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