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Chapter 12

Income and Social Class

CONSUMER BEHAVIOR, 9eMichael R. Solomon

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Chapter Objectives

When you finish this chapter, you should understand why:

• Both personal and social conditions influence how we spend our money.

• We group consumers into social classes that say a lot about where they stand in society.

• A person’s desire to make a statement about his social class, or the class to which he hopes to belong, influences the products he likes and dislikes.

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Consumer Spending and Economic Behavior

• General economic conditions affect the way we allocate our money

• A person’s social class impacts what he/she does with money and how consumption choices reflect one’s place in society

• Products can be status symbols

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Discretionary Income

• The money available to a household over and above what it requires to have a comfortable standard of living

• How we spend varies based in part on our attitudes toward money

• Tightwads

• Spendthrifts

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Wal-Mart Study onAttitudes Toward Money

Brand aspirationals

Price-sensitive affluents

Value-priced shoppers

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Consumer Confidence

• Behavioral economics

• Consumer confidence

• Factors affecting the overall savings rate:

• Pessimism/optimism about personal circumstances

• World events

• Cultural differences in attitudes toward savings

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Social Class Structure

• “Haves” versus “have-nots”

• Social class is determined by income, family background, and occupation

• Universal pecking order: relative standing in society

• Social class affects access to resources

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Discussion

• How do you assign people to social classes, or do you at all?

• What consumption cues do you use (e.g., clothing, speech, cars, etc.) to determine social standing?

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Picking a Pecking Order

• Social stratification

• Artificial divisions in a society

• Scarce/valuable resources are distributed unequally to status positions

• Achieved versus ascribed status

• Status hierarchy

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Social Mobility

Horizontal Mobility

Upward Mobility

Downward Mobility

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Figure 12.1 American Class Structure

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Components of Social Class

• Occupational prestige

• Is stable over time and similar across cultures

• Single best indicator of social class

• Income

• Wealth not distributed evenly across classes (top fifth controls 75% of all assets)

• How money is spent is more influential on class than income

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Predicting Consumer Behavior

• Whether social class or income is a better predictor of a consumer’s behavior depends on the type of product:

• Social class is better predictor of lower to moderately priced symbolic purchases

• Income is better predictor of major nonstatus/nonsymbolic expenditures

• Need both social class and income to predict expensive, symbolic products

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Consumer View of Luxury Goods

• Luxury is functional

• Luxury is a reward

• Luxury is indulgence

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Taste Cultures

• Taste culture: differentiates people in terms of their aesthetic and intellectual preferences

• Upper- and upper-middle-class: more likely to visit museums and attend live theater

• Middle-class: more likely to go camping and fishing

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Figure 12.2 Living Room Clusters and Social Class

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Taste Cultures

• Codes: the way consumers express and interpret meanings

• Allows marketers to communicate to markets using concepts and terms consumers are most likely to understand and appreciate

• Restricted codes: focus on the content of objects, not on relationships among objects

• Elaborated codes: depend on a more sophisticated worldview

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Status Symbols

• What matters is having more wealth/fame than others

• Status-seeking: motivation to obtain products that will let others know that you have “made it”

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Parody Display

• Parody display: deliberately avoiding status symbols

• Examples:

• Ripped jeans

• Sports utility vehicles

• Red Wing boots

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Problems with Social Class Segmentation

• Ignores status inconsistencies

• Ignores intergenerational mobility

• Ignores subjective social class

• Ignores consumers’ aspirations to change class standing

• Ignores the social status of working wives

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Chapter Summary

• Both personal and social conditions influence how we spend our money.

• We group consumers into social classes that say a lot about where they stand in society.

• A person’s desire to make a statement about social class influences the products he likes and dislikes.