12-1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter 12 Income and Social Class CONSUMER BEHAVIOR, 9e Michael R. Solomon

12-2 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.

12-3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-4 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-5 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Wal-Mart Study on Attitudes Toward Money Brand aspirationals Price-sensitive affluents Value-priced shoppers

12-6 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-7 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-8 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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?

12-9 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Social Mobility Horizontal Mobility Upward Mobility Downward Mobility

12-11 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 12.1 American Class Structure

12-12 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-14 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Consumer View of Luxury Goods Luxury is functional Luxury is a reward Luxury is indulgence

12-15 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-16 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 12.2 Living Room Clusters and Social Class

12-17 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-18 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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”

12-19 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Parody Display Parody display: deliberately avoiding status symbols Examples: Ripped jeans Sports utility vehicles Red Wing boots

12-20 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

12-21 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.