Paritosh Joshi: Open Secret: The New Consumer Classification System

14 Dec,2012

By Paritosh Joshi

 

How many times a day do you use a phrase beginning “SEC A…”? Yes, dozens. Not surprising either. You are in the business of Media & Communications in India and you have spent absolutely years hearing and using SEC.

 

Socioeconomic Classification has a storied history as a major tool of market research. SEC, as it is universally abbreviated has several advantages over predecessor systems that were typically based on personal or household income. For one, most respondents have a variety of reasons to be economical with the truth in reporting it. The more wealthy will tend to damp it down, the less fortunate inflate it. For another, it has long been known that income by itself has little predictive value in understanding buying and consumption behaviour. Marketers, market researchers and other social scientists, confronted with the inadequacies of income based systems have long sought, and long been eluded by, the perfect system that can explain consumer behaviour. They began to sense promise when they examined the Chief Wage Earner’s (CWE’s) occupation, though. It became clear that people of similar occupation and occupation level had more in common with one another than those that were dissimilar. Systems evolved that were predicated exclusively on CWE’s occupation. The UK, by way of example, evolved the NS-SEC (National Statistics- Socioeconomic Classification). Some countries; India was among the pioneers; went further, developing systems that used two classification variables. Our system used the CWE’s Occupation and Education to determine the socioeconomic class to which a household belonged.

 

The strength of the Indian SEC is attested to by its utility and durability over the last quarter century, the system having been launched by the Market Research Society of India (MRSI) back in the mid 1980s.

 

But here’s the bad news. It is finally past its ‘best by’ date. And nobody has told you.

 

For the last few years, researchers and statisticians have found it ever harder to explain observed behaviour with the SEC. This triggered a joint exercise between the MRSI and the Media Research Users Council (MRUC), the joint-industry body that publishes the Indian Readership Survey to develop a system to replace the SEC. The joint exercise required a lot of very talented analysts and statisticians to test a range of alternative structures using single or multiple classificatory variables to dice the data. One candidate, the winning candidate, paired Education of CWE with Durables Ownership. A pre-specified list of 11 assets is presented to a respondent and all that the system needs is not the specific items ticked but the number of items ticked. Hard is it might appear prima facie to believe this might have some practical application, you end up with a system with very good discriminating ability. The base dataset used to test the validity of all models in reckoning was successive rounds of the Indian Readership Survey. Voila! The New Consumer Classification System (NCCS) was born.

 

Now here are some cool things about the NCCS.

 

It is truly Pan India, covering urban and rural audiences. Unlike SEC that was only for urban India.

 

It discriminates the most premium audiences much more sharply than the predecessor.

 

It is naturally adaptable. If the current list of 11 durables is no longer able to discriminate in a few years, it will change the list. Indeed, the system is committed to revisiting the list with a pre-specified periodicity.

 

While the IRS has now started publishing its tables classified both by SEC and NCCS, very few users seem to have actually started looking critically at the NCCS tables. Don’t you want to be the early adapter?

 

Paritosh Joshi has been a marketer, a mediaperson and a key officebearer on industry bodies. He is developing an independent media advisory practice. His column, Media Matrix, appears on MxMIndia every Thursday

 

 

Post a Comment 
  • Sai Nagesh

    Hi Paritosh, given the fact that the ownership of durables today is happening at a much younger age than ever before, don’t you think that incorporating the age at which a durable was acquired will be an important input too , rather than just the current ownership ? for ex; while a sub 1000 cc car is still an entry car for an average 23 year old; there is this growing no of 23 year olds who are preferring the a 1200 to 1500 cc vehiclea as the entry vehicle. Wouldnt factors like this be a good dscriminator to define maybe ‘the Aggressors’ ??!!!! Cheers !

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