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Indian households get new socio-economic classifications

business Updated: May 08, 2011 23:42 IST
Rachit Vats
Rachit Vats
Hindustan Times
Rachit Vats

The socio economic classification (SEC), which is like the census for advertisers in India and is used to classify and target consumers based on certain parameters, has been remodeled by the Media Research Users Council (MRUC) and the Market Research Society of India (MRSI). A new SEC system, aimed at sharper classification of consumer households, has been unveiled to replace the old system.

The new system brings both the urban and the rural consumers on one table and classifies households by using two parameters — educational qualifications of the chief wage earner in the household; and the number of assets owned (out of a pre-specified list of 11 assets). Based on these parameters each household will be classified in one of 12 SEC groups.

"The new SEC system promises to be more accurate. A lot of marketers felt that SEC system built in the 1980s has changed as the consumers have greatly evolved since then. This new system, based on the two additional parameters, will bring sharper discrimination and the much-desired single system for the country," said Lloyd Mathias, chairman, MRUC (also president, corporate monitoring, Tata Teleservices).

Experts suggest the new system will run parallel to the old system before seeing acceptance. There will be a complete overhaul of the categorisation system and marketers will see the changes in the consumer pattern in a much sharper way, identifying segments that have high (or low) consuming potential. At present, the SEC system is the currency used by all research companies and advertisers to target households that they see their target group residing in.

"It is a significant step forward in the way we look at consumers. The older system no longer captures the consumer patterns as robustly," said R Gowthaman, MD, Mindshare India (Gowthaman is on the MRUC board).

MRUC worked on the new classification system for around five years. The new system took into account: the need for it to be more discriminating, with sharper identification of the uppermost segment of society; the need to continue to be easy to administer; and the need for a common classification for urban and rural India.

SEC A1 in the new system now comprises of 0.5% of all Indian households. Nearly 2% of urban households and less than 0.1% of rural households belong to it. SEC E3 now comprises of 10% of all Indian households. Only 2% of urban households and 13% of rural households belong to it. Nearly 93% of all SEC E3 households are in rural India.

However, not everyone is convinced about the two new parameters used in the new system. "A uniform yardstick for the urban and rural landscape is a good step. While the team must have done enough permutations and combinations to include education and durable ownership, I am curious why occupation was eliminated from the equation, as it would have created a more granular segmentation. The concern here is that the mix of durables will keep changing and then the samples will not be strictly comparable," said Nandini Dias, COO, Lodestar UM.

MRUC and MRSI will review the list of assets from time to time. Of the 11 assets specified, laptops are a part of the list but mobile handsets have been excluded. Other assets include ceiling fan, LPG gas/stove, air conditioners, cars and/or other vehicles, colour television sets, agricultural land, refrigerators, and electricity connection. These parameters will be applicable for both urban and the rural markets.