MRSI announces a new socio-economic classification system

The Market Research Society of India (MRSI) has replaced the existing New Consumer Classification System (NCCS) with the Indian Socio-Economic Classification System (ISEC) in a bid to help businesses better understand and target their audience in today’s evolving landscape. 

ISEC goes beyond the NCCS, which primarily relied on the education of the main earner and ownership of certain consumer durables. 

Taking a more comprehensive approach, the ISEC considers the occupation of the chief wage earner (CWE), as well as the education of the highest educated male and female adults in the household.

This reflects the changing dynamics of Indian households, where women play a more prominent role in decision-making and spending.

ISEC also categorizes households into 12 income brackets compared to NCCS’s six, providing a more precise picture of their spending power.

This revamped system has garnered wide acceptance from industry stakeholders. Major players like The Indian Society of Advertisers, leading research agencies like Kantar and IPSOS, and key media agencies are already adopting ISEC. 

Industry leaders have also acknowledged the limitations of NCCS and Amit Adarkar, chief executive of IPSOS India, emphasized the need for a more “relevant, evolved, and representative system” like ISEC during a discussion with industry experts. 

Why the change?

Industry leaders agree that the existing NCCS no longer accurately reflects consumer behavior. 

ISEC addresses these concerns by offering a more nuanced understanding of consumers. As K Ramakrishnan of Kantar said, it “works well in both urban and rural India” and provides “better distinctiveness” for targeting and decision-making. 

The 1988 urban SEC system, solely based on the education and occupation of the CWE, struggled to reflect the evolving demographics and spending power of Indian households.

This limitation was further compounded by the lack of an official rural classification system endorsed by the MRSI. This fragmented approach frustrated marketers, who yearned for a unified system that accurately captured affluence (income and purchasing power) across both urban and rural spheres.

In 2011, the NCCS, developed by MRSI, emerged as a promising solution. It used a grid system combining the CWE’s education with ownership of 11 specific consumer durables to define socio-economic classes. While a step forward, NCCS also faced limitations as it solely considered the CWE’s education, neglecting the growing financial impact of women in households. 

With only six income brackets, the NCCS also failed to capture the nuanced spending power variations within each class. The reliance on consumer durables ownership no longer accurately reflected modern spending habits, thus rendering the framework outdated. 

These challenges paved the way for ISEC as it offers a more comprehensive and relevant picture. 

As India’s consumer landscape continues to evolve, ISEC promises to be a critical tool for navigating the changing market, as it will make it easier for brands and agencies to reach their ideal audience with greater precision and efficiency, help them in optimizing advertising budgets for better impact and drive economic development, while also identifying underserved markets, particularly those influenced by women’s purchasing power.