Chapter 13 Income and Social Class

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Chapter 13Income and Social Class
By Michael R. Solomon
Consumer Behavior Buying, Having, and Being Sixth
Edition
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Opening Vignette Phil

• How would you describe Phils social class?
• Upon learning that the Caldwells have money,
  what stereotypes did Phil have about families
  with high income?
• How did his experience with the Caldwell estate
  differ from his preconceptions?
• What lesson can we learn from Phils experience?

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Consumer Spendingand Economic Behavior

• Status Symbols
• Products that serve as markers of social class
• Income Patterns
• Womans Work
• More people participating in the labor force
• Mothers with children are the fastest growing
  segment of working people
• Yes, It Pays to Go to School!
• Education is expensive but pays off in the long
  run

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Luxury Items as Status Symbols

• Luxury items like diamond engagement rings are
  valued as status symbols the world over, as this
  Brazilian ad for a jeweler reminds us.

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Education A Higher Living Standard

• Education is strongly linked to a higher standard
  of living. People who earn a college degree are
  likely to earn much more during their lives than
  those who do not.

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To Spend or Not to Spend,That is the Question

• Discretionary Spending
• Discretionary income The money available to a
  household over and above that required for a
  comfortable standard of living
• Individual Attitudes Toward Money
• Atephobia Fear of being ruined
• Harpaxophobia Fear of being robbed
• Peniaphobia Fear of poverty
• Aurophobia Fear of gold

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Attitudes Toward Money
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Consumer Confidence

• Behavioral Economics (a.k.a. economic
  psychology)
• Concerned with the human side of economic
  decisions
• Consumer Confidence
• Consumers beliefs about what the future holds
• Overall savings rate influenced by
• (1) Individual consumers pessimism or optimism
  about their personal circumstances
• (2) World events
• (3) Cultural differences in attitudes toward
  saving

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Social Class

• A Universal Pecking Order
• Dominance-submission hierarchy Each individual
  in the hierarchy is submissive to those higher in
  the hierarchy and is dominant to those below them
  in the hierarchy
• Social Class Affects Access to Resources
• Marx believed that position in society was
  determined by ones relationship to the means of
  production.
• Weber believed that rankings of people depended
  on prestige (status groups), power (party) and
  wealth (class)
• Social Class Affects Taste and Lifestyles
• Social class The overall rank of people in a
  society
• Homogamy Tendency to marry into a similar social
  class

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Social Class Affects Leisure

• This ad implies that there are social class
  differences in leisure activities and preferred
  beverages.

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Social Class Affects Lifestyle
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Social Stratification

• Social Stratification
• Creation of artificial divisions in a society
• Achieved Versus Ascribed Status
• Achieved status Status earned through hard work
  or diligent study
• Ascribed status Status one is born with
• Status hierarchy Structure in a social group in
  which some members are better off than others

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Achieved versus Ascribed Wealth

• In our society, wealth is more likely to be
  earned than inherited.

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Class Structure

• Class Structure in the United States
• Warners six social classes
• (1) Upper Upper
• (2) Lower Upper
• (3) Upper Middle
• (4) Lower Middle
• (5) Upper Lower
• (6) Lower Lower
• Class Structure Around the World
• Every society has some type of hierarchical class
  structure

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American Class Structure
Figure 13.1
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High Status of Golf in Japan

• Golf is a high status game in Japan, where land
  is scarce and greens fees are extremely high.

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Targeting Social Class

• This ad for US Magazine uses a strategy that
  relies on cultural tastes of consumers in
  different social classes.

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Social Mobility

• Social Mobility
• The passage of individuals from one social class
  to another
• Horizontal Mobility
• Movement from one position to another roughly
  equivalent in social status
• Downward Mobility
• Movement from one position to another position
  that is lower in social status
• Upward Mobility
• Movement from one position to another position
  that is higher in social status
• Differential fertility Middle class reproduce
  fewer children than lower class

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Components of Social Class

• Occupational Prestige
• The worth of people based on what they do for a
  living
• Income
• Distribution of wealth is important to marketers
  because it determines buying power and market
  potential
• The Relationship Between Income and Social Class
• Social class is a better predictor of purchases
  that have symbolic aspects but low to moderate
  price
• Income is a better predictor of major
  expenditures that do not have status or symbolic
  aspects
• Social class and income are both needed to
  predict purchases of expensive, symbolic products

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Discussion Question

• Certain occupations hold prestige because of
  their worth to society. Others are prestigious
  because of power or income.
• Can you think of professions that are prestigious
  but not necessarily high in income?

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Measuring Social Class

• Problems with Measures of Social Class
• Dated measures which are no longer valid
• Increasing anonymity of society
• Reputational method Extensive interviews within
  a community to determine reputations of
  individuals
• Status crystallization Assesses the impact of
  inconsistency on the self and social behavior
• Overprivileged Income is 25 to 30 percent
  greater than ones social class median
• Underprivileged Income is 15 percent less than
  ones social class median
• Hierogamy Physically attractive women tend to
  marry up in social class

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Adapting to Social Status

• Lottery winners who experience sudden wealth may
  have trouble adapting to their new social status.

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Measuring Social Class (cont.)

• Problems with Social Class Segmentation A
  Summary
• They have ignored status inconsistency.
• They have ignored intergenerational mobility.
• They have ignored subjective social class.
• They have ignored consumers aspirations to
  change their class standing.
• The have ignored the social status of working
  wives.

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How Social ClassAffects Purchase Decisions

• Class Differences in Worldview
• A major social class difference involves the
  worldview of consumers
• Working class
• More focused on immediate needs than long-term
  goals
• Depend more heavily on relatives for emotional
  support
• Orient themselves toward community rather than
  the world
• More likely to be conservative and family
  oriented
• Affluenza Many well-off consumers seem to be
  stressed or unhappy despite their wealth

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Taste Cultures

• People in the upper classes are more likely to
  share tastes in the arts as well. They spend
  relatively more of their leisure time attending
  the symphony, museums, the theatre, and so on.

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Targeting the Poor and Rich

• Targeting the Poor
• Most marketers ignore this segment
• Targeting the Rich
• Segmenting consumers based on their attitudes
  toward luxury
• (1) Luxury is functional
• (2) Luxury is a reward
• (3) Luxury is indulgence

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Status Symbols

• Invidious distinction
• Use of products to inspire envy in others through
  a display of wealth or power
• Conspicuous consumption
• Peoples desire to provide prominent visible
  evidence of their ability to afford luxury goods
• The Billboard Wife
• The decorative role women play when showered with
  expensive clothes
• Leisure class People for whom productive work is
  taboo
• Conspicuous waste Using up resources in
  nonconstructive pursuits

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Status Symbols are Always in Flux

• At one time, having very pale skin was the mark
  of an upper social class because it indicated
  that the person did not have to work in the
  fields. Today, a suntan is equated with leisure
  time and consumers go to great lengths to get one
  naturally or with help.

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Status Symbols in Brazil

• Armored cars are a status symbol in Brazil. This
  ad for an armored-car maker uses an egg carton
  metaphor to illustrate the security it offers.

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Discussion Question

• The ad to the left insinuates that because of the
  status of a gift from Tiffany and Co., it really
  doesnt matter what is in the box.
• What other brands can you think of that have such
  status, that the name carries as much prestige as
  the product?

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Products as Status Symbols
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Status Symbols (cont.)

• Parody Display
• Sophisticated form of conspicuous consumption to
  seek status by deliberately avoiding status
  symbols

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Parody Display

• Ripped jeans (especially the pricey kind that
  come that way when you buy them) are an example
  of a parody display.