Media Research Users Council (MRUC) has taken research a step ahead. In keeping with the problems that marketers face in context to the inadequacy that Socio-Economic Classification (SEC) pose, the agency has brought in the concept of Household Premiumness Index (HPI). To offer a micro level analysis of markets, it has also introduced IRS Local Area Potential (ILAP).
The man behind the concept of HPI, Ashok Das explained that SEC has often proved to be inadequate to understand TG and to uniquely identify premium households. Another problem it poses is that at the middle and the lower end the huge rural population is often missed out.
Marketers have time and again, taken a surrogate road, where they look at durable ownership or assign judgmental points, thus identifying the TG they want. But this method is not consistent and raises questions - hence the concept of HPI is required today.
He said, "HPI is a more direct classifier. It explains consumption behaviour better and it is a measure that enables sharper targeting." However, he pointed out that HPI should be seen in addition to SEC and not a replacement.
He informed that 'Premium' is something that is wanted by most but owned by few and the price of the same doesn't matter. Consequently, cheese can be more premium than washing machine or video camera more premium than cars. With this thought as the basic premise, the agency has considered 50 variables (including Durables, FMCGs, Services and Demographic measures) to arrive at the HPI.
Also, the concept has induced variables in a hierarchical order for a few cases like TV, Transportation and in cases like Kitchen durables and FMCGs, as a group. The HPI score from all sources adds up to a highest score of 1000, which reflects the value of the in terms of its products and services.
A few findings from these that would be of immediate interest to advertisers is that when the HPI score is seen in tandem with SEC, it is seen that R1 is close to B2, R2 is close to SEC D and R3 is close to SEC E, which in any other case are classes that wouldn't be taken in consideration for any media plan. The agency has put together a new economic pyramid based on this, which elaborates that the top end isn't well identified by SEC.
The other findings show states and even top 20 cities from an HPI perspective. "HPI will help in media choice and in some cases will even lead to change in the selection. We are working for the IRS database from the next round to include the HPI score as well. It adds another dimension to consumer classification and is a more direct and consumption oriented measure," concluded Das.
The second tool, ILAP provides demographic, penetration of product and service in potential areas like distribution, test marketing, below the line activity, growth etc with insights at micro area level for the products and service. ILAP will allow marketers to study profiles at a much smaller level of geography. "It divides the city into many parts and enables us to study them on various demographic and affluence patterns," said MRUC's N P Satyamurthy.
ILAP clubs ward into 'areas' and each area includes a sample size of 200. ILPA allows information at both the household and the individual level in various cities. In essence what this does is that the marketer can comprehend the dynamics of different cities much better and then make an informed choice of the business decision that they want to take for the city.