Chapter 12: Income, Social Class, and Family Structure

Question 1

12.2 We group consumers into social classes that say a lot about where they stand in society.

Answer 1

12.2 We group consumers into social classes that say a lot about where they stand in society.

Question 2

Social Class

Answer 2

The overall rank of people in a society; people who are grouped within the same social class are approximately equal in terms of their social standing, occupation, and lifestyle

People who belong to the same social class have approximately equal social standing in the community. They work in roughly similar occupations, and they tend to have similar lifestyles by virtue of their income levels and common tastes. These people tend to socialize with one another and share many ideas and values regarding the way life should be lived

Question 3

The place a person occupies in the social structure is an important determinant not just of _______ money is spent but also _______ is spent.

Answer 3

how much

how it

Question 4

Old money

Answer 4

People who have had money for a long time and do not need to prove it

Aka: they dont need to spend their money to show they have money to spend

Question 5

New money

Answer 5

In contrast, consumers who are relative newcomers to affluence might allocate the same amount of money very differently

Question 6

Example of careful spending based on income status

Answer 6

The moissanite market is projected to hit $50 million by 2025. So, after all is said and done, are diamonds “still a girl’s best friend?

Fake wedding rings so you can go on a nice honey moon or pay for a mortgage

Question 7

Pecking order

Answer 7

Not the chicken example

But the fact that society has a pecking order ranked in terms of their relative standing in society

Our standing determines our education, housing, consumer goods

Question 8

The German sociologist Max Weber showed that the rankings people develop are not one-dimensional;

Answer 8

some rankings involve prestige or “social honour” (he called these status groups), some focus on power (or party), and some revolve around wealth and property (class)

Question 9

homogamy or “assortative mating

Answer 9

We tend to marry people similar in social class to ourselves

Question 10

Social stratification

Answer 10

The process 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

Question 11

reputation economy

Answer 11

this term refers to the “currency” people earn when they post comments online and others recommend their comments

Question 12

Achieved status

Answer 12

Your hard work has led you to be better off

“Every hair in my mink coat represents a toilet I’ve cleaned.”

Question 13

Ascribed status

Answer 13

Born with the silver spoon

Some socialites, such as Paris Hilton and Kim Kardashian, have been criticized because their fame seems to have more to do with ascribed status than with their talent or hard work.

Question 14

Status hierarchy

Answer 14

A ranking of social desirability in terms of consumers’ access to such resources as money, education, and luxury goods

Question 15

Income inequality

Answer 15

the extent to which resources are distributed unevenly within a population

Question 16

Social mobility

Answer 16

The movement of individuals from one social class to another

Question 17

Horizontal mobility

Answer 17

occurs when a person moves from one position to another that is roughly equivalent in social status; for instance, a nurse becomes an elementary school teacher

Question 18

Downward mobility

Answer 18

movement none of us wants but, unfortunately, we observe this pattern when displaced workers are forced to go on social assistance or people join the ranks of the homeless

Question 19

The top three countries for encouraging mobility were

Answer 19

Denmark, Austria, and Norway

Question 20

China Class Structure

Answer 20

Nike shoes are a a symbol of success

Items in China are not as expensive meaning a family that makes under the North American poverty line can still have nice clothes and fancy items

Question 21

Japan Class Structure

Answer 21

Tsunami hurt their economy but japan also cares for high quality items.

They like to splurge to give the illusion of wealth to help reduce their anxieties

Single working women buy the most luxury items

Question 22

Middle East Class structure

Answer 22

Few arab women work

But many arab women like to shop with their friends

Question 23

The United Kingdom Class Structure

Answer 23

• Very class conscious

- Marketing chavs’ as a group

Question 24

India Class Structure

Answer 24

• Half of population lives on less than $1.25 a day

- Dogs are a symbol of wealth

Question 25

Brazil Class Structure

Answer 25

- Showing off wealth is important as it commands respects | - Work of arts is important

Question 26

Mass class

Answer 26

This segment comprises the hundreds of millions of global consumers who now enjoy a level of purchasing power that enables them to afford high-quality products—except for big-ticket items such as university educations, housing, or luxury cars Examples: Latin Americans have their Volkswagen Beetle (affectionately called el huevito, the little egg); Indian consumers had their Maruti 800 in production for almost thirty years75 (selling for as little as $5720); and the Fiat Palio, the company’s “world car,” targeted people in 40 countries worldwide

Question 27

Occupational prestige

Answer 27

the notion that some occupations are more respected than others Stable over time and similar across cultures Single best indicator of social class

Question 28

Social Class facts How Income Relates to Social Class Whether social class or income is a better predictor of a consumer’s behaviour depends on the type of product:

Answer 28

Social class is a better predictor of purchases that have symbolic aspects but low-to-moderate prices (e.g., cosmetics and liquor). Income is a better predictor of major expenditures that do not have status or symbolic aspects (e.g., major appliances). Both social class and income data are needed to predict purchases of expensive, symbolic products (e.g., cars and homes).

Question 29

Potent actors

Answer 29

those who believe they have the ability to take actions that affect their world For example, the professionals in the study who were likely to be potent actors set themselves up for financial opportunity and growth

Question 30

Impotent reactors

Answer 30

those who feel they are at the mercy of their economic situations

Question 31

Affluenza

Answer 31

Many well-off consumers seem to be stressed or unhappy despite or even because of their wealth

Question 32

three groups on the basis of their attitudes toward luxury:

Answer 32

1) LUXURY IS FUNCTIONAL 2) LUXURY IS A REWARD 3) LUXURY IS INDULGENCE

Question 33

1) LUXURY IS FUNCTIONAL

Answer 33

Summary: Logical purchases, not impulsive These consumers buy things that will last and have enduring value. They conduct extensive pre-purchase research and make logical decisions rather than emotional or impulsive choices.

Question 34

2) LUXURY IS A REWARD

Answer 34

Summary: Younger people...I’ve made it! These consumers tend to be younger than the first group but older than the third group. They often use luxury goods to say, “I’ve made it.” The desire to be successful and to demonstrate their success to others motivates these consumers to purchase conspicuous luxury items, such as high-end cars and homes in exclusive communities.

Question 35

3) LUXURY IS INDULGENCE

Answer 35

Summary: Lavish and self-indulgent This group is the smallest of the three and tends to include younger consumers and slightly more males than the other two groups. To these consumers, the purpose of owning luxury items is to be extremely lavish and self-indulgent. This group is willing to pay a premium for goods that express its individuality and make others take notice. These consumers have a more emotional approach to luxury spending and are more likely than the other two groups to make impulse purchases

Question 36

Old Money Famalies

Answer 36

(e.g., the Bronfmans, Westons, Killams, McCains) live primarily on inherited funds And they are secure in their status. In a sense, they have been trained their whole lives to be rich

Question 37

the working wealthy

Answer 37

In contrast to people with old money, today there are many people—including high-profile billionaires such as Bill Gates, Mark Cuban, and Richard Branson

Question 38

Nouveaux riches

Answer 38

describes consumers who recently achieved their wealth and who don’t have the benefit of years of training to learn how to spend it.

Question 39

loyalty programs

Answer 39

e.g., when airlines award you special status according to the number of miles you fly)

Question 40

Status Symbols

Answer 40

Products that are purchased and displayed to signal membership in a desirable social class

Question 41

Luxury goods often serve as status symbols, but the proliferation of inexpensive counterfeit products threatens to diminish their value

Answer 41

(“Hey buddy, wanna buy a genuine Rolex for $20?”)

Question 42

Fakes are a major headache for many manufacturers, especially in Asia: Officials estimate that ____ percent of counterfeit goods found in the United States, Europe, and Japan are made in China (and counterfeit goods make up 8 percent of China’s GDP)

Answer 42

72

Question 43

Researchers who interviewed consumers who purchased luxury fashion brands in India and Thailand identified three coping strategies:

Answer 43

1) Flight 2) Reclamation 3) Abranding

Question 44

1) Flight

Answer 44

They stop using the brand because they don’t want to be mislabelled as a lesser-status person who buys fake brands.

Question 45

2) Reclamation

Answer 45

They go out of their way to emphasize their long relationship with the brand but express concern that its image will be tarnished.

Question 46

3) Abranding

Answer 46

They disguise their luxury items in the belief that truly high-status people do not need to display expensive logos, and those who do so betray their lower status

Question 47

Conspicuous Consumption

Answer 47

refer to people’s desire to provide prominent, visible evidence of their ability to afford luxury goods

Question 48

Leisure Class

Answer 48

People for whom productive work it taboo

Question 49

Brand prominence

Answer 49

Degree to which a consumer desires to conspicuously display a brand, product, logo, to others

Question 50

Status crystallization

Answer 50

The extent which different indicators of a person's status (income, ethnicity, occupation) are consistent with one another

Question 51

Overprivileged

Answer 51

Having an income at least 25 to 30 percent greater then the median for one's class

Question 52

Underprivileged

Answer 52

Those who earn at least 15 percent less than the median of their social class, must often allocate a big chunk of their income toward maintaining the impression that they occupy a certain status

Question 53

Household living arrangements

Answer 53

whether or not the person lives with another person or persons and, if so, whether or not he or she is related to that person or persons

Question 54

Census Family

Answer 54

a married couple and the children, if any, of either or both spouses; a couple living common law and the children, if any, of either or both partners; or, a lone parent of any marital status with at least one child living in the same dwelling. . . . A couple may be of opposite or same sex. Grandchildren living with their grandparent(s) but with no parents present also constitute a census family

Question 55

Extended Family

Answer 55

Several generations live together Grandparents, aunts, uncles, cousins etc

Question 56

Nuclear Family

Answer 56

a mother and a father and one or more children

Question 57

Total fertility rate (TFR)

Answer 57

the average number of children that would be born per woman if all women lived to the end of their childbearing years and bore children according to a given fertility rate at each age.

Question 58

Many factors affect what a family spends, including:

Answer 58

the number of people (children and adults) in the family, their ages, and whether one, two, or more adults are employed outside the home

Question 59

Two especially important factors that determine how a couple spends time and money are

Answer 59

(1) whether they have children and | (2) whether the woman works outside the home

Question 60

Family Life Cycle

Answer 60

A classification scheme that segments consumers in terms of changes in income and family composition and changes in demands placed on income

Question 61

2) whether the woman works outside the home

Answer 61

Families with working mothers, for example, must often make allowances for expenses such as daycare, a work wardrobe for the woman, and home-cleaning services

Question 62

Twenty-somethings People in their 20's spending habits

Answer 62

spend less than average on most products and services because their households are small and their incomes are low, especially today

Question 63

______ consumers spend more per capita on luxury items, such as gourmet foods and upscale home furnishings

Answer 63

Older

Question 64

A life-cycle approach to the study of the family assumes that pivotal events alter role relationships and trigger new stages of life that alter our priorities.

Answer 64

These events include couples moving in together, the birth of a first child, the departure of the last child from the house, the death of a spouse, retirement of the principal wage earner, and divorce

Question 65

It’s particularly useful to get a handle on longitudinal changes in priorities when we want to predict demand for specific product categories over time.

Answer 65

For example, the money spent by a couple with no children on dining out and on vacations will probably be diverted for quite different purchases after the birth of a child.

Question 66

Have researches found a successful model to describe family life-cycle stages?

Answer 66

Ehh, no Researchers have proposed a number of models to describe family life-cycle stages, but their usefulness has been limited because, in many cases, they have failed to consider important social trends, such as the changing role of women, the acceleration of alternative lifestyles, child-free and delayed-child marriages, and single-parent households.

Question 67

Baby showers, for example, may be considered a rite of passage to motherhood, fatherhood, or parenthood, depending on the gender ideologies and work orientation of one or both parents.

Answer 67

Word

Question 68

Four variables to Measure the Family Life Cycle Effects on Buying

Answer 68

(1) age, (2) marital status, (3) the presence or absence of children in the home, and (4) the children’s ages

Question 69

Young bachelors and newlyweds

Answer 69

are more likely to engage in exercise; go out to bars, concerts, movies, and restaurants; go dancing; and drink alcohol. Perhaps reflecting the bounty of wedding gifts, newlyweds are the most likely to own appliances, such as toaster ovens and electric coffee grinders. The dollar value of homes, cars, and other durables is lowest for bachelors and single parents but it increases as people go through the full-nest and childless-couple stages.

Question 70

Couples with children

Answer 70

generally have higher expenses, such as for food and utility bills

Question 71

Families with young children

Answer 71

are more likely to consume health foods, such as fruit, juice, and yogurt, while families made up of single parents and older children buy more junk food

Question 72

Babysitters and daycare are, of course, highest among single-parent and full-nest households, while home-maintenance services (e.g., lawn-mowing) are most likely to be used by older couples and bachelors.

Answer 72

Facts

Question 73

Income Patterns

Answer 73

* A larger proportion of people of working age are in the labour force * 2015, employment trends for women showed an increase from 47 to 69 percent * 40 percent of wives in dual-earner couples make more than half of the family income * In couples with children 75 percent are dual-earning couples

Question 74

Consumer demand =

Answer 74

Willingness to buy + Ability to buy

Question 75

Discretionary income

Answer 75

Is the money available to a household over and above that required for a comfortable standard of living

Question 76

Changes as a household ages

Answer 76

Older households spend a much larger share of budget on shelter and transportation, and less on food and apparel Households are spending more now on entertainment and education

Question 77

Walmart study identified three distinct groups of consumers:

Answer 77

–Brand aspirationals: on low incomes but obsessed with names like KitchenAid. –Value-price shoppers: who like low prices and cannot afford more. –Price-sensitive affluents: wealthier shoppers who love deals.

Question 78

Behavioural economics / economic psychology

Answer 78

Is concerned with the “human” side of economic decisions

Question 79

Consumer confidence:

Answer 79

Extent to which people are optimistic or pessimistic about the future health of the economy Influences how much discretionary money we will pump into the economy

Question 80

Overall savings rate is affected by: The extent to which one saves money

Answer 80

–Pessimism/optimism about personal circumstances –National and World events –Cultural differences in attitudes toward savings

Question 81

Income in equality

Answer 81

The extent to which resources are distributed unevenly within a population.

Question 82

The education one has is directly related to?

Answer 82

Both occupation and income

Question 83

Taste culture

Answer 83

Differentiates people in terms of their aesthetic and intellectual preferences

Question 84

Upper and upper-middle class

Answer 84

more likely to visit museums and attend live theatre

Question 85

``` Middle-class Middle class ```

Answer 85

More likely to go camping and fishing

Question 86

Invidious distinction

Answer 86

We buy things to inspire envy in others through a display of wealth/ power

Question 87

How Do We Measure Social Class?

Answer 87

It is difficult to measure social class complexities * Index of Status Characteristics and the Index of Social Position developed by August Hollingshead * Blishen – Socioeconomic index for Occupations in Canada may be used when occupation is the most appropriate variable to use to collect information on socioeconomic status

Question 88

1971, the average Canadian family comprised close to 4.0 people, but in 2017 that slipped to 2.47

Answer 88

Therefore average family sizes are shrinking

Question 89

Sandwich Generation

Answer 89

Adults who care for their parents as well as their own children

Question 90

Boomerang kids:

Answer 90

Adult children who return to live with their parents –Canadian young men are far more likely than young women to live with their parents. –Spend less on housing and staples and more on discretionary purchases such as entertainment