Household Potential Index (HPI)

Something that is “wanted by many” but “consumed by few” is our definition of Premiumness. Simply put, premuimness is defined as the inverse of penetration. For example, 41 per cent of all homes in India have Television. Only 2 per cent have a flat TV. Hence, homes with a flat TV is considered to be “premium” by HPI measure.

The concept of HPI allocates high scores for less penetrated product categories and services. On the other hand, lower scores to higher penetrated categories or mass consumed categories. Thereby, HPI eliminates judgmental factors and is therefore a more systematic approach, making it applicable across all segments of households, from the “super affluent” to the so-called “desperates”. HPI is a holistic measure of potential, and not just based on few durables.

In order to ensure that a specific ownership of a durable or consumption of a particular category of FMCG or services does not result in very high scores, 50 different measures have been incorporated into the HPI system.

HPI considers a wide spectrum of categories from Durables, FMCGs, Services, which are covered in IRS and scores are assigned in a scientific and automated method to products owned, consumed/ used. In addition to product categories, HPI also takes into account the key differentiating household demographics, such as, Highest Education in the household, Number of working members, education of the housewife, area occupied by the household vis-à-vis the number of people residing etc.

Look at the table-1 below. Going by the definition of SEC, A1 should be the most affluent class. However, it is not the reality. As per HPI, if we look at the top 1 per cent of consuming homes in India, only 39 per cent is from the uppermost SEC A1 and the remaining 61 per cent is from other SECs in Urban and Rural segments.

Conversely speaking, 61 per cent of SEC A1 does not feature in the Top 1 percent of the consuming households.