1. Chapter 15 Social Class

2. What is social class? The division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either more or less status

3. Why does social class matter to marketers? Social class is a natural form of segmentation Social class membership serves consumers as a frame of reference (reference group) for the development of their attitudes and behavior Thus members of a social class turn to other members of that class for cues regarding appropriate behavior If they aspire to a higher social class, they will emulate the behavior of members of that class

4. Classifying society’s members into a small number of social classes enables researchers to note  the existence of shared values, attitudes, and behavior patterns among members within each social class; and  the differing values, attitudes and behavior between social classes Researchers are also able to relate social class standing to consumer attitudes toward specific products and to examine social class influences on the actual consumption of products

5. Social class structure in the U.S. Researchers disagree on how many distinct class divisions are necessary to adequately describe class structure in the U.S.  As few as two  As many as nine Choice depends on the amount of detail the researcher believes is necessary to explain the attitudes or behavior under study

6. Variations in the Number and Types of Social-Class Categories TWO-CATEGORY SOCIAL CLASS SCHEMAS Blue-collar, white-collar Lower, upper Lower, middle THREE-CATEGORY SOCIAL CLASS SCHEMAS Blue-collar, gray-class, white-collar Lower, middle, upper FOUR-CATEGORY SOCIAL CLASS SCHEMAS Lower, lower-middle, upper-middle, upper FIVE-CATEGORY SOCIAL CLASS SCHEMAS Lower, working-class, lower-middle, upper-middle, upper Lower, lower-middle, middle, upper-middle, upper

7. continued SIX-CATEGORY SOCIAL CLASS SCHEMAS Lower-lower, upper-lower, lower-middle, upper-middle, lower-upper, upper-upper SEVEN-CATEGORY SOCIAL CLASS SCHEMAS Real lower-lower, a lower group of people but not the lowest, working class, middle class, upper-middle, lower-upper, upper-upper NINE-CATEGORY SOCIAL CLASS SCHEMAS Lower-lower, middle-lower, upper-lower, lower-middle, middle- middle, upper-middle, lower-upper, middle-upper, upper-upper

8. Percent Distribution of Five-Category Social-Class Measure SOCIAL CLASSESPERCENTAGE Upper 4.3 Upper-middle 13.8 Middle 32.8 Working 32.3 Lower 16.8 Total percentage100.0

9. Marketing implications Many mass marketers have chosen either to ignore the upper class or to combine them with the upper-middle class Small size and highly cultivated tastes make the upper class a desirable target market for specialty firms with the ability to cater to a small number of affluent consumers

10. Social class distinctions in the U.S. 1. Egalitarianism 2. Size of the middle class 3. Upward mobility

11. Marketing implications of upward mobility Recognizing that individuals often aspire to the lifestyle and possessions enjoyed by members of a higher social class, marketers frequently incorporate the symbols of higher- class membership--both as products and props--in advertisements targeted to lower social-class audiences

12. Downward mobility Social commentators have suggested that some young adults, particularly Gen-X’ers, are unlikely to do better than, or even as well as, their parents The number of young men reaching middle class income-levels by their 30 th birthday has been declining

13. The middle class is shrinking in size and purchasing power The upper class is growing in size and purchasing power The lower class is growing in size but not in purchasing power The rich are getting richer and the poor are getting poorer We are becoming a two-tiered society  The haves  The have-nots

14. Today U.S. has the most unequal distribution of wealth and income of any western society The wealthiest 1% own more wealth than the bottom 95% The richest 13,000 families earn more than the bottom 20 million In 1997, Bill Gates owned more wealth than the bottom 45% of American households combined Over the last 30 years, the top 100 CEO’s went from earning 39 times the pay of their ordinary workers to more than 1,000 times Median household net worth matches the sticker price of a new Ford Expedition

15. Marketing implications Many marketers have adopted a “Tiffany/Wal-Mart” strategy

16. Measuring social class There is no general agreement on how to measure social class Researchers are uncertain about the underlying dimensions of social class structure Systematic approaches for measuring social class fall into the following broad categories: 1. Subjective measures 2. Reputational measures 3. Objective measures

17. 1. Subjective measures Individuals are asked to estimate their own social class positions; response is based on participants’ self-perceptions or self-images Can lead to an inaccurate profile of social classes Subjective measures of social class membership tend to produce an overabundance of people who classify themselves as middle class

18. 2. Reputational measures Selected community informants make initial judgments concerning the social class membership of others within the community Trained researchers then assign community members to social class positions

19. 3. Objective measures Researchers use questionnaires that ask respondents several factual questions about themselves, their families, or their places of residence 1. Amount and source of income 2. Location and type of residence 3. Education 4. Possessions

20. Marketing managers who have developed socioeconomic profiles of their target markets can locate these markets by studying socioeconomic data provided by  the U.S. Bureau of the Census  numerous commercial geodemographic data services  mass media organizations

21. Indexes Objective measures of social class fall into two basic categories: 1. Single-variable indexes 2. Composite-variable indexes

22. Single-variable indexes Occupation is the most widely accepted single variable Occupation often equates with other variables, such as  Education  Income level

23. Business executives and professionals who are self-employed or entrepreneurs are substantially more likely to be very wealthy than their counterparts who work for someone else This link is consistent with the trend of increasing numbers of business school graduates seeking to work for themselves rather than going to work for “big business”

24. 1. Education Generally speaking, the more education a person has, the more likely it is that the person is well paid and has an admired or respected position

25. The Relationship between Formal Education and Household Income Under $10,00031.911.7 $10,000 to $14,99918.08.5 NO MORE THAN ELEM. SCHOOLTOTAL ALL HOUSEHOLDS100% $15,000 to $24,99922.015.5 $25,000 to $34,99912.014.0 $35,000 to $74,9995.617.6 $75,000 and Over2.115.6 Households (000’s)8,06294,364 Median income$15,043$35,235 24.4 16.0 SOME HIGH SCHOOL 100% 23.3 13.3 7.5 3.3 9,683 $18,298 11.4 9.1 HIGH SCHOOL GRAD. 100% 18.2 16.9 8.7 29,507 $31,376 8.3 6.8 1 TO 3 YEARS OF COLL. 100% 14.5 15.1 21.2 14.3 23,670 $39,637 3.3 4+ YEARS OF COLL. 100% 7.5 10.3 23.2 35.2 23,424 $58,052

26. 2. Income Researchers use either amount or source Not all researchers agree on this variable as an accurate indicator of social class It is the difference in values, not money, that differentiates social classes

27. Overprivileged middle class are more likely to own products such as campers, motorboats, pickup trucks, tractor lawnmowers, and backyard swimming pools Underprivileged upper class are more likely to spend money on private club memberships, special educational experiences for their children and cultural objects and events

28. 3. Possessions Chapin’s Social Status Scale focuses on the presence of certain items of furniture and accessories in the living room Lower class families are likely to place their television sets in the living room Middle class families usually place their television sets in the bedroom or family room

29. Composite-variable index Variables vary depending on the specific index chosen Index of status characteristics measures the following socioeconomic variables: Occupation Source of income House type Dwelling area (quality of neighborhood)

30. Socioeconomic Status Scores, developed by the Bureau of the Census, combines the three basic variables:  Occupation  Amount of family income  Educational attainment