Select a current or past music icon, and discuss his or her impact on consumer buying habits. Think about the music icon’s behavior, personality, dre

MAR 3211, Consumer Behavior 1

Course Learning Outcomes for Unit VII Upon completion of this unit, students should be able to:

2. Relate consumer behavior to public policy issues. 2.1 Explain state and federal government policy changes resulting from an event.

4. Examine how consumers are influenced by values as members of a particular culture.

4.1 Explain how consumers were affected by a company’s reaction to a catastrophic event.

8. Analyze how consumers evaluate product selections. 8.1 Summarize how a negative event influenced consumer buying.

Course/Unit

Learning Outcomes Learning Activity

2.1 Unit Lesson Essay

4 PowerPoint Presentation Lin (2012) article Lu, Li, Zhang, and Rai (2014) article

4.1 Unit Lesson Essay

8 PowerPoint Presentation Lin (2012) article Lu, Li, Zhang, and Rai (2014) article

8.1 Unit Lesson Essay Reading Assignment In order to access the following resources, click the links below. Click here to access the Unit VII PowerPoint presentation. (Click here to access a PDF version of the presentation.) Lin, E. (2012). Starbucks as the third place: Glimpses into Taiwan's consumer culture and lifestyles. Journal

of International Consumer Marketing, 24(1/2), 119–128. https://libraryresources.columbiasouthern.edu/login?auth=CAS&url=http://search.ebscohost.com/logi n.aspx?direct=true&db=a9h&AN=71707958&site=ehost-live&scope=site

Read pp. 300–306 and 310–313 in the following article: Lu, X., Li, Y., Zhang, Z., & Rai, B. (2014). Consumer learning embedded in electronic word of mouth. Journal

of Electronic Commerce Research, 15(4), 300–316. https://libraryresources.columbiasouthern.edu/login?auth=CAS&url=http://search.proquest.com.library resources.columbiasouthern.edu/docview/1629950036?accountid=33337

UNIT VII STUDY GUIDE Social Class and Lifestyles

MAR 3211, Consumer Behavior 2

UNIT x STUDY GUIDE Title

Unit Lesson In this unit, we will discuss another component of influence—income and social class; influence has been a subculture throughout history. Social classes can influence lifestyles, opinions, attitudes, and behaviors. Certain products/services are identified as status symbols with certain social classes, not only in the United States but also worldwide. Consumer identity is clearly shown by the consumer’s social class and lifestyle, both of which are tied to his or her income. A consumer’s confidence in his or her future and the state of the overall economy have a significant impact on how freely he or she spends and the types of products purchased. People have different attitudes toward money—from “tightwads” who hate to part with their money to “spendthrifts” who enjoy spending and buying. Eight consumer segments have been identified below.

Each of these segments represents a different way of thinking about money and spending. How do you feel about money? Which of these segments would you fit? Do you think other people might agree with your ranking of yourself? How others perceive you is important to most people. Social class describes the rank of people in society who tend to align with one’s personal social standing. Achieved status refers to individuals who have earned their status through hard work while ascribed status refers to individuals who have acquired their status as a result of being born with that status. Periodically, certain individuals will pass from one social class to another, and that is referred to as social mobility. How is social class determined? Typically, it is determined based on occupational prestige and income. Occupational prestige suggests that we use the individual’s occupation to evaluate his or her worth. This aligns with the second determinant of social class—income. Income looks at the distribution of wealth as it aligns with the amount of buying power the individual might have. What does all this mean to marketers? Many marketers purposely target the upscale markets with the idea that these individuals have the resources to spend more money. While this might be a good supposition, one needs to remember that every wealthy consumer does not necessarily desire to spend. It truly depends on where and how they obtained their money as well as how long they have had it. Another current wave of thought is to appeal to the bottom of the pyramid (BOP) or the low-income consumers. It is important to note that more than 14% of Americans live below the poverty line, and most marketers simply ignore this group

The illustration shows eight consumer segments.

Crash dieters

Try to eliminate all items from the budget

Vultures Lurk in the discount or closeout sections for the best deals

Ostriches Refuse to acknowledge spending habits

Balancers Choose some lower-priced items so they can afford preferred items in other areas

Treaters Give themselves a treat each time they cut back on spending

Justifiers Justify spending as long as there is a good reason

Abstainers Hold off on saving and end up using credit cards to avoid paying now

Scrimpers Avoiding eliminating certain things; they choose the bargain brands of their favorite items

MAR 3211, Consumer Behavior 3

UNIT x STUDY GUIDE Title

(Feeding America, n.d.). While these individuals do not have a huge spending base, they have the same basic needs to purchase these items. It is for this reason and the fact that this group is large in number that some marketers are taking a second look at this set. It is a good assumption that companies that engage with the BOP consumers are attempting to sell products at very low prices with a low margin. The key is to sell high quantities with the hopes of making a profit based on volume. While this model seems to be a viable option, there needs to be an exceptional margin of about 50%, which is well above the 30% penetration that guides many companies. Selling to these villages is inefficient and tedious. While this sounds negative, it can be done by building the contribution margin through higher price points and higher margins. Social classes in the United States are a bit fluid compared to some countries across the globe. The generally accepted social classes are identified in the chart below.

Social Class Description Upper-upper Old rich Lower-upper New rich Upper-middle Professionals and owners Lower-middle Lower-paid white collar workers and higher-paid

blue collar workers Upper-lower Blue collar workers Lower-lower Underemployed and unemployed

An interesting fact is that the richest 20% of people in the United States earn half of all the income while the poorest 20% earn 3% of all the income (Frohlich, 2015). This statistic is quite telling. While this structure seems functional, it has its issues. It tends to ignore status inconsistencies, discourage intergenerational mobility, have subjective social class, and discourage consumer aspirations to change social standing. Lifestyles are another area that influence consumer identity. This refers to the idea that people will separate themselves based on the things they like to do, how they spend their leisure time, and how they spend their disposable income. All three of these components are interrelated. Within the lifestyle areas, there could be several different social classes of people that have the same lifestyle preferences. Psychographics is another area that assists marketers in segmenting the market. Using psychological, sociological, and anthropological factors assists the marketer in developing a detailed profile of the target market and to determine why they make decisions about certain products, ideologies, people, or otherwise. The marketer uses demographics to determine who buys and psychographics to determine why they buy. A research tool used by marketers to group consumers according to activities, interests, and opinions is AIO. The idea is for marketers to group consumers who have similar activities and patterns of usage in order to draw analogies to enable them to prepare more effective marketing campaigns. Additionally, marketers use this tool to define the target market, create a new view of the market, position the product, communicate product attributes more clearly, develop product strategy, and market social and political issues. The values and lifestyles system (VALS) is yet another tool used by marketers to more effectively reach their target markets. VALS uses a battery of questions that identify and divide the respondents into groups, each with distinctive characteristics. These divisions are identified below.

Group Description Innovators Confident and successful individuals who are self-

directed consumers Thinkers Well-established consumers who tend to analyze

before acting Achievers Hardworking, goal-oriented consumers who value

money Experiencers Spontaneous consumers who are on the cutting

edge of trends Believers Faithful consumers who appreciate stability Strivers Low-resource consumers who often change jobs Makers Straightforward consumers who are often distrustful Strugglers Thrifty consumers with low resources

MAR 3211, Consumer Behavior 4

UNIT x STUDY GUIDE Title

After reading the group descriptions, it becomes quite evident how marketers might use the VALS tool to identify their target market and how they would best reach them. The more that a marketer understands, the greater his or her ability to more effectively market. Combining VALS with the concepts of AIO could provide an even clearer picture of the target market. Besides this analysis of lifestyles, marketers also examine the social class structure as they attempt to more clearly understand consumer buying behavior. Recently, there has been a splurge of publicity on the addictive behavior of some shoppers. This refers to those who spend an enormous amount of time on recreational shopping and tend toward impulsive purchases without regard to the financial ramifications. The obvious issue for most is the inability to pay the credit card bills at the end of the month and the acquisition of items that they really do not need. These types of behaviors have been associated with depression and a lack of self-confidence, with the idea that acquiring products and services will take care of these problems. Society, as well as our legislative bodies, have weighed in on certain consumer and marketing behaviors, identifying them as misbehaviors. Opinions regarding what is acceptable or normal behavior really depends on our ethical beliefs, ideologies, or even cultural beliefs. Consumer misbehaviors might include shoplifting, drinking and/or texting while driving, or even outright practices of fraud. Fraud cases are growing in number, primarily because of the increased use and abuse of the Internet. Methods of defrauding consumers are continuously employed as consumers themselves become more dependent on the Internet for their consumer buying needs. Unethical behaviors on the part of marketers might include deceptive advertising, artificial price increases, or advertising in such a way as to manipulate without concern for the well-being of the individual. Examples of this might include offering products that offer short-term satisfaction but long-term consumer and societal problems. Continued interest in environmentalism and consumer good are extending corporate social responsibility (CSR) practices to be the norm instead of an option. Socially responsible behavior on the part of a company has been associated with favorable consumer evaluations and, ultimately, increased customer satisfaction. At the end of the day, this should result in an increase in overall sales for an organization. There have been several areas of public criticism of marketing that include deceptive advertising and advertising to children. Deceptive advertising is characterized as advertising that intentionally leaves out information that could change the consumer’s mind. Also included in this category is that of puffery that suggests the marketer is including exaggerated claims, again, to influence the consumer. The topic of marketing to children begs the question of whether children can understand the marketing messages and interpret them in the real world. The other concern is the number of messages that are directed at children. In summary, these marketing practices ask whether the sales tactics are actually manipulative in nature and whether they are creating artificial needs. Through this discussion, the question is whether the burden should be placed on the company or if there should be legislation to protect the consumer. Whether it be on a state or federal level, how much public policy should be enacted? There is also the question of how much should be placed on the consumer. Finding the right balance between consumer protection and market freedom is incredibly difficult to master.

References Feeding America. (n.d.). Hunger and poverty facts and statistics. http://www.feedingamerica.org/hunger-in-

america/impact-of-hunger/hunger-and-poverty/hunger-and-poverty-fact-sheet.html Frohlich, T. C. (2015, October 10). States with widest gaps between rich, poor. USA Today.

https://www.usatoday.com/story/money/personalfinance/2015/10/10/24-7-wall-st-states-rich- poor/73618858/