The recent introduction of the Indian Socio-Economic Classification (ISEC) by the Market Research Society of India (MRSI), which seeks to disrupt how advertisers and broadcasters interpret consumer data, has sparked intense debate, bringing the entire media and advertising industry to a boiling point over the past one week.
India’s top advertisers, who spend hundreds of crores annually on advertising, believe that they have lost a huge chunk of their ad money over the years due to the flawed NCCS (New Consumer Classification System) which has been in place for a decade now.
“MRSI recently conducted a comparative study on NCCS and ISEC panels. When the chief wage earner’s education and consumer durables were used as determinants, over 60 percent of households got bucketed into just three categories A, B & C. In ISEC, the similar category level contributes to merely 15 percent of the households,” a marketer told e4m on condition of anonymity.
“Worse, the NCCS panel bucketed a whopping 83% of the urban population into just two categories -- A and B. That clearly means we have been targeting a huge segment of consumers uselessly with no clear insights about their spending habits,” said another advertiser.
Many marketers feel that a lot of advertising money has gone in vain due to what they believe is a flawed methodology.
“The ISEC presents cohorts in the pyramid form based on their affluence level which reflects the true picture of Indian society. Besides, this pyramid is found to be quite stable over the years, in our study. That pyramid is missing in the NCCS altogether”, people privy to the matter say.
NCCS relies on the education of the “primary wage earner” and “consumer durables” in households, while ISEC considers the occupation of the “primary earner” and the educational attainment of both the “most educated male and female adults” in the households. Both systems classify consumers into five broad categories-- A, B, C, D & E in the case of NCCS and High Class, Upper-Middle Class, Middle Class, Lower-Middle Class and Low Class in the case of ISEC. They are further divided into 12 sub-categories.
“Today penetration of consumer durables has witnessed a significant increase, leading current socio-economic classification to be less discriminatory and more volatile. Besides, the ownership of durable items cannot be the determinant of socio-economic classification in the era of easy EMI and 0% finance schemes,” CMOs shared.
When the NCCS was implemented a few years ago, the intention was good. "However, time has proved that it is unstable and non-discretionary, which costs us dear," said advertisers.
Shashank Srivastava, Senior Executive Director, Marketing and Sales, Maruti Suzuki, expressed his disappointment over NCCS flaws though he insists that these flaws may not have caused major ad waste. “NCCS was always an indicative reference for media planning. Of course, flaws in the stated system of NCCS of course are disappointing,” he said.
Notably, the advertisers body– the Indian Society of Advertisers– was quick to endorse ISEC giving a go-ahead to its implementation by the Broadcast Audience Research Council (BARC). BARC has begun evaluating the ISEC, Shashi Sinha, BARC chairman told e4m.
“Not keeping pace with time”
A few marketers believe that NCCS is not flawed but outdated. “It is just that the penetration of markers moved up rapidly and the currency couldn’t keep up. Like all currencies, it needed a refresh which the ISEC provides,” a marketer noted.
Chintamani Rao, Strategic Marketing and Media Consultant wrote in his column published in e4m on Thursday, “Year on year, the proportion of A, B, and C households in the universe has been going up, and of D and E households, coming down.”
The socio-economic classification (SEC) was first introduced in the country about four decades ago to classify consumers into different groups. Over time, flaws were noticed in the system and NCCS was brought. While the Indian Readership Survey (IRS) started using NCCS from 2014 onwards, the BARC implemented it in 2015, industry experts say.
Veteran adman Ramesh Narayan, Founder of Canco Advertising Pvt. Ltd, Director Strategy, Asian Federation of Advertising Associations (AFAA) and Mancom Member India Chapter IAA said, “I am absolutely delighted that ISEC is considering women's education as a key definer of social capital. Women's education normally translates into a keen mind working in whatever field interests them. The entire socio-economic fabric would change with the women's choices and her purchasing habits. Yes, there will be a need as Shashi Sinha rightly points out, to take all stakeholders on board.”
