7 comments on “Living Standards Measurement (LSM)

  1. Great summary of both the concepts. I have an exam in an hour and the entire concept is now clear to me. Thanks a lot guys.

  2. Wouldn’t it be better if we use LSM to gauge customers inclination to buy a product and SEC to check his ability to buy the product and hence come with a clearer Demand expectation

    • Agreed. That would be an ideal case scenario.

      But the application of LSM or SEC is also dependent on the kind of product/service being offered. So, for instance, if it is a basic need – like food and clothing, then we need to merely consider the buying capacity of the consumer. While on the other hand, if it is a convenience/luxury, like branded clothes, and burgers (vs clothes and food), then you need LSM to determine how much the customer is inclined to increase his spend on satisfying the same need. LSM Standard will tell you whether the customer will upgrade to a level of branded clothes such as Allen Solly or Van Heusen, or whether he will upgrade even further to the Armanis of the world.

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