CHAPTER 04 The Changing American Society: Demographics and Social Stratification McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc All rights reserved PART II: EXTERNAL INFLUENCES 4-2 Learning Objectives L0 L0 L0 L0 L0 L0 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 4-3 Consumer Behavior In The News… Where Is The Growth For Luxury Brands?  Who 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 4-4 Consumer Behavior In The News… Where Is The Growth For Luxury Brands?  Who you think will fuel growth in luxury brands in the future?  Emerging Group – Under 35 years old with $100k199k 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 4-5 Demographics and Social Stratification Demographics Population and Size Occupation Education Income Age 4-6 Demographics and Social Stratification 4-7 Demographics and Social Stratification 4-8 Demographics and Social Stratification 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 18-24 25-34 35-44 45-54 55-64 65+ 4-10 4-19 4-19 Understanding American Generations Targeting Generation 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 Vibration Online Media Helps Firms Reach Gen Y and Z YouTube Spotlight 4-20 Applications in Consumer Behavior 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 Social Stratification 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 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 not exist in the U.S or most other industrialized societies 4-23 Social Stratification 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 Structure in the United States Social Standing is Derived and Influences Behavior 4-25 Social Structure in the United States 4-26 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 4-27 Social Structure in the United States Middle Americans Upward Pull Strategy 4-28 Measurement of Social Class 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 • 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 • Multi-Item Index Hollingshead Index of Social Position Index of Social Position (ISP) 4-31 Measurement of Social Class Demographics or Social Status? 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! 4-32 Social Stratification and Marketing 4-33 ... 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... use of music, language and images key to remain relevant and fresh Vibration Online Media Helps Firms Reach Gen Y and Z YouTube Spotlight 4-20 Applications in Consumer Behavior EVO 3D Superphone... 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