plot, flush toilet
(13.8%) Schooling up to some high school TV: SABC1, SABC2, SABC3, Bop TV TV set, hi-fi/radio set, stove, fridge
Urban Outdoor Activities: Stokvel meetings, lottery tickets
R1 523 per month income

LSM 5 16-34 years old Radio: ALS, Radio BOP, Metro FM, KAYAfm, Electricity, water, flush toilet
(12.5%) Some high school to matric YFM TV set, hi-fi/radio set, stove, fridge
Urban TV: SABC1, SABC2, SABC3, Bop TV, e.tv Activities: Exercising, painting interior of
R2 205 per month income Weekly newspaper, magazines house, stokvel meeting, buys music, lottery
Outdoor tickets

LSM 6 16-34 years old Wide range of commercial/community radio Electricity, hot running water, flush toilet
(12.6%) Up to post-matric, not university TV: SABC1, SABC2, SABC3, e.tv Winner of a number of durables plus cell
Urban Daily/weekly newspapers, magazines phone
R3 557 per month income Cinema and outdoor Activities: Exercising, painting interior of
house, stokvel meeting, buys music, lottery
tickets

LSM 7 Male35+ years old Wide range of commercial/community radio Full access to services
(6.05%) Matric and higher TV: SABC1, SABC2, SABC3, e.tv, M-Net Increased ownership of durables plus motor
Urban Daily/weekly newspapers, magazines vehicle
R5 509 per month Accessed internet once in last four weeks Participation in all activities
Cinema and outdoor

LSM 8 35+ years old Wide range of commercial/community radio Full access to services
(5.8%) Matric and higher TV: SABC1, SABC2, SABC3, e.tv, M-Net, Full ownership of all durables, including PC
Urban DSTV and satellite dish
R7 428 per month income Daily/weekly newspapers, magazines Increased participation in activities
Accessed internet once in last four weeks
Cinema and outdoor

LSM 9 Male35+ years old Wide range of commercial/community radio Full access to services
(5.4%) Matric and higher TV: SABC2, SABC3, e.tv, M-Net, DSTV Full ownership of durables including PC and
Urban Daily/weekly newspapers, magazines satellite dish
R9 861 per month income Accessed internet once in last four weeks Increased participation in activities, excluding
Cinema and outdoor stokvel meetings

35+ years old Wide range of commercial/community radio Full access to services
LSM 10 Matric and higher TV: SABC1, SABC2, SABC3, e.tv, M-Net, Full ownership of durables including PC and
(5.1%) Urban DSTV satellite dish
R13 788 per month income Daily/weekly newspapers, magazines Increased participation in activities, excluding
Accessed internet once in last four weeks stokvel meetings
Cinema and outdoor

* Percentage of the population is given in brackets.

** Please note that the income levels per month is not the most recently published income levels – the website of the SAARF can be
consulted for the latest monthly income levels.

SA Pharmaceutical Journal – October 2007 53

MANAGEMENT
Societal changes experienced in South
Africa since the first democratic elections
made the need to change the weight of
certain variables in the older LSM un-
avoidable.2 These changes to the LSM
weightings from time to time in the past
made long-term trending of data impos-
sible. The new SAARF Universal LSM,
however, allows the tool to be changed
without losing the ability to trend.
The current LSM (SAARF 2004 SU-LSM)
uses the following 29 variables to divide
the South African population into 10 LSM
groups2:
• Hot running water
• Have a deep freeze
• Fridge/freezer
• Water in home or on stand
• Microwave oven
• Have M-Net and/or DSTV
• Flush toilet in house or on plot
• Have a dishwasher
• VCR in household
• Metropolitan dweller
Lively discussion on pharmacovigilance at
PIASA conference
R ealising the increasing importance of
pharmacovigilance in the pharmaceuti-
cal industry, the Pharmaceutical Industry As-
sociation of South Africa (PIASA) recently held
a two-day conference on this key subject. It
was well attended, with approximately 111
delegates welcomed by Kobus Venter, CEO,
Janssen Cilag and Chairperson of the Regu-
latory and Clinical Committee of PIASA
A strong panel of speakers with diver-
gent viewpoints came from all spheres, in-
cluding academic, regulatory, industry, the
South African Department of Health (DoH)
and the World Health Organisation (WHO).
They covered the spectrum of reporting on ad-
verse drug events, from the practical aspects
of implementing pharmacovigilance from
both an industry and a regulatory authority
perspective, to guidelines for investigating
and reporting unexpected side effects.
Keynote speaker Professor Ralph Ed-
wards from the WHO Centre in Uppsala,
Sweden, gave delegates an international
perspective on the latest trends in safety and
pharmacovigilance around the globe.
A panel representing different areas of
expertise was asked to discuss how the phar-
maceutical industry and the MRA can work
54
• Vacuum cleaner/floor polisher
• Have a sewing machine
• Have a washing machine
• DVD player
• Have a computer at home
• House/cluster/town house
• Have an electric stove
• One or more vehicles
• Have TV set(s)
• No domestic worker
• Have a tumble drier
• No cell phone in household
• Have a Telkom telephone
• One cell phone in household
• Hi-fi or music center
• None or only one radio
• Built-in kitchen sink
• Living in a non-urban area
• Home security service
The presence, or not, of these variables
for each respondent in the AMPS survey
is coded. A formula (based on the
weightings used) is then applied to yield
a score for each respondent, the value of
together to improve drug safety from product
development to post-marketing surveillance.
Another discussion focused on important
issues such as what the MRA does with the
data submitted, problems with spontaneous
reporting, company access to safety reports,
unit standards for pharmacovigilance officers,
and the possibility of establishing a professional
body for pharmacovigilance officers.
Massive task
“The task of monitoring the safety of medi-
cines on an ongoing basis is a massive one,
and communications between the regulators,
the manufacturers and the public are vital,”
says Maureen Kirkman, Head: Scientific and
Regulatory Affairs, PIASA. “While clinical trials
give an indication of expected side- effects,
which are then included in the package in-
sert of the medicine when it is marketed, medi-
cines being used in the marketplace in much
greater numbers of patients with various con-
comitant conditions may result in reports
ofunexpected events depending on the re-
sponse of the individual with the condition
being treated or possibly interactions with
other medications”
Spontaneous reporting is the core data-
SA Pharmaceutical Journal – October 2007
which determines his or her LSM group
membership. 3
Conclusion
The LSM is a unique method of segment-
ing the market, but it must always be re-
membered that it is just one of many
measures. The greatest benefit of the
LSM is that it is simple to use, and al-
though the breakdown of each LSM ac-
cording to race can be done, race itself is
not used as a variable in determining the
composition of the LSM. The LSM pro-
vides a valid and tested means for seg-
menting the market that can also be used
outside the AMPS framework for various
research purposes.

REFERENCES:
1. Cant MC, Brink A & Brijball S. 2006. Consumer
Behaviour. Cape Town: Juta & Co Ltd.
2. South African Advertising Research Foundation Liv-
ing Standards Measure. 2007. Available on the
web: http://www.saarf.co.za/home.htm (date ac-
cessed: 1 October 2007).
3. Terblanché N. 1998. Retail Management.
Johannesburg: International Thomson Publishing.
generating tool of international pharmaco-
vigilance, relying on healthcare professionals
(and sometimes consumers) to identify and
report any suspected adverse drug reaction to
a national pharmacovigilance centre or to
the manufacturer.
Because spontaneous reports are almost
always submitted voluntarily, a major weak-
ness is under-reporting. Another issue is that
overworked medical personnel may not al-
ways see reporting as a priority. If the symp-
toms are not serious, they may not notice them
at all. And even if the symptoms are serious,
they may not be recognised as the effect of a
particular medicine.
Even so, spontaneous reports are a cru-
cial element in the worldwide enterprise of
pharmacovigilance and form the core of the
World Health Organisation Database, which
includes around 3.7 million reports (as at Sep-
tember 2006), growing annually by an esti-
mated 250 000.
Calling the conference a success, PIASA
found the participation of so many a bolster-
ing effect in its ongoing quest to sustain a
favourable environment for the continued
development of the pharmaceutical industry
in South Africa.