Huge market potential for Gauteng

The three large metropolitan areas, Ekurhuleni, Johannesburg and Tshwane jointly accounted for an expenditure of R441 billion in 2008, which is 31.8% of the total figure in South Africa and approximately 90% of household consumption expenditure in Gauteng.

These figures are part of the Bureau of Market Research's (BMR) recent report entitled Market potentials for South Africa by province, municipality and population group, 2008 (BMR Report 388).

Market potentials were calculated using information from the BMR's income and expenditure database based on the number of possible buyers and their average annual consumption of products and services per population group, municipality and province.

Market potentials for a specific product and/or service will be higher in the more affluent provinces, where a large number of affluent people (potential customers) are living in affluent areas (municipalities). Conversely, market potentials will be lower in the poorer provinces where there are many poor people (potential customers) residing in poor areas (municipalities).

Population contribution, consumption

According to Prof Carel van Aardt, research director of the BMR income and expenditure division, the results of the study show that the White population, although only 10.8% of the total South African population in 2008, contributed 40.2% of household consumption expenditure.

The contribution of the White population group to total household consumption expenditure decreased from 48.1% in 1993 to 40.2% in 2008 while the contribution of the African population to total household consumption expenditure increased from 38.6% in 1993 to 47.1% in 2008.

Provincial results

The table below briefly details the percentage contribution by municipalities to the overall provincial household consumption.

Six metropoles consume most

According to Marietjie Coetzee, BMR senior computer scientist, the six metropolitan municipalities in South Africa are the six top municipalities with regard to household consumption expenditure. Nearly 54% of all household consumption expenditure in South Africa occurs in these six municipalities. Furthermore, these metropolitan areas are responsible for 38.3% of total consumption expenditure by African households, 79.0% by Asian households, 62.4% by Coloured households and 66.5% by White households.

Marketers' trends

According to Van Aardt and Coetzee, the results show that there are clear patterns and trends with regard to market potentials in South Africa that need to be kept in mind by marketers in making product development and marketing decisions.

• Household consumption expenditure has grown significantly since 1993 in both nominal and real terms
  
• Average annual nominal growth rate of 12.9% was experienced during the period 1993 to 2008
  
• 116.5% growth in household consumption expenditure in nominal growth terms during the period 2001 to 2008
  
• 43.8% growth rate in real terms was experienced during the period 2001 to 2008
  
• Large per capita consumption expenditure differentials are found within and between provinces, eg R52 084 pa in Gauteng during 2008 compared to R15 091 pa in respect of Limpopo. In Johannesburg in 2008, consumption expenditure was as high as R60 636 pa compared to Ntabankulu in the Eastern Cape at R6780 pa
  
• All 30 municipalities with the biggest household consumption expenditure in South Africa in 2008 were predominantly urban municipalities.

The full 44-page report is available from the Bureau of Market Research.