Consumers Rule

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Income and Social Class Chapter 13
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Consumer Spending and Economic Behavior

• General economic conditions affect the way we
  allocate our money
• A persons social class impacts what he/she does
  with money and on how consumption choices reflect
  ones place in society
• Products as status symbols

3
Income Patterns

• The average Americans standard of living
  continues to improve due to
• An increase of women in the workforce
• Increases in educational attainment

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Discretionary Spending

• Discretionary income
• Americans spend a much larger share of budget on
  shelter and transportation, and less on food and
  apparel
• Households are spending more now on entertainment
  and education

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Individual Attitudes Toward Money

• Seven distinct types of money personalities (see
  Table 13.1)
• Hunter
• Gatherer
• Protector
• Splurger
• Striver
• Nester
• Idealist

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Individual Attitudes Toward Money (Contd)

• Money success/failure, social acceptability,
  security, love, or freedom
• Money-related disorders
• Atephobia
• Harpaxophobia
• Peniaphobia
• Aurophobia

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Consumer Confidence

• Behavioral economics/economic psychology
• Consumer confidence the extent to which people
  are optimistic or pessimistic about the future
  health of the economy
• Influences how much discretionary money we will
  pump into the economy
• Overall savings rate is affected by
• Pessimism/optimism about personal circumstances
• World events
• Cultural differences in attitudes toward savings

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Social Class

• Haves vs. have-nots
• Social class is determined by income, family
  background, and occupation
• Where we occupy in the social structure
  determines how much we spend and how we spend it
• 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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A Universal Pecking Order

• Dominance-submission hierarchy
• Pecking order relative standing in society
• Standing determines access to resources
• Education, housing, consumer goods
• We try to improve our standing by moving up
  social order whenever possible
• Marketing strategies focus on this desire to move
  up in standing

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Social Class Affects Access to Resources

• Divisions of society in terms of social and
  economic resources
• Marx position in society ones relationship to
  means of production
• Control of resources vs. dependence on own labor
  for survival
• Webers rankings status groups, party, and class

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Social Class Affects Tastes and Lifestyles

• Social class overall rank of people in society
• Those in same social class work in similar
  occupations, have similar lifestyles, socialize
  with one another, share ideas/values, marry each
  other (homogamy)
• Social class is a matter of what we do with our
  money and how we define our roles in society

12
Social Stratification

• Social arrangements in which some members get
  more resources than others by virtue of relative
  standing, power, or control in the group
• Artificial divisions in a society
• Scarce/valuable resources are distributed
  unequally to status positions
• Achieved vs. ascribed status
• Status hierarchy

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Class Structure in the U.S.
Figure 13.1
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Class Structure Around the World

• Rise of Chinese middle class
• Nikes new brand presence there
• Japan as a status- and brand-conscious society
• Single, working women spending on luxury goods
• Major retailers/brands are coming to
  Middle-Eastern countries, where Arab women enjoy
  shopping with their families/friends
• Englands rigid class structure still exists, but
  the dominance of its aristocracy is fading
• Marketers are targeting chavs interest in
  fashion, food, and gadgets

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The Rise of Mass Class

• Income distribution
• Affordable luxuries within reach of many
  consumers
• Rising incomes decreasing prices
• Marketers cater to mass class with high-quality
  products

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Social Mobility

• The passage of individuals from one social class
  to another
• Horizontal mobility
• Downward mobility
• Upward mobility
• Differential fertility
• Cinderella fantasy

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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 is not distributed evenly across classes
  (top fifth controls 75 of all assets)
• Income per se is not often a good indicator of
  social class its the way money is spent and not
  how much is spent

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Discussion

• Compile a list of occupations and ask a sample of
  students in a variety of majors (both business
  and nonbusiness) to rank the prestige of these
  jobs
• Can you detect any differences in these rankings
  as a function of students majors?

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Relationship Between Income and Social Class

• Money and class are by no means synonymous
• Additional wage earners are often of lower status
• Extra money earned is often not pooled toward the
  common good of the family
• More money tends to result in buying more of the
  usual rather than upgrading to higher-status
  products
• 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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Measuring Social Class

• Social class is a complex and difficult concept
  to measure
• Raw education and income measures work as well
  as composite status measures
• Americans have little difficulty placing
  themselves in working/middle classes
• Blue-collar workers with high-prestige jobs still
  view themselves as working class
• Class is very subjective its meaning speaks to
  self-identity as well as economic well-being

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Problems with Social Class Measures

• Most measures of social class in the past had
  trouble accounting for two-income families, young
  singles living alone, or households headed by
  women
• Increasing anonymity of our society
• Reputational method is virtually impossible to
  implement today (can use demographic data and
  subjective impressions)
• Status crystallization
• Impact of inconsistency on the self and social
  behavior

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Problems with Social Class Measures (Contd)

• Overprivileged vs. underprivileged conditions
  of social class
• Problems associated with lottery winners
• Traditional issues of hierogamy
• Women tend to marry up more than men do
• Sexual appeal for economic resources
• Many women now contribute equally to familys
  well-being
• Potential spouses social class as product
  attribute

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Problems with Social Class Segmentation A Summary

• Marketers tend to ignore
• Status inconsistency
• Intergenerational mobility
• Subjective social class
• Consumers aspirations to change class standing
• Social status of working wives

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How Social Class Influences Purchase Decisions

• Consumers perceive different products/ stores as
  appropriate for certain social classes
• Working class sturdy, comfortable, and familiar
  products
• Affluent people appearance/body image
• Diet foods/drinks

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Class Differences in Worldview

• World of working class is intimate and
  constricted
• Immediate needs dictate buying behavior
• Dependence on relatives/local community
• More likely to be conservative/family-oriented
• Maintaining appearance of home/property
• Dont feel high-status lifestyle is worth effort
• Affluenza and pressure to maintain family status
• Discussion Do you believe affluenza is a
  problem among Americans your age?

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Taste Cultures

• Differentiates people in terms of their aesthetic
  and intellectual preferences
• Distinguishes consumption choices among social
  classes
• Groupings based on shared tastes in literature,
  art, music, leisure, and home decoration

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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
• Marketing appeals constructed with class
  differences in mind will result in quite
  different messages
• Restricted codes vs. elaborated codes

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Cultural Capital

• Set of distinctive and socially rare tastes and
  practices
• Refined behavior that admits a person into the
  realm of the upper class
• Etiquette lessons and debutante balls
• Taste as a habitus that causes consumption
  preferences to cluster together

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Targeting the Poor

• Poor people have the same basic needs as everyone
  else
• Staples/food, health care, rent
• On average, residents of poor neighborhoods must
  travel more to have same access to supermarkets,
  banks, etc.
• La Curacao retail stores in CA

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Targeting the Rich

• Many marketers try to target affluent, upscale
  markets
• Affluent consumers interests/spending priorities
  are affected by where they got their money, how
  they got it, and how long they have had it
• Luxury groups
• Luxury is functional
• Luxury is a reward
• Luxury is indulgence

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Old Money

• These types of families live on inherited funds
• Family history of public service and philanthropy
• Rockefeller University, Whitney Museum
• Distinctions made by ancestry and lineage

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The Noveau Riches

• The working wealthyrags to riches
• Newcomers to the world of wealth
• Status anxiety leading to symbolic
  self-completion
• Advertising emphasizes looking the part

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Status Symbols

• Keeping up with the Joneses/Satos
• Often what matters is that you have more
  wealth/fame than others
• Status-seeking motivation to obtain products
  that will let others know that you have made it
• Status-symbol products vary across cultures and
  locales

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Conspicuous Consumption

• Peoples desire to provide prominent visible
  evidence of their ability to afford luxury goods
• Invidious distinction
• Robber barons

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The Trophy Wife

• Leisure class and idle rich
• Wives of wealthy husbands as walking billboards
• Potlatch of Kwakiutl Indians
• Modern-day lavish parties/weddings
• Conspicuous waste

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Discussion

• Thorstein Veblen argued that women were often
  used as trophy wives to display their husbands
  wealth
• Is this argument still valid today?

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Parody Display

• Deliberately avoiding status symbols
• To seek status by mocking it