Chapter 12 Income and Social Class CONSUMER BEHAVIOR, 9e Michael R. Solomon Dr. Rika Houston CSU-Los Angeles MKT 342: Consumer Behavior

Consumer Spending and Economic Behavior General economic conditions A person’s social class Products as status symbols Consumer schizophrenia?

Attitudes toward money Discretionary Income The money available to a household over and above what it requires to have a comfortable standard of living Attitudes toward money Tightwads Spendthrifts

Wal-Mart Study on Attitudes Toward Money Brand Aspirationals Price-Sensitive Affluents Value-Priced Shoppers

Factors affecting the overall savings rate: Consumer Confidence Behavioral economics Consumer confidence Factors affecting the overall savings rate: Pessimism/optimism World events Cultural differences

Social Class Structure “Haves” versus “have-nots” Determined by: Income Occupation Education Family background Universal pecking order relative standing in society Affects access to resources

Determinants of Social Class Structure Income Occupation Background Family Education

Social Stratification Creation of artificial divisions among people Distribution of scarce/valuable resources

Picking a Pecking Order Distribution of scarce/valuable resources Based upon relative standing, power, or control Status hierarchy Achieved Status (by hard work) Ascribed Status (by who they are)

Social Mobility Horizontal Mobility Upward Mobility Downward Mobility

Figure 12.1 American Class Structure

Components of Social Class Occupational prestige Stable over time 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 means than income

Predicting Consumer Behavior What predicts consumer behavior better? Social class or income? Well, it depends on the product! Social Class: Moderately priced, symbolic purchases Income: Major non-status/non-symbolic expenditures Social Class and Income: Expensive, symbolic products

Three Consumer Views of Luxury Goods Luxury is functional Luxury is a reward Luxury is indulgence

Upper- and upper-middle-class Middle-class Taste Cultures Differentiates people in terms of their aesthetic and intellectual preferences Upper- and upper-middle-class Museums and live theater Middle-class Camping and fishing

Codes in Taste Cultures 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

Status Symbols Status seeking (through consumption) is a global trend What matters is having more wealth/fame than others Lets others know that you have “made it”

Deliberately avoiding status symbols Examples: Parody Display Deliberately avoiding status symbols Examples: Ripped jeans Sports utility vehicles Red Wing boots

Problems with Social Class Segmentation Ignores status inconsistencies Ignores intergenerational mobility Ignores subjective social class Ignores consumers’ aspirations Ignores the social status of working wives

Chapter 12: Income & Social Class Key Concepts Discretionary income Attitudes toward money Consumer confidence Determinants of social class structure Social stratification Achieved vs. ascribed status Social mobility American class structure Components of social class structure Consumer views of luxury goods Taste cultures & codes of taste cultures Status symbols Parody display Problems with social class segmentation