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Chapter 12: Income and Social Class - Coggle Diagram
Chapter 12: Income and Social Class
12-1. Our confidence in our future, as well as in the overall economy, determines how freely we spend and the types of products we buy
To Spend or Not to Spend, That is the Question
Consumer Confidence
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.
Many businesses take forecasts about anticipated spending seriously, and periodic surveys “take the pulse” of the U.S. consumer.
When people are somewhat pessimistic about their prospects and about the state of the economy, as they are now, they tend to cut back on what they spend and take on less debt.
When consumers feel optimistic about the future, they reduce the amount they save, they take on more debt, and they splurge on discretionary items.
Income Inequality and Social Mobility
Income inequality
is the extent to which resources are distributed unevenly within a population.
One consequence of rising inequality is that more consumers worry about
“falling behind”
Social mobility
refers to the “passage of individuals from one social class to another.”
Horizontal mobility
occurs when a person moves from one position to another that’s roughly equivalent in social status
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 or join the ranks of the homeless.
The term
plutonomy
describes an economy that’s driven by a fairly small number of rich people.
Despite that discouraging trend, demographics decree that overall there must be
upward mobility
in our society
The Great Recession and Materialism
The loss of wealth prompted drastic changes in consumer spending that almost overnight altered the landscape of consumer behaviour
Hedonic adaptation
; it basically means that to maintain a fairly stable level of happiness, we tend to become used to changes, big or small, wonderful or terrible.
Even many
fashionistas
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
Income-Based Marketing
Targeting the Top of the Pyramid: High-Income Consumer
Divides consumers into three groups based on their attitudes toward luxury
Luxury is a reward
Luxury is indulgence
Luxury is functional
People who have had money for a long time tend to use their fortunes a lot differently. Old money families live primarily on inherited funds. One commentator called this group “the class in hiding.”
In contrast to people with old money, today there are many people—including high-profile billionaires such as Bill Gates, Mark Zuckerberg, and Sir Richard Branson—who are “the working wealthy.”
Targeting the Bottom of the Pyramid
The 4 A's of addressing low-income consumers
Acceptability
Employ innovative thinking to meet customer needs
Establish local R&D
Focus development on customers
Availability
Select and support retailers
Devise stoking strategy
Shorten supply chain
Localize sourcing
Reduce cost serve
Awareness
Promote offerings through mix of outlets
Form partnerships with public and non-governmental organizations
Affordability
Maintain operations on zero ( or near-zero) working capital
Leverage scale effects and sourcing network
Reduce packaging size for low price per unit
12-2. Social Class and Consumer Identity
Income versus Social Class
a better predictor of purchases that have symbolic aspects but low to moderate prices
Income is a better predictor of major expenditures that do not have status or symbolic aspects
We need both social class and income data to predict purchases of expensive, symbolic products
How do we measure social class
The increasing anonymity of our society
A related problem occurs when a person’s social-class standing creates expectations
Marketing researchers were among the first to propose
Strongly question the accuracy of this assumption in today’s world
Pick a Pecking Order
Exhibit a clearly defined dominance–submission hierarchy
Marketers carve society into groups for segmentation purposes
Use the term social class more generally to describe the overall rank of people in a society
Social Stratification
A worldview is another way to differentiate among social classes
Cosmopolitanism is an aspect of worldview
The process of social stratification refers to this creation of artificial divisions
Social class around the world
Japan
a highly brand-conscious society where upscale, designer labels are incredibly popular
working women are largely responsible
the Middle east
a growing middle class of more than 150 million people
few Arabic women work.
China
An economic boom is creating a middle class
poverty threshold of about $14,000 can enjoy middle-class comforts
the United Kingdom
an extremely class-conscious country
The upper class were educated at schools such as Eton and Oxford
India
India’s economy is booming despite the global recession, and affluent consumers prize higher-end global brands
The middle class currently represents less than 15 percent of India’s population
12-3. Status Symbols and Social Capital
Social and Cultural Capital
The transformation of Burning Man from what used to be known as a countercultural celebration to a showcase for wealth illustrates Bourdieu’s concept of social capital.
Bourdieu also reminds us of the importance of cultural capital. This term refers to a set of distinctive and socially rare tastes and practices—knowledge of “refined” behavior that admits a person into the realm of the upper class.
The Burning Man Festival began in 1986 as a Summer Solstice celebration on a San Francisco beach that attracted a small group of people
Online Social Capital
In the online world, many people hold others in high regard for their opinions as much as, or maybe even more than, for their money
The “psychic income” we get when we post reviews that others validate creates a reputation economy, in which the “currency” people earn is approval rather than cold hard cash.
In general, we know that a community is healthier and more desirable when it is able to offer a lot of social capital as an inducement for people to join; that’s one reason
why the competition is fierce to get admitted to Ivy League universities
Online gated communities that selectively allow access to some people may offer a high degree of social capital to the lucky few who pass the test
The social network This.com is an invitation-only platform that allows a user to post only one link a day to focus those in the know on a particular topic.
Taste Cultures, Codes, and Cultural Capital
Another approach to social class focuses on the codes people within different social strata use
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.
A taste culture describes consumers in terms of their aesthetic and intellectual preferences
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
Status Symbols
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 particular products that count as status symbols vary across cultures and locales
In China, children are status symbols (partly because the government strongly discourages couples from having more than one baby). Parents want to show off their pampered child and are eager to surround their “little emperors” with luxury goods.
The Russian economy has fallen on hard times lately because of economic sanctions and falling oil prices
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
In Indonesia, as in many countries, a cell phone is a status symbol—but instead of a
sleek iPhone, a decade-old Nokia model users call “the Brick” is the one to have.
Invidious distinction
; this means that we use them to inspire envy in others
through our display of wealth or power
Conspicuous consumption
to refer to people’s desires to provide prominent visible evidence of their ability to afford luxury goods.
Wives are an economic resource.
Today we refer to these women as trophy wives.
The “decorative” role of women, as rich men showered them with expensive clothes, pretentious homes, and a life
of leisure as a way to advertise their own wealth
One set of researchers labels these differences brand prominence
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
As the competition to accumulate status symbols escalates, sometimes the best tactic is to switch gears and go in reverse.