Why advertisers are pushing for shifting from NCCS to ISEC

The growth in GDP and income, penetration of consumer durables, and ownership of vehicles have witnessed a significant increase, rendering the current socio-economic classification NCCS to become less discriminatory and more volatile.

Introduced in 2011 by the Media Research Users’ Council (MRUC) and the Market Research Society of India (MRSI) to supersede the outdated SEC system from the 1980s, the current NCCS system relies solely on the education level of the primary earner and the presence of specific consumer durables in households.

In response to these limitations, MRSI unveiled its latest Socio-economic Classification System, “ISEC”, on Wednesday. Distinguished by its more comprehensive approach, ISEC incorporates factors such as the occupation of the primary earner and the educational attainment of both the most educated male and female adults in the household.

While advertisers and research bodies are game to it, broadcasters are yet to come on board before BARC implements ISEC. In the interim, marketers persist in devising strategies to navigate the challenges posed by the current SEC system.

In a panel discussion moderated by Shuvadip Banerjee, Chief Digital Marketing Officer at ITC and General Secretary of MRSI and held on the sidelines of the ISEC launch by MRSI, Jasmine Sachdeva, Managing Partner at Wavemaker India, shared that digital data helps in navigating the challenges thrown by NCCS.

Questioning the effectiveness of the current SEC System, she said that NCCS classifies households under multiple SEC groups, including A+, A, B, C and so on, but how do we know the A+ that's been defined is actually the person who is actually going to buy my product.

Jasmine Sachdeva

“Consumer behaviour varies across different product categories. Digital data comes to the rescue by providing insights into the consumer's smartphone usage and household registration details (HHR). This data, rooted in consumer behaviour and digital footprints, offers a more deterministic approach. We leverage this information to make informed decisions aimed at conversion,” added Sachdeva.

She emphasised that eventually, marketers will expand their focus on CTV beyond solely targeting premium audiences, given its rapidly growing penetration. Explaining the thought behind it, Sachdeva said, “Today, a Rs 20,000 TV is also a so-called smart TV. With the cost of smart TVs decreasing, there's a clear path for India to surpass 50 million CTV households. Inevitably, CTV will become an integral component of TV media planning. Currently, many of our clients are already embracing this shift. Right now, we are just taking several hits. How to be more deterministic, remains a challenge.”

Rajiv Dubey

Another panellist Rajiv Dubey and Head of Media, at Dabur India, acknowledged the evolution of the digital ecosystem and its benefits in cohorting. However, he maintains that TV's influence remains formidable and has yet to be surpassed. Dubey also contends that current penetration figures for CTV are exaggerated and inaccurate.

He added, “We are over-targeting CTV. While segmentation is easier in the digital ecosystem, its base is still around 46 crore in comparison to TV’s 90 crore households. India being a TV-first country, the medium has the potential to reach more people than digital.”

Supporting his stance on TV versus digital, Dubey emphasised the significance of reassessing our current SEC system, especially considering India's preference for television as the primary medium. He explained, “Regarding NCCS, about 83% of the population has transitioned to NCCS A and B. This upward movement in household classification applies across all categories within the NCCS system. The existing distribution of the population and segmentation does not align with the insights provided by NCCS presently, posing a challenge for brands targeting mass audiences.”

Sachdeva further highlighted that instead of solely relying on propensity to buy, we must consider the disposable income into propensity to buy.

“For instance, a consumer might possess the financial capability to purchase the latest iPhone but may lack the willingness to spend such a significant amount, despite continuous targeting efforts by the iPhone brand,” she said.

Vivek Malhotra, Group Chief Marketing Officer of India Today Group, expressed the challenge of determining the segment of SEC classification to which a consumer belongs, given the complexity of their buying decisions and media consumption habits.

Explaining the same with an example, he said suppose there are two consumers buying cars. While one finances it, the other buys it through a full down payment. Therefore, this consumption doesn't really become a parameter of defining the consumer persona and the same communication can’t be sent to both the consumers.

Drawing a parallel to media, he commented, “A person may be categorised as a TV viewer even if they watch infrequently and potentially consume content elsewhere. Consequently, despite being classified as a TV viewer, the brand's TV message might not effectively reach them. Audience dynamics are constantly shifting, with individuals exiting and entering the TV universe. Today's consumption patterns do not necessarily align with traditional audience classifications.” 

Amit Adarkar

Amit Adarkar, CEO of IPSOS India and the panel participant highlighted the necessity for a stable SEC system in India, considering its status as a growing nation, unlike the established and robust European markets. Adarkar emphasised the importance of a system that doesn't require frequent adjustments in the coming years.

Explaining it further, he said, “European economies are significantly more developed, characterised by stable growth rates, low inflation, and high standards of living. In contrast, the Indian market is experiencing rapid growth and flux. This suggests that a SEC system designed to be actionable and discriminatory in the present may become outdated in the future, posing a challenge.”

Echoing the sentiments of Sachdeva, Dubey, and Malholtra, Muralidhar Salvateeswaran, Chief Operations Officer at Insights APAC, Kantar, remarked that the whole problem is of the classification issue. “The traditional hierarchy from lower to middle to upper to super-upper still holds significance. However, the challenge lies in the classification variables. This discrepancy poses a significant challenge encountered in all the surveys we conduct,” he commented.

Malhotra revealed that viewers of Freedish on India Today Group are being categorised as NCCS A. He elaborated, "Even though they aren't paying monthly cable bills, they fall under NCCS A classification. Similarly, HD channels are being consumed across CDE categories, with some seeing higher consumption in CDE than in A."

During the panel discussion, when moderator Shuvadip Banerjee, Chief Digital Marketing Officer at ITC and General Secretary of MRSI, inquired about Dabur India's approach to conducting surveys, product and advertisement testing, and reaching the appropriate audience, Vinay Virwani, Head of Consumer Insights at Dabur India, responded that Dabur does not solely rely on the current SEC system, which is based on economic classification, but also takes into account the life stage of the consumer.

Vinay Virwani

To illustrate, Virwani provided an example, stating, "A consumer may belong to SEC DE but might purchase a more expensive child-safe phenyl the moment they become a parent."

Furthermore, Virwani highlighted the importance of considering education in audience classification, noting, "Some individuals may have lower formal education levels but possess specialised training or skills. Under the current NCCS categorisation, they may be classified into a lower SEC, but in reality, they belong to a higher SEC."

In conclusion, Banerjee emphasised that socioeconomic classification remains one of the primary methods for identifying the right consumer set.

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