Consumer Behaviour - Assignment

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This chapter begins by considering how people appear based on the products we surround ourselves with.

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Tightwads hate to part with their money and actually experience emotional pain when they make purchases. Spendthrifts enjoy nothing more than spending. Frugality seems to be driven by a pleasure of saving, compared to tightwaddism which is driving by a pain of paying. Consumer research on attitudes toward money found eight segments. These ranged from crash dieters who would try to cut out all nonessential spending until things improved to vultures who circle the market looking for bargains.

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Behavioral economics is also called economic psychology. It is the study of the human side of economic decisions. Consumers’ beliefs about what the future holds are an indicator of consumer confidence. Consumer confidence is a measure of how optimistic or pessimistic people are about the future health of the economy and how they predict they’ll fare down the road. When people are optimistic about the future, they tend to reduce their savings rate. In addition, world events and culture affect overall savings rates. The person depicted in the Bianco ad is tired of hearing about the financial crisis.

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Plutonomy to describe an economy that’s driven by a fairly small number of rich people.

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Social mobility refers to the passage of individuals from one social class to another. Horizontal mobility occurs when a person moves from one position to another that is roughly equal. For instance, when a nurse becomes an elementary school teacher, horizontal mobility has occurred. Upward mobility means moving to a higher status. Downward movement is losing social status. Overall though most people remain in their social class. The improvements people make are not sufficient to shift them into a whole other class. The exception is when someone marries someone who is much richer.

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SBI divides consumers into three groups based on their attitudes toward luxury. Consumers who use their money to buy things that will last and have enduring value view luxury as functional. Those who use luxury goods to say “I’ve made it” view luxury as a reward. Those who seek out luxury goods in order to illustrate their individuality take an emotional approach to luxury spending and view luxury as indulgence.

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We typically assume that marketers are targeting consumers at the top of the pyramid. Those are consumers with the highest incomes but they are also a small percentage of the world market. There are also marketers targeting the bottom of the pyramid. 78% of the global population is low income consumers whose purchasing power is under $10,000 per year.

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This figure illustrates how marketers can market to low-income consumers. The As include awareness, affordability, availability, and acceptability.

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You may wish to consider the types of spending and saving categories shown in the Marketing Opportunity box in this segment. Is your own spending reflected in one of the types?

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Our second learning objective focuses on social class and how consumer behavior relates to social class.

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We use the term social class to describe the overall rank of people in a society. People who belong to the same social class have approximately equal social standing in the community. They work in similar occupations and tend to have similar lifestyles. We tend to marry people in a similar social class to ours, a tendency that sociologists call homogamy.

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Social stratification refers to the creation of artificial divisions among people such that some members get more resources than others by virtue of their relative standing, power, or control in the group. In groups, some resources are earned through hard work and this is known as achieved status. Others may get resources because of who they are and this is known as ascribed status. Most groups do exhibit a status hierarchy where some members are better off than others.

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Social class includes multiple determining factors but two highly influential factors are occupational prestige and income. Occupation is considered the best indicator of social class because it is strongly linked to use of leisure time, allocation of family resources, aesthetic preferences, and political orientation. The distribution of wealth determines which groups have the greatest buying power and market potential.

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The process of social stratification refers to this creation of artificial divisions, “those processes in a social system by which scarce and valuable resources are distributed unequally to status positions that become more or less permanently ranked in terms of the share of valuable resources each receives.” Most groups exhibit a structure, or status hierarchy in which some members are better off than others. They may have more authority or power, or other members simply like or respect them. In a system in which (like it or not) we define people to a great extent by what they do for a living, occupational prestige is one way we evaluate their “worth.” A worldview is another way to differentiate among social classes. To generalize, the world of the working class (i.e., the lower-middle class) is more intimate and constricted. For example, working-class men are likely to name local sports figures as heroes and are less likely to take long vacation trips to out-of-the-way places. Many well-off consumers seem to be stressed or unhappy despite or even because of their wealth, a condition some call affluenza. Cosmopolitanism is an aspect of worldview that is starting to receive more attention by consumer behavior researchers, who define a cosmopolitan as someone who tries to be open to the world and who strives for diverse experiences (not to be

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Social class and income can be useful in predicting consumer choices, but not always.

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Social class remains an important way to categorize consumers. However, marketers fail to use social class information as effectively as they could because of the reasons above.

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It’s becoming more difficult to identify social class from product choices. Think about how many college women you know who have a Coach purse but eat ramen noodles for dinner.

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A taste culture describes consumers in terms of their aesthetic and intellectual preferences. This concept helps us to understand subtle distinctions in consumer choices. Another approach to social class focuses on codes, the ways consumers express and interpret meanings. Restricted codes focus on the content of objects, rather than on the relationships among objects. Elaborated codes are more complex.

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In one study of social differences in taste, researchers catalogued home owners’ possessions as they sat in their living rooms and asked them about their income and occupation. They identified clusters of furnishings and decorative items that seemed to appear together with some regularity. They found different clusters based upon social status as shown in the figure.

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The transformation of Burning Man from what used to be known as a countercultural celebration to a showcase for wealth illustrates Bourdieu’s concept of social capital. Cultural capital refers to a set of distinctive and socially rare tastes and practices—knowledge of “refined” behavior that admits a person into the realm of the upper class. Glamping is glamorous camping. The “psychic income” we get when we post reviews that others validate creates a reputation economy, in which the “currency” people earn is approval rather than cold hard cash. And, like exclusive country clubs, online gated communities that selectively allow access to some people may offer a high degree of social capital to the lucky few who pass the test.

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For Veblen, we buy things to create invidious distinction this means that we use them to inspire envy in others through our display of wealth or power. Veblen coined the term conspicuous consumption to refer to people’s desires to provide prominent visible evidence of their ability to afford luxury goods. Although status seeking through product consumption and display is a worldwide phenomenon, some find the best tactic is to do the opposite. In that case, status is attained by avoiding it. Social scientists call this form of conspicuous consumption parody display. This phenomenon of conspicuous consumption was, for Veblen, most evident among what he termed the leisure class people for whom productive work is taboo. In recent years the tables have turned as older women—who increasingly boast the same incomes and social capital as their male peers—seek out younger men as arm candy. These so-called cougars. In contrast, some people may feel the need to almost hit others over the head with their bling; they use “loud signals, one set of researchers labels these differences brand prominence. Brands like Louis Vuitton, Gucci, and Mercedes vary in terms of how blatant their status appeals (e.g., prominent logos) are in advertisements and on the products themselves—or in other words, in the type of status signaling they

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How do people who buy luxury goods handle it when that brand is counterfeited? They may flight, reclaim, or abrand. Flight means they stop using the brand. Reclamation means they try to establish their long-term relationship with the real brand. Abrand means they minimize the visibility of their luxury goods so that only those who also have the real thing know that they also have the real thing.

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Consumers engage in conspicuous consumption as a way to display status markers, yet the prominence of these markers varies from products with large recognizable emblems to those with no logo at all. Those in the know can recognize a subtle status marker. In contrast, others may try to use loud signals to ensure others spot their status markers. These differences are labeled brand prominence. Consumers in this typology are assigned to one of four consumption groups based on their wealth and need for status. These are patricians, parvenus, poseurs, and proletarians.

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Do you use quiet or loud signals or perhaps a mixture of both?

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