Relationship between social class and consumer behavior in economics

relationship between social class and consumer behavior in economics

As shown in Figure: Shared behaviour, the behaviour of all social classes are and all social classes behave in a similar manner without much difference. . groups and social classes, e.g., Maruti is an economy car; Zen is a world car; . There is a positive relationship between income and spending. . The rapidly growing middle class of consumers in emerging nations, including middle class and $13, to $22, for the lower middle class (Economic Intelligence Unit. Social class usually is defined by the amount of status that members of a specific class possess in relation to members of other classes. geogrpahic and socio economic factors to locate concentrations of consumers with.

A number of local giants like Future Group Kishor BiyaniReliance, Bharti Walmart and Tatas Super Stores are entering into the arena and are creating an impact on the new waves of consumerism in India. The country has more than 12 million retail outlets, which will continue to dominate the retail landscape for diversified product categories. The contribution of local and international retail is still quite low compared to that of other developing nations.

Our review of channel outlooks of some developing nations shows a slow transition from the conventional retail system. To win middle-income consumers, availability is most crucial for a retail chain. However, both local and multinational brands must design their channel strategies to meet the challenging needs of balancing business with multiple channels and localising the retail experience based on the consumer traffic in stores.

Winning the retail battle on small outlets with proper monitoring system of distributors, wholesalers and retailers is the route to marketing in developing nations. Unilever Pakistan serves oversmall retail outlets with an extensive route plan referred to as the Permanent Journey Plan to ensure that each retail outlet is served on a precise schedule and with frequency to replenish the products it needs.

Further, data marketing is done by capturing secondary sales data through handheld technology given to all salesmen who take orders from retail and wholesale outlets to measure and monitor outlet coverage, strike rate, drop size per outlet and other such performance indicators.

In India, Hindustan Levers serves more than 1. Outlets are analyzed for their sales trends and are prioritised in terms of consumer off-take to decide on coverage and services needed. MNCs must also change their business models to exploit these opportunities. We take an inventory of evolving marketing strategies in developing markets in Figure 3.

An explanation of related factors is also given below. Marketing Strategies Drive down price points and cost structure. Business feasibility in this part of the world is most driven by economy of scale derived through tremendous volume, which a good brand can get. As we have examined the movement of the middle class in geographic concentration from Tier 1 cities to Tier 2 and 3 cities in most developing nations, it is mandatory to look into the infrastructure development in these regions to be close to these consumers.

This is important in terms of localised product specifications, channel and distribution management, price points, exploiting local availability of raw materials and above all brand building by undertaking social value creation besides adopting local advertising and below-the-line techniques. Pursue ongoing market research to know more of the emerging consumer trends.

relationship between social class and consumer behavior in economics

As this explosion of new consumerism in developing nations is an ongoing phenomenon and will extend for the next two decades to lead to some established trend, organisations will gain by getting knowledge of consumers and consumer behaviour on a continuous basis. The time and money invested in this activity will help understand the changes in consumer behaviour and a change in strategy of the organisation by a quick reaction time, which is the essence of the game.

Balance quality, price and branding. Local champions focus more on cost and price, whereas MNCs have an absolute focus on quality and branding. As consumers are becoming more and more quality conscious, local champions have to move from price competition to focus on quality and branding. One good example in China is the white goods giant Haier, which changed its vision and with innovative strategies achieved this goal not only in the local market but also in its pursuit to become a global player.

MNCs on the other hand will have to balance quality and branding by examining their value chain and revamping it for all sorts of over specifications to be consumer centric Jullens, Broaden the regional scope. Local champions are normally niche players in rural markets where customers have more price penetration needs. The middle-income explosion in the future will provide new opportunities in neighbouring markets.

As MNCs must make an inroad with the value-driven approach to emerging value-conscious consumers, the marketing war will take a new shape, with consumers being the ultimate beneficiary. Check segmentation of customers to find new opportunities to boost sales and profitability. A lot of new market opportunities lie in the way companies segment their markets, customers or consumers.

It drives their product, service and value innovation. According to a local research on the marketing practices of multinational and local companies in Pakistan, it has been found that segmentation is largely based on conventional methods, and it is not very productive for discovering opportunities around emerging consumer needs, latent or known. For instance, it is not uncommon in cellular phone industry to segment customers as prepaid or post-paid.

In milk it is loose milk users, packaged milk users, powdered milk users or users of another product such as for drinking, tea making and dessert making. This approach, however, risks alienating customers in two ways: And big spenders in one product category who start buying in a second category are justifiably miffed when they are treated as strangers.

Lego, the brick toy manufacturer, while segmenting based on age also considers what users do with their bricks. Schoolchildren who focus on building when they play will likely want plain bricks, but those who focus on role-playing usually gravitate toward themed sets.

Non-demographic Segmentation Key Questions 1. How buyers define value 2. How susceptible they are to changing their minds 3. What kind of product styling they prefer 5. How they view change and technological progress 6. What individualised needs they want to fulfil 7. How confident they are in their ability to choose among different offerings Local preference in different emerging markets must be researched to be successful.

Segmentation on a global scale will not work. Hindustan Levers in India has not left any gaps in its approach to the detergent market in terms of coverage of various segments and price points, and it has been able to give a tough time to low-price competitors like Nirma and Ghari. A careful segmentation strategy helped Frito-Lay capture the bulk of the Indian and Pakistani branded-snacks market. They localised the taste of their global product and also created Kurkure, a cross between sub-continental traditional street food and Western-style potato chips.

This means coming into the initial consideration set of consumers is highly important in developing nations. This is also because of the fact that emerging consumers are younger: They are more optimistic and want to spend as their income increases. Many of them are first-time buyers of a car, television, or computer. Hence they would like to be informed and know more about brands. They are receptive to branding efforts of international and local companies.

Influence of Social and Economic Classes on Consumer Behaviour

They also need to move to mobile and digital channels, including e-commerce. Chinese consumers are more likely to trust online recommendations from companies as well as friends and family circles than to trust television advertisements.

In China more than half of the urban population is online, and a quarter of Brazilians using the Internet had opened Twitter accounts in Another important factor to be considered in branding efforts in developing countries is to reach these consumers with positioning that suits local market preferences and concerns and is likely to be trusted. For typical Chinese consumers, a PC is a very big-ticket purchase, so they care mainly about durability. Improve price—performance ratio affordability to increase the market.

Expanding the market helps a company significantly to hold its position or at least stay near it. When consumers are hard- pressed for money, products might not only compete with similar products but they also will compete with the priority list of consumers matching the purchasing power.

It is high time companies looked across value chain and make the needed structural improvements to address consumer affordability, which will bring consumption jumps, making their products feasible to the masses. Expansion of demand for motorcycles through structural cost improvement in Pakistan is a good example. Many marketers used to refuse to go for it, declaring it was not their domain.

This attitude cannot work anymore. Developing countries also have most of their population in rural areas, and the opportunities there are tremendous. In India, many health care businesses have changed their approach to their innovation, creativity and marketing programs to match the needs of the bottom-of-the-pyramid BOP market and are quite successful.

These opportunities call for organisations to make changes in their value chains while of course keeping their shareholder value. This can also take place without compromising on the quality of service being offered to BOP consumers. This approach and change of mind set are appropriate now. The opportunities, dynamics, alternatives and impact of the BOP market will be examined with reference to the strategy benchmark being created in this part of the world.

With economic expansion and increasing investment on governmental levels, social transformation is taking place in the rural part of developing nations. Another important factor to consider is the market growth of rural India, which is expected to triple in the next 20 years, surpassing the market size of South Korea or Canada.

Opportunities for marketers in BOP markets are tremendous. Serving rural markets in India, China, Indonesia or any other developing economies is not without big challenges. Bottlenecks in exploiting the true potential of these markets include infrastructural constraints such as roads.

Channel development is a big issue.

Influence of Social and Economic Classes on Consumer Behaviour

Another problem is developing consumer awareness and appreciation of products and services, which are crucial in maintaining a certain quality of life. There are examples from both multinationals and local companies who are adopting through new business models to serve the need of BOP consumers in a very unique way. Nevertheless, before social needs are integrated into the value chain and processes of the organisations, identification of these new opportunities around the social issues of the community requires a change in organisational attitude, and strategizing around the same requires a new leadership competency and human resource skills.

The reaction to development of a new product and service matching the social value or cost innovation breaking the utility—specification ratio to favour the society appears negative. Keeping in view the tremendous opportunity that rural markets now offer and continue to further enhance, managers in many markets are left with no option but to go for this new opportunity, which is quite big in number and potential. We will review a number of examples taking place in various parts of the world market where the favoured attitude has done the job.

Products are not just competing with competitive brands but are also competing for consumer purchasing power. A nonconventional approach to creating capacity to consume was adopted by a supermarket chain called Casas Bahia in Brazil. This approach is subject to criticism on several points. Reliance by marketing scholars on an essentially Warnerian framework--a view of social classes as discrete membership groups that evidence a high degree of cultural homogeneity--has produced research that has principally sought to demonstrate the existence of significant differences in consumption behavior across classes.

Such an approach, while certainly legitimate and necessary, has for the most part left unexamined the diversity and dynamism of intra-class behavior. This flaw is especially serious given the rise in two-income families, female-headed households, and other types of living arrangements that depart from the traditional marital-couple mold.

Indeed, many of the instruments used to measure social class assume a family in which the male head is the sole wage-earner and is most likely at the peak of his earning capacity. This approach seems especially ill-suited for handling issues surrounding a social mobility and status attainment, b life-cycle changes and their impact on social standing, and c status inconsistency and status crystallization.

Instead it argues that a particular view of social class structure--one originally proposed by Max Weber and subsequently developed and researched at length by sociologists--can be especially helpful in understanding certain aspects of consumer behavior. Furthermore, it is a view that begins to address the aforementioned problem areas. Weber's conceptualization of social class is appropriately delimited and yet avoids the inflexibility of the somewhat outdated Warnerian vies.

In addition, this approach offers a compelling explanation of why one expects to find a close connection between social class position and consumption-related activities.

Weber recognized that social stratification [This paper will use the terms 'social class" and "social stratification" interchangeably, although strictly speaking a society may be stratified without having distinct social classes.

The concepts of class and status, however, are distinguished from each other. This reflects Weber's use of the terms, but is frequently at odds with ordinary usage, which uses terminology like class level and social status interchangeably. The relationship between the concepts of class and status and the broader phenomenon of stratification will be developed further in this paper. He asserted that society was ordered along several hierarchies, with class and status being the principal stratification dimensions.

Class, for Weber, was largely an economic category. It has been variously associated with occupation, wealth, or, more broadly, life chances. Status, on the other hand, has to do with social distinctions and thus has been commonly linked with lifestyles. Consumer researchers have not usually found the distinction between class and status a useful one to make.

Wilkie offers a possible explanation for this: Marketers and consumer behavior professionals have tended to concentrate almost entirely on the life-style dimension, as this reflects most directly the purchasing patterns and consumption habits of different social classes To press this point a bit further, one might suggest that the connection between social class and lifestyle has been made too closely.

relationship between social class and consumer behavior in economics

For example, the assertion that lifestyle is "the essence of social class" Myers and Guttman is an overstatement and may encourage the neglect of other social class aspects.

Dominquez and Page a,maintain that the distinction between class and status is highly relevant for consumer researchers working with social stratification issues. Indeed, they propose that at the outset of any study one must determine whether the consumption-related behavior is more likely to be related to class or status.

Social class is a useful construct for explaining consumption behavior because it offers insight into both the various resources that limit consumer choice and the preferences that direct the allocation of those resources. Perhaps the significance of this proposition can be illustrated by way of a comparison. Economic theory of consumer behavior starts with a consumer's budget constraint and his preferences for some assortment of goods and then sets about determining how the consumer will allocate his scarce financial resources so as to maximize utility.

The theoretical apparatus inevitably leads to this point of equilibrium, but only if the consumer's tastes can be treated as given. Social class analysis steps into this vacuum, giving evidence that important differences in lifestyles and consumption patterns stem from corresponding differences in social standing.

But not only does this perspective offer insight into consumer preferences and tastes, but it also deepens our understanding of the particular constraints under which the consumer acts in the marketplace. There are at least four resource dimensions that are encomPassed in social class structure: The concentration of wealth at the very top of the social spectrum in the United States is enormous.

Gilbert and Kahl estimate that the so-called capitalist class, which accounts for 1 percent of the U. Considering the entire class structure, we find that the class-income correlation can be estimated at about 0. This figure, while quite significant, underlines the fact that income class and social class are not interchangeable concepts. People tend to associate with social class equals in their friendships, marriages, organizational memberships, and residential choices Warner ; Hollingshead ; Laumann ; Simkus ; Gilbert and Kahl Furthermore, as social class rank increases so too does level of social participation Kahl ; Hodges ; Curtis and Jackson Thus higher social class rank suggests a wider social network than does lower, which is characterized by kin-oriented ties that are further restricted in a geographical sense Coleman Social skill and occupational position seem inextricably linked; entrance and advancement into many middle and upper-middle class occupations depends significantly upon one's ability to demonstrated certain social attitudes and traits Lynd and Lynd ; Whyte ; Kanter Similarly the occupational position of parents strongly colors the socialization of their children, thereby inculcating social values which may either facilitate or inhibit occupational achievement Kohn Familiarity with cultural matters and the possession of cultural credentials appears to be strongly associated with higher social class standing Bourdieu Cultural capital is sometimes acquired--typically through the acquisition of appropriate academic credentials or through participation in cultural affairs--in an effort to enhance or improve one's social standing DiMaggio Perceptions of time appear to be strongly conditioned by social class membership.

Three findings in particular emerge: Americans and Europeans do not believe in social classes. They believe in classless society. Indian constitution also does not believe in classes and every one has been given equal rights. Still when it has reserved seats for election, admissions in educational institutions and or government jobs it has indirectly admitted that there are social classes based on historical factors.

relationship between social class and consumer behavior in economics

In USA there are classes based on race. In India there are tribals and scheduled classes who have different perceptions, consumption pattern, food habits, social customs, systems of marriages and other rituals.

Social Class and Consumer Behaviour «MANAGEMENT INNOVATIONS MANAGEMENT INNOVATIONS

These factors affect behaviour as a consumer and therefore to optimize sales each class will have to be approached differently. Quality of neighbourhood also has impact on behaviour. For instance in Delhi residence of South Extension, G. Their habits, consumption pattern is much different than that of a person of East Delhi or West Delhi. In South Delhi upper income group persons reside and many of them own big cars, big bungalows, their children study in famous schools and colleges.

They are more modern in outlook and have adopted western fashions. They visit modern show rooms for shopping and buy only costly products. They consume more cosmetics; go to clubs and restaurants more often than people of other localities. They are really affluent elite and their consumption pattern is different than persons of other localities. These types of differences are visible not only in one town but all over the world.

Hence locality can be one method of social classification.

Consumer behavior of Social Class and Lifestyle

Lifestyle of various Social Classes: The life style that is consumer behaviour of various social classes differ widely. A person in lowest class is able to buy only bare minimum requirements of life. On the other extreme there are rich elites either because of historical factors like zamidars in India or persons in foreign countries who have inherited. But researchers have established that lifestyle of one social class in terms of attitude towards life, activities like visiting clubs, hotels behaviours liking or disliking of certain products and activitiesbeliefs and behaviour tend to be similar on this basis consumer researchers segregate them in different classes.

For instance, upper most class has well established small family. They are richest persons and some of them like Indian industrialists run charity institutions. They sponsor colleges, hospitals in their family and their name. Some of the persons in this group are top lawyers and physicians who have made name and wealth heavily for their services, major industrialists, bankers, financiers, exporters etc. The senior successful top business executives drawing salary of Rs.

The persons in this group often believe in showing their new acquired richness. They buy high priced cars, house, get best education for their children and get treatment in best hospitals in case of illness. This class wants to have best enjoyment of life and looks for the future of their family. The next class is of high level professionals.

These persons do not have family status and have acquired wealth due to proficiency in their profession. Therefore, they are career oriented and their priority is to build career of their children too through best education in India or abroad.

These persons are active in professional, social and community activities but most of them do not take much interest in religious functions. They believe in high standard of living and try to buy best things in life-houses, furniture, furnishings, automobiles, health care, insurance, education of their children so that they may also become good professionals.

They prefer to live in posh colonies and buy goods in best stores. They take great interest in development of their children and therefore believe in small family.

The next social class according to economic status is middle class whose mean income in India varies between Rs. They are mostly junior executives. They are white collar workers but also include high paid blue collar persons and small traders.

These people have great ambition to move up and are one of the biggest classes in every society. Sometimes they are called cream of the society. They are generally well educated or technical hands and always try to improve their skills so that they can move up.

They want respectability in the society and therefore on certain occasions they spend more than their capacity. Most of them spend sometime worshiping of their faith and participate in religious and social functions. They have target that children are admitted in state owned or aided colleges because private colleges are considered too expensive. These persons are major consumers for many branded products, new developing stores on western style and they also patronize e-commerce.

Most of the factory workers and petty shopkeepers fall in this group and majority of them have income within range of Rs. In view of limited income they are not able to satisfy all their demands.

They try to get their children to be well educated so that they get good jobs when they become adult. Persons in this group are most influenced by culture and social customs. They spend heavily on marriages and funerals of elderly people, many times more than their resources and become indebted. But majority of them are security minded and therefore save for future in banks, insurance policies, purchase of gold ornaments. Most of them want to own TV for leisure and electric fans, coolers and refrigerators for daily comfort.

They also want to own two wheelers for movement to offices and other places. These factors has increased demand of these goods speedily in last two decades and even in juggins in Delhi one comes across families owning TV, fridge and two wheelers. It consists mainly of unskilled workers and often they work as labourers on farms, construction of houses and roads and in factories.

They earn per day between Rs. This class is found not only in India but even in countries like USA but their per day earning is much higher than in India but is not adequate to live decent life.

In this class both husband and wife and many times even children work.