For over 60 years, the Standard Industrial Classification (SIC) system has served as a widely accepted structure for the analysis of businesses participating in the US economy. Marketers have long looked to the SIC system and its successor—the North American Industry Classification System (NAICS)—to simplify the processes behind identifying, segmenting, and targeting potential customers and prospects.

But what if you don't have a lot of marketing experience in an industry? Perhaps you are just starting out and need to quickly understand the makeup of your potential customers and prospects, and profile them.

Understanding SIC and NAICS can seem like a daunting task, but having a cursory comprehension of these systems can help you support various marketing activities.

SIC and NAICS Simplified

According to the SIC system, an industry consists of a group of establishments primarily engaged in producing or handling the same product or group of products, or rendering the same services.

The US Census Bureau assigns one code to each establishment based on its primary activity (generally the activity that generates the most revenue). Classification codes are typically derived from information that business establishments provide on surveys, census forms, and administrative records.

SIC is a four-digit, top-down code: The first two digits of the code sequence define the major industry sector, and the second two digits further refine the sub-classification of that sector.

NAICS is a newer, six-digit version of SIC, first put used in 1997. Though NAICS has largely replaced SIC, some areas of government and business still use SIC codes, so it is important to understand both classification systems.

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ABOUT THE AUTHOR
image of Mimi Miles

Mimi Miles is director of Marketing for AXIOS HR, provider of human resources services and HR outsourcing. She has 20+ years' experience in concepting, branding, and promoting products and services.

LinkedIn: Mimi Miles