Thursday, February 08, 2007

Marketing Funda : Socio Economic Classification (SEC)

Funda#3 : What is Socio Economic Classification ( SEC) ?

A common classification that is used by marketers to describe the Indian population is the Socio Economic Classification ( SEC). SEC is the classification of Indian consumers on the basis of two parameters : Occupation and Education of the chief wage earner (Head) of the households.The SEC classification,created in 1988 ,was ratified by Market Research Society of India (MRSI) ,is used by most media researchers and brand managers to understand the Indian consuming class.

According to SEC, the Urban Indian households are classified on the basis of the two parameters Education and Occupation into

SECA1,A2,B1,B2,C,D,E1,E2

In urban households, SEC A1 include those with graduation/post graduate holding senior positions like CEO’s and Middle level managers and also those entrepreneurs having some college education and employs more than 10 staffs. The chart is self-explanatory.
While the Rural Indian Households are classified into SEC R1,R2,R3,R4.
In the rural classification, the parameters are Education of the Chief wage earner and the type of the house.

The SEC classification helps the marketers to identify segments tha t has high consuming potential.The high potential types : A1,A2, the medium ones and the bottom of pyramid ones. The SEC classification is used by Media planners to decide the media which gives the client maximum effectiveness. The research team at the me dia houses uses the NRS and IRS surveys' raw data to identify the reach of the media in these SEC segments and uses this input for pitching their campaign to large advertisers.

Although this classification is popular for over 18 years, the classification has its negatives also since it takes only two parameters: education and occupation .This is based on the assumption that higher education leads to higher income thus higher consuming potential. But we know that this may not be true always. A trader or a retailer with no qualification can earn more income than a Post graduate executive, but SEC will categorize the traders/retailers not as SEC A1or A2.

Hence Market research users council ( MRUC) has devised another classification called New Consumer Classification System( NCCS) which calculates a Household Premiumness Index ( HPI) which takes parameters like ownership and consumption of media services and products with other demographics.

All these classifications create jargon that we teachers lecture and brand managers are still searching for the White Light that provides the key to understand the Indian consumer.

Source: cks.in,readbetweenps.blogspot.com,agencyfaqs

6 comments:

  1. this is not exhaustive…how will you include a housewife..who is not working…but has some required education…what about households where there are two earning members…whose classification will you take…one who is a graduate sales man and the wife is a graduate shop owner… how can the classification of a house hold be done in this case…? I think its High time to Shift to LSM classification in india

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  2. With this demographic segmentation (SEC) the problem is how do you know if a specific individual is a segment will buy a product? And if they already are then why is she buying them? Customers do not conform their desires to match those of average consumers in a segment. Non demographic traits such as values, tastes and preferences are more likely to inform purchases.
    Also to build a brand that means something to your consumers, you need to attach the brand to a product that means something to your consumer, and to do this segmentation method is trash. If we had to segment at all, thenat it is better to segment markets in wants that reflect how consumers actually live their lives, and hence consume what they do.

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  3. I have been visiting various blogs for my term papers writing research. I have found your blog to be quite useful. Keep updating your blog with in valuable information... Regards

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  4. Hi great blog with valuable information. A question, has the new classification (NCCS, HPI) been done? If so where can i get more information about that?

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  5. @ Ajith.. SEC of a household is defined on the basis of Chief Wage Earner (CWE). CWE means, a person who contributes maximum share in the kitchen expenses in a household. So person A can earn more but contributing nothing in kitchen is not considered CWE, while person B earning less compare to A, but contributing more in Kitchen expense is CWE and, SEC of a household will be defined on the basis of that person.
    However I am not denying the fact that this alone is not the exhaustive tool for classification purpose.

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  6. Anonymous2:40 PM

    Your blog is good source of market informative as well as helpful for my Market Analysis and Development.

    ReplyDelete

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