IRS redefines socio economic classification of Indian consumers

Market Research Users Council or MRUC believes that the socio-economic classification, which every marketer has been using till date, is often inadequate to understand TG. and to uniquely identify premium households.

For instance, traders and shopkeepers are not included in the SEC A or A1, although their consumption habits or income is at par with this socio-economic group.

SEC is essentially judged by two broad categories – education and occupation of the chief wage earner of a household. So a trader, whose MHI may be more than a person belonging to SEC A, doesn't figure in this SEC as his educational qualification or the category of occupation does not warrant his inclusion.

Hansa Research, in association with MRUC, has developed a new classification, 'Household Premiumness Index' (HPI), which provides an understanding of the true affluence of a household through new offers. It is a derived indicator, based on demographics, ownership and consumption of media products and services.

Ashok Das, managing director, Hansa Research, the research agency behind IRS findings, clarifies that HPI further classifies SECs and is not an alternative to the economic categorisation.

To judge the premium-ness of a household, Hansa Research has identified the products and services used by household. Here, the price of the product or services is not taken to consideration. Instead, premium-ness depends on products and services which are wanted by most, but wanted or used by only a few. As Das says, “Premium-ness is derived as an inverse of penetration.”

For instance, a household which owns a video camera, is given higher premium points as compared to one, which owns a car, although a car is costlier than a a video camera.

Similarly, all households owning a television set doesn't get equal premium points. Even here, the make and date of purchase of the television set are taken into consideration as there is a huge price difference among the various models of television sets.

For instance, a household which owns any television set is given 2.4 premium points as the penetration is 41 per cent. On the other hand, a household which owns a new colour television with a remote, gets 5.6 premium points as its penetration is 17.9 per cent. A 21 inches-plus colour television's penetration is just 0.2 per cent, so its premium points goes up to 490.2.

Hansa Research and MRUC has identified 18 durables, 22 FMCG products, four services and six demographic measures to judge the premiumness of a household.

Scores obtained from all sources are added and indexed to a maximum of 1000 to calculate the HPI of a a household. This score reflects the value of the home, in terms of its use of products and services and other consumer evolution measures.

As per the current classification of SEC, 1.0 per cent of the household in India is A1 and 1.8 per cent is A2. But as per HPI, among this top 1 per cent of the household, only 39 per cent belong to SEC A1 and 31 per cent belong to SEC A2, the balance 30 per cent belong to different SECs (B1, B2, C, D, R1, R2 and R3).

The study indicates that Delhi and Chandigarh are the top two states in terms of HPI. The mean HPI for Delhi is 43 and Chandigarh's mean HPI is 34. In comparison, the all India average of mean HPI is 7.7. West Bengal, Bihar, Jharkhand are among the poorer states with a mean HPI of 6, 5 and 4, respectively.

Among the top twenty cities in terms of HPI, Delhi is on the top of the list, followed by Chandigarh, Thiruvananthapuram, Ludhiana and Lucknow. Mumbai comes at the sixth position with a mean HPI of 28. Chennai comes next, with a mean HPI of 25.

Among the metros, Kolkata doesn't even figure in the top 20 list. Guwahati with a mean HPI of 24 is the only east Indian city to feature among the top twenty cities. © 2005 agencyfaqs!