1. Chapter 12 Social Class and Lifestyles
CONSUMER BEHAVIOR, 10e Michael R. Solomon
Chapter 12 discusses how our income and social class affect our lifestyle choices and consumer behavior.

2. 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.

3. Chapter Objectives (continued)
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.
Consumers’ lifestyles are key to many marketing strategies.

4. Objective 1: Both Personal and Social conditions influence how we spend our money
The field of behavioral economics studies how consumers decide what to do with their money.
Consumer confidence—the state of mind consumers have about their own personal situation, as well as their feelings about their overall economic prospects—
helps to determine whether they will purchase goods and services, take on debt, or save their money.

5. The Overconfident Consumer
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The Overconfident Consumer
1. Do you neglect to think about where the money's coming from before you buy something?
2. Do you make large, spontaneous purchases?
3. Do you use your credit limit as a guide for your spending?
We all try to be optimistic about the future. But overconfident consumers wear rose-colored glasses when it comes to how they'll pay tomorrow for what they buy today. They have little or no savings and they often over­estimate future earnings based on credit limits. An overconfident consumer is more likely to buy big-ticket items.
Advice: Don't push your credit limit. Save for big purchases, and build up an emergency fund.

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The Status Seeker
1. Do you frequently compare your belongings to those of others? 2. Do you have to have the latest "in" thing? 3. Do you feel bad when you can't have what others have? Status seekers are willing to go into debt to achieve a desired standard of living. And if their income falls, they can't ratchet back their lifestyle. They always have to own the latest, greatest stuff, and they figure that if their neighbors have a BMW, then they deserve one, too. The biggest problem with keeping up with the Joneses is that "people tend to compare themselves to the wrong Joneses,“ Advice: Adopt a lifestyle within your means. And if you strive for more, acquire it through savings, not debt.

7. The Smart Spender
Smart shoppers can easily differentiate between needs and wants, and mostly stick to buying what they need.
Though they may splurge occasionally, they comparison shop whenever possible to get the best price.
Smart shoppers also have their wits about them regarding the long- term effects of their purchases. They don't buy if they don’t know where the money will come from and it follows that they pay off their debt monthly. Smart shoppers stockpile their extra cash in savings so they have a cushion for unexpected expenses.
Advice: Keep up the good work! And try to pass along your good habits to a friend.

8. People who occupy different positions in society consume in different ways, which helps create a unique lifestyle.
Income patterns are being shaped by a shift in women’s roles toward higher paying occupations and increases in educational attainment.

9. To spend or not to spend
Consumer demand for goods depends on their ability and willingness to buy.
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 – hate to part with their money
Spendthrifts – enjoy spending and buying
Tightwads hate to part with their money and actually experience emotional pain when they make purchases. Spendthrifts enjoy nothing more than spending. Frugality seems to be driven by a pleasure of saving, compared to tightwaddism which is driving by a pain of paying. Consumer research on attitudes toward money found eight segments. These ranged from crash dieters who would try to cut out all nonessential spending until things improved to vultures who circle the market looking for bargains.

10. Saatchi Identified 8 consumer segments
Crash Dieters (26%) cut out all nonessential spending
Scrimpers (13%) are reluctant to make sacrifices so they trade down to less expensive brands but buy what they like
Abstainers (15%) postpone big purchases but look to buy on credit and pay later
Balancers (9%) sacrifice purchases in some categories in order to buy things in other categories
Treaters (12%) know they have to cut back but have trouble budgeting so they reward themselves with small treats when they do economize
Justifiers (12%) are willing to spend but need a reason
Ostriches (9%) are in denial
Vultures (4%) circle the market and snap up bargains

11. What does money mean? Money is often equated with
success
failure
social acceptability
security
love
freedom and sex appeal
Clinical conditions associated with money include
atephobia (fear of being ruined)
harpaxophobia (fear of becoming a victim of robbers)
peniaphobia (fear of poverty)
aurophobia (fear of gold).

12. Objective 2: Social Class Structure
We group consumers into social classes that say a lot about where they stand in society.
Social Class - A consumer’s standing in society, determined by
education
income
family background
occupation
All groups make distinctions among members in terms of superiority, power and access to valued resources.

13. The place one occupies in the social structure in an important determinant of how much money you spend, and how it is spent.

16. Social Class Structure
Universal pecking order: relative standing in society
The tendency to marry within one’s own social class is known as homogamy.
“Haves” versus “have-nots”
Karl Marx – “Haves” control the resources and the means of production, and the “have nots” provide the labor
Karl Marx – Haves control the resources and the means of production, and the have nots provide the labor
We use the term social class to describe the overall rank of people in a society. People who belong to the same social class have approximately equal social standing in the community. They work in similar occupations and tend to have similar lifestyles. We tend to marry people in a similar social class to ours, a tendency that sociologists call homogamy.

17. Picking a Pecking Order
Virtually all groups make distinctions among members in terms of relative superiority, power, and access to valued resources.
This social stratification creates a status hierarchy where consumers prefer some goods to others.

18. Sometimes we are able to pass from one class to another - Social Mobility
Horizontal Mobility
when a person moves from one position to another that is roughly equal
Upward Mobility
moving to a higher status
Social mobility refers to the passage of individuals from one social class to another.
Horizontal mobility occurs when a person moves from one position to another that is roughly equal. For instance, when a nurse becomes an elementary school teacher, horizontal mobility has occurred.
Upward mobility means moving to a higher status.
Downward movement is losing social status. Overall though most people remain in their social class. The improvements people make are not sufficient to shift them into a whole other class. The exception is when someone marries someone who is much richer.
Downward Mobility
losing social status

19. For Reflection
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?

20. Objective 3: Social Class and Consumer Behavior
Although income is an important indicator of social class, it is getting harder to identify
Factors such as place of residence, cultural interests, and worldview also determine social class.
As income distributions change around the world, it is getting more difficult to distinguish among members of social classes—
many products succeed because they appeal to a newly emerging group marketers call the mass class (people with incomes high enough to purchase luxury items, at least on a small scale).
It’s becoming more difficult to identify social class from product choices. Think about how many college women you know who have a Coach purse, but eat ramen noodles for dinner.

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22. Objective 3: Social Class and Consumer Behavior
Our desire to make a statement about our social class, or the class to which they hope to belong, influences the products we like and dislike.
It is getting more difficult to link brands or stores with a specific class.
Global consumers now enjoy a level of purchasing power affording them high-quality products
Known as the mass class consumer segment.
Wealthy families are proud of good deals they find at mass discount stores.
It’s becoming more difficult to identify social class from product choices. Think about how many college women you know who have a Coach purse, but eat ramen noodles for dinner.

23. Getting harder to link brands and stores with a specific class

24. Beyonce and Jay Z at walmart
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Beyonce and Jay Z at walmart

25. 2 major Components of Social Class
Occupational prestige
Occupation linked to income
Linked to use of leisure time, aesthetic preferences, political orient
Of interest to marketers because it determines which groups have the greatest buying power and market potential
Income
Not a good indicator of social class ($100K garbage collector)
How money is spent vs. how much we spend is more important to marketers
Social class includes multiple determining factors but two highly influential factors are occupational prestige and income. Occupation is considered the best indicator of social class because it is strongly linked to use of leisure time, allocation of family resources, aesthetic preferences, and political orientation. The distribution of wealth determines which groups have the greatest buying power and market potential.
Two major components of social class are occupation and income.
Occupational prestige is a way to evaluate the worth of a person.
A person’s occupation is strongly linked to his or her use of leisure time, allocation of family resources, aesthetic preferences, and political orientation so many social scientists consider it to be the single best indicator of social class.
The distribution of wealth is of interest to marketers because it determines which groups have the greatest buying power and market potential.
Income per se is not a very good indicator of social class (e.g., the blue-collar worker who earns $90,000 a year working an industrial crane). The way we spend our money is more telling than how much we spend.

26. For reflection
Which do you think is more important – occupation or income?
Give examples of prestigious occupations that do not have corresponding wealth and high-paying jobs that do not have much prestige

27. Consumer View of Luxury Goods
Consumers divided into three groups based on their attitudes toward luxury.
Luxury is functional (they use money to buy things that will last and have enduring value).
Luxury is a reward (they use money to buy things that say “I made it!”).
Luxury is an indulgence (they use money to buy lavish things).
SBI divides consumers into three groups based on their attitudes toward luxury.
Consumers who use their money to buy things that will last and have enduring value view luxury as functional. Those who use luxury goods to say “I’ve made it” view luxury as a reward. Those who seek out luxury goods in order to illustrate their individuality take an emotional approach to luxury spending and view luxury as indulgence.

28. Old Money vs. Nouveau Riche
Old money families live primarily on inherited funds and tend to be discreet about exhibiting wealth.
The working wealthy or nouveau riche recently achieved wealth and do not know how to spend it.
Old money families live primarily on inherited funds and tend to be discreet about exhibiting wealth.
Old money consumers distinguish among themselves in terms of ancestry and lineage rather than wealth and are secure in their status.
The working wealthy or nouveau riche recently achieved wealth and do not know how to spend it.
Many suffer status anxiety so they monitor the cultural environment to make sure they are consuming the right goods and services.
Their flamboyant consumption is an example of symbolic self-completion because they display class symbols to make up for lack of assurance about correct behaviors.

29. Taste Cultures
Taste culture differentiates people in terms of their aesthetic and intellectual preferences
Upper- and upper-middle-class are more likely to visit museums and attend live theater
Middle-class is more likely to go camping and fishing
Lower-class more likely to BBQ and watch sports on TV
A taste culture describes consumers in terms of their aesthetic and intellectual preferences. This concept helps us to understand subtle distinctions in consumer choices.

30. Living Room Clusters and Social Class
In one study of social differences in taste, researchers catalogued home owners’ possessions as they sat in their living rooms and asked them about their income and occupation. They identified clusters of furnishings and decorative items that seemed to appear together with some regularity. They found different clusters based upon social status as shown in figure 12.2.

31. Status Symbols – “badges of achievement”
We evaluate ourselves based on:
Accomplishments
Money
Success
Status-seeking: motivation to obtain products that will let others know that you have “made it”
Conspicuous consumption -“He who dies with the most toys, wins”
Parody display – status is attained by avoiding it.
People have a tendency to evaluate themselves, their professional accomplishments, their material well being, and so on, relative to others.
Status symbols can be thought of as “badges of achievement;” loyalty programs may create a hierarchy with status.
“He who dies with the most toys, wins” is a trite but (to many) a true phrase that describes the desire to accumulate badges of achievement.
Status seeking is a significant source of motivation to buy products that show we “made it”.
Although status seeking through product consumption and display is a worldwide phenomenon, some find the best tactic is to do the opposite. In that case, status is attained by avoiding it. Social scientists call this form of conspicuous consumption parody display.

32. Reflection
Create a list of ten status symbols that are important to you.
How are these symbols linked to success?
If a marketer knew your list, how would it affect their strategy for marketing to you?
What are the new status symbols for Gen Y? How do they differ from your parents status symbols?

33. Imitations of status symbols – coping strategies
Flights – stop using the brand to avoid association with lesser-status person who buys fake brands.
Reclamation – emphasize long relationship with the brand and express concern for the brand’s image.
Abranding – they disguise their luxury items in the belief that high-status people do not need to display expensive logos, so those who do betray lower status.
Imitations of status symbols prompted three coping strategies from luxury fashion brand consumers.

34. Objective 4: Lifestyles: Who We Are, What We Do.
Consumers’ lifestyles are key to many marketing strategies.
A consumer’s lifestyle refers to the ways she chooses to spend time and money and how her consumption choices reflect these values and tastes.
A lifestyle marketing perspective recognizes that people sort themselves into groups on the basis of the things they like to do, how they spend their leisure time, and how they spend their disposable income. In this ad, we see how a beverage can appeal to lifestyle.
AIO activities interests opinionss

35. Lifestyles as Group Identities
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Lifestyles as Group Identities
Other terms used to describe lifestyle are taste public, consumer group, symbolic community, and status culture.
Many people in similar social and economic circumstances may follow the same general consumption pattern.
Unlike values, people’s tastes and preferences evolve over time.

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Lifestyle Research
Lifestyle research is useful to track societal consumption preferences and to position specific products and services to different segments.
Marketers segment based on lifestyle differences; they often group consumers in terms of their AIOs (activities, interests, and opinions).
Psychographics

37. 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.
Lifestyle is the key to many marketing strategies.
We’ve reviewed many concepts in this chapter. The key points are noted in the slide.