Consumer Behavior, business and finance assignment help

User Generated

znexp

Business Finance

Description

Need help with these.

Unformatted Attachment Preview

12 Income and Social Class C H R I S T I A N , J When you finish this chapter you will understand: A Chapter Objectives M I E 1 Why do both personal and social conditions influence how we spend our money? 2 How do we group consumers into social classes that say a lot about where they stand in society? 3 Why does a person’s desire to make a statement about his social class, or the class to which he 5 products he likes and dislikes? hopes to belong, influence the 5 6 7 B U ISBN 1-256-36592-0 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. F C H her parents. He was doing some R contracting work at the securities firm where I Marilyn works, and it was love at first sight. Even though Phil attended the “School of Hard Knocks” S they knew they could work on the streets of Brooklyn and Marilyn was fresh out of Princeton, somehow things out despite their vastly different backgrounds. Marilyn hinted that T her family has money, but Phil doesn’t feel intimidated. After all, he knows plenty of guys from his oldI neighborhood who wheeledand-dealed their way into six figures. He certainly can handle one more A big shot in a silk suit who flashes a roll of bills and shows off his expensive modern furniture with mirrors and gadgets everyN where you look. , When they arrive at the family estate in Connecticut, Phil looks for a Rolls-Royce parked in the inally, the big day has come! Phil is going home with Marilyn to meet circular driveway, but he only sees a beat-up Jeep Cherokee, which must belong to one of the servants. J by how shabby everything Once inside, Phil is surprised by how simply the house is decorated and seems. A faded Oriental rug covers the hall entryway and all of the furniture A looks really old. Phil is even more surprised when he meets Marilyn’s father, Mr. Caldwell. M He had half expected him to be wearing a tuxedo and holding a large brandy snifter like the rich people he’s seen in the I E movies. In fact, Phil had put on his best shiny Italian suit in anticipation, and he wore his large cubic zirconium pinky ring so this guy would know that he had some money too. When Marilyn’s father emerges from his study wearing an old rumpled cardigan sweater and tennis sneakers, Phil realizes 5 5 6 7 B U ISBN 1-256-36592-0 he’s definitely not one of those guys from the old neighborhood. 457 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 458 SECTION 4 Consumers and Subcultures 1 ECONsumer Behavior OBJECTIVE Why do both personal and social conditions influence how we spend our money? As Phil’s eye-opening experience at the Caldwells’ house suggests, there are many ways to spend money and there’s also a wide gulf between those who have it and those who don’t. Perhaps an equally wide gap exists between those who have had it for a long time and those who “made it the hard way—by earning it!” This chapter begins as we briefly consider how general economic conditions affect the way we allocate our money. Then, reflecting the adage that says “The rich are different,” we’ll explore how people who occupy different positions in society consume in very different ways. C H Income Patterns R A popular saying goes, “You can never be too thin or too rich.” Although conditions I the average American’s standard of living continues to are tenuous now, overall improve—though manySconsumers don’t get a full ticket to The American Dream. Two factors contribute to an (overall) upward trajectory: a shift in women’s roles and increases in educationalTattainment.4 I with preschool children are the fastest-growing segment of working • Mothers A people. Furthermore, many of them work in high-paying occupations, such as N medicine and architecture, which men used to dominate. Although women are still a minority in most professional occupations, their ranks continue to swell. , • The steady increase in the numbers of working women is a primary cause of the rapid growth of middle- and upper-income families. Education also determines who gets a bigger piece of the economic pie. J Although picking up the tab for college often entails great sacrifice, it still pays off in the long run. A College graduates earn about 50 percent more than those who have only goneM through high school during the course of their lives. Women without high school diplomas earn only 40 percent as much as women who have I a college degree.5 So, hang in there! E To Spend or Not to Spend, That Is the Question 5 and services depends both on our ability and our willConsumer demand for goods ingness to buy. Whereas 5 demand for necessities tends to be stable over time, we postpone or eliminate other expenditures if we don’t feel that now is a good time to 6 spend money.6 For example, you may decide to “make do” with your current clunker for another year rather 7 than buy a new car right away. Even businesses like warehouse clubs that sell staples by the case feel the pain when shoppers postpone their B purchases; stores like Costco and Sam’s Club post big losses when people no longer U and clothing even though sales of paper towels and buy their discounted jewelry pickles hold steady.7 Discretionary income is the money available to a household over and above what it requires to have a comfortable standard of living. Economists estimate that American consumers wield about $400 billion a year in discretionary spending power. People aged 35 to 55, whose incomes are at a peak, account for about half of this amount. As the population ages and income levels rise, the way a typical U.S. household spends its money changes. The most noticeable shift is to allocate a much larger share of its budget to shelter and transportation, and less to food and apparel. (Note: This doesn’t mean that higher income households buy less food and clothing—the proportion of dollars that goes toward these categories decreases.) #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 In the current dismal economic climate we have to kick things off by acknowledging that recent changes in consumer spending—prompted by numerous factors including frozen credit markets and massive layoffs—almost overnight altered the landscape of consumer behavior. The “go go” years seem like a distant memory as many people suddenly put the brakes on their BUY NOW mentality. Since the 1980s (when we last experienced economic turbulence) Americans’ savings rate dropped steadily—it dipped to less than 1 percent in late 2008. In a few short months this rate rocketed to 5 percent as people cut back wherever they could. The new mantra: Make do with what you have. Save. Question every expense—do you really need that Starbucks latte, that $80 haircut, that fashion magazine? Thriftiness is in, eye-popping bling is out. Even many fashionistas have turned into frugalistas—they refuse to sacrifice style but they achieve it on a budget. Now it’s cool to visit Web sites and blogs that celebrate frugality—like Dollar Stretcher (stretcher.com), All Things Frugal (allthingsfrugal.com), and Frugal Mom (frugalmom.net).”1 Of course, it remains to be seen whether this new frugality will persist when the economy improves (and it will). Young consumers who have grown up with images of (if not actual) affluence and in-your-face bling may not be prepared to pull such an abrupt aboutface. In one survey, 91 percent of young adults say they have financial goals, but only 53 percent stick to a monthly budget—and 42 percent give themselves a grade of D or F to describe how well they save.2 Contrary to popular wisdom, not everyone suffers in a recession—and consumers don’t uniformly cut back on their spending. Many of them just reallocate their priorities (and perhaps buy less on credit). For now, which companies will feel the pain and which will actually gain? A few years ago Citigroup strategists coined the term plutonomy to describe an economy that’s driven by a fairly small number of rich people. Taking a cue from the Standard & Poor’s 500-stock index, they created a “basket” of luxury stocks like Bulgari, Porsche, and Sotheby’s. Unfortunately many of those rich people are a lot less rich today—and luxury brands are hurting. On the other hand another team of analysts created their own Poor Getting Poorer Consumer Spending and Economic Behavior CHAPTER 12 Individual Attitudes Toward Money Especially in the wake of the Great Recession of 2009, many consumers experience doubts about their individual and collective futures, and they are anxious to hold on to what they have. Of course, not everyone has the same attitudes about money and its importance. We all know tightwads who hate to part with every penny (and who actually experience emotional pain when they hand over their cash) and spendthrifts who enjoy nothing more than when they buy everything in sight. Research on this issue finds that (stereotypes aside), American tightwads outnumber spendthrifts. Men are more likely than women to be tightwads, as are older people and those with more education. How do we tell a tightwad from someone who’s just being frugal? One of the researchers puts it this way: “The evidence suggests that frugality is driven by a pleasure of saving, as compared with tightwaddism, which is driven by a pain of paying.”8 C Wal-Mart conducted a year of intensive research on its customers to better HThe company now orunderstand how they think about money and brand names. ganizes its products around the shopper groups it identified, R which Wal-Mart says represent the majority of its business. A separate team services each group across I five so-called “power” product categories: food, entertainment, apparel, home S goods and pharmacy.9 The three groups are: T 1 Brand aspirationals—People with low incomes who are obsessed with names I such as KitchenAid 2 Price-sensitive affluents—Wealthier shoppers who love Adeals 3 Value-price shoppers—Those who like low prices and cannot afford much more N Money has many complex psychological meanings; we ,equate it with success or failure, social acceptability, security, love, freedom and yes, even sex appeal.10 There are therapists who specialize in treating money-related disorders, and they report that some people even feel guilty about their success and deliberately make bad investJ ments to reduce this feeling! Some other clinical conditions include atephobia (fear of A being ruined), harpaxophobia (fear of becoming a victim of robbers), peniaphobia (fear of poverty), and aurophobia (fear of gold).11 A recentM study that approached money as a social resource explored some interesting links between our need for acI ceptance and feelings about cash. In one case participants were either led to believe a group had rejected them or that it had accepted them. ThenEthey completed a number of measures that reflected their desire for money. Those who the group rejected expressed a greater desire for money. At another stage subjects counted either real 5 money or pieces of paper and then they experienced physical pain. Those who counted money reported they felt less pain than did those who 5 just counted paper!12 Income and Social Class Index—this basket includes 22 stocks that include retailers, generic brands, repossession agencies, dollar stores, and pawnshops that prosper when others do worse. In a period when the S&P declined by 40 percent, this index actually generated a positive return of about 9 percent. Not everyone is hurting—as consumers downscale their eating habits, for example, fast-food chains like McDonald’s pick up the surplus. People may not buy as many expensive concert tickets, but they still treat themselves to a movie—box office receipts are holding up well. Finally, although people are a lot more conscious of price, it’s not clear they’ve forsaken what was—before the recession hit—a growing emphasis on corporate social responsibility. In one global survey about seven in ten consumers said despite the recession they have given just as much—or more—time and money to causes they deem worthy and more than half still are prepared to pay more for a brand that supports a good cause. Nearly 8 in 10 U.S. consumers who say they are very anxious regarding their personal finances said they would switch to a brand that supports good causes. As an aside, marketers have their work cut out for them if they want to earn brand loyalty and do good at the same time: Only one-third of the respondents worldwide said they were aware of any brand that supports a good cause!3 6 The field of behavioral economics, or economic psychology, 7 studies the “human” side of economic decisions (including the decision-making biases we learned about B in Chapter 8). Beginning with the pioneering work of psychologist George Katona, U this discipline studies how consumers’ motives and their expectations about the fuConsumer Confidence ISBN 1-256-36592-0 459 ture affect their current spending, and how these individual decisions add up to affect a society’s economic well-being.13 Consumers’ beliefs about what the future holds are an indicator of consumer confidence—this measure reflects how optimistic or pessimistic people are about the future health of the economy and how they predict they’ll fare down the road. These beliefs are important because they influence how much money people pump into the economy when they make discretionary purchases. Many businesses take forecasts about anticipated spending very seriously, and periodic surveys “take the pulse” of the American consumer. The Conference Board conducts a survey of consumer confidence, as does the Survey Research Center at #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 460 SECTION 4 Consumers and Subcultures CB AS I LIVE IT Dominique Dallas, University of Tennessee, Knoxville by myself who acts like this. You would think the way my friends carr y themselves and spend money that they have full-time jobs and receive weekly bonuses. My friends rely on their credit cards to live the way they want. All in all, by spending money, we prove we have access C to a decent amount of discretionar y income. H y income, my With this discretionar friends and I purchase R high-end shoes, clothes, and jewelr y. On top of that, we go out toIeat often to restaurants like BlueSFin and Wasabi, take road trips at least twice a month to Atlanta andTGatlinburg, and par ty hardy wheneverI we get the chance! One could say as college A enjoying the students, we are simply best years of our life, Nbut how is it possible to enjoy the best years of , money or one’s life without any without being a par t of a higher social class that can afford such J our things? It seems despite financial state as students, A especially those with loans, it is impor tant to display M financial stability and affluence I through the things we acquire. Nowadays, most E cell phones, students have their own laptops, MP3 players, and other gadgets. More so, we live in fully 5 and drive our furnished apar tments own cars. It seems society has 5 manipulated even the broke college 6 this or that kids to believe buying A s I roll over and rub sleep from my eyes, I realize it is another morning. My roommate is rather quiet and the tenants above me are not heavily walking back and for th. This is a special morning! Birds are chirping, the sun is peeking through my window, and I am waking up, not because of an alarm clock, but because it is Saturday! Saturday mornings are greeted with bright eyes and grinning smiles because it means three things: pancakes and cheesy eggs for breakfast, a day at the mall with the girls, and dinner with the guys! I love pancakes, but more so, I love shopping! It is the per fect time to purchase a nice blouse, or two, or three. My friends always call me “spoiled” and “high maintenance” because I am able to buy what I want with few stipulations when I go to the mall. While I have a decent par t-time job and my parents offer funds ever y now and then, I am truly a “broke college kid.” Meanwhile, who cares? Inevitably, there exists the pressing issue to look my best from head to toe and to par ticipate in social activities whether I have a well-paying job or not. Never theless, it is not just me represents our rank and social status. Discretionary income and status symbols are the two concepts that are directly related to my personal example. My friends and I buy certain things that prove us to be financially able. Multiple purchases of these items like DVDs, shoes, and food mean we have money in the bank, which relates us with a social class that has a higher income. The other concepts listed within Chapter 12 seem to hit the head on the nail. There has always been a known correlation between income and social status and how certain materialistic objects and activities indicate your social class. Nonetheless I still want nice things. I want to look my best and enjoy the finer things in life. It is as though we are trained at birth to want nice, luxury items because they are associated with affluence, glamour, and class. A marketer would be happy to know that making a product seem appealing in terms of luxury, uniqueness, and sheer material comfort will be very advantageous. Society is filled with people who naturally want the best. We seek higher education, to land a better than average job, that will pay an over-thetop salary, so we can ultimately live comfortably to be a part of the upper tier of the social hierarchy. 7 B the University of Michigan. U The following are the types of questions they pose to consumers:14 Would you say that you and your family are better off or worse off financially than a year ago? Will you be better off or worse off a year from now? Is now a good time or a bad time for people to buy major household items, such as furniture or a refrigerator? Do you plan to buy a car in the next year? When, as now, people are pessimistic about their prospects and about the state of the economy, they tend to cut back on what they spend and take on less debt. #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 • • • • CHAPTER 12 However, when they are optimistic about the future, they reduce the amount they save, take on more debt, and buy discretionary items. These factors influence the overall savings rate: 1 Individual consumers’ pessimism or optimism about their personal circumstances such as a sudden increase in personal wealth as the result of an inheritance 2 World events such as the recession 3 Cultural differences in attitudes toward saving (e.g., the Japanese have a much higher savings rate than do Americans)15 2 Social Class Structure C OBJECTIVE We divide all societies into the “haves” and the “have-nots” How do we group (though the amount people “have”H is relative). The United consumers into social States is a place where “all men are R created equal,” but even classes that say a lot so some people seem to be more equal than others. As Phil’s I about where they stand encounter with the Caldwells suggests, a complex set of variin society? ables, including income, family background, and occupaS tion determines his standing in society. T The place you occupy in the social structure helps to deI you spend it. Phil was termine not only how much money you spend but also how surprised that the Caldwells, who clearly had a lot of money, Adid not seem to flaunt it. This understated way of living is a hallmark of so-called “old money.” People who have had it for a long time don’t need to prove they’ve got it.NIn contrast, consumers who are relative newcomers to affluence might allocate their , booty very differently. ISBN 1-256-36592-0 Pick a Pecking Order J In many animal species, a social organization develops whereby the most assertive A or aggressive animals exert control over the others and have the first pick of food, living space, and even mating partners. Chickens, for example, M exhibit a clearly defined dominance–submission hierarchy. Within this hierarchy, each hen has a posiI tion in which she is submissive to all the hens above her and she dominates all the E17 ones below her (hence the origin of the term pecking order). People are not much different. We also develop a pecking order that ranks us in terms of our relative standing in society. This rank determines our access to such 5 try to move up in resources as education, housing, and consumer goods. People the social order to improve their ranking. This desire to improve one’s lot in life, 5 and often to let others know that one has done so, is at the core of many marketing 6 strategies. Just as marketers carve society into groups for segmentation 7 purposes, sociologists describe divisions of society in terms of people’s relative social and economic B resources. Some of these divisions involve political power, whereas others revolve U around purely economic distinctions. Karl Marx, the nineteenth-century economic theorist, argued that a person’s relationship to the means of production determined his position in a society. The “haves” control resources, and they use the labor of others to preserve their privileged positions. The “have-nots” depend on their own labor for survival, so these people have the most to gain if they change the system. The German sociologist Max Weber showed that the rankings people develop are not one dimensional. Some involve prestige or “social honor” (he called these status groups), some rankings focus on power (or party), and some revolve around wealth and property (class).18 We use the term social class more generally 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 roughly similar occupations, Income and Social Class 461 ECONsumer Behavior It’s naïve to think that everyone reacts the same way to an economic downturn. The U.K.-based firm M&C Saatchi conducted research to identify eight specific consumer segments that each display different attitudes and behaviors regarding spending and saving money:16 1 Crash Dieters (26 percent): Try to cut out all nonessential spending until things improve. 2 Scrimpers (13 percent): Want to maintain their lifestyle and are reluctant to make sacrifices so they will trade down to less expensive brands but not stop buying what they like. 3 Abstainers (15 percent): Postpone big purchases but look to buy things on credit and pay later. 4 Balancers (9 percent): Sacrifice purchases in some categories in order to buy things in others. 5 Treaters (12 percent): They know they have to cut back but they have trouble budgeting; so they reward themselves when they do economize with small treats. 6 Justifiers (12 percent): They are willing to spend but they need a good reason to buy something, such as a new model or a deal. 7 Ostriches (9 percent): Are in denial; they’re mostly younger consumers who continue to buy as long as their credit cards hold out. 8 Vultures (4 percent): Circle the market, looking to snap up bargains as businesses offer bargain basement prices. #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 462 SECTION 4 Consumers and Subcultures C H R I S T I A N , This ad implies that there are social class differences in leisure activities and preferred beverages. Source: Courtesy of Libbey Glass Co. J A M I and they tend to have similar lifestyles by virtue of their income levels and common E tastes. These people tend to socialize with one another and share many ideas and values regarding the way life should be lived.19 Indeed, “birds of a feather do flock together.” We tend to marry people in a sim5 ilar social class to ours, a tendency sociologists call homogamy, or “assortative mat5 of married high school dropouts marry someone who also ing.” Well over 90 percent dropped out or who has6only a high school diploma. On the other side of the spectrum, less than 1 percent of the most highly educated Americans have a spouse who 7 20 did not complete high school. Social class is as much B a state of being as it is of having: As Phil saw, class is also a matter of what you do with your money and how you define your role in society. U the idea that some members of society are better off or Although we may not like “different” from others, most consumers do acknowledge the existence of different classes and the effect of class membership on consumption. As one wealthy woman observed when researchers asked her to define social class: In school, some kids seem to get all the breaks. They have access to many resources, such as special privileges, fancy cars, large allowances, or dates with other #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 I would suppose social class means where you went to school and how far. Your intelligence. Where you live. . . . Where you send your children to school. The hobbies you have. Skiing, for example, is higher than the snowmobile. . . . It can’t be [just] money, because nobody ever knows that about you for sure.21 CHAPTER 12 Income and Social Class 463 popular classmates. At work, some coworkers get promoted to high-prestige jobs with higher salaries and perks such as a parking space, a large office, or the keys to the executive washroom. In virtually every context some people rank higher than others. Patterns of social arrangements evolve whereby some members get more resources than others by virtue of their relative standing, power, or control in the group.22 The process of social stratification refers to this creation of artificial divisions: “. . . those processes in a social system by which scarce and valuable resources are distributed unequally to status positions that become more or less permanently ranked in terms of the share of valuable resources each receives.”23 We see these distinctions both in RL and online as the reputation economy takes shape—recall that this term refers to the “currency” people earn when they post online and others recommend their comments.24 C H agree that in many Think back to groups to which you’ve belonged. You’ll probably instances some members seem to get more than their fair share R of bennies, whereas other individuals aren’t so lucky. Some of these resources probably went to people I who earned them through hard work or diligent study, or achieved status. But someone may have gotten the goodies because she was lucky enough S to be born with “a silver spoon in her mouth.” Such good fortune reflects ascribed status. T Whether rewards go to the “best and the brightest” or to someone who happens I a social group. Most to be related to the boss, allocations are rarely equal within groups exhibit a structure, or status hierarchy, where someAmembers are better off than others. They may have more authority or power, or other members simply like N or respect them. , Achieved Versus Ascribed Status In our society, wealth is more likely to be earned than inherited. Source: Courtesy of The Phoenix Companies, Inc. J A M I E ISBN 1-256-36592-0 5 5 6 7 B U #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 464 SECTION 4 Consumers and Subcultures Social Mobility We’ve seen that worldwide there’s an upward drift in terms of access to consumer goods. But, to what degree do people actually move from one social class to another? In some societies such as India it’s difficult to change one’s social class, but in America we like to say, “Any man (or woman?) can grow up to be president” (though being related to a former president doesn’t hurt your chances). Social mobility refers to the “passage of individuals from one social class to another.”25 Horizontal mobility occurs when a person moves from one position to another that’s roughly equivalent in social status; for instance a nurse becomes an elementary school teacher. Downward mobility is of course movement none of us wants but unfortunately we observe this pattern fairly often as farmers and other displaced workers go on welfare rolls C or join the ranks of the homeless. By one estimate, between 2.3 million and 3.5 million Americans experience homelessness in a year’s H time.26 Despite that discouraging trend, demographics decree that overall there must R be upward mobility in our society. The middle and upper classes reproduce less (i.e., I have fewer children per family) than the lower classes (an effect demographers call Sthey tend to restrict family size to below replacement level differential fertility), and (i.e., they often have only one child). Therefore, so the reasoning goes, over time T those of lower status must fill positions of higher status.27 Overall, though, theI offspring of blue-collar consumers are blue-collar, and the offspring of white-collarAconsumers are white-collar.28 People do improve their positions over time, but these increases are not usually dramatic enough to catapult N to another. The exception is when a person marries them from one social class someone considerably richer. This “Cinderella fantasy” is a popular theme in our so, ciety; we see it in movies (Pretty Woman or Maid in Manhattan) and popular TV shows such as The Bachelor. J Class Structure inAthe United States The United States in theory M does not have a rigid, objectively defined class system. Nevertheless, Americans tend to maintain a stable class structure in terms of inI come distribution. Unlike some other countries, however, what does change are the groups (ethnic, racial, E and religious) that occupy different positions within this structure at different times.29 A sociologist named W. Lloyd Warner proposed the most influential classification of American class structure in 1941. Warner identified 5 six social classes:30 1 2 3 4 5 6 Upper upper Lower upper Upper middle Lower middle Upper lower Lower lower 5 6 7 B U #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 These classifications imply that access to resources, such as money, education, and luxury goods increases as you move up the ladder from lower lower to upper upper. For example in 2006 (the most recent year where complete data are available) the richest 20 percent of U.S. households earned half of all the income. In contrast the poorest 20 percent received just over 3 percent. However these figures don’t tell the whole story since some poorer families have access to nontaxable income or members may be between jobs so their low income is temporary. When you adjust income for other factors and look at the data on a per person basis (while on average 3.1 people live in a household in the top category, only 1.7 live in one in CHAPTER 12 Income and Social Class 465 Figure 12.1 A CONTEMPORARY VIEW OF THE AMERICAN CLASS STRUCTURE INCOME UPPER AMERICANS Upper-Upper (0.3%): The “capital S society” world of inherited wealth Lower-Upper (1.2%): The newer social elite, drawn from current professionals Upper-Middle (12.5%): The rest of college graduate managers and professionals; lifestyle centers on private clubs, causes, and the arts MIDDLE AMERICANS Middle Class (32%): Average pay white-collar workers and their blue-collar friends; live on “the better side of town;” try to “do the proper things” Working Class (38%): Average pay blue-collar workers; lead “working class lifestyle” whatever the income, school, background, and job C LOWER AMERICANS H “A lower group of people, but not the lowest” (9%): Working, not on welfare; living standard is just above poverty; behavior judged “crude,” “trashy” R “Real Lower-Lower” (7%): On welfare, visibly poverty-stricken, usually out of work (or have “the dirtiest jobs”); “bums,” “common criminals” I S T I four times more than the bottom category), the richest people actually consume the poorest.31 A Other social scientists have proposed variations on this system over the years, Nabout class—although but these six levels summarize fairly well the way we still think the proportion of consumers who fall into each category fluctuates over time. Fig, ure 12.1 provides one view of the American status structure. J A Every society has some type of hierarchical class structure that determines people’s access to products and services. Let’s take a quick look at a M few important ones. I China E of more than 130 milIn China, an economic boom is rapidly creating a middle class ISBN 1-256-36592-0 Class Structure Around the World lion people that analysts project will grow to more than 400 million in 10 years. During the cultural revolution, Mao’s Red Guards seized on even the smallest possessions—a pocket watch or silk scarf—as evidence of5“bourgeois consciousness.” Change came rapidly in the early 1990s, after Mao’s successor Deng Xiaoping 5 uttered the phrase that quickly became the credo of the new China: “To get rich is 6 glorious.” Because costs are low, a family with an annual income7below the U.S. poverty threshold of about $14,000 can enjoy middle-class comforts, including stylish B clothes, Chinese-made color televisions, DVD players, and cell phones. Wealthier Chinese entrepreneurs indulge in Cuban Cohiba cigars that U sell for $25 each, a quarter of the average Chinese laborer’s monthly wage. In bustling Shanghai, newly minted “yuppies” drop their kids off for golf lessons; visit Maserati and Ferrari showrooms; buy some luxury items from Louis Vuitton, Hugo Boss, or Prada; then pick up some Häagen-Dazs ice cream before they head to an Evian spa to unwind. One cultural difference that may help to account for this love of branded goods is that Asians tend to be highly sensitive to cues that communicate social standing, and well-known brand names help to manage this impression. Indeed, even in the United States researchers report that Asian immigrants and Asian Americans prefer branded goods to generic products compared to other Americans.32 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 466 SECTION 4 Consumers and Subcultures Many companies, like this Austrian bank, aggressively pursue the upper class consumer. Source: Courtesy of Bank Austria Creditanstalt AG. Photo by Gunter Parth. C H R I S T I A N , J A M Nike, which consumers in a survey named China’s coolest brand, profits mightI ily from the rise of the Chinese middle class. Nike shoes are a symbol of success, and the company opens an E average of 1.5 new stores a day there. The company worked for a long time to attain this status—it started when it outfitted top Chinese athletes and sponsored all the teams in China’s pro basketball league. Still, becoming a fash5 consumers to spend twice the average monthly salary for ion icon (and persuading a pair of shoes) is no mean 5 feat in a country that’s not exactly sports crazy. So Nike affiliated with the NBA (which began to televise games in China) and brought over 6 Jordan for visits. Slowly but surely, in-the-know Chinese players such as Michael 33 came to call sneakers “Nai-ke.” 7 B U Japan is a highly brand-conscious society where upscale, designer labels are incredJapan #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 ibly popular. The Japanese love affair with top brands started in the 1970s when the local economy was booming and many Japanese could buy Western luxury accessories for the first time. Some analysts say Japan’s long slump since that time may have fostered a psychological need to splurge on small luxuries to give people the illusion of wealth and to forget their anxieties about the future. Single, working women are largely responsible for fueling Japan’s luxury-goods spending— about three-quarters of Japanese women aged 25 to 29 work outside the home. As we saw in Chapter 10, these “office ladies” save money by living with their parents so this leaves them with cash on hand to spend on clothes, accessories, and vacations.34 CHAPTER 12 The Middle East In contrast to the Japanese, few Arab women work. This makes a search for the latest in Western luxury brands a major leisure activity for those with money. Dressing rooms are large, with antechambers to accommodate friends and family members who often come along on shopping sprees. A major expansion of Western luxury brands is under way across the Middle East, home to some of the fashion industry’s best customers. High-end retailers such as Saks Fifth Avenue and Giorgio Armani operate opulent stores that cater to this growing market. However, fashion retailers must take cultural and religious considerations into account. Missoni makes sure that collections include longer pants and skirts, and evening gowns with light shawls to cover heads or bare shoulders. And advertising and display options are more limited: Erotic images don’t work. In the strict religious culture of Saudi Arabia, mannequins can’t reveal a gender or human shape. At Saks’ Riyadh C store, models are headless and don’t have fingers. Half of the two-level store is off-limits to men.35 H The United Kingdom R England is an extremely class-conscious country, and at least until recently inherI ited position and family background largely predetermined consumption patterns. S Eaton and Oxford and Members of the upper class were educated at schools such as they spoke like Henry Higgins in My Fair Lady. We can still find remnants of this rigid T class structure. “Hooray Henrys” (wealthy young men) play polo at Windsor and I hereditary peers still dominate the House of Lords. However, the supremacy of inherited wealth appears to have A faded in Britain’s traditionally aristocratic society as British entrepreneurs like Richard Branson (of the N particularly hard hit by Virgin empire) redefine the economy. The United Kingdom was the recession, like the United States, and a new emphasis on , frugality alters people’s Income and Social Class Marketing Pitfall A recent flap illustrates the rapid changes in Indian society. Vogue India ran a 16-page spread of poor people surrounded by luxury goods—an old toothless woman holds a child who wears a Fendi bib, a woman and two other people ride on a motorbike as she sports a Hermès bag that sells for more than $10,000, a street beggar grips a Burberry umbrella. A columnist denounced the spread as “. . . not just tacky but downright distasteful.” The magazine’s editor commented that the shoot’s message is simply that “. . . fashion is no longer a rich man’s privilege. Anyone can carry it off and make it look beautiful.”40 priorities. In addition populist outrage grew after it came to light in 2009 that legislators had billed the government for excessive expenses—among other abuses, British taxpayers footed a £2,000 bill for one M.P. to clean the moat surrounding his castle.36 J Some big marketers such as Unilever and Groupe Danone set their sights on a A more lower-class group the British call chavs. This label refers to young, lower-class men and women who mix flashy brands and accessories M from big names such as Burberry with track suits. Their style icons include soccer star I David Beckham and his wife, Victoria aka Posh Spice. Despite their (alleged) tackiness, marketers like E on fashion, food, and chavs because they spend a lot of their disposable income gadgets. France’s Danone, which makes HP Sauce, a condiment the British have poured over bacon sandwiches and fries for a century, launched a series of ads to 5 at a wedding buffet; play up to the chav culture. One features a brawl over the sauce another includes glammy soccer players’ wives mingling cattily 5 at a party.37 Danone found “chavvy” people on the streets of Liverpool to star in the ads. 6 India 7 India’s economy is booming despite the global recession, and affluent consumers B prize higher-end global brands—even though nearly half of India’s population live U Hermès scramble to on less than $1.25 a day. Brands like Gucci, Jimmy Choo, and ISBN 1-256-36592-0 467 open stores in high-end hotels or new superluxury malls, where the management often stations guards at the doors to keep the destitute outside.38 One of Bollywood’s biggest stars, Shahrukh Khan, is “brand ambassador” for Tag Heuer watches, which cost thousands of dollars. He gives them away on the Indian version of Who Wants to Be a Millionaire?—the show that also formed the basis for the hit movie Slumdog Millionaire. India’s ascendancy is fairly recent; for decades after the country became independent from Britain its economy was socialistic and traditional. Today, young consumers watch MTV, read international fashion magazines, and embrace the power of plastic—credit-card spending in India rose by 30 percent a year for the past 5 years.39 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 468 SECTION 4 Consumers and Subcultures Vogue India’s emphasis on fashion and luxury illustrates the stark divisions between the haves and the have-nots in that developing country. Source: Courtesy of Newscom. C H R I S T I A N , 3 J A M I E Social Class and Consumer Behavior OBJECTIVE It’s getting more difficult to clearly link certain brands or 5 stores with a specific class. Marketplace changes make it more difficult for the casual observer to accurately place a 5 consumer in a certain class by looking at the products he 6 That’s because a lot of “affordable luxuries” now are buys. within reach of many consumers who could not have ac7 quired them in the past. Think of how many college women B you know who buy pricey bags from Louis Vuitton or Coach, U eat Ramen noodles for dinner. To make matters even then more confusing, a wealthy family may well buy its wine at Costco and its bath towels at Target—and especially in today’s economy proudly gloat about the steals they got.41 Luxury brands slash prices to attract more customers, while mass-market brands move upscale—Disney’s new Disney Couture line sells cashmere sweaters “inspired by Tinker Bell,” pricey chandeliers patterned after the Art Deco décor in Mr. Disney’s former office, and a $1,400 sequined Mickey Mouse T-shirt from Dolce & Gabbana.42 Profound changes in global income distribution drive this shift. Traditionally, it was common to find a huge gulf between the rich and the poor—you were either one or the other. Today, rising incomes in many economically developing countries, such as South Korea and China, coupled with decreasing prices for quality consumer goods Why does a person’s desire to make a statement about his social class, or the class to which he hopes to belong, influence the products he likes and dislikes? ISBN 1-256-36592-0 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. CHAPTER 12 Income and Social Class and services, level the playing field. The current recession aside, more and more consumers around the globe participate in the global economy. The biggest emerging markets go by the acronym BRIC: Brazil, Russia, India, and China. These four countries today account for 15 percent of the $60 trillion global economy, but analysts project they will overtake the European and American economies within 20 years.43 This change fuels demand for mass-consumed products that still offer some degree of panache. Companies such as H&M, Zara, EasyJet, and L’Oréal provide creature comforts to a consumer segment analysts label mass class. This refers to the hundreds of millions of global consumers who now enjoy a level of purchasing power that’s sufficient to let them afford high-quality products—except for bigticket items such as college educations, housing, or luxury cars. The mass-class market, for example, spawned several versions of affordable cars: Latin Americans have their Volkswagen Beetle (they affectionately call it el huevito, C“the little egg”); Indian consumers have their Maruti 800 (it sells for as little as US $4,860); and the Fiat Palio, H the company’s “world car,” targets people in emerging countries such as Brazil, 44 Argentina, India, China, and Turkey. R I S When we think about a person’s social class, we consider a number of pieces of T information. Two major ones are occupation and income. Let’s take a quick look I at both. A Occupational Prestige N extent by what they In a system in which (like it or not) we define people to a great do for a living, occupational prestige is one way we ,evaluate their “worth.” Components of Social Class Hierarchies of occupational prestige tend to be quite stable over time and across cultures. Researchers find similarities in occupational prestige in countries as diverse as Brazil, Ghana, Guam, Japan, and Turkey.45 J A typical ranking includes a variety of professional and business occupations at A the top (e.g., CEO of a large corporation, physician, and college professor), whereas jobs that hover near the bottom include shoe shiner, ditch M digger, and garbage collector. Because a person’s occupation links strongly to his or her use of leisure time, I allocation of family resources, aesthetic preferences, and political orientation, many Eclass. social scientists consider it the single best indicator of social Income 5 The distribution of wealth is of great interest to social scientists and to marketers because it determines which groups have the greatest buying power and market 5 potential. Wealth is by no means distributed evenly across the classes. As we 6 of social class behave seen, income per se is not often a very good indicator cause the way we spend our money is more telling than 7how much we spend. Still, people need money to obtain goods and services to express their tastes, so B obviously income is still very important. American consumers are getting both U wealthier and older, and these changes will continue to influence consumption preferences. ISBN 1-256-36592-0 How Income Relates to Social Class Although we equate money with class, the precise relationship between other aspects of social class and income is not clear, and social scientists debate it.46 The two are by no means synonymous, which is why many people with a lot of money try to buy their way into a higher social class. One problem is that even if a family adds one or more wage earners and increases its household income, each additional job is likely to be lower in status than the primary wage earner’s job. In addition, these members don’t necessarily pool their earnings toward the common good of the family.47 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 469 470 SECTION 4 Consumers and Subcultures So which is a better predictor of consumer behavior? The answer partly depends on the type of product we sell—do people buy it largely for its functional value (what it does) or for its symbolic value (the impression it conveys to others)? • • • Social class is a better predictor of purchases that have symbolic aspects, but low to moderate prices (e.g., cosmetics, liquor). Income is a better predictor of major expenditures that do not have status or symbolic aspects (e.g., major appliances). We need both social class and income data to predict purchases of expensive, symbolic products (e.g., cars, homes). Class Differences in Worldview #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 A worldview is one way to Cdifferentiate among social classes. To generalize, the world of the working class (i.e., the lower-middle class) is more intimate and constricted. For exH are likely to name local sports figures as heroes and are less ample, working-class men likely to take long vacation R trips to out-of-the-way places.48 Immediate needs, such as a new refrigerator or TV, tend to dictate buying behavior, whereas the higher classes foI cus on more long-term goals, such as saving for college tuition or retirement.49 Working-class consumers Sdepend heavily on relatives for emotional support and tend to orient themselves in terms of the local community rather than the world at large. T They are more likely to be conservative and family oriented. Maintaining the appearI ance of one’s home and property is a priority, regardless of the size of the house. One recent study that looked at social class and how it relates to consumers’ A feelings of empowerment reported that lower-class men aren’t as likely to feel they have the power to affectNtheir outcomes. Respondents varied from those who were what the researcher calls , potent actors (those who believe they have the ability to take actions that affect their world) to impotent reactors (those who feel they are at the mercy of their economic situations). This orientation influenced consumption behaviors; for example,Jthe professionals in the study who were likely to be potent actors set themselves up for financial opportunity and growth. They took very broad A perspectives on investing and planned their budgets strategically.50 Although they would Mlike to have more in the way of material goods, workingclass people do not necessarily envy those who rank above them in social standing.51 I They may not view the maintenance of a high-status lifestyle as worth the effort. As E commented, “Life is very hectic for those people. There one blue-collar consumer are more breakdowns and alcoholism. It must be very hard to sustain the status, the clothes, and the parties that are expected. I don’t think I’d want to take their place.”52 5 right. Although good things appear to go hand-in-hand This person may be with higher status and wealth, the picture is not that clear. The social scientist Émile 5 Durkheim observed that suicide rates are much higher among the wealthy; he wrote 6 of most comfort suffer most.”53 Durkheim’s wisdom may in 1897, “The possessors still be accurate today. Many 7 well-off consumers seem to be stressed or unhappy despite or even because of their wealth, a condition some call affluenza.54 A New York B Times/CBS News poll asked kids aged 13 to 17 to compare their lives with what their U up. Forty-three percent said they had a harder time, parents experienced growing and upper-income teenagers were the most likely to say that their lives are harder and subject to more stress. Apparently, they feel the pressure to get into elite schools and to maintain the family’s status.55 Many marketers try to target affluent, upscale markets. This often makes sense because these consumers—those who are still employed in the aftermath of the recession—obviously have the resources to spend on costly products that command higher profit margins. However, it is a mistake to assume that we should place everyone with a high income into the same market segment. As we noted earlier, social class involves more than absolute income. It is also a way of life, and factors including where they got their money, how they got it, and how long they have had it significantly affect affluents’ interests and spending priorities.56 CHAPTER 12 Income and Social Class 471 CB AS I SEE IT Professor George Loewenstein, Carnegie Mellon University T he average American spends more on lottery tickets than on reading materials or movies. In 2003, total spending on lotteries was almost $45 billion, or $155 for every man, woman, and child in the United States. Moreover, people at low income levels play the lottery disproportionately; one study found that those with incomes under $10,000 spent almost three times as much on lottery tickets as those with incomes over $50,000. Why is playing the lottery so attractive, and why is it especially attractive to low-income individuals? My colleagues Emily Haisley and Romel Mostafa and I explored these questions. We hypothesized that one of the attractions of the lottery is that the typical lottery ticket only costs a dollar—peanuts in the budget of even those with low incomes. We went to the Greyhound bus station in Pittsburgh and asked bus travelers if they would complete a survey about their attitudes toward Pittsburgh in exchange for $5. We then gave them the opportunity to purchase up to five lottery tickets. For some subjects, we handed them the $5 and had them make a single choice of how many tickets to buy (from zero to five). For other subjects, we handed them $1 at a time, five times in a row, and each time asked if they wanted to use the dollar to buy a lottery ticket. Subjects in the latter condition purchased about twice as many lottery C tickets. Of course $1 isn’t much, but as the H many people are statistics document, forking out the money R day after day. This helps to explain the appeal of the lottery, whichI is the single most popular form of gambling in the United S States despite having the lowest payout rate. But, T this finding does not explain why low-income individuals are I so attracted to playing the lottery. In A we attempted to two follow-up studies find out. We reasoned N that poor people play the lottery , because, in disproportionately contrast to more affluent people, it is their only opportunity, however small, J for a dramatic improvement in their economic situation. In the first study A we made some Greyhound riders feel M in the survey to rich by asking them report their income I on a scale that went up in $10,000 increments, E or more. We peaking at $50,000 made others feel poor by asking income with a scale that went up in 5 peaking at $50,000 increments, $1,000,000 or more. 5 Those made to feel poor bought, on average, about twice as many tickets. In the second study we reasoned that lottery tickets might be attractive to people with low incomes because they have the same opportunity to win as people with higher incomes (in contrast to other areas of life where rich people have advantages). We reminded them of this fact by asking them to report whether poor people, rich people, or neither had an advantage in different areas of life, with one of the areas being “gambling.” Those respondents who received this subtle reminder that lotteries give everyone similar odds of winning once again bought more. The sad fact is that lotteries return only fifty cents on the dollar, making them one of the worst possible investments, and far less lucrative than playing the stock market—even in a bad year. Yet 21 percent of Americans, and 38 percent of those with incomes less than $25,000— report that the lottery is the only way they would be able to accumulate several thousand dollars for retirement. Along with payday loans, rent-to-own establishments, pawn shops, and instant rebate tax services, lotteries are one of the many ways that commercial and state enterprises may be detrimental to the financial well-being of the poor. ISBN 1-256-36592-0 6 7 Despite our stereotype of rich people who just party all day long, one study B found the typical millionaire is a 57-year-old man who is self-employed, earns a meU same wife for most of dian household income of $131,000, has been married to the his adult life, has children, has never spent more than $399 on a suit or more than $140 for a pair of shoes, and drives a Ford Explorer (the humble billionaire investor Warren Buffett comes to mind). Interestingly, many affluent people don’t consider themselves to be rich. One tendency researchers notice is that they indulge in luxury goods while they pinch pennies on everyday items—they buy shoes at Neiman Marcus and deodorant at Wal-Mart, for example.57 SBI Consulting Business Intelligence divides consumers into three groups based on their attitudes toward luxury: 1 Luxury is functional—These consumers use their money to buy things that will last and have enduring value. They conduct extensive prepurchase #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 472 SECTION 4 Consumers and Subcultures Net Profit ASmallWorld.net is a social networking site that gives the wealthy access to one another in cyberspace—while keeping the rest of us out. It’s an invitationonly site that’s grown to about 150,000 registered users. The site’s founders promote it as a Facebook for the social elite. A few recent postings help to understand why. One person wrote, “I need to rent 20 very luxury sports cars for an event in Switzerland. . . . The cars should be: Maserati—Ferrari— Lamborghini—Aston Martin ONLY!” Another announced: “If anyone is looking for a private island, I now have one available for purchase in Fiji.” The rich are different.58 research and make logical decisions rather than emotional or impulsive choices. 2 Luxury is a reward—These consumers tend to be younger than the first group but older than the third group. They use luxury goods to say, “I’ve made it.” The desire to be successful and to demonstrate their success to others motivates these consumers to purchase conspicuous luxury items, such as high-end automobiles and homes in exclusive communities. 3 Luxury is indulgence—This group is the smallest of the three and tends to include younger consumers and slightly more males than the other two groups. To these consumers, the purpose of owning luxury is to be extremely lavish and self-indulgent. This group is willing to pay a premium for goods that express their individuality and make others take notice. They have a more emotional approach to luxury spending and are more likely than the other two groups to C make impulse purchases.59 H As Phil discovered, R people who have had money for a long time use their fortunes a lot differently. Old money families (e.g., the Rockefellers, DuPonts, Fords, I etc.) live primarily on inherited funds.60 One commentator called this group “the class in hiding.”61 Following S the Great Depression of the 1930s, moneyed families became more discreet about exhibiting their wealth. Many fled from mansions such T as those we still find in Manhattan (the renovated Vanderbilt mansion now is Ralph Lauren’s flagship store) Ito hideaways in Virginia, Connecticut, and New Jersey. Mere wealth is not sufficient to achieve social prominence in these circles. You A also need to demonstrate a family history of public service and philanthropy, and Ncontributions often enable donors to achieve a kind of imtangible markers of these mortality (e.g., Rockefeller , University, Carnegie Hall, or the Whitney Museum).62 “Old money” consumers distinguish among themselves in terms of ancestry and lineage rather than wealth.63 And (like the Caldwells) they’re secure in their status. In a sense, they have trained J their whole lives to be rich. In contrast to people with old money, today there are many people—including A high-profile billionaires such as Bill Gates, Steve Jobs, and Richard Branson—who are “the working wealthy.” M64 The Horatio Alger myth, where a person goes from “rags to riches” through hard work and a bit of luck, is still a powerful force in our society. I That’s why a commercial that showed the actual garage where the two cofounders of E struck a chord in so many. Hewlett-Packard first worked Although many people do in fact become “self-made millionaires,” they often encounter a problem (although not the worst problem one could think of!) after they 5 change their social status. The label nouveau riche dehave become wealthy and scribes consumers who5 recently achieved their wealth and who don’t have the benefit of years of training to learn how to spend it. 6 riches; many suffer from status anxiety. They monitor the Pity the poor nouveau cultural environment to 7 ensure that they do the “right” thing, wear the “right” clothes, get seen at the “right” places, use the “right” caterer, and so on.65 Their flamB boyant consumption is an example of symbolic self-completion because they try to U have “class” to make up for an internal lack of assurdisplay symbols they believe ance about the “correct” way to behave.66 In major Chinese cities such as Shanghai, some people wear pajamas in public as a way to flaunt their newfound wealth. As one consumer explained, “Only people in cities can afford clothes like this. In farming villages, they still have to wear old work clothes to bed.”67 A taste culture describes consumers in terms of their aesthetic and intellectual preferences. This concept helps to illuminate the important, yet sometimes-subtle, distinctions in consumption choices among the social classes.68 For example, a comprehensive analysis of social class differences using data from 675,000 households #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 “What Do You Use That Fork For?” Taste Cultures, Codes, and Cultural Capital CHAPTER 12 Income and Social Class supports the mass-class phenomenon we discussed before: Differences in consumption patterns between the upper and upper-middle classes and between the middle and working classes are disappearing. However, strong differences still emerge in terms of how consumers spend their discretionary income and leisure time. Upper- and upper-middle-class people are more likely to visit museums and attend live theater, and middle-class consumers are more likely to camp and fish. The upper classes are more likely to listen to all-news programs, whereas the middle classes are more likely to tune in to country music.69 Some social critics don’t like the taste culture perspective because they charge it’s elitist. Judgments of the relative artistic value of Beethoven versus The Beastie Boys aside, it is very helpful to recognize that we segment ourselves in terms of our shared tastes in literature, art, music, leisure activities, and home decoration. Indeed, all of the thousands of online brand communitiesCwe discussed in Chapter 10 are living evidence that we do this all the time! H researchers cataloged In one of the classic studies of social differences in taste, home owners’ possessions as they sat in their living roomsRand asked them about their income and occupation. They identified clusters of furnishings and decorative I items that seemed to appear together with some regularity, and they found different clusters depending on the consumer’s social status (see Figure S 12.2). For example, Figure 12.2 LIVING ROOM CLUSTERS AND SOCIAL CLASS T I A N Traditional , +500 14 Curtains translucent Low Social Status 3 Carpet design floral –500 8 Furniture bulky 5 Bright walls J A 38 Wall M mirror 43 Still-life print 36 Clock,I 45 Artificial other flowers 44E Cut 29 Religious objects 11 Furniture French 9 Furniture traditional 28 Candleholder 46 Small potted plant 25 Piano flowers 32 Photographs 19 General space dense 49 Antimacassars 48 Trophies 30 Bible 42 Religious painting 50 Dogs/animals 26 Television 2 Carpet 1 Floor 53 House below average 10 Furniture mixed 23 Furniture below average 21 Disorder 24 Fireplace 6 Walls wood Very neat 22 Excellent condition 15 Curtains plain 32 Knicknacks 5 5 6 7 B U 20 39 Outdoor paintings 12 Docks 47 Large potted plants 37 Picture windows +500 34 Encyclopedia 27 Hi-Fi 13 Number of windows 35 Clock, sunburst 52 Organ High Social Status 41 Abstract painting 51 Sculpture 7 Furniture modern 16 Curtains floral 4 Carpet solid ISBN 1-256-36592-0 17 Curtains geometric 18 General space bare –500 Modern #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 473 474 SECTION 4 Consumers and Subcultures Many consumers still covet luxury products— whether they can afford them or not. Source: Courtesy of Harry Winston Jewelers. C H R I S T I A N , J A M I E #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 they tended to find a cluster that consisted of religious objects, artificial flowers, and 5 lower-status living rooms, whereas they were likely to still-life portraits in relatively catalog a cluster of abstract 5 paintings, sculptures, and modern furniture in a higherstatus home.70 6 social class focuses on the codes (the ways consumers exAnother approach to press and interpret meanings) people within different social strata use. It’s valuable 7 for marketers to map these codes because they can use concepts and terms that tarB get customers will relate to. Marketing appeals we construct with class differences U in mind result in quite different messages. For example, a life insurance ad a company targets to a lower-class person might depict in simple, straightforward terms a hard-working family man who feels good immediately after he buys a policy. A more upscale appeal might depict a more affluent older couple surrounded by photos of their children and grandchildren. It might include extensive copy that plugs the satisfaction of planning for the future. These two ways to communicate product benefits incorporate different types of codes. Restricted codes focus on the content of objects, not on relationships among objects. Elaborated codes, in contrast, are more complex and depend on a more sophisticated worldview. These code differences extend to the way consumers approach basic concepts such as time, social relationships, and objects. Table 12.1 summarizes some differences between these two code types. CHAPTER 12 TABLE 12.1 Income and Social Class Effects of Restricted Versus Elaborated Codes Restricted Codes Elaborated Codes Emphasize description and contents of objects Have implicit meanings (context dependent) Emphasize analysis and interrelationship between objects; i.e., hierarchical organization and instrumental connections Have explicit meanings Language Use few qualifiers, i.e., few adjectives or adverbs Use concrete, descriptive, tangible symbolism Have language rich in personal, individual qualifiers Use large vocabulary, complex conceptual hierarchy Social relationships Stress attributes of individuals over formal roles Stress formal role structure, instrumental relationships Time Focus on present; have only general notion of future Focus an instrumental relationship between present activities and future rewards Physical space Locate rooms, spaces in context of other rooms and places: e.g., “front room,” “corner store”H General characteristics Implications for marketers C R(or Stress inherent product quality, contents trustworthiness, goodness of “real-type”), I spokesperson Stress implicit of fit of product with total Slifestyle Use simple adjectives, descriptions Identify rooms, spaces in terms of usage; formal ordering of spaces; e.g., “dining room,” “financial district” Stress differences, advantages vis-à-vis other products in terms of some autonomous evaluation criteria Stress product’s instrumental ties to distant benefits Use complex adjectives, descriptors T Source: Adapted from Jeffrey F. Durgee, “How Consumer Sub-Cultures Code Reality: A ILook at Some Code Types,” in Richard J. Lutz, ed., Advances in Consumer Research, 13 (Provo, UT: Association of Consumer Research, 1986): 332. A N Clearly, not all taste cultures are created equal. The upper , classes have access to resources that enable them to perpetuate their privileged position in society. Pierre Bourdieu was a French theorist who wrote at length about how people compete for resources, or capital. Bourdieu did large-scale surveys to track J people’s wealth, and he related this “economic capital” to patterns of taste in entertainment and the arts. A He concluded that “taste” is a status-marking force, or habitus, that causes consumption preferences to cluster together. Later analyses M of American consumers largely confirm these relationships; for example, higher-income people are more I likely than the average consumer to attend the theater, whereas lower-income peoE ple are more likely to attend a wrestling match.71 In addition to economic capital (financial resources), Bourdieu pointed to the significance of social capital (organizational affiliations and networks). The legions 5 so much business of aspiring professionals who take up golf because they conduct on the greens demonstrate how social capital operates. Similarly, as we’ve seen, re5 spected bloggers acquire social capital when they gain access to business contacts 6 who go online to search for information and advice.72 Bourdieu also reminds us of the consequences of cultural 7 capital. This refers to a set of distinctive and socially rare tastes and practices—knowledge of “refined” beB havior that admits a person into the realm of the upper class.73 The elites in a society collect a set of skills that enable them to hold positionsU of power and authority, and they pass these on to their children (think etiquette lessons and debutante balls). These resources gain in value because class members restrict access to them. That’s part of the reason why people compete so fiercely for admission to elite colleges. Much as we hate to admit it, the rich are different. ISBN 1-256-36592-0 475 Status Symbols We tend to evaluate ourselves, our professional accomplishments, our appearance, and our material well-being relative to others. The popular phrase “keeping up with the Joneses” (in Japan it’s “keeping up with the Satos”) refers to a desire to compare your standard of living with your neighbors—and exceed it if you can. #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 476 SECTION 4 Consumers and Subcultures Luxury items like diamond engagement rings are valued as status symbols the world over, as this Brazilian ad for a jeweler reminds us. Source: Courtesy of Saatchi & Saatchi/Brazil. C H R I S T I A N , J A M I E 5 5 6 7 Often it’s not enough to have wealth or fame—what matters is that you have B more of it than others. One study demonstrated how we assign value to loyalty proU award you special status based on the number of miles grams (e.g., when airlines #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 you fly) at least in part based on our level in the hierarchy relative to other members. Subjects were assigned to “gold status” in a program where they were in the only tier or a program where there was also a silver tier. Although both groups were “gold,” those in the program that also offered a lower level felt better about it.74 A major motivation to buy is not to enjoy these items but rather to let others know that we can afford them. These products are status symbols. The popular bumper sticker slogan, “He who dies with the most toys, wins,” summarizes the desire to accumulate these “badges of achievement.” Status-seeking is a significant source of motivation to procure appropriate products and services that we hope will let others know we’ve “made it.” A recent study demonstrated how people turn to status symbols to prop up their self-concepts, especially when they feel badly or uncertain about CHAPTER 12 other aspects of their lives. When subjects in auctions were made to feel that they had little power, they spent more to purchase items to compensate for this deficit.75 We associate status symbols with luxury products, but the reality is that consumers are very good at latching onto all sorts of things that enable them to proclaim their place in a pecking order. In cyberspace, Twitter is the status vehicle du jour as actors, politicians, athletes, and millions of the rest of us hop on board the 140-character train. Celebrities including bicyclist Lance Armstrong, actor Ashton Kutcher, basketball player Shaquille O’Neal, and even Oprah are enthusiastic passengers. This social media platform is a way to stay informed, build a following, and perhaps prove that you’re cool enough to be a Twitterer. A tweet by design diva Martha Stewart illustrates the “me too” motivation: “Proving that I really am on Twitter!”76 As we discussed earlier in the chapter, the rise of a mass-class C market means that many luxury products have gone down-market. Does this mean Americans no H to roll out ever-pricier longer yearn for status symbols? Hardly. The market continues goods and services, from $130,000 Hummers and $12,000R mother–baby diamond tennis bracelet sets to $600 jeans, $800 haircuts, and $400 bottles of wine. Although I it seems that almost everyone can flout a designer handbag (or at least a counterfeit version with a convincing logo), our country’s wealthiest consumers employ 9,000 S personal chefs, visit plastic surgeons, and send their children to $400-an-hour math T tutors. A sociologist explained, “Whether or not someone has a flat-screen TV is going to tell you less than if you look at the services they use,I where they live and the control they have over other people’s labor, those who are serving A them.”79 Of course, the particular products that count as status symbols vary across culN tures and locales: • • • ISBN 1-256-36592-0 • , Although to most Americans the now-defunct Hummer vehicle is a symbol of excess, Iraqis still regard the huge gas-guzzlers as an alluring symbol of power. An Iraqi Hummer dealer observed, “In Iraq, people judge you J by your car, and you’re not a man without one.” People there use an Arabic phrase to explain the need to A have the biggest car—hasad thukuri, which roughly translates as “penis envy.”80 In China, children are status symbols (partly because the M government strongly discourages couples from having more than one baby). Parents want to show off I their pampered child and are eager to surround their “little emperors” with luxEof their disposable inury goods. Chinese families spend one-third to one-half come on their children.81 Largely because of an oil boom, there are at least 25 billionaires and 88,000 mil5bite out of the Russian lionaires in Russia (though the recession has taken a big economy also). Muscovites crave luxury goods to show 5 off their newfound wealth. Some buy the GoldVish cell phone that glitters with 120 carats of dia6 as much as possible monds encrusting a case of white gold. The desire to spend on indulgences fuels a popular joke in Moscow: A wealthy 7 businessman tells a friend he bought a tie for $100. He responds, “You fool. You can get the same tie B for $200 just across the street.”82 Ua status symbol (see In Indonesia, as in many countries, a cell phone is Marketing Pitfall box)—but instead of a sleek iPhone, a decade-old Nokia model users call “the Brick” is the one to have. This “smart phone” never took off in the West—its bulky design makes it look dated. But in Jakarta, its heft is what people like about it. At a whopping half-pound, it doesn’t fit into a pocket so it’s very visible when models, politicians, and other celebrities cart it around with them. Nokia even sells a gold-plated version for $2,500. In the world of status symbols, anything goes as long as others don’t have it.83 Income and Social Class 477 Marketing Pitfall Think about those of us who suffer from cell phone envy: Did you stake out your place in line when Apple first released its coveted iPhone? British researchers observed how men in clubs used their phones as part of “the mating ritual.” Whereas female patrons generally kept their phones in their purses and retrieved them only when needed, most men took their phones out of their jacket pockets or briefcases when they sat down and placed them on the bar counter or table for all to see. The authors propose that men use their mobile phones just as peacocks use their plumage or male bullfrogs use their croaks— to advertise their status to available mates. They noted that the amount of time the men spent toying with and displaying their phones increased significantly as the number of men relative to women increased—just as male peacocks fan open their feathers more vigorously as the number of competing suitors increases.77 Today, the average cell phone user replaces his phone in less than 2 years, and many aficionados pant for a new model much sooner than that. It’s not about function; it’s about fashion and the next best thing. Motorola learned about the status value of phones when its fortunes plunged along with the price of its Razr model (a 30 percent drop in stock price in 6 months). Although the Razr was a big hit when Motorola launched it, the company sat on its laurels and didn’t realize that customers soon would crave the latest and greatest. As one industry analyst stated, “Phone manufacturers are only as hot as their last major hit—if they haven’t smacked it over the fence in a while, they’re in trouble. Motorola failed to follow it up with something similarly as big as the Razr.” Motorola hoped that its newer Krzr model would lure back style-conscious consumers because it’s got better functionality than the Razr. But the Krzr also looks a lot like a Razr and analysts doubt that phoneaholics are going to buy into a product that looks like it’s so yesterday.78 The social analyst Thorstein Veblen first discussed the motivation to consume for the sake of consuming at the turn of the twentieth century. For Veblen, we buy things to create invidious distinction—this means we use them to inspire envy in #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 478 SECTION 4 Consumers and Subcultures Marketing Opportunity There were tales, repeated in the newspapers, of dinners on horseback; of banquets for pet dogs; of hundred-dollar bills folded into guests’ dinner napkins; of a hostess who attracted attention by seating a chimpanzee at her table; of centerpieces in which lightly clad living maidens swam in glass tanks, or emerged from huge pies; of parties at which cigars were ceremoniously lighted with flaming banknotes of large denominations.84 C H lived it up back in the old days, right? Well, maybe the Sounds like they really more things change, theR more they stay the same: The recent wave of corporate scandals involving companies such as AIG, Enron, WorldCom, and Tyco infuriated many I consumers when they discovered that some top executives lived it up even as other employees were laid off.SOne account of a $1 million birthday party the chief executive of Tyco threw for his wife is eerily similar to a robber baron shindig: The party reT portedly had a gladiator theme and featured an ice sculpture of Michelangelo’s I from his penis into crystal glasses. The company also David with vodka streaming furnished the executive’s A New York apartment with such “essentials” as a $6,000 shower curtain, a $2,200 gilt wastebasket, and a $17,100 “traveling toilette box.”85 This phenomenon N of conspicuous consumption was, for Veblen, most evident among what he termed ,the leisure class, people for whom productive work is taboo. In Marxist terms, such an attitude reflects a desire to link oneself to ownership or control of the means of production, rather than to the production itself. Those who control these resources,Jtherefore, avoid any evidence they actually have to work for a living, as the term the idle rich suggests. A To Veblen, wives are an economic resource. He criticized the “decorative” role of women as rich men showered M them with expensive clothes, pretentious homes, and a life of leisure as a way to advertise their own wealth (note that today he might have arI gued the same for a smaller number of husbands). Fashions such as high-heeled shoes, E on dresses, and elaborate hairstyles all conspired to entight corsets, billowing trains sure that wealthy women could barely move without assistance, much less perform manual labor. Similarly, the Chinese practice of foot-binding prevented female mem5 walking, and servants carried them from place to place. bers of the aristocracy from Veblen’s inspiration5came from anthropological studies he read of the Kwakiutl Indians, who lived in the Pacific Northwest. At a potlatch ceremony, the host showed off his wealth and gave 6 extravagant presents to the guests. The more he gave away, the greater his status. Sometimes, the host employed an even more radical strategy 7 to flaunt his wealth. He would publicly destroy some of his property just to demonB strate how much he had. U Because guests had to reciprocate by giving a gift of equal And the plot thickens: value, the host could humiliate a poorer rival with an invitation to a lavish potlatch. The hapless guest would eventually be forced into bankruptcy because he needed to give away as much as the host, even though he could not afford it. If this practice sounds “primitive,” think for a moment about many modern weddings. Parents commonly invest huge sums of money to throw a lavish party and compete with others for the distinction of giving their daughter the “best” or most extravagant wedding, even if they have to dip into their retirement savings to do it. Like the potlatch ritual, in modern times our desire to convince others we have a surplus of resources creates the need for us to exhibit the evidence that we do. Accordingly, we may prioritize consumption activities that use up as many resources as possible in nonconstructive pursuits. This conspicuous waste, in turn, shows others that we have the assets to spare. Veblen wrote, “We are told of certain #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 About 14 percent of Americans live below the poverty line, and most marketers largely ignore this segment. Still, although poor people obviously have less to spend than do rich ones, they have the same basic needs as everyone else. Low-income families purchase staples, such as milk, orange juice, and tea, at the same rates as average-income families. Minimum wage–level households spend more than average on out-of-pocket health-care costs, rent, and food they eat at home.89 Unfortunately, they find it harder to obtain these resources because many businesses are reluctant to locate in lower-income areas. On average, residents of poor neighborhoods must travel more than 2 miles to have the same access to supermarkets, large drug stores, and banks as do residents of more affluent areas.90 Still, a lot of companies are taking a second look at marketing to the poor because of their large numbers. The economist C.K. Pralahad added fuel to this fire with his book The Fortune at the Bottom of the Pyramid, which argued big companies could profit and help the world’s 4 billion poor or low-income people by finding innovative ways to sell them soap and refrigerators.91 Some companies get into these vast markets as they revamp their distribution systems or make their products simpler and less expensive. When Nestlé Brazil shrank the package size of its Bono cookies (no relation to the U2 singer) from 200 grams to 140 grams and dropped the price, sales jumped 40 percent. Unilever called a new soap brand Ala so that illiterate people in Latin America could easily recognize it. In Mexico, cement company CEMEX improved housing in poor areas after it introduced a pay-as-you-go system to buy building supplies.92 Muhammad Yunus, a Bangladeshi economist, won the 2006 Nobel Prize in Economics for pioneering the concept of microloans. His Grameen Bank loans small sums—typically less than $100—to entrepreneurs in developing countries. Many of these go to “cell-phone women,” who rent time on the phones to others in their remote villages. The bank has issued about 6 million loans to date, and almost 99 percent of recipients repay them (compared to a 50 percent repayment rate for a typical bank in a developing country).93 others through our display of wealth or power. Veblen coined the term conspicuous consumption to refer to people’s desires to provide prominent visible evidence of their ability to afford luxury goods. The material excesses of his time motivated Veblen’s outlook. Veblen wrote in the era of the “robber barons,” where the likes of J. P. Morgan, Henry Clay Frick, and William Vanderbilt built massive financial empires and flaunted their wealth as they competed to throw the most lavish party. Some of these events were legendary, as this account describes: CHAPTER 12 Income and Social Class 479 CB AS I LIVE IT Shannon Fuller, College of St. Joseph’s A s I live in a world full of status symbols, it is extremely hard not to get caught up in the mess of who’s who and where everyone ranks in a certain social class. Even in a small town like Rutland, Vermont status still plays a major role in the life of teenagers. Growing up I had three siblings, two of which are also girls. So like every moderate income family that meant lots of hand-me-down clothes, especially because one of my sisters is only thirteen months older than I. This meant a lot of my outfits were already put on display once or twice before, therefore the only way for me to produce a style of my own was to get a job. At the age of fourteen I started my first job at McDonald’s. Jobs are also a status symbol, which meant I was not very high on the list. As the years through high school went on I struggled to maintain a status higher than most kids but I was not popular by any means. I moved on to a better job at a gym and than a furniture store. I C was average, I was everyone’s friend and I could float H group but that among every different didn’t place me in Rany type of status either. The age finally set in where I cars, boys, and clothes were on the top of my list. I somehow lucked out S and convinced my parents to let me Tmy mom got a new have their car and one. So not only Idid I have a nicer car than my older sister but I had a nicer car than most of A my friends. As the years went on myNcar and I got older together and three years later I , graduated high school. Now I am in college and it is amazing how status symbols change with a complete 360. J A Polynesian chiefs, who, under the stress of good form, preferred M to starve rather than carry their food to their mouths with their own hands.”87 I As the competition to accumulate status symbols escalates, sometimes the best Eis to deliberately avoid tactic is to switch gears and go in reverse. One way to do this status symbols—that is, to seek status by mocking it. Social scientists call this sophisticated form of conspicuous consumption parody display.88 Hence, the popu5 stonewash so they larity of old, ripped blue jeans (or more likely the ones companies look old and ripped), “utility” vehicles such as Jeeps among 5 the upper classes (like the Caldwells), and brands with a strong blue-collar heritage like Von Dutch truck6 ers’ hats and Red Wing boots. ISBN 1-256-36592-0 7 How Do We Measure Social Class? B U Because social class is a complex concept that depends on a number of factors, it is not surprising that social scientists disagree on the best way to measure it. Early measures included the Index of Status Characteristics from the 1940s and the Index of Social Position from the 1950s.94 These indices combined individual characteristics (e.g., income, type of housing) to arrive at a label of class standing. The accuracy of these composites is still a subject of debate among researchers; a study claimed that for segmentation purposes, raw education and income measures work as well as composite status measures.95 Figure 12.3 shows one commonly used measurement instrument. American consumers generally have little difficulty placing themselves in either the working class (lower-middle class) or middle class.96 The proportion of consumers who identify themselves as working class tended to rise until about 1960, but it has declined since then. Blue-collar workers with relatively high-prestige jobs still tend to view themselves as working class, even though their income levels are equivalent to Status is now more of who has a higher GPA along with other materialistic items but it is important to be known and top of the class. I still have my same old Honda, but I maintain a positive role in the business department as secretary of Business Club and now just recently voted in as Vice President for the upcoming year. However status means next to nothing now that I realized there is a much bigger picture in life. My GPA is one point away from a perfect 4.0 but the time has arrived where I have realized it is not about the materialist things in life so much anymore. It is about friends, family, and finding happiness in yourself as well as others. To many people status is everything and will remain everything but to me status is what you make it. So I choose to make it nothing and without status, I could not be happier. Marketing Pitfall Men as trophies? In recent years the tables have turned as older women—who increasingly boast the same incomes and social capital as their male peers—seek out younger men as arm candy. These so-called cougars are everywhere; surveys estimate that about one-third of women over age 40 date younger men. One self-professed cougar explained the appeal: “The mentality of having a youthful person on your arm who makes you feel good, who makes you feel ageless, makes you feel desired and desirable.” This trend gets carried to the next level at an annual speed-dating event that pairs rich older women with hot younger guys. The “sugar mamas” have to be over age 35 and earn at least $500,000 a year or have a minimum of $4 million in liquid assets. A matchmaker selected 20 “boy toys” out of 5,000 men who applied to meet the cougars.86 #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 480 SECTION 4 Consumers and Subcultures Ripped jeans (especially the pricey kind that come that way when you buy them) are an example of parody display. Source: Courtesy of Stock Boston/Photo by Bob Kramer. C H R I S T I A N 97 This fact reinforces the idea that the labels of “working many white-collar workers. class” or “middle class” are , very subjective. Their meanings say at least as much about self-identity as they do about economic well-being. Problems with Measures J of Social Class #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. ISBN 1-256-36592-0 Market researchers were among the first to propose that we can distinguish people A from different social classes from one another. Some of these class distinctions still exist, but—as we saw earlier—others including brand preferences have changed. M Unfortunately, many of these measures are badly dated and are not as valid today.98 I One reason is that social scientists designed most measures of social class with E in mind; this unit included a male wage earner in the the traditional nuclear family middle of his career and a female full-time homemaker. These measures have trouble accounting for two-income families, young singles living alone, or households 5 as we saw in Chapter 11 are so prevalent today. headed by women, which Another problem with 5 measuring social class is the increasing anonymity of our society. Earlier studies relied on the reputational method, where researchers con6 within an area to determine the reputations and backducted extensive interviews grounds of individuals (see 7 the discussion of sociometry in Chapter 10). When they used information and also traced people’s interaction patterns, they could generate B a very comprehensive view of social standing within a community. However, this apU to implement in most communities today. One comproach is virtually impossible promise is to interview individuals to obtain demographic data and to combine these data with the interviewer’s subjective impressions of each person’s possessions and standard of living. As an example, refer to the items in Figure 12.3. Note that the accuracy of this questionnaire relies largely on the interviewer’s judgment, especially regarding the quality of the respondent’s neighborhood. The interviewer’s own circumstances can bias these impressions because they can affect her standard of comparison. Furthermore, the instrument uses highly subjective terms: “Slummy” and “excellent” are not objective measures. These potential problems highlight the need to adequately train interviewers, as well as for some attempt to cross-validate such data, possibly by employing multiple judges to rate the same area. CHAPTER 12 Income and Social Class Figure 12.3 EXAMPLE OF A COMPUTERIZED STATUS INDEX Interviewer circles code numbers (for the computer) that in his/her judgment best fit the respondent and family. Interviewer asks for detail on occupation, then makes rating. Interviewer often asks the respondent to describe neighborhood in own words. Interviewer asks respondent to specify income—a card is presented to the respondent showing the eight brackets—and records R’s response. If interviewer feels this is overstatement or understatement, a “better judgment” estimate should be given, along with an explanation. EDUCATION: Grammar school (8 yrs or less) Some high school (9 to 11 yrs) Graduated high school (12 yrs) Some post high school (business, nursing, technical, 1 yr college) Two, three years of college—possibly Associate of Arts degree C Graduated four-year college (B.A./B.S.) H Master’s or five-year professional degree Ph.D. or six/seven-year professional degree R Respondent –1 R’s –2 Age –3 ____ –4 –5 –7 –8 –9 Respondent’s Spouse –1 Spouse’s –2 Age –3 ____ –4 –5 –7 –8 –9 OCCUPATION PRESTIGE LEVEL OF HOUSEHOLD HEAD: Interviewer’s judgment of how head of household rates in I occupational status. (Respondent’s description—asks for previous occupationS if retired, or if R is widow, asks husband’s: __________) –0 Chronically unemployed—“day” laborers, unskilled; on welfare Steadily employed but in marginal semiskilled jobs; custodians,T minimum pay factory help, –1 service workers (gas attendants, etc.) I Average-skill assembly-line workers, bus and truck drivers, police and firefighters, route A –2 deliverymen, carpenters, brickmasons Skilled craftsmen (electricians), small contractors, factory foremen, N low-pay salesclerks, –3 office workers, postal employees , Owners of very small firms (2–4 employees), technicians, salespeople, office workers, civil –4 servants with average-level salaries –5 Middle management, teachers, social workers, lesser professionals Lesser corporate officials, owners of middle-sized businesses (10–20 J employees), moderate–7 success professionals (dentists, engineers, etc.) A (leading doctors and lawyers), Top corporate executives, “big successes” in the professional world –9 “rich” business owners M AREA OF RESIDENCE: Interviewer’s impressions of the immediate I neighborhood in terms of its reputation in the eyes of the community. E Slum area: people on relief, common laborers Strictly working class: not slummy but some very poor housing Predominantly blue-collar with some office workers Predominantly white-collar with some well-paid blue-collar 5 Better white-collar area: not many executives, but hardly any blue-collar either 5 Excellent area: professionals and well-paid managers “Wealthy” or “society”-type neighborhood 6 TOTAL FAMILY INCOME PER YEAR: Under $5,000 $5,000 to $9,999 $10,000 to $14,999 $15,000 to $19,999 –1 –2 –3 –4 7 $20,000 to $24,999 $25,000 B to $34,999 $35,000 to $49,999 $50,000 U and over –1 –2 –3 –4 –5 –7 –9 TOTAL SCORE _______ –5 –6 –7 –8 Estimated Status __________ ISBN 1-256-36592-0 (Interviewer’s estimate: ___________________ and explanation _______________________________________) R’s MARITAL STATUS: Married ____ Divorced/Separated ____ Widowed ____ Single ____ (CODE: ____) One problem when we assign any group of people to a social class is that they may not exhibit equal standing on all of the relevant dimensions. A person might come from a low-status ethnic group but have a high-status job, whereas another may live in a fancy part of town but he may not have finished high school. Social #ONSUMER"EHAVIOR"UYING (AVING AND"EING, Ninth Edition, by Michael R. Solomon. Published by Prentice Hall. Copyright © 2011 Pearson Education, Inc. 481 482 SECTION 4 Consumers and Subcultures scientists use the concept of status crystallization to assess the impact of social class inconsistency.99 The logic is that when these indicators are not consistent stress occurs because the rewards from each part of such an “unbalanced” person’s life are variable and unpredictable. People who exhibit such inconsistencies tend to be more receptive to social change than are those whose identities are more firmly rooted. A related problem occurs when a person’s social-class standing creates expectations that he or she can’t meet. Some people find themselves in the not-unhappy position of making more money than we expect of those in their social class. This means they are overprivileged, a condition we define as an income that is at least 25 to 3...
Purchase answer to see full attachment
User generated content is uploaded by users for the purposes of learning and should be used following Studypool's honor code & terms of service.

Explanation & Answer

Good luck in your study and if you need any further help in your assignments, please let me know Can you please confirm if you have received the work? Once again, thanks for allowing me to help you R

Running Head: SEGMENTATION IN MARKETING

Segmentation in Marketing

Name

Course

Institution

Instructor

Date

SEGMENTATION IN MARKETING

2

Table of Contents
Introduction ..................................................................................................................................... 3
Toyota’s Marketing Strategy .........................................................Error! Bookmark not defined.
Income, Social Class, Age..........................................................Error! Bookmark not defined.
Challenges of Marketing Scion ..................................................Error! Bookmark not defined.
Age Segmentation in Mazda ..........................................................Error! Bookmark not defined.
Bibliography ..................................................................................Error! Bookmark not defined.

SEGMENTATION IN MARKETING

3

Introduction
In the case study, the authors discuss such issues as the elements that influence people’s
spending patterns. It turns out that numerous aspects of people’s lives affect their attitudes
towards money, and how quickly they part with it. Furthermore, it is clear that these influences
are not limited to internal aspects alone. External factors such as brands are equally responsible
for the impact as well. Consumer confidence is perhaps the key element that motivates or
demotivates people to part with money, depending on how well they can trust future aspects of
the economy. The case reveals that people in the United States are class structures, where each
group has a different level of access to resources. The hierarchy in the class structure dictates
that people with more money belong in top positions, with the least occupying the bottom levels.
The study also outlines such social classifications in other economic giants in the world, such as
China and the United Kingdom. All the same, other determinants make consumers transcend
some of these classifications and carve out a niche of their own. They portray consumption
habits resembling their opinion about luxuries and necessities. The case study also analyzes some
financial practices by companies, such as Walmart.


Running Head: SEGMENTATION IN MARKETING

Segmentation in Marketing

Name

Course

Institution

Instructor

Date

SEGMENTATION IN MARKETING

2

Table of Contents
Introduction ..................................................................................................................................... 3
Toyota’s Marketing Strategy .......................................................................................................... 3
Income, Social Class, Age........................................................................................................... 3
Challenges of Marketing Scion ................................................................................................... 4
Age Segmentation in Mazda ........................................................................................................... 5
Bibliography ................................................................................................................................... 6

SEGMENTATION IN MARKETING

3

Introduction
In the case study, the authors discuss such issues as the elements that influence people’s
spending patterns. It turns out that numerous aspects of people’s lives affect their attitudes
towards money, and how q...


Anonymous
I use Studypool every time I need help studying, and it never disappoints.

Studypool
4.7
Trustpilot
4.5
Sitejabber
4.4

Similar Content

Related Tags