Buyer Behaviour Income and Social Class

1. Buyer BehaviourIncome and Social Class Chp. 13 with Duane Weaver

2. Income & Social ClassOUTLINE • INCOME PATTERNS • $PENDING • Consumer Confidence • Social Class • Impacts • Measuring • Affect on Purchase Decisions

3. INCOME PATTERNS • Average Cdn. Income is up • Steady increase in working women, thus middle & upper income Family earnings UP! • Education increases income2006 results: • 50%+ Cdns. with some post secondary education/income • 25% have some University, 16%+ have degree

4. or + ? $PENDING • Discretionary Incomea.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??^^^

5. Consumer Confidenceand 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)

6. 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)

7. 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.

8. 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, ethnicstatus, job status, & actual social behaviour

9. 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

10. SOCIAL CLASS’sAffect 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)

11. SOCIAL CLASS’sAffect 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.

12. Thank You