NAME: AKHILESH H.

ID: 2017H1490343P.

Socio-Economic Classification in India

The NCCS (New Consumer Classification System) or the New SEC system as it is
referred to in the MRSI documents was co-developed by MRSI (Market Research Society of
India) and MRUC (Media Research Users Council) as the new classification system to be used
in the industry.
NCCS - The New SEC system is used to classify households in India and is based on two
variables:
• Education of Chief Wage Earner.
• Number of Consumer Durables (from a predefined list) owned by the family. The list has 11
items, ranging from electricity connection to cars and air conditioners; including agricultural
land in rural areas.
The new SEC was developed after analysis of various discriminators that would define
the purchasing power of a household. Alternative systems – a point based system including
education of CWE, press exposure of housewife, ownership of durables and user ship of
consumer goods; and a system considering ‘best type’ of consumer durables owned were also
considered before settling on the present SEC.
There is an assumption here that a system that throws up more inequalities is more
discriminating. The 11 shortlisted durables were identified as the best discriminators of the
‘purchasing power’ of a household after evaluating the series of variables, including education
of housewife, type of house, amenities, number of rooms, ownership of durables and user
ship of consumer goods.
Discriminating durables used in the table are: Electricity Connection, Ceiling Fan, Gas Stove,
Refrigerator, Two Wheeler, Washing Machine, Colour TV, Computer, Four-wheeler, Air
Conditioner, and Agricultural Land (in rural areas).
Based on the following parameters a certain household is placed in a certain cell of matrix,
which is formed by taking the two parameters on the X and Y scale.
Then each of the cell is referred to as:
1. A1, A2, A3
2. B1, B2
3. C1, C2
4. D1, D2
5. E1, E2, E3
Why the new SEC classification?
The previous method of classification was based on the different groups of Urban and
Rural India, with the new method there is a single system for both the rural and urban market
which makes it easier for the marketers to target their product or services. The previous
classification was linked only to one individual and not the household and used only CWE
discriminators for education and occupation, the household parameters were not considered.
The current system eliminates these setbacks by incorporating the durables in household
parameters and links the classification to a household and not to an individual. These
improvements capture the affordability quotient of the household more adequately than the
previous SEC and make it more dynamic.
Thus the new SEC is better than the Urban and Rural SEC as it reduces the diversity within the
social grade and extends the difference by grade.

How is the new SEC going to help?

One of the essential tasks of the marketers is understanding their target audience and
their consumption patterns, it helps the marketers in making targeting decisions and also
reaching out to the target audience more efficient and effective. Post liberalization there has
been a drastic change in the society, education and occupation are not the best indicators of
the income. The occupations which might be considered as low paying have seen increase in
their wages, the aspirations and the needs of the different classes are better segmented in
the new system. The rural India has increased media penetration and thus the gap between
the urban and rural has significantly reduced and a unified measurement gives marketers a
better view of the target market as the rural India has seen a lot of growth.

Drawbacks
The new system keeps changing the durables every two years thus this does not allow
the marketers to make historical comparisons, the previous SEC was static and allowed
marketers to make 10 year comparisons but the new system doesn’t allow this as the durables
might change in such long span of time.
Different brand marketers have different opinions about the old and the new SEC
classification, while some of the big marketers have customized the classification to form their
own in-house classification.