1. CHAPTER 04 The Changing American Society: Demographics and Social Stratification Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

2. 4-2 PART II: EXTERNAL INFLUENCES

3. Understand the critical role that demographics play in influencing consumer behavior Define the concept of generations and discuss the generations that exist in America Explain the concept of social stratification and the role that socioeconomic factors play Identify and discuss the major social classes in America Understand how social class is measured Discuss the role of social class in developing marketing strategies Learning Objectives 4-3

4. Where Is The Growth For Luxury Brands?  Who do you think will fuel growth in luxury brands in the future?  Aspiring Group – 35 years or older with income of $100k-199k in income (65% of all people who earn $100k or more per year)  Emerging Group – Under 35 years old with $100k-199k in income (12% of all people who earn $100k or more per year) Source: D. Hirschman, “On Road to Riches,” Advertising Age, May 23, 2011, p. 9. Consumer Behavior In The News… 4-4

5. Where Is The Growth For Luxury Brands?  Who do you think will fuel growth in luxury brands in the future?  Emerging Group – Under 35 years old with $100k- 199k in income – if you answered Emerging you are right!  Though smaller, Emerging are younger and will move into the truly affluent ($200k plus) – a big predictor of luxury purchases  Aspiring no longer “feel” wealthy in today’s economy, which relates subjective discretionary wealth (SDI) Source: D. Hirschman, “On Road to Riches,” Advertising Age, May 23, 2011, p. 9. Consumer Behavior In The News… 4-5

6.  Population and Size  Occupation  Education  Income  Age Demographics 4-6 Demographics and Social Stratification

7. 4-7 Demographics and Social Stratification

8. 4-8 Demographics and Social Stratification

9. Demographics  Age  U.S. Age Distribution 1  Key Growth Categories 1 “Resident Population Projections by Sex and Age: 2010 to 2050,” Statistical Abstract of the United States 2008 (Washington, DC: U.S. Bureau of the Census, 2008), Table 10. 4-9 Demographics and Social Stratification

10. 18-24 25-34 35-44 45-54 55-64 65+ 4-10 Demographics and Social Stratification

11. Generation age cohort A Generation or age cohort is a group of persons who have experienced a common social, political, historical, and economic environment. Cohort analysis Cohort analysis is the process of describing and explaining the attitudes, values and behaviors of an age group as well as predicting its future attitudes, values, and behaviors. 4-11 Understanding American Generations

12.  Pre-Depression  Depression  Baby Boom  Generation X  Generation Y  Generation Z Mature Market 4-12 Understanding American Generations

13. How to Target the Mature Market Gerontographics has identified the following four segments of the mature market: Healthy Indulgers - Healthy Indulgers Ailing Outgoers - Ailing Outgoers Health Hermits - Health Hermits - Frail Recluses 4-13 Understanding American Generations

14.  Compared to prior generations, Boomers are: Higher income, higher education More tech savvy Defining retirement differently  Boomers also are: Strong market for “anti-aging” products, travel, and financial services Often alienated by overly “youth oriented” appeals in ads Baby Boom Generation: A Closer Look 4-14 Understanding American Generations

15.  Marketers must look beyond the stereotypes: Stereotype 1 Boomers all have the same values and outlook Stereotype 2 Boomers are self-centered Stereotype 3 Boomers are not tech savvy Stereotype 4 Boomers are married empty nesters who are downsizing Stereotype 5 Boomers are all retiring early and wealthy Segmenting the Boomer Market 4-15 Understanding American Generations

16.  Beyond the stereotype:  Early stereotype – Xers as disenfranchised youth Reality 1– Xers are more highly educated than previous generations Reality 2– Xer women are more highly educated than Xer men Reality 3– Xers are getting married, having families and facing the time pressures associated with these events Reality 4– Reaching Xers requires special attention to media, particularly online Generation Xers: A Closer Look 4-16 Understanding American Generations

17.  Really Two Sub-Markets: Young Gen Y and Older Gen Y  Expected to have at least as high of education level as previous generation  Very tech savvy including Internet, text messaging, and social media  A strong market for apparel with brands like Metropark  Tapping into consumer-generated buzz works with the high level of social media of this segment Generation Yers: A Closer Look 4-17 Understanding American Generations

18. The following Video Clip demonstrates how FreeAgent.com tries to appeal to the Gen Y segment! 4-18 Video Application

19. 4-19

20. Targeting Generation Z 4-20 YouTube Spotlight Vibration Online Media Helps Firms Reach Gen Y and Z  Known as Digital Natives, Generation @, Net Generation  $200 billion purchase power!  Buying patterns formed as young teen will follow through life  Gen Z easily bored; use of music, language and images key to remain relevant and fresh Understanding American Generations

21. EVO 3D Superphone ad targets the active and diverse Gen Z “youth market.” Notice the use of texting and emphasis on device power. Courtesy HTC Corporation. 4-21 Applications in Consumer Behavior

22.  Social Rank and Social Class System  Status Crystallization  Social Structure in the United States  The Coleman-Rainwater Hierarchy  The Measurement of Social Class  Social Stratification and Marketing Strategy 4-22 Social Stratification

23. We are all familiar with the concept of social class, but most of us would have difficulty explaining our class system to a foreigner. Social rank Social rank is one’s position relative to others on one or more dimensions valued by society, also referred to as social class and social standing. social class system A social class system is a hierarchical division of a society into relatively distinct and homogeneous groups with respect to attitudes, values, and lifestyles. "Pure” social classes do not exist in the U.S. or most other industrialized societies. 4-23 Social Stratification

24. Status dimensions, such as parental status, education, occupation and income, set limits on one’s lifestyle, including one’s residence. Status crystallization Status crystallization, which is moderate in the U.S., reflects the consistency of these status dimensions. Web Exercise What Social Class are You? Play the “Chintz or Shag” Game from PBS Click button to link to PBS site 4-24 Social Stratification

25. Social Standing is Derived and Influences Behavior 4-25 Social Structure in the United States

26. 4-26 Social Structure in the United States

27. 4-27 Social Structure in the United States Source: Information for this table adapted from Richard P. Coleman, “The Continuing Significance of Social Class in Marketing,” Journal of Consumer Research, December 1983, p. 267; and Richard P. Coleman and Lee P. Rainwater, with Kent A. McClelland, Social Standing in America; New Dimensions of Class (New York, NY: Basic Books, 1978). *Income is 2010 inflation adjusted dollars using U.S. Consumer Price Index (CPI) data.

28. Upward Pull Strategy Middle Americans 4-28 Social Structure in the United States

29. There are two basic approaches to measuring social status: - Single-item index - Multi-item index - Multi-item index single-item indexes multi-item indexes Since an individual’s overall status is influenced by several dimensions, single-item indexes are generally less accurate than are well-developed multi-item indexes. 4-29 Measurement of Social Class

30. Single-Item IndexSingle-Item Index  Education  Occupation  Income Marketers generally think of these as direct influencers of consumption behavior rather than determinants of status that then influence behavior. 4-30 Measurement of Social Class

31. Multi-Item IndexMulti-Item Index  Hollingshead Index of Social Position  Index of Social Position (ISP) 4-31 Measurement of Social Class

32. Social statusdemographics Social status is largely derived from demographics; that is, one’s income, education, and occupation go a long way toward determining one's social class or status. social status demographic Should marketers use an overall measure of social status (a multi-item index) or a demographic variable such as income? Unless the marketer is interested in social standing per se, he/she will most likely focus on demographic characteristics as direct influencers on consumer behavior! Demographics or Social Status? 4-32 Measurement of Social Class

33. 4-33 Social Stratification and Marketing