1. Income and Social Class
Chapter 13
Income and
Social Class

2. Income Patterns
The average American’s standard of living continues to improve and can be linked to:
Women’s roles in the workplace - women are obtaining more high-paying occupations, and
Increases in the attainment of education - college graduates earn 50% more than high school grads.
Consumer demand for goods and services depends on ability and willingness to buy .
Discretionary Income is the money available to a household over and above that required for a comfortable standard of living.
Consumers tend to equate money with security and comfort and they are anxious about holding on to what they have.

3. On the Other Hand…… About 33 million (11.7%) Americans Live in Poverty
Poverty = A Family of 4 Making Less Than $18,000
In the Bay Area, a family of 4 needs to make an average of $37/hr to rent a two-bedroom house.

4. Income Gap in the U.S. Average Family Income Bottom Fifth Top Fifth
States with the widest gaps in average income, 1998–2000
Average Family Income
Bottom Fifth
Top Fifth
Top-to-Bottom Ratio
New York
$12,639
$161,858
12.8
Louisiana
$10,130
$117,374
11.6
Texas
$12,568
$138,001
11.0
California
$14,053
$154,304
Massachusetts
$15,740
$165,729
10.5
Tennessee
$13,078
$137,524
Kentucky
$12,602
$130,825
10.4
Source: Economic Policy Institute and Center on Budget and Policy Priorities' analysis of data from the U.S. Census Bureau's Current Population Survey

5. Income Gap in the U.S. Average Family Income Bottom Fifth Top Fifth
States with the narrowest gaps in average income, 1998–2000
Average Family Income
Bottom Fifth
Top Fifth
Top-to-Bottom Ratio
Indiana
$17,868
$125,616
7.0
Utah
$18,758
$131,951
South Dakota
$16,845
$120,705
7.2
Minnesota
$20,245
$154,972
7.7
Wyoming
$14,867
$116,984
7.9
Iowa
$16,586
$131,668
Colorado
19,522
$155,809
8.0
Source: Economic Policy Institute and Center on Budget and Policy Priorities' analysis of data from the U.S. Census Bureau's Current Population Survey

6. Consumer Confidence
Consumers’ beliefs about what the future holds is an indicator of Consumer Confidence.
Reflects the extent to which people are optimistic or pessimistic about the future health of the economy.
When people are pessimistic about their prospects, they tend to cut back their spending and take on less debt.
When they are optimistic about the future, they tend to reduce the amount they save, take on more debt, and buy discretionary items.

7. Consumer Sentiment and Expectations

8. Subdued Simplicity: Post Dot Com
Then Now
Car BMW Honda
Home Potrero Hill Apt Cole Valley Apt
With View With Roommate
Breakfast Tully’s Mocha Home-brewed
Beverage Coffee
Shopping Neighborhood Market Costco
Business Financing Venture Capital Bootstrapping
Strategy
Source: San Francisco Chronicle (2001)

9. Social Class Influences:
Social Class is Determined by a Complex Set of Variables, Including: Income, Family Background, and Occupation.
Social Class Influences:
How Much Money Will Be Spent
How Money Will Be Spent
Access to Resources Such as Education, Housing,
and Consumer Goods
Taste and Lifestyles

10. Social Stratification
Social Stratification Refers to the Creation of Artificial Divisions In a Society by:
Status
Hierarchy
Some Members Are
Somehow Better Off
Than Others
Achieved Status
Earned Through Hard Work
Ascribed Status
Obtained Through Luck or Inheritance

11. Class Structure in the U.S.
Upper-Upper
0.3%
Lower-Upper
1.2%
Class Structure in the U.S.
Upper-Middle
12.5%
Middle Class
32%
Working Class
38%
Lower But Not Lowest 9%
Access to Resources Such As Money,
Education, and Luxury Goods
Real Lower-Lower 7%

12. Social Mobility
Social Mobility Refers to the Passage of Individuals From One Social Class to Another.
Horizontal Mobility
Upward Mobility
Downward
Mobility

13. Components of Social Class
Occupational
Prestige
Income
Educational
Attainment

14. Relationship Between Income and Social Class
The relationship between income and social class:
More income doesn’t necessarily result in increased status or changed consumption patterns.
Income predicts purchase of expensive products without status (i.e. major appliances).
Social class can predict the purchase of low to moderate priced symbolic products (i.e. cosmetics).
Both social class and income are needed to predict purchases of expensive, symbolic products (i.e. cars, homes).

15. Measurement of Social Class
Changes in
Family
Structure
Problems
With
Measures of
Social Class
Women
and
Social
Class
Increasing
Anonymity
Status
Inconsistency

16. How Social Class Affects Purchase Decisions
Appropriate?
Codes
Worldview
Taste
Cultures
Considerations
for Constructing
Marketing
Messages

17. Targeting Different Income Levels
Targeting the
Poor
Targeting the Rich
14% of Americans Live
Below the Poverty Line
Many Feel Alienated by Society
Some Firms Develop Products for Them
Educate Consumers on
How to Stretch $
Many Firms Target Affluent Markets
The Nouveau Riches
Some Firms Locate Closer to this Market
The “Get Set”
Luxury Products Are
Important
“Old Money” Consumers

18. Status Symbols The Billboard Wife Status Symbols Leisure Class
Common
Characteristics of
Conspicuous
Consumption
Parody Display
Modern
Potlatch