Type: Research Essays
Sample donated: Sarah Brewer
Last updated: April 28, 2019
Traditionally two parameters wereused in socio economic parameters of Indian Consumers. These were: Occupationand Education of the chief wager of the household. It was originally started byIMRB international and was ratified in 1988 by Market Research Society of India(MRSI).
As a way of understanding thetarget audience and their consumption pattern, market segmentation was donebased on education and occupation on the chief wages or earning member of ahousehold. SEC has developed new parameters now which is called NCCS (NewConsumer Classification System) which is also co-developed by Market ResearchUsers Council (MRUC). It considers the old parameter of Education and now definesa new parameter in the form of Number of Consumer Durables. While the former asthe grid options such as:- Illiterate, Literate but no formal schooling orSchooling unto 4 years, Schooling between 5–9 years, High School pass, Somecollege (including a diploma but not a graduate), Graduate / Post Graduate(General), Graduate / Post Graduate (Professional), the latter comes with apre-defined list of 11 items owned by the family such as ElectricityConnection, Ceiling Fan, LPG Stove, Two Wheeler, Colour TV, Refrigerator,Washing Machine, Personal Computer/Laptop, Car/Jeep/Van, Air Conditioner and AgriculturalLand. While the old version of SEC has 8 grades(A1 to E2), the new one as 12 grades (from A1 to E3) defined for both urban andrural population. Simplification ofclassification being the prime motive of new SEC system, it takes intoconsideration of many anomalies associated with the old one. For instance,there is an apparent less subjectivitywith the omission of ‘occupation’ as a parameter.
Also, it discards the assumption of higher qualifications leading to higherincome and consumption or purchasing power of household. It becomes easierto classify the consumers’ preferences as the heterogeneity within social grades is reduced significantly. Asingle system combats this and projectsa better state of affordability in households. Underlying assumption tothis was that systems based on inequalities was not showing the right picture. Thenew SEC system connects householdsrather than individuals with the streamlined data collection with the dynamicvariables which change with time and help gain deeper insights for marketresearchers. The earlier system has static variables with no significantlychanging discriminators.
However, newSEC to suffer from the lack of utility to make historical comparisons of brandsas the list of durables is updated every two years under this system. To dealwith this ‘Hindustan Unilever’ developed’ Living Standard Measurements’ whichsegments consumers into 18 segments LSM segments by incorporating 25 parameterswhich takes into consideration some factors like media consumption,entertainment preferences also which makes it more effective to recogniseconsumer behaviour.