Lesson 4 – CONSUMERS IN THEIR SOCIAL AND CULTURAL SETTING
Unit 2 – Income and Social Class
Overview
There are many ways to spend money, and there’s also a wide gulf between those who have it and those who don’t. Perhaps an equally wide gap exists between those who have had it for a long time and those who “made it the hard way—by earning it!” In this unit, we briefly consider how general economic conditions affect the way we allocate our money. Then, to reflect the adage that says, “The rich are different,” we’ll explore how people who occupy different positions in society consume in very different ways.
Learning Objectives
• Our confidence in our future, as well as in the overall economy, determines how freely we spend and the types of products we buy.
• We group consumers into social classes that say a lot about where they stand in society.
• Individuals’ desires to make a statement about their social class, or the class to which they hope to belong, influence the products they like and dislike.
Course materials
Our confidence in our future, as well as in the overall economy, determines how freely we spend and the types of products we buy.
The field of behavioral economics studies how consumers decide what to do with their money. Consumer confidence—the state of mind consumers have about their own personal situation, as well as their feelings about their overall economic prospects—helps to determine whether they will purchase goods and services, take on debt, or save their money.
We group consumers into social classes that say a lot about where they stand in society.
A consumer’s social class refers to his or her standing in society. Factors including education, occupation, and income determine the class to which we belong. Virtually all groups make distinctions among members in terms of relative superiority, power, and access to valued resources. This social stratification creates a status hierarchy in which
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consumers prefer some goods to others. Although income is an important indicator of social class, the relationship is far from perfect. Factors such as place of residence, cultural interests, and worldview also determine social class. As income distributions change around the world, it is getting more difficult to distinguish among members of social classes; many products succeed because they appeal to a newly emerging group that marketers call the mass class (people with incomes high enough to purchase luxury items, at least on a small scale).
Individuals’ desires to make a statement about their social class, or the class to which they hope to belong, influence the products they like and dislike.
Conspicuous consumption, when a person flaunts his status by deliberately using up valuable resources, is one way to “buy up” to a higher social class. Nouveau riches, whose relatively recent acquisition of income rather than ancestry or breeding accounts for their enhanced social mobility, are the most likely to do this. We use status symbols (usually scarce goods or services) to communicate our standing to others. Parody display occurs when we seek status by deliberately avoiding fashionable products.
Read:
Chapter 12 – Income and Social Class
Consumer Behavior 12e
by: Michael R. Solomon
Activities/assessment:
Answer the following Review Questions:
1. How have women contributed to the overall rise in income in our society?
2. Define discretionary income.
3. How does consumer confidence influence consumer behavior?
4. What is a pecking order?
5. Explain what is meant by achieved versus ascribed status.
6. Is income alone a good determinant of social class?
7. What is income inequality, and why is it a problem?
8. How are attitudes toward luxury categorized according to SRI Consulting Business Intelligence?
9. In some countries it is difficult to measure and quantify social class. Why might this be the case?
10. What are the main motivators in purchasing a status symbol?
11. What is the term used to describe an individual’s aesthetic and intellectual preferences?
12. Describe the difference between a restricted and an elaborated code. Give an example of each.

13. How do the elites restrict access to their group?
14. What are the three identified strategies used by consumers if counterfeiting is common in their preferred brands?
15. What roles do status symbols play in purchase decisions?
16. What is meant by the term “calculated consumption”?
17. What is a current example of parody display?
18. Describe what we mean by the term mass class and summarize what causes this phenomenon.