Socio economic status in the digital age: Does this approach still work for Asia Pacific?

By John Smurthwaite  

Many marketing and research professionals believe that the use of SES (socio economic status) as an issue should be dead and buried. With the growing number of segmentation models being generated via digital path to purchase, social media, analytics and more direct niche targeting through an array of smart digital mobile devices, many will say that SES may seem an anachronism from the analogue past. So why are we reviving this topic once more?

The reality is that as the concept of SES still has strong support from many marketing professionals in developing parts of Asia Pacific, the concept still deserves some respect.
SES was introduced as a useful segmentation tool of broad socio-economic status and in its early days was fairly simple to calculate and very useful as a marketing discriminator providing added direction to basic demographics. The base census data, from which most SES classifications are derived, allowed for broad quantification of these socio-economic groupings.

INCOME?

In the pre-digital/pre-mobile age, marketers needed more than basic demographics to help target consumers. Personal or household income was (and still is) a critical segmentation discriminator for targeting and choosing effective media channels. Income data collection through surveys has always been fraught. Under/over reporting and non-response on income have always been issues that have limited the effectiveness of this important element.

SES was seen as a way around income data collection issues as SES was seen as a good proxy for income segmentation. Two simple questions to collect “education levels” and “occupation levels” combined provided a range of usually socio-economic points which greatly assisted marketers in targeting geographically and in media buying – especially mainstream media (TV, radio and print).

But as we know, in many countries the traditional approach died some time ago as education levels improved and occupations not only moved towards the service industry but became more complicated to measure. This meant that SEC was no longer quite as predictive and therefore became less useful for media targeting.

Also responses from surveys endeavouring to measure income levels continued to fall, meaning that marketers had poorer quality targeting options available than previously. This meant that neither the Income nor SES classification was as useful as needed for targeting consumers adequately.

Obtaining better quality income data has not improved. Responses on income declined for a number of reasons but primarily for security concerns. SES classifications needed to be revisited to find more useful segmentation guides.

WHAT ELSE?

Across APAC, countries more or less divide into two groups on this issue. One group of countries claims to be classless and hence say that SES is of little use although they may contradict their argument by collecting income data! In this first group are Japan, Korea, New Zealand and Australia plus socialist countries such as China.

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