Through the pyramid: implications of interconnectedness in Africa

Abstract

Purpose

Many markets are conceptualized as a stratified low- and middle-income “pyramid” of consumers. Emerging markets are sites of rapid consumer mobility, and thus the middle class there is connected to, and often supports, low-income relatives and employees. Therefore, this paper aims to establish that African income groups are not insular, but rather interrelated and have strong social ties reinforced with longstanding communal values, such as ubuntu.

Design/methodology/approach

Using a between-subjects experimental vignette design, the propensity of the middle class to cover low-income individuals on an insurance product was assessed.

Findings

Income strata are interrelated and can inform value propositions, which is demonstrated in this paper with insurance, where the middle class are willing to include others, depending on their social proximity, on their insurance cover.

Research limitations/implications

The context for this study was personal home insurance; hence, the generalisability of the results is circumscribed. Other more tangible forms of cover, such as medical, funeral or educational insurance, may engender far stronger effects.

Practical implications

Marketers tend to view low- and middle-income consumers as independent. A view of their interrelation will change the design of many products and services, such as a service catered to the poor but targeted at their support networks. An example of such a service is insurance, which is traditionally hard to sell to the poor. A less atomistic approach to income strata could have implications for vicarious consumption, as well as a reconsideration of the disposable income of both groups.

Originality/value

The pyramid is an interconnected network of social and economic ties.

Citation

Chipp, K., Carter, M. and Chiba, M. (2019), "Through the pyramid: implications of interconnectedness in Africa", European Business Review, Vol. 31 No. 3, pp. 289-303. https://doi.org/10.1108/EBR-01-2018-0006