Income and Social Class

Social class in India

- booming economy - affluent consumers prize *higher end global trends* (e.g. Jimmy Choo, Gucci, etc) - soon to be 267 million middle class - *celebrities* have a very strong influence on consumers' purchasing behavior

elaborated codes

*more complex* and depend on a more sophisticated worldview

social capital

*showcase for wealth* that causes exclusivity (e.g. glamping) - those with social capital have *access to exclusive networks* where business and political deals happen

luxury is indulgence

*smallest* of the three groups and includes *younger consumers* and *more males* than the other two; the purpose of owning luxury is to be *very lavish & self indulgent* more likely to make *impulse purchases*

Social Class in Middle East

- *searching for the latest Western luxury brands* in a major leisure activity for those with money - *growing middle class* of more than 150 million - *young economy*: more than half of people are younger than 25 years old

six social classes

- created by sociologist W. Lloyd Warner 1. upper *upper* 2. lower *upper* 3. upper *middle* 4. lower *middle* 5. upper *lower* 6. lower *lower* proportion of consumers that fall into each category fluctuates over time

social stratification

- creation of *artificial divisions in a society by virtue of their relative standing, power, or control in the group* - we tend to define someone's worth by their occupational prestige (e.g. doctors, engineers)

social class

- describes an overall rank of people in a society - tend to have similar occupations & lifestyles by virtue of income levels and common tastes

Social Class in China

- economic boom creating a middle class of more than 130 million - *brands* are important to signal higher social status (e.g. Louis Vuitton) - nike considered China's coolest brand

Social Class in the UK

- extremely *class conscious* - people divided into *upper, middle, and working classes* - dominance of *inherited wealth has faded* in traditionally aristocratic society - hit hard by the Great Recession and a new *emphasis on frugality* has altered people's priorities

old money

- families live primarily on *inherited funds* (e.g. rockefellers, DuPonts, Fords, etc.) - to achieve social prominence, you need a *family history public service & philanthropy* beyond just money - old money families *distinguish themselves in terms of ancestry & lineage* rather than wealth; making large donations achieves a sense of immortality (e.g. Carnegie Hall)

Social class in Japan

- highly *brand conscious* society where upscale, designer labels are very popular - "office ladies" = single, women are largely responsible for fueling Japan's luxury goods spending - typically live with their parents which gives them more money to spend on goods

great recession

- lasted from December 2007 -June 2009 - largest drop in employment since the Great Depression - rather than "buy now" mentality, we try to see where we can save

social class vs income as indicators of consumer behavior

- which is better indicator of consumer behavior? - depends on type of product: functional vs symbolic value - *social class* = better predictor for *symbolic aspects* with *low - moderate prices* (cosmetics, liquor) - *income* = better predictor for *major expenditures* that *don't have status or symbolic meanings* (e.g. major appliances) - both predict purchases of *expensive, symbolic* products (e.g. cars, homes)

two different types of codes

1. *restricted codes* 2. *elaborated codes* code differences extend to the way consumers approach basic concepts like time, social relationships, and objects

two factors that contribute to an overall upward income trajectory

1. a *shift in women's roles* - mother's with preschool children are fastest growing segment of working people; many people are in high paying occupations like medicine and architecture 2. *increases in educational attainment* - degree holders earn 80% more

4 A's of targeting low income consumers

1. awareness 2. affordability 3. availability 4. acceptability

three groups of consumers based on attitudes towards luxury

1. luxury is *functional* 2. luxury is a *reward* 3. luxury is an *indulgence*

four types of consumption groups based on status signaling

1. patrician 2. parvenu 3. poseur 4. proletarian

types of spenders

1. tightwads 2. spendthrifts can be either depending on items purchased

biggest emerging markets

BRIC (Brazil, Russia, India, China)

cultural capital

a *set of distinctiveness and socially rare tastes* (e.g. etiquette lessons and debutante balls) - *knowledge of "refined" behavior* that admits a person into a realm of the upper class - allows elite to hold positions of power and authority

plutonomy

an economy that's driven by a fairly small number of rich people e.g. United States

consumer confidence

consumer's beliefs about what the future holds consumers can be either: - pessimistic - optimistic

noveau riche

consumers *recently achieved their wealth*; along the lines of rags to riches which is a powerful force of motivation in our society - many suffer from *status anxiety* (?)

luxury is reward

consumers *tend to be younger* and *wish to signal their success* to others by buying conspicuous luxury items like *cars and homes*

luxury is functional

consumers use their money to buy things that will *last and have enduring value*; conduct *extensive prepurchase research* rather than emotional/impulsive

taste cultures

describes consumers in terms of their *aesthetic and intellectual preferences* people's *tastes vary based on social status*

parody display

deliberately *avoid status symbols by mocking them*; another tactic to seek status e.g. ripped jeans

pecking order

dominance submission hierarchy ranks us in terms of our relative standing in society; *can determine our access to resources* like education, housing, and consumer goods

frugalistas

fashionistas refuse to sacrifice style but they achieve it on a budget

restricted codes

focus on the *content* of objects, *not on relationships* among objects

parvenu

high wealth, high need for status want to disassociate from have nots use loud signals

patrician

high wealth, low need for status signal to each other use quiet signals

mass class

hundreds of millions of global consumers who enjoy a level of purchasing power that allows them to *afford high quality products* e.g. H&M, Zara, EasyJet, L'Oreal

status symbols

items that we purchase that signal to others to others our wealth

*important graph*

lecture 14 page 21 people have similar tastes depending on their status and preference for modern or traditional styles *low - high social status* vs *modern - traditional* ex. people with high social status and traditional tastes like abstract paintings and sculptures

brand prominence

level of loudness in signaling

poseur

low wealth, high need for status aspire to be haves mimic parvenus

proletarian

low wealth, low need for status do not engage in signaling

Affordable Luxuries

make it harder to link certain brands/stores with a specific class

social mobility

passage of individuals from one social class to another

conspicuous consumption

people's desires to provide *prominent visible evidence* of the ability to afford luxury goods

pessimistic consumers

spend less and take on less debt

taste

status marking force or habitus that causes consumption preferences to clump together

discretionary income

the money available to a household *over & above what it requires to lead a comfortable life* - magic number is $75,000 for annual income - emotional well being steadily rises as people get to this level but doesn't significantly increase after that

codes

the ways consumers express and interpret meaning

optimistic consumers

they spend more and take on more debt

spendthrifts

those who enjoy buying everything in sight

tightwads

those who hate to part with money and actually experience emotional pain when doing so

hedonic adaptation

to maintain a fairly stable level of happiness, we tend to become used to changes, big or small, good or bad - means *over time the rush from a major purchase will dissipate* and we're back to baseline - explains why consumers are happier when they buy a bunch of smaller things over time rather than blowing it all on one purchase

homogamy

we tend to marry people in a social class similar to our own

invidious distinction

we use goods to *inspire envy in others* through our display of wealth or power

affluenza

well off consumers tend to be unhappy & stressed; just because someone has a higher social standing doesn't mean they're happier

upward mobility

when a person gains status of some kind

downward mobility

when a person loses status of some kind

horizontal mobility

when a person moves from one position to another that's roughly equivalent in status