If there is one thing that behavioural economics has taught us, it’s that none of us is immune from misinterpreting data. Here Colin Strong, Head of Technology Research at GfK, talks about the danger of seeing patterns that might not be there in big data.

Behavioural economics is being enthusiastically adopted across the market research industry all over the world. Researchers everywhere are applying insights from decision making science and embracing the concept that we’re all a little bit irrational. But are we irrational in the same way?

Welcome to Leigh Caldwell, RWC’s newest correspondent. Leigh is author of the Psychology of Price and partner at the Irrational Agency. He’s joining our team to write about all things behavioural economics. In his first post he talks about the three leading theories of decision making.

Melissa Verreynne and Francois Conradie

What growing consumption demand in africa means for business

Explosive growth in Africans’ disposable income will result in a surge in consumer demand over the next few decades. 

It is a given that Africa’s economic growth over the next few years will be rapid – continued commodity-fuelled growth combined with rents from new energy discoveries and Africa’s role in growing food for an expanding global population will ensure healthy increases in economic output for decades to come. It is obvious that these revenues will boost per capita incomes and consumption demand, but wholesalers, retailers and marketers would do well to begin thinking with greater precision about what, specifically, these increasing incomes will be spent on. The best clue as to what Africans will spend their higher incomes on may be obtained by asking what Indians and Chinese spent their increasing incomes on when those countries saw per capita gross domestic product (GDP) rise quickly in the 1990s and 2000s.

Demographics
First, some detail about the characteristics of the African consumer market story may be useful. The main reason for the current growth in consumption demand on the continent is demographic. Africa’s population is growing, and fast. According to United Nations (UN) projections, Africa’s population will exceed India’s by 2023 and China’s by 2025. The continent is forecast to be home to close to two billion people by 2041, double the current figure. Thus, looking solely at the size of the consumer market, the potential of the African market is immense.

At the same time, this population is becoming richer. This trend results mainly from the change which is underway in the population’s age structure. Changes in public health policy and culture are pushing fertility rates down, especially in North Africa, so the shape of the population pyramid is changing. The base – the proportion of children in the population – is narrowing, and the proportion of people in the older cohorts is growing. As a result, the dependency ratio – the ratio of people in the economically active period of their lives to the young and the old whom those workers must support – is improving. This means that working Africans are supporting fewer dependents than ever before, and they are spending the extra disposable income that results from that situation on several categories of consumer goods.

If you’re an ESOMAR member you can read the full interview in MyESOMAR in the digital copy of Research World. If you are not a member of ESOMAR you can join and receive a free copy of Research World 6 times a year or alternatively you can sign up for a subscription of the magazine in our publications store.

Robert Heeg

Last year, ESOMAR successfully introduced corporate membership. Some of the organisations that joined tell us about the benefits of global associations in an age of changing privacy and quality perceptions. 

In a diverse, sometimes chaotic global marketplace, it helps to streamline standards, set best practices and exchange the latest information. As a global organisation, ESOMAR introduced corporate membership to better serve the increasingly international needs of its members. Indeed, global coverage was a major reason for full-service market research agency SKIM to sign up as a corporate member, says chairman Dirk Huisman. “We have offices in more and more countries and are currently expanding into Latin America, so we need a global approach. We only work for multinational clients, and they expect standardisation. Of course, we’ve also joined local associations, but membership of a global organisation makes it easier for us to work with people worldwide who answer to the highest standards.” Most of all, Huisman feels that an association should establish best practices. “They should say, ‘When we collaborate, this is our nomenclature.’ We all need to speak the same language. An advantage for us is that ESOMAR is the only association that is pretty much represented everywhere.”

This global reach is equally important for a client like Swarovski, says Alexander Linder, director corporate consumer and market insights at the luxury goods company. “We usually select our partners through the ESOMAR website. When we need to do research in territories where we haven’t been before, this is the best way to find quality vendors and get feedback on them.”

If you’re an ESOMAR member you can read the full interview in MyESOMAR in the digital copy of Research World. If you are not a member of ESOMAR you can join and receive a free copy of Research World 6 times a year or alternatively you can sign up for a subscription of the magazine in our publications store.