Buyer Behaviour Income and Social Class Chp. 13 with Duane Weaver

Income & Social Class OUTLINE INCOME PATTERNS $ PENDING Consumer Confidence Social Class Impacts Measuring Affect on Purchase Decisions INCOME PATTERNS $ PENDING Consumer Confidence Social Class Impacts Measuring Affect on Purchase Decisions

INCOME PATTERNS Average Cdn. Income is up Steady increase in working women, thus middle & upper income Family earnings UP! Education increases income 2006 results: 50%+ Cdns. with some post secondary education/income 25% have some University, 16%+ have degree Average Cdn. Income is up Steady increase in working women, thus middle & upper income Family earnings UP! Education increases income 2006 results: 50%+ Cdns. with some post secondary education/income 25% have some University, 16%+ have degree

$ PENDING Discretionary Income a.k.a “disposable income” “the money available for a household over and above that required for a comfortable standard of living.” ^^^what does this really mean??^^^ Discretionary Income a.k.a “disposable income” “the money available for a household over and above that required for a comfortable standard of living.” ^^^what does this really mean??^^^ + or ?

Consumer Confidence and the propensity to spend Behavioural Economics (economic psychology) tries to determine: how consumers’ motives and expectations about the future affect the entire society’s economic well-being. Optimism vs. Pessimism Spend vs. Hoard/Save (e.g. Great Depression, severe weather, impending war, threats of terror…social or political unrest) Behavioural Economics (economic psychology) tries to determine: how consumers’ motives and expectations about the future affect the entire society’s economic well-being. Optimism vs. Pessimism Spend vs. Hoard/Save (e.g. Great Depression, severe weather, impending war, threats of terror…social or political unrest)

SOCIAL CLASS Social Class = a consumer’s standing Determined by a complex set of variables including income, family background, and occupation within a particular culture. (note we will look at cultural implications separately) Is it Have vs. Have not? What is the “have”??? How does the perception of social class impact the cognition of spending? (e.g. minimalism vs. materialism) Social Class = a consumer’s standing Determined by a complex set of variables including income, family background, and occupation within a particular culture. (note we will look at cultural implications separately) Is it Have vs. Have not? What is the “have”??? How does the perception of social class impact the cognition of spending? (e.g. minimalism vs. materialism)

IMPACTS of SOCIAL CLASS Pecking order Access to resources Tastes and Lifestyle Social stratification and status hiearchy Please get together with your team NOW: take 8 minutes to come up with one example for each of the above. Your examples should exemplify how social class impacts a decision to spend by that social group. Pecking order Access to resources Tastes and Lifestyle Social stratification and status hiearchy Please get together with your team NOW: take 8 minutes to come up with one example for each of the above. Your examples should exemplify how social class impacts a decision to spend by that social group.

Measuring Social Class Why bother? What is the value to a marketer, advertiser, or product manager? Complex concept that is difficult to measure Problems with metrics: Badly dated, not as relevant today Most based on traditional nuclear family Relies largely on interviewer’s judgment Mixed rankings: income, ethnic status, job status, & actual social behaviour Why bother? What is the value to a marketer, advertiser, or product manager? Complex concept that is difficult to measure Problems with metrics: Badly dated, not as relevant today Most based on traditional nuclear family Relies largely on interviewer’s judgment Mixed rankings: income, ethnic status, job status, & actual social behaviour

Measuring Social Class Social Class Segmentation Issues: Ignore status inconsistency Ignore intergenerational mobility Ignore subjective social class (self- identity vs. classification of value) Ignore aspirations to change one’s standing Ignore social status of working spouse Social Class Segmentation Issues: Ignore status inconsistency Ignore intergenerational mobility Ignore subjective social class (self- identity vs. classification of value) Ignore aspirations to change one’s standing Ignore social status of working spouse

SOCIAL CLASS’s Affect on Purchase Decisions Social class “standing” can be used to segment markets as we see examples of buyer behaviour that are related. E.g.: Working class focusing on Function and Yuppie focusing on Image. World-view of classes Taste cultures (aesthetic and intellectual preferences), codes (restricted v.s elaborated), cultural capital (destinctive rare practices) Social class “standing” can be used to segment markets as we see examples of buyer behaviour that are related. E.g.: Working class focusing on Function and Yuppie focusing on Image. World-view of classes Taste cultures (aesthetic and intellectual preferences), codes (restricted v.s elaborated), cultural capital (destinctive rare practices)

SOCIAL CLASS’s Affect on Purchase Decisions Targeting Social Class From what we have learned, how can we better target a specific social class? High income Middle income Low income Invidious distinction – products that inspire envy in others through display of wealth or power. Conspicuous consumption – people’s desire to provide prominent, visible evidence of their ability to afford luxury goods. Parody Display – seek status by reverse consumption, mocking status symbols. Targeting Social Class From what we have learned, how can we better target a specific social class? High income Middle income Low income Invidious distinction – products that inspire envy in others through display of wealth or power. Conspicuous consumption – people’s desire to provide prominent, visible evidence of their ability to afford luxury goods. Parody Display – seek status by reverse consumption, mocking status symbols.

Thank You