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

Opening Vignette: Phil How would you describe Phil’s social class? Upon learning that the Caldwell’s “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 Phil’s experience?

Consumer Spending and Economic Behavior Status Symbols: Products that serve as markers of social class Income Patterns Woman’s 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

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.

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.

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

Attitudes Toward Money

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

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 one’s 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

Social Class Affects Leisure This ad implies that there are social class differences in leisure activities and preferred beverages.

Social Class Affects Lifestyle

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

Achieved versus Ascribed Wealth In our society, wealth is more likely to be earned than inherited.

Class Structure Class Structure in the United States: Warner’s 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

American Class Structure Figure 13.1

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

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

Social Mobility Social Mobility: Horizontal 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

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

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?

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 one’s social class median Underprivileged: Income is 15 percent less than one’s social class median Hierogamy: Physically attractive women tend to “marry up” in social class

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

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.

How Social Class Affects 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

Taste Cultures and Codes Differentiates people in terms of aesthetic and intellectual preferences Codes: The ways meanings are expressed and interpreted by consumers Restricted codes: Focus on the content of objects, not the relationship between objects (dominant among working class) Elaborated codes: More complex and depend on a sophisticated world view (used by middle and upper class) Economic Capital: Financial Resources Social Capital: Organizational affiliations and networks

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.

Cultural Capital Cultural Capital: Habitus: Grid-group Theory: A set of distinctive and socially rare tastes and practices Habitus: The way we classify experiences as a result of our socialization processes Grid-group Theory: Model developed by anthropologist, Mary Douglas, that distinguishes between a person’s relationship to his or her own social group and to the general social system

Theoretically Based Lifestyle Model Figure 13.4

Targeting the Poor and Rich 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

Old and New Money Old Money: The Nouveau Riches: Families which live primarily on inherited funds The Nouveau Riches: Consumers who have achieved extreme wealth and are relatively recent members of upper class Status anxiety: Concern that one is being consistent with the cultural environment of being wealthy Symbolic self-completion: Excessive flamboyant consumption to make up for insecurity

Status Symbols Invidious distinction: Conspicuous consumption: Use of products to inspire envy in others through a display of wealth or power Conspicuous consumption: People’s 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

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.”

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.

Discussion Question The ad to the left insinuates that because of the status of a gift from Tiffany and Co., it really doesn’t 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?

Products as Status Symbols

Status Symbols (cont.) Parody Display: Sophisticated form of conspicuous consumption to seek status by deliberately avoiding status symbols

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