Consumer Behaviour - Chapter 4

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
L01
L02
L06
L05
L04
L03
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 Distribution1
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. A Generation or age cohort is a
group of persons who have
experienced a common social,
political, historical, and economic
environment.
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
- Ailing Outgoers
- 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
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 is one’s position relative to others on one or
more dimensions valued by society, also referred to as
social class and social standing.
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, 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
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 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 Index
Hollingshead Index of Social Position
Index of Social Position (ISP)
4-31
Measurement of Social Class

32. 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.
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