‘ISEC is a welcome development, and none too soon’

Shashi Sinha’s statement that BARC is evaluating the proposed Indian Socio-Economic Classification (ISEC) makes one wonder. In an interview with e4m, Sinha said: “We are evaluating the ISEC proposed by the MRSI. Soon, we will start consulting our stakeholders – broadcasters and advertisers. BARC can take the next step only after their feedback.”

There is nothing wrong with what he said: the question is about the way in which the industry works. Clearly, BARC is not on board. The advertisers – the ISA – have endorsed it, but unless it is accepted by the IBDF, the biggest stakeholder in BARC, ISEC is a non-starter. (Note, Sinha does not mention the agencies, the third stakeholder in BARC.)

It must first be said that ISEC is a welcome development, and none too soon, not only for what it is but, equally, for what it replaces. The ISEC considers parameters only of occupation and education, much as the erstwhile SEC (Socio-Economic Classification) did. Where it differs is that while the occupation parameter is the occupation of the chief earner, as earlier, the two education parameters are the education level of the most educated adult male and – most important – the most educated adult female in the household. The last is brilliant, insightful thinking, in my view.

ISEC replaces the NCCS (New Consumer Classification System), which has long outlived what I said back then was its predictably limited usefulness. Adopted in 2011, the NCCS is based on two parameters, one of which is the education of the Chief Wage Earner (or, now, Chief Earner). The other is not occupation, but the number of durables owned by the household, from a list of 11.

There were all kinds of analyses to show why and how the NCCS was better than the SEC, which it replaced, but to my mind it was terribly left-brained. Marketers are interested in a household’s propensity to consume. If the purpose of such a system is to classify households according to their propensity to consume, we must look for indicators of their likely behaviour. Ownership of durables is manifest behaviour: as an indicator, it simply says those have bought more products in the past are better prospects for the future.

I argued that if a household that owned one durable today were to buy two more next year, its classification would change. Consequently, as over time all households would own more durables, everyone’s classification would move up. Well, that is exactly what happened. Year on year, the proportion of NCCS A, B, and C households in the universe has been going up, and of D and E households, coming down.

The ISEC is more stable, as was the old SEC. For a household those parameters change slowly over time, and if they do change then either that’s a result of a life change, or it results in a life change. If the Chief Earner upgrades their occupation, or the education status of adults in the household changes, that will definitely lead, in time, to a change in their consumption habits, and accordingly the classification should change.
Few today would remember – or even, perhaps, be aware of – a time when households were classified only by income, which as a parameter had fairly obvious shortcomings. The move from income to socio-economic parameters was a seminal change, and it came about without a hiccup because the stakeholders were in conversation from the start.

Sometime in 1987 an informal group got together with the objective of finding a better predictor of consumption behaviour: Roda Mehta and I from OBM (Ogilvy); Rajni Chaddha from Hindustan Lever (HUL); Prakash Nijhara from Cadbury (Mondelez); and Thomas Puliyel from IMRB (Kantar IMRB).

Preparations were already under way then for fieldwork for a new edition of the National Readership Survey (NRS, precursor to the IRS), which was the only syndicated media research at the time. Clearly, a new method of classification would be meaningless if the NRS did not use it. The first step, then, had to be to co-opt the NRS Council. After quick consultations they agreed with the need for change, and put things on hold.

At the instance of the group, the MRSI undertook research, generously funded by Cadbury, to determine which parameters were the best discriminators of a household’s propensity to consume. They concluded that it was a combination of the education and occupation of the chief wage earner (CWE). That made sense intuitively, too.

The resulting classification method, dubbed SEC (Socio-Economic Classification), was adopted starting with the NRS of 1988.

Now we are on the threshold another change, one as needed as the one 35 years ago, but the path ahead is uncertain.

The IBDF has formed a task force to understand and evaluate the proposed system, and there is, reportedly, a genre-based division of opinion among broadcasters. News and sports broadcasters are said to welcome it because they believe they stand to gain. GEC broadcasters, on the other hand, are likely to oppose it because they fear that they stand to lose – specifically, from the inclusion of the woman’s education as a parameter. Apparently the operating principle in the industry body continues to be, as always, not, “Does it make sense” but “How does it affect my business?”

It is good to see that the ISA, long silent on matters concerning BARC, has publicly endorsed ISEC. Whether it can pull its weight in BARC is a different matter.

Abhi picture baaki hai.

Disclaimer: The views expressed here are solely those of the author and do not in any way represent the views of exchange4media.com.