Ads 24 unpacks the hidden economy of the South African traditional saving scheme.
Advertisers should be paying more attention to stokvels as recent research, 'Stokvels - A Hidden Economy - Unpacking the potential of South African traditional saving schemes' May 2012 conducted by African Response, shows that they collectively save R44bn a year.
There are 11,400,400 individuals belonging to 811,830 stokvels. Marketers can expect a substantial return on investment by directly targeting the stokvel market. These traditional group saving schemes provide members with mutual financial well-being, while fulfilling social and entertainment needs. Stokvels are fertile ground to communicate a brand's worth to the mass market. Ads24's mass market titles including Daily Sun, Ilanga, and The Witness, all of which also have Sunday editions, are ideally positioned to reach this market.
The number of people belonging to a stokvel is significant and so is the corresponding rand value. According to AMPS2012A 17% of South Africans belong to a stokvel.
Talk to them...
"Targeted campaigns can be rolled out specifically for stokvels in order to ensure brands remain visible to this market. It would be fruitful for businesses to have conversations with stokvels, not only for brand building, but in order to remain top of mind, thus maintaining visibility to the target market," states the African Response research report entitled 'Stokvels a Hidden Economy'.
One way of doing this is through advertising in newspaper titles, like Daily Sun, which target stokvel participants. The African Response research results challenge some of the stereotypes associated with stokvels, especially perceptions of the typical stokvel member. Baleseng Dlamini, Business Manager of Ads24's Mass Market titles says, "Similar stereotypes are often attributed to readers of the Daily Sun; it is assumed that they are low LSM individuals with little spending power. This myth puts advertisers at a disadvantage. Stokvels are starting to be taken seriously even in the banking sector where some banks have made provision for them through group savings schemes."
Just because they belong to a stokvel, don't assume...
The report reveals, "The presence of a significant number of high LSM individuals (20%), coupled with the fact that the majority (83%) of stokvel members are gainfully employed, shows that it cannot be assumed that those who participate in stokvels are poor and economically inactive."
The report classifies five main types of stokvels that dominate the traditional saving scheme arena. The majority of those interviewed (95%) belong to either: a general savings, burial society, grocery, or investment stokvel. Most stokvels deposit the money collected into stokvel bank accounts.
"Although considered informal by the banking sector, stokvels are fairly structured, governed by a constitution, and affirmed by the Stokvel Social Trust. Meetings are guided by an agenda and a drive for efficiency is instilled, it is not unusual for stokvels to elect a treasurer. Traditional saving schemes are recognised as entities in the business fraternity and are now a category in the National Business Awards (African Access 2012) and are even being enlisted on the Johannesburg Stock Exchange," states the report.
Do not discount the power of word-of-mouth
"At their member gatherings, large budget decisions are made and conversation is generated about the community, current affairs, trends and brands. Daily Sun has 5.6 million readers and understands and caters for this market. Not only does the content provide conversation starters, but the advertisements are used as a resource to find the best deals.
"Advertisers should not discount the tremendous strength of word-of-mouth in these contexts and the influence it has on the final decision to purchase. When a newspaper can provide accessible and relevant information to the community, especially about special offers on bulk purchases and stokvel specific offerings, the brand could make use of this reach, to align itself for an unprecedented windfall," says Dlamini.