CONSUMER BEHAVIOUR ASSIGNMENT

On

SOCIO-ECONOMIC CLASSIFICATION

SUBMITTED TO: SUBMITTED BY:

DR. MOHIT LOHANI SIMRAN SHOKEEN
(257/2021)
SEC CLASSIFICATION SYSTEM

The SEC Classification is the classification of consumers on the basis of parameters.

Traditionally the two parameters used to categorize consumers were: Occupation and
Education of the chief wage earner (Head) of the households.
According to the 2011 definition provided by the Market Research Society of India (MRSI),
the socio-economic categorization (SEC) is a method used to categorize and target consumers
based on specific criteria. It is predicated on two factors:
1. Education of the Chief Earner. The options are Illiterate, Literate but no formal schooling
or Schooling unto 4 years, Schooling between 5–9 years, High School pass, some college
(including a diploma but not a graduate), Graduate / Postgraduate (General), Graduate /
Postgraduate (Professional)
2. The number of Consumer durables (pre-decided from a list of 11 items) owned by the
family. The list of 11 items is: Electricity Connection, Ceiling Fan, LPG Stove, Two-
Wheeler, Color TV, Refrigerator, Washing Machine, Personal Computer/Laptop,
Car/Jeep/Van, Air Conditioner, Agricultural Land

History
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.
Originally developed by IMRB International as a way of understanding market segments,
and consumer behaviour it was standardized and adopted by the Market Research Society of
India in the mid-1980s as a measure of socio-economic class and is now commonly used as
a market segmentation tool in India.

SEC Grid (old version)

In the older version, the SEC Classification consists of two grids-

 The Urban SEC Grid, which uses Education levels and Occupational criteria of

the Chief Wage Earner (CWE) of a household as measures to determine socio-
economic classification, and segments urban India into 7 groups (A1 to E2) and
 The Rural SEC Grid, which uses Education and Type of House (pucca, semi-
pucca, and kaccha) as measures of socio-economic class, and segments rural India
into 4 groups (R1, R2, R3, R4)
This is based on the assumption that higher education leads to higher income thus higher
consuming potential. But, we know that this may not always be true. 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.
It divides the population into 3 classes:

 Upper most segment of the consuming class-A1, A2 and B1

 Middle segment- B2 and C
 The lower most segment - D, E1, and E2.

URBAN SEC GRID

RURAL SEC GRID

R1- Uppermost; R4- Lowermost
New Consumer Classification System (NCCS) is the new tool for classifying consumers in
India. The methodology is used by the Broadcast Audience Research Council in TV audience
measurement system. It was almost three decades ago that socio-economic classification
(SEC) was introduced in the country to classify consumers into different groups. Over time,
flaws were noticed in the system. That's when the industry decided to revise the consumer
classification system and introduce the New Consumer Classification System (NCCS),
which, in many ways, is better than the SEC.
NCCS is used to classify households in India. It was co-developed
by Market Research Society of India (MRSI) and Media Research Users Council
(MRUC) and classifies households on two variables:
 Education of the chief wage earner: There are three options: not literate, literate but
not in a formal context, or four years of schooling. completion of high school, some
college (with a diploma but no degree), graduate or postgraduate study (generally),
and five to nine years of education (Professional)

 The 11 consumer durables owned by the household from a predefined list: The 11
durables (as on date) 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). Research showed that it is an
adequate classification. This list will be relooked after a certain period of time.
The 11 shortlisted durables were identified as the best discriminators of the
‘purchasing power’ of a household after evaluating the series of variables,
Usage of SEC System
These grids are frequently utilised by social and business researchers in India to ascertain the
consumption choices and purchasing power of households. The SEC grid does not employ
family income as a metric since this information is difficult to gather and because it has been
shown that in India, education levels and career requirements are stronger indicators of
consumer desire. In contrast to the Household Potential Index, which evaluates consumption
intensity, these tools employ a different methodology
Based on these 2 variables, 12 grades have been identified in the SEC system, ranging from
A1 to E3
 A1, A2, A3
 B1, B2
 C1, C2
 D1, D2
 E1, E2, E3

Advantages of New SEC:

 More discrimination as compared with current systems
 A single system for urban and rural India
 Less subjectivity- as we no longer use occupation
 It’s simple - easy to answer, not very time consuming, easy to classify
 The new SEC system is able to reduce heterogeneity within social grade- and stretch
the differences by grade

Limitations:
 We need to be better prepared to handle minor changes to the system, because
“consumer durables” penetration will change faster than education or occupation
 The questioning can appear intrusive to people who are unaccustomed to market
research. It’s not a problem elsewhere

Suggestions:
 The new SEC system is able to reduce heterogeneity within social grade- and stretch
the differences by grade
 We have a system that is simple, easy to administer. It gives us good discrimination;
the social grades created are more homogenous
 But we do need to revisit the system at least once every two years; and make sure that
when a change is needed, this is a smooth process
 It’s easy to begin using the new system. For those who need to keep track of the old
SEC for reasons of comparability, the new system means just one more question-
which can be tagged on right at the end.