A general classification of marketing used to describe the population is the Socio-Economic Classification or the SEC. It was created in 1988 and ratified by the Market Research Society of India (MRSI).
According to the SEC, consumers were classified based on the two basic yet essential parameters. The occupation and education of the (CWE) Chief Wage Earner or the Head of the household were considered to determine socio-economic segmentation.
IMRB International was the original developer of this concept. It emerged as a way of understanding the market segments and consumer behaviour. In the mid-1980s, MRSI adopted it as a measure of socio-economic class. Today, the SEC is used widely as a market segmentation tool.
Traditionally, SEC was of two types: Urban Grid and Rural Grid. The Urban Indian households were classified based on two parameters- Education and Occupation.
The Chief Wage Earner’s (CWE) education status and occupation are taken into consideration while segmenting them into seven groups, i.e., A1 to E2. On the other hand, Rural SEC Grid uses education and the Type of House, i.e., pucca, semi-pucca, and kaccha. These measures of socio-economic class are further utilised to classify rural Indians into four groups, i.e., R1, R2, R3, and R4.
What is Socio-Economic Classification and Why It Matters in Retail Marketing
SEC (in marketing) is a standard way to group the population into socio-economic strata so brands can tailor product mix, communication and distribution.
For Example:
- SEC code A1 represents highly educated, high-income professionals and managers (premium purchase behaviour).
- SEC code B2 typically maps to educated, salaried middle-income households (value + aspirational buys).
- SEC code A2 often indicates successful entrepreneurs or business owners with higher disposable income than middle segments.
Knowing what is SEC code in a survey lets researchers tag respondents easily and derive segment-level insights (purchase frequency, preferred channels, price sensitivity). Internal links you may consider adding: Retail merchandising software and Store inventory management for deeper operational application.
What is SEC Code A1?
Sec Code A1 Denotes the Top Urban Socio-Economic Group.
Typical Attributes:
- Occupation: Senior executives, professionals, business owners with employees.
- Education: Graduate/post-graduate or professional qualifications.
- Income & Behaviour: High disposable income, premium brand orientation, willing to pay for quality and convenience, frequent use of modern retail & e-commerc
In retail planning, A1 areas are ideal for premium assortments, experiential merchandising and targeted luxury/product launches.
Understanding SEC Code B2 and A2: Differences and Implications
- SEC B2: middle-upper segment salaried employees, mid-level managers, small business owners; educated (high school to graduate). They balance value and aspiration; they respond well to value-plus promotions, mid-premium SKUs and financing/EMI offers.
- SEC A2: higher than B2 small entrepreneurs, established professionals; often higher purchasing power than B2, but more diffusion than A1.
- Implication: A2 stores may carry both premium and aspirational SKUs.
- Retail Tactic: tiered assortmentcore premium plus promotional bundles to drive trial.
How SEC Codes Are Used in Surveys and Market Research
SEC codes are collected in surveys by asking standard questions on the Chief Wage Earner’s occupation and education (urban) or education + house type (rural). Typical uses:
- Segmenting survey data to compare preferences across SEC groups.
- Media planning (which channels reach which SECs).
- Product positioning and pricing experiments.
- Sampling quotas to ensure representative panels.
In practice, a survey question like “What is the highest education of the household head?” + “What is his/her occupation?” maps the respondent to a specific SEC code for downstream analysis.
Overview of SEC Record India and Its Importance
SEC Record India (or regional SEC databases) provide area-level distributions of SEC codes useful for store location planning, trade area analysis and micro-segmentation. Retailers use SEC records to:
- Choose store formats and assortments for a catchment area.
- Forecast demand for premium vs mass products.
- Plan marketing spends and media targeting by locality.
Up-to-date SEC records improve new store decisions and help match inventory to local consumer profiles.
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Socio-Economic Classification (SEC) Grid
Below are concise, easy-to-scan tables that explain the Urban SEC Grid and Rural SEC Grid.
1. Urban SEC Grid:
In the rural SEC Grid, the Indian population is classified based on the education of the chief wage earner of the households into sections R1, R2, R3, and R4. Skilled Workers
| Skilled Workers | E2 | E1 | D | C | C | B2 | B2 |
| Petty traders | E2 | D | D | C | C | B1 | B2 |
| Shop owners | D | D | C | B2 | B1 | A2 | A2 |
| Entrepreneurs with no employees | D | C | B2 | B1 | A2 | A2 | A1 |
| Entrepreneurs with less than 10 employees | C | B2 | B2 | B1 | A2 | A2 | A1 |
| Entrepreneurs with more than 10 employees | B1 | B1 | A2 | A2 | A1 | A1 | A1 |
| Self-employed professionals | D | D | D | B | B | A | A |
| Clerical/Salesmen | D | D | D | C | B2 | B1 | B1 |
| Supervisory level | D | D | C | C | B2 | B1 | A2 |
| Officers/Executives-Junior | C | C | C | B2 | B1 | A2 | A2 |
| Officers/Executives-Mid/Senior | B1 | B1 | B1 | B1 | A2 | A1 | A1 |
In the Rural SEC Grid, R1 to R4 represent socioeconomic classes based on education and housing type, where R1 is the highest class and R4 is the lowest class.
The table above is relatively self-explanatory. The data is classified into three classes which include upper, middle, and lower classes.
From A1 to B1 is the upper class, the middle-class is in segments B2 and C, and D to E2 is termed lower class.
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2. Rural SEC Grid:
In the rural SEC Grid, the Indian population is classified based on the education of the chief wage earner of the households into sections R1, R2, R3, and R4.
| Education | Type of Houses | ||
| Pucca | Semi-Pucca | Kucha | |
| Illiterate | R4 | R4 | R4 |
| Literate but no formal school | R3 | R4 | R4 |
| Up to 4th standard | R3 | R3 | R4 |
| 5th to 9th standard | R3 | R3 | R4 |
| S.S.C./H.S.C. | R2 | R3 | R3 |
| Some College but not graduate | R1 | R2 | R3 |
| Graduate/Post Graduate (General) | R1 | R2 | R3 |
| Graduate/Post Graduate (Professional) | R1 | R2 | R3 |
In the above table, R1 denotes the Uppermost class while R4 is the lowest class.
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Limitations of Traditional Socio-Economic Classification in Retail
Despite the widespread use of the Socio-Economic Classification by the marketers, it does have weaknesses. It is entirely based on two parameters: education and occupation, which are not necessarily a true measure of income. It is not always the case that the higher the education the higher the income, and it is based on an assumption. A large number of people who are poorly educated earn more by doing business, skills based or even becoming an entrepreneur. Such a narrow vision might lead to poor targeting, improper product lines and stock planning may be ineffective in contemporary retail.
New Consumer Classification System (NCCS): An Advanced Approach
To address SEC’s limitations, the Market Research Users Council (MRUC) developed the NCCS.
Key Differences:
- Method: NCCS uses asset & durable ownership + household characteristics (e.g., number of working adults, education of housewife) rather than occupation alone.
- Indicators: Ownership of items (TV, refrigerator, vehicle, washing machine, etc.) gives a Household Premiumness Index (HPI).
- Advantages: Single unified grid for urban + rural, less subjective, better reflects purchasing power and lifestyle.
Implication for Retailers: NCCS often provides more accurate insights for product assortment, media planning and channel strategy, especially in fast-changing markets.
Importance for Stock Management & Practical Applications
Sec (And Nccs) Data Feeds Practical Retail Decisions. Examples:
- Assortment Planning: Regions dominated by SEC A1 households → stock premium SKUs, larger premium variants.
- Pricing & Promotions: B2/C areas → focus on value packs, discounts and EMI schemes.
- Shelf Allocation: Give more facings to high-velocity value SKUs in D/E stores; dedicate feature bays to premium launches in A1/A2 stores.
- Store Format Decisions: Smaller convenience formats in D/E dominated areas; experience-led larger stores in A1 zones.
- Media & Promo Targeting: Local radio/OOH vs digital/social depending on SEC mix.
- Route & Distribution Planning: Prioritise frequency of replenishment in high-sell-through areas to avoid stock-outs.
Using sec in marketing enables data-driven micro-targeting across these retail levers.
Related Read : Store Inventory Management
Practical Applications of SEC in Retail Marketing
Some of the ways retailers utilize SEC data include categorizing audiences, floor planning and tailoring marketing activities. It assists brands to know what type of products are likely to attract certain socio-economic groups as well as where promotions should be targeted. As an example, we can consider luxury product marketing to be deployed at the A1 zones and the prioritization of essential goods to be offered to B and C segments D and E. SEC also helps in the scheme of distribution routes, pricing approaches and regional consumer behavior pattern to push sales efficiency.
Advantages of Using Socio-Economic Classification in Targeted Retail Strategies
- Enables sharper consumer segmentation and better market understanding
- Helps in designing personalized promotions and targeted campaigns
- Optimizes product assortment and pricing for each SEC group
- Reduces inventory costs by aligning stock with demand potential
- Supports location-based marketing and new store expansion planning
These benefits make SEC a valuable tool for marketers aiming to enhance retail performance and customer engagement.
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Conclusion:
To solve the problems arising from the older SEC, the Market Research Users Council (MRUC) created a new classification termed NCCS, i.e., New Consumer Classification System. It helps marketers plan their media expenses efficiently. Marketers analyze and derive an idea of what consumers need and what they already have. It is primarily used to determine the purchasing power of the consumers.
The NCCS measures a Household Premiumness Index (HPI). HPI considers factors such as demographics, the highest education in the household, the number of working members, and the housewife’s education. It also takes into account the number of Consumer durables (pre-decided from a list of 11 items) owned by the family. The list of 11 things is Color TV, Personal Computer/Laptop, Electricity Connection, Air Conditioner, Ceiling Fan, LPG Stove, Two Wheeler, Refrigerator, Agricultural Land, Washing Machine, Car/Jeep/Van.
In the new system, there are 12 grades, starting from A1 to E3. The NCCS is beneficial in the following ways:
- More significant discrimination when compared with the current system
- A single system for both- urban and rural India
- No longer uses occupation. Thus, it’s less subjective
- The NCCS is simple. It’s easy to answer questions, saves time, and becomes easy to classify
There aren’t significant drawbacks to this system. However, minor changes in the system are bound to happen because “consumer durables” penetration changes faster than education or occupation.
Frequently Asked Questions
1. What is the socioeconomic class classification?
Socioeconomic class classification is a system used to segment people based on factors like income, education, occupation, and living standards to understand consumer behavior.
2. What are the key differences between Urban and Rural SEC Grids?
- Urban SEC Grid classifies households based on the education and occupation of the Chief Wage Earner (CWE).
- Rural SEC Grid classifies households based on the CWE’s education and the type of house (pucca, semi-pucca, or kaccha).
3. What is the New Consumer Classification System (NCCS)?
NCCS is an updated system replacing SEC, considering factors like household education, number of working members, and ownership of consumer durables to classify consumers more accurately.
4. What is a socio-economic group classification?
It is a method of dividing people into groups based on income, education, and occupation to understand their purchasing power and lifestyle.
5. What is R1, R2, R3, R4 in rural marketing?
In the Rural SEC Grid, R1 to R4 represent socioeconomic classes based on education and housing type, where R1 is the highest class and R4 is the lowest class.
6. What is SEC Code A1 and what does it represent in marketing?
SEC A1 denotes the top urban socio-economic segment—highly educated professionals, senior executives and business owners. In marketing, A1 areas are targeted with premium assortments, brand experiences and higher-priced SKUs.
7. How is SEC Code B2 different from A1 and A2?
B2 is a middle segment—salaried employees and junior managers with moderate purchasing power. Compared to A1/A2, B2 is more price-sensitive and responsive to value plus aspirational offers.
8. What role do SEC Codes play in surveys and market research?
SEC codes are used to quota and segment samples, compare behaviour across strata, and guide media planning and product positioning based on socio-economic profiles.
9. Where can I find an SEC Record India for market segmentation?
SEC distributions are often available through market research firms, government census supplements, trade associations and retail analytics providers. Retailers often purchase or licence area-level datasets for catchment analysis.
10. How accurate are SEC codes for consumer classification today?
SEC is a useful baseline but has limits occupation and education do not always equate to income or lifestyle. Combining SEC with NCCS, POS data and local surveys yields better accuracy.
