Consumer Behavior, Ninth Edition Schiffman & Kanuk Copyright 2007 by Prentice Hall Chapter 11 Social Class and Consumer Behavior

11 - 2Copyright 2007 by Prentice Hall Chapter Outline What Ss Social Class? The Measurement of Social Class Geodemographic Clustering The Affluent Consumer The Middle Class Consumer The Working Class Selected Consumer Behavior Applications of Social Class

11 - 3Copyright 2007 by Prentice Hall Social Class The division of members of a society into a hierarchy of distinct status classes, so that members of each class have either higher or lower status than members of other classes.

11 - 4Copyright 2007 by Prentice Hall Status Consumption Consumers endeavor to increase their social standing through consumption Very important for luxury goods Is different from conspicuous consumption

11 - 5Copyright 2007 by Prentice Hall Discussion Question Why is status consumption important for some consumers? How can marketers promote increased status consumption?

11 - 6Copyright 2007 by Prentice Hall Social Class Is Hierarchal Status is frequently thought of as the relative rankings of members of each social class

11 - 7Copyright 2007 by Prentice Hall Table 11.2 Percent Distribution of Five- Category Social-Class Measure SOCIAL CLASSESPERCENTAGE Upper 4.3 Upper-middle 13.8 Middle 32.8 Working 32.3 Lower 16.8 Total percentage100.0

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11 - 9Copyright 2007 by Prentice Hall Social Class Measurement Subjective Measures –individuals are asked to estimate their own social-class positions Reputational Measures –informants make judgments concerning the social-class membership of others within the community Objective Measures –individuals answer specific socioeconomic questions and then are categorized according to answers

Copyright 2007 by Prentice Hall Objective Measures Single-variable indexes –Occupation –Education –Income –Other Variables Composite-variable indexes –Index of Status Characteristics –Socioeconomic Status Score

Copyright 2007 by Prentice Hall Discussion Question What are the advantages to a marketer using the objective method to measure social class? When would the subjective or reputational method be preferred?

Copyright 2007 by Prentice Hall Index of Status Characteristics (ISC) A composite measure of social class that combines occupation, source of income (not amount), house type/dwelling area into a single weighted index of social class standing.

Copyright 2007 by Prentice Hall Socioeconomic Status Score (SES) A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing.

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Copyright 2007 by Prentice Hall Occupational ranking in terms of honesty and ethical standards - Figure 11-2

Copyright 2007 by Prentice Hall Table 11.7 Typical Categories Used for Assessing Amount or Source of Income Amount Under $25,000/year $25,000-$49,999 $50,000-$74,999 $75,000-$99,999 $100,000-$124,999 $125,000-$149,999 $150,000-$174,999 $175,000-$199,999 $200,000 and over Source Public welfare Private financial assistance Wages (hourly) Salary (yearly) Profits or fees Earned wealth Inherited wealth, interest, dividends, royalties

Copyright 2007 by Prentice Hall Geodemographic Clusters A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods) and demographic variables (e.g., income, occupation) to identify target markets.

Copyright 2007 by Prentice Hall PRIZM (Potential Rating Index by Zip Market) A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed.

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Copyright 2007 by Prentice Hall The Affluent Consumer Especially attractive target to marketers Growing number of households can be classified as “mass affluent” with incomes of at least $75,000 Some researchers are defining affluent to include lifestyle and psychographic factors in addition to income Have different medial habits than the general population

Copyright 2007 by Prentice Hall Most large banks offer “private banking” services to their most affluent customers. weblink

Copyright 2007 by Prentice Hall Three segments of affluent consumers’ average household expenditures Figure 11-5

Copyright 2007 by Prentice Hall What Is the Middle Class? The “middle” 50 percent of household incomes - households earning between $22,500 and $80,000 Households made up of college-educated adults who use computers, and are involved in children’s education Lower-middle to middle-middle based on income, education, and occupation (this view does NOT include upper-middle, which is considered affluent)

Copyright 2007 by Prentice Hall The Middle Class There is evidence that the middle class is slowly disappearing in the U.S. Growth of middle class in some Asian and Eastern European countries Many companies offering luxury to the masses with near-luxury models and goods

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Copyright 2007 by Prentice Hall The Working Class? Households earning $40,000 or less control more than 30 percent of the total income in the U.S. These consumers tend to be more brand loyal than wealthier consumers.

Copyright 2007 by Prentice Hall Discussion Question What types of products are targeted to the working class? What issues must marketers consider when targeting their ads to the working class?

Copyright 2007 by Prentice Hall The U.S. Census is an excellent source of data on different economic groups. weblink

Copyright 2007 by Prentice Hall The Techno Class Having competency with technology Those without are referred to as “technologically underclassed” Parents are seeking computer exposure for their children Geeks now viewed as friendly and fun

Copyright 2007 by Prentice Hall Consumer Behavior and Social Class Clothing, Fashion, and Shopping The Pursuit of Leisure Saving, Spending, and Credit Social Class and Communication

Copyright 2007 by Prentice Hall Preferences of Americans for 100 Arts, Media and Leisure Pursuits Figure 11-8

Copyright 2007 by Prentice Hall Class Situations, Self-Perceptions, and Financial Orientations Figure 11-9