Social Class and Consumer Behavior

Social Class

The division of members of a society into a hierarchy of distinct status classes, so that members of each class have either higher or lower status than members of other classes

Social Class and Social Status

Social status is usually defined in terms of one or more of the following socioeconomic variables:
Family Income Occupational Status Educational Attainment

The Measurement of Social Class

Subjective Measures Reputational Measures Objective Measures

Subjective Measures

In the subjective approach to measuring social class, individuals are asked to estimate their own socialclass positions.

Reputational Measures

The reputational approach requires selected community informants to make initial judgments concerning the social-class membership of others within the community.

Objective Measures

A method of measuring social class whereby individuals are asked specific socioeconomic questions concerning themselves or their families On the basis of their answers, people are placed within specific social-class groupings.

Objective Measures
Single-variable indexes
Occupation Education Income Other Variables

Composite-variable indexes
Index of Status Characteristics Socioeconomic Status Score

SingleVariable Index

The use of a single socioeconomic variable (such as income) to estimate an individuals relative social class.

Chapins Social Status Scale

A social class rating scheme that focuses on the presence or absence of certain items of furniture and accessories in the home.

CompositeVariable Index

An index that combines a number of socioeconomic variables (such as education, income, occupation) to form one overall measure of social class standing.

Index of Status Characteristics (ISC)

A composite measure of social class that combines occupation, source of income (not amount), house type and dwelling area into a single weighted index of social class standing. Also known as Warners ISC.

Socioeconomic Status Score (SES)

A multivariable social class measure used by the United States Bureau of the Census that combines occupational status, family income, and educational attainment into a single measure of social class standing.

Table 11.7 Social-Class Profiles

THE UPPER-UPPER CLASS--COUNTRY CLUB ESTABLISHMENT Small number of well-established families Belong to best country clubs and sponsor major charity events Serves as trustees for local colleges and hospitals Prominent physicians and lawyers May be heads of major financial institutions, owners of major longestablished firms Accustomed to wealth, so do not spend money conspicuously THE LOWER-UPPER CLASS--NEW WEALTH Not quite accepted by the upper crust of society Represent new money Successful business executive Conspicuous users of their new wealth

Table 11.7 continued

THE UPPER-MIDDLE CLASS--ACHIEVING PROFESSIONALS Have neither family status nor unusual wealth Career-oriented Young successful professionals, corporate managers, and business owners Most are college graduates, many with advanced degrees Active in professional, community, and social activities Have a keen interest in obtaining the better things in life Their homes swerve as symbols of their achievements Consumption is often conspicuous Very child-oriented

Table 11.7 continued

THE LOWER-MIDDLE CLASS--FAITHFUL FOLLOWERS Primary nonmanagerial white-collar workers and highly paid bluecollar workers Want to achieve respectability and be accepted as good citizens Want their children to be well-behaved Tend to be churchgoers and are often involved in church-sponsored activities Prefer a neat and clean appearance and tend to avoid faddish or highlystyled clothing Constitute a major market for do-it-yourself products

Table 11.7 continued

THE UPPER-LOWER CLASS--SECURITY-MINDED MAJORITY The largest social-class segment Solidly blue-collar Strive for security (sometimes gained from union membership) View work as a means to buy enjoyment Want children to behave properly High wage earners in this group may spend impulsively Interested in items that enhance their leisure time (e.g., TV sets) Husbands typically have a strong macho self-image Males are sports fans, heavy smokers, beer drinkers THE LOWER-LOWER CLASS--ROCK BOTTOM Poorly educated, unskilled laborers Often out of work Children are often poorly treated Tend to live a day-to-day existence

Geodemographic Clusters

A composite segmentation strategy that uses both geographic variables (zip codes, neighborhoods, or blocks) and demographic variables (e.g., income, occupation, value of residence) to identify target markets.

PRIZM (Potential Rating Index by Zip Market)

A composite index of geographic and socioeconomic factors expressed in residential zip code neighborhoods from which geodemographic consumer segments are formed.

Understanding the India-Social Class Scenario

The Socio-Economic Classification Grid

Conventional SEC Parameters Reclassified SEC Parameters

Consumer Behavior and Social Class

Clothing, Fashion, and Shopping The Pursuit of Leisure Saving, Spending, and Credit Social Class and Communication

The Lorenz curve is a graphical representation of the cumulative distribution function of the empirical probability distribution of wealth; it is a graph showing the proportion of the distribution assumed by the bottom y% of the values. It is often used to represent income distribution, where it shows for the bottom x% of households, what percentage y% of the total income they have. The percentage of households is plotted on the x-axis, the percentage of income on the y-axis. It can also be used to show distribution of assets. In such use, many economists consider it to be a measure of social inequality. It was developed by Max O. Lorenz in 1905 for representing inequality of the wealth distribution. It is also useful in business modeling: e.g., in consumer finance, to measure the actual delinquency Y% of the X% of people with worst predicted risk scores.

Gini Coefficient
The Gini coefficient measures the inequality among values of a frequency distribution (for example levels of income). A Gini coefficient of zero expresses perfect equality where all values are the same (for example, where everyone has an exactly equal income). A Gini coefficient of one (100 on the percentile scale) expresses maximal inequality among values (for example where only one person has all the income). The Gini coefficient is the area between the line of perfect equality and the observed Lorenz curve, as a percentage of the area between the line of perfect equality and the line of perfect inequality. The higher the coefficient, the more unequal the distribution is. In the diagram on the right, this is given by the ratio A/(A+B), where A and B are the indicated areas.