This document discusses socioeconomic classification systems used in India. It begins by defining socioeconomic classification as dividing the population based on social and economic status. It then outlines the origins and shortcomings of previous income-based systems. The modern system uses education and occupation of the chief wage earner to classify urban populations into eight categories (A1 to E2). For rural areas, it uses education and house type. Tables show the classification grids for urban and rural areas. Additional filters may be used for targeting super affluent segments. Estimated monthly household incomes are also provided for some urban socioeconomic classes.

1. Socio Economic
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Classification Grid of India
Paper presented by
Murli Mohan Rao
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2. What is socio economic classification?
• Refers to a method by which the general population is divided
into segments basis their social and economic status
• An effective socio economic classification system helps us in
achieving the following:
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• Targeting the right segments for a given product category, especially
in the launch phase
• Conducting marketing research activities with the most appropriate
consumers for a given category or brand
• Designing differential marketing strategies for different segments
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3. Origins of socio economic classification …
• Till mid 80’s, marketing research agencies and clients used the
income based classification method
• A set of bands were identified (which in itself varied between
companies and clients) and basis incomes stated by a
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respondent, they were classified into segments such as:
• Below poverty line
• Poor
• Lower middle class
• Middle class
• Upper middle class
• Affluent / rich
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4. Origins of socio economic classification (contd) …
• However, this method of classification had several shortcomings:
• Credibility issues …
• In India less than 2% of the earning population pay taxes … while this can be
largely attributed to financial constraints, it is also true that many people hide or
mask their actual incomes to escape tax. Hence, in a typical market research
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scenario, very few people actually reveal their true income
• Difficulty in tracking over a period of time …
• Due to inflation and other issues, the value of a particular salary band keeps on
changing. For e.g. the Rs. 10000 of today may be equal to Rs. 8000 of tomorrow
• Inability to indicate purchase potential …
• Merely having money may not necessarily be the best indicator of purchase
potential especially because many affluent people in India lead spartan lives 4

5. Origins of socio economic classification (contd) …
• Difficulty in comparing geographies …
• Incomes used to vary considerably by the geography that one belonged to given a
host of conditions … thereby making it impossible to compare and assess different
geographical locations
• Ignorance about actual income …
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• In case of blue collared workers and below, there is a great chance of people not
even knowing about their total income as their income is susceptible to vagaries …
i.e. daily income as against a regular salary, several days in a month where they
cannot find work, seasonal incomes, especially in businesses such as agriculture
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6. Origins of socio economic classification (contd) …
• Hence, there was a need for a:
• System that was based on credible information
• System that stood the test of time
• System that helped in reasonably determining purchase potential
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• System that was relevant across the length and breadth of the
country
• System that worked across various cross sections of the society
• With these objectives, industry stalwarts came together and
designed the modern socio economic classification system
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7. Modern socio economic classification …
• The modern socio economic classification method uses two
major variables to classify the population at large i.e. EDUCATION
and OCCUPATION of the chief wage earner
• The Chief Wage Earner is defined as the person who contributes the
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maximum to the total income of the family. This was relevant for the
Indian condition, as the main contributor to income usually had the
maximum say with regards to purchase decisions in the family
• Basis various combinations of these variables, consumers can be
classified into different socio economic classes …
A1, A2, B1, B2, C, D, E1 and E2 (in that order … from affluent to
deprived)
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8. Modern socio economic classification (contd) …
• It addresses many of the issues that otherwise existed with
income based classification:
• It now stands the test of time … as respondents evolve in financial and
educational status, their SEC changes accordingly
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• It is more credible … as most people will not have any issues in sharing their
educational and occupational background
• It is true for pan India … as it bypasses the vagaries that are otherwise
associated with income based classification, which is usually geography dependent
• It estimates purchase potential with reasonable accuracy … as it relies
on the two most relevant contributors to evolution in individuals i.e. education and 8
occupation

9. Modern socio economic classification (contd) …
• The modern socio economic classification system has two
versions:
• The urban version and The rural version
• The urban version uses variables as indicated in the previous
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section i.e. INCOME and OCCUPATION … the rural version on the
other hand uses EDUCATION and TYPE OF HOUSE, as occupations
can be almost similar across most Indian villages
• Pucca (means house with concrete and steel)
• Kaccha (means thatched houses or huts)
• Semi Pucca (means a mix of concrete and thatched houses)
• The next couple of slides detail each of these grids 9

10. Urban SEC grid …
I have below a list of educations and occupations … can you please indicate the
education levels and occupation of the person who contributes the maximum to
family income? (CWE – Chief Wage Earner or the person contributing the maximum
to family income … may not always be the highest earning member in the family
CWE Education Code CWE Occupation Code
Illiterate 1 Unskilled worker 1
Literate, but no formal schooling 2 Skilled worker 2
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School – upto 4th standard 3 Petty trader 3
School – 5th to 9th standard 4 Shop owner 4
SSC / HSC (10th – 12th) 5 Businessmen / None 5
Some college (incl. Dip) but not graduate 6 industrialist (no. of 1 – 9 6
Graduate – general – BA, BSc, Bcom 7 employees) 10 + 7
Graduate – profess – BE, MBBS, Btech 8 Self-employed professional * 8
Post Grad – general – MA, MSc, Mcom 9 Clerk/Salesman 9
Post Grad – general – ME, MD, MTech 10 Supervisory level 10
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11. Urban SEC grid (contd) …
Occupation of the Illiterate School School SSC / HSC Some Graduate / Graduate /
Chief Wage Earner up to – 5th to college Post Post
4th / 9th but not Graduate – Graduate –
literate graduate general professional
but no
formal
schooli
ng
Unskilled E2 E2 E1 D D D D
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Skilled workers E2 E1 D C C B2 B2
Petty traders E2 D D C C B2 B2
Shop owners D D C B2 B1 A2 A2
Businessme Non D C B2 B1 A2 A2 A1
n / 1–9 C B2 B2 B1 A2 A1 A1
Industrialists 10 + B1 B1 A2 A2 A1 A1 A1
with
Self employed D D D B2 B1 A2 A1
Clerical D D D C B2 B1 B1
Supervisory D D C C B2 B1 A2
Officers / Executives – C C C B2 B1 A2 A2
Junior
Officers / Executives – B1 B1 B1 B1 A2 A1 A1 11
Senior

12. Urban SEC Grid (contd) …
• The SEC grid too has its share of problems, as it clubs rich
Industrialists like Anil Ambani in the same bracket as a senior
corporate professional
• Hence, in such cases, wherein we need to focus on super
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affluent, we use additional filters (outside the SEC grid) in
research assignments … consumer ratings on these filters help us
in estimating their extent of affluence / evolution … for e.g.
• Number of international trips in a year (non business)
• Number of durables owned
• Area of residence
• Club membership
• Type of credit cards owned 12
• Kind of house and so on …

13. Urban SEC Grid (contd) …
• Interestingly however, agencies and clients over the years have
tried to get an income angle into the standard socio economic
classification matrix … while there have been many conservative
estimates, the following appears to be closest to the reality of
what I have observed and understood over the years
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• SEC A1+ (affluent, senior most staff, senior businessmen, CEOs …)
• 30000 + MHI (MHI means monthly household income from all sources)
• SEC A1 (educated, senior managers …)
• 20000+ MHI
• SEC B1
• 14000+ MHI
• SEC B2 13
• 10000+MHI

14. Rural SEC Grid …
EDUCATION OF CHIEF PUCCA HOUSE SEMI PUCCA KACCHA HOUSE
WAGE EARNER HOUSE
ILLITERATE R4 R4 R4
SELF LEARNING (NO R3 R4 R4
SCHOOL)
UPTO CLASS 4 R3 R3 R4
CLASS 4 – CLASS 9 R3 R3 R4
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SSC / HSC R2 R3 R3
COLLEGE R1 R2 R3
GRADUATION / POST R1 R2 R3
GRADUATION – GENERAL
GRADUATION / POST R1 R2 R3
GRADUATION -
PROFESSIONAL
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15. Other interesting links …
• http://www.bijapurkar.com/demanddrivers/dsds_calibrating.php
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