Chapter 4 -- Demographics -- Spring 2009 -- student version

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Chapter 4 -- Demographics -- Spring 2009 -- student version Powered By Docstoc
					CHAPTER   4

Demographics and Social Stratification


    &        Occupation     Education   Income   Age

Demographics and Social Stratification

Population and Size

 Demographics and Social Stratification

Population and Size
  The population of the U.S. is approximately 298
  million today and is expected to surpass 320 million by
  The population has grown steadily since 1960
  despite a declining birthrate due to longer life
  expectancies, the large baby boom generation moving
  through their child-bearing years, and immigration.

Demographics and Social Stratification

  Occupation is probably the most widely applied
  single cue we use to initially evaluate and define
  individuals we meet.
  One’s occupation provides status and income.
  The type of work one does and the types of
  individuals one works with over time also directly
  influence one's values, lifestyle, and all aspects of the
  consumption process.
Demographics and Social Stratification
    Occupational Influences on Consumption

Demographics and Social Stratification
  Approximately 85% of Americans have a high school
  degree, and 27% have completed college.
  Education is increasingly critical for a “family wage”
  Traditional high-paying manufacturing jobs that
  required relatively little education are rapidly

 Demographics and Social Stratification
Education (cont.)
   High-paying jobs in the manufacturing and service
   sectors today require technical skills, abstract
   reasoning, and the ability to read and learn new skills
   Since individuals tend to have spouses with similar
   education levels, these differences are magnified with
   spousal income is considered.

Demographics and Social Stratification
  Education Level Influences on Consumption

Demographics and Social Stratification

  A household’s income level combined with its
  accumulated wealth determines its purchasing power.
  Income enables purchases but does not generally
  cause or explain them. Occupation and education
  directly influence preferences for products, media, and
  activities; income provides the means to acquire them.

 Demographics and Social Stratification

Income (cont.)
  Therefore, income is generally more effective as a
  segmentation variable when used in conjunction with other
  demographic variables.
  How wealthy one feels may be as important as actual
  income for some purchases.
  Subjective discretionary income (SDI) is an estimate by
  the consumer of how much money he/she has available to
  spend on nonessentials. SDI adds considerable predictive
  power to actual total family income (TFI).
Demographics and Social Stratification

  Proper age positioning is critical for many products.
  Our age shapes the media we e, where we shop, how
  we use products, and how we think and feel about
  marketing activities.
  Age carries with it culturally defined behavioral and
  attitudinal norms, which affect our self-concepts and

       Demographics and Social Stratification

    Age (cont.)
                                                                                       Age                                                    Percent
                                                                                       Category                     2005               2015   Change
              U.S. Age                     Distribution1
                                                                                                     <10                   38.3        41.5       8.3

                                                                                                  10-19                    41.6        41.1      -1.2
              Key Growth Categories
                                                                                                  20-29                    38.5        42.5      10.4

                                                                                                  30-39                    38.6        39.9       3.3

                                                                                                  40-49                    44.9        39.4     -12.2

                                                                                                  50-59                    36.5        43.3      18.7

                                                                                                  60-69                    22.9        33.9      47.9

                                                                                                     >69                   26.3        30.5      16.2

1   “Population by Age Group,” Statistical Abstract of the United States 2001 (Washing, DC: U.S. Bureau of the Census, 2001), p. 16.
Demographics and Social Stratification
       Age Influences on Consumption
        18-24   25-34   35-44   45-54   55-64   65+

Understanding American Generations

              A Generation or age cohort is a
              group of persons who have
              experienced a common social,
              political, historical, and economic
              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 behaviors.
 Understanding American Generations

Depression            Mature Market

Baby Boom
Generation X
Generation Y

 Understanding American Generations
          How to Target the Mature Market

One approach to segmenting older consumers is
gerontographics, based on the theory that people
change their outlook on life when they experience major
life events such as becoming a grandparent, retiring,
losing a spouse, or developing chronic health conditions.
Those experiencing similar events are likely to have
similar outlooks on life, and given similar economic
resources, similar lifestyles.

Understanding American Generations
          How to Target the Mature Market

Gerontographics has identified the following four
segments of the mature market:

    - Healthy Indulgers (7 million, rapidly growing)
    - Ailing Outgoers (18 million)
    - Health Hermits (20 million)
    - Frail Recluses (18 million)

Understanding American Generations

The Pre-Depression Generation is composed of those
individuals born before 1930, living through the Depression,
WWII, and witnessing radical social, economic, and technologic
change throughout their lives.
                      As a group, they are conservative and
                      concerned with financial and personal
                      This generation of some 18 million
                      Americans is part of a broader category
                      of consumers called the mature market
                      (age 55+).

  Understanding American Generations
The Depression Generation is composed of approximately 32
million individuals who were born between 1930 and 1945.
They were small children during the Depression or WWII and
matured during the prosperous years of the1950s and early
1960s. They “invented” rock and roll and grew up with music
and television as important parts of their lives.

Marketers target this segment
utilizing themes associated with an
active lifestyle and breaking with
stereotypical portrayals of older
consumers .

Understanding American Generations

           The Baby Boom Generation refers to
           those individuals born during the dramatic
           increase of births between the end of
           WWII and 1964. There are almost 80
           million baby boomers, which is
           substantially more than the two preceding
           generations combined.
           Baby boomers were heavily influenced by
           the Kennedy assassination, the Vietnam
           War, recreational drugs, the sexual
           revolution, the energy crisis, the rapid
           growth of divorce, and the cold War, as
           well as rock and roll and the Beatles.
 Understanding American Generations
       Baby Boom Generation: A Closer Look
Compared to prior generations, Boomers are:
   Higher income, higher education
   More tech savvy
   Defining retirement differently
Boomers also are:
   Strong market for “anti-aging” products, travel, and
   financial services
   Often alienated by overly “youth oriented” appeals in ads

   Understanding American Generations

Generation X (45 million) was
born between 1965 and 1976.
Xers matured during difficult
economic conditions in the
First generation to be raised
by mainly dual-career
households, with 40%
spending at least some time in
a single-parent household
before age 16.

Understanding American Generations
           Generation Xers: A Closer Look
Beyond the stereotype:
   Stereotype – Xers as disenfranchised youth
   Reality 1– Xers are more highly educated than previous
   Reality 2– Xer women are more highly educated than
   Xer men
   Reality 3– Xers are getting married, having families and
   facing the time pressures associated with these events
   Reality 4– Reaching Xers requires special attention to
   media, particularly online

 Understanding American Generations

Generation Y, or echo boom generation, account for 71 million
Americans. They are the children of the original baby boomers
and were born between 1977 and 1994.
                  Gen Y is characterized by a strong sense of
                  independence and autonomy.
                  They are assertive, self-reliant, emotionally
                  and intellectually expressive, innovative, and
                  It is a multiracial generation, with African
                  American and Hispanic teenagers often
                  being the style leaders.

 Understanding American Generations
            Generation Yers: A Closer Look
Interesting Facts About Gen Y:
   Really Two Sub-Markets: Twenty-somethings and Teens
   Expected to have the highest education of previous
   generations with incomes to follow
   Very tech savvy with media options including Internet, cell
   phones, and video games
   A strong market for automobiles with brands like Toyota
   creating edgy and affordable models such as the Scion to
   target them

Understanding American Generations

            Millennials, the newest generation, was
            born after 1994, with an estimated 62
            million people by 2010.
            It is generally too early to characterize
            Millennials, but they will likely continue
            trends in increased education diversity,
            and technology usage.
            Marketers are increasingly targeting older
            Millennials, known as “tweens” (age 8-
            14), going after early loyalty and hefty

            Social Stratification

Social Rank and Social Class System
Status Crystalization
The Derived Nature of Social Class
The Coleman-Rainwater Hierarchy
The Measurement of Social Class
Social Stratification and Marketing Strategy

               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 do not exist in the U.S. or most other
industrialized societies.
             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.

  Social Structure in the United States

Social Standing is Derived and Influences Behavior

 Social Structure in the United States

The Coleman-Rainwater Social Class Hierarchy

Social Structure in the United States

The Coleman-Rainwater Social Class Hierarchy

   Social Structure in the United States
                     Upper Americans
The Upper-Upper Class are aristocratic families that make up
the social elite. Members with this level of social status generally
are the nucleus of the best country clubs and sponsors of major
charitable events.
                        Most communities in America have one or
                        more families with significant “old money.”
                        They generally stay out of the public
                        spotlight unless they enter politics or
                        support a charity or community event.
                        These individuals live in excellent homes,
                        drive luxury automobiles, own original art,
                        and travel extensively.
Social Structure in the United States
          Upper Americans
           The Lower-Upper Class are the current
           generation’s new successful elite. These
           families are relatively new in terms of upper-
           class social status and have not been
           accepted by the upper crust of the
           community. For example, they are often
           unable to join the same exclusive clubs or
           command the same respect of the “blue
           Many engage in conspicuous consumption
           to show off their great wealth. These
           nouveaux riches to the “in thing” on a grand
  Social Structure in the United States

                   Upper Americans
The Upper-Middle Class, consists of families who possess
neither family status derived from heritage nor unusual wealth.
                        Occupation and education are key
                        aspects of this stratum, consisting of
                        successful professionals, independent
                        businesspeople, and corporate
                        managers. Making sure their children get
                        a sound education is very important to
                        this group.
                        They are highly involved in the arts and
                        charities, and belong to private clubs.
   Social Structure in the United States

                   Middle Americans
The Middle Class consists of white-collar
workers and high-paid blue-collar workers.
The middle-class core typically has some
college education though not a degree.
Many members of this class feel very
insecure due to recent trend of workforce
reductions. They are concerned about
respectability and care what their neighbors
Members of the middle class are likely to
get involved in do-it-yourself projects.
Social Structure in the United States

          Middle Americans
           Upward Pull Strategy

   Social Structure in the United States
                   Middle Americans
The Working Class consists of skilled and semiskilled factory,
service, and sales workers. Though some households in this
social stratum seek advancement, members are more likely to
seek security for and protection of what they already have.
Many working-class aristocrats dislike
the upper middle class and prefer
products and stores positioned at their
social-class level.
They are proud to be able to do “real
work” and see themselves as the often-
unappreciated backbone of America.
   Social Structure in the United States
                    Lower Americans
The Upper-Lower Class consists of individuals who are
poorly educated, have very low incomes, and work as unskilled
laborers. Most have minimum-wage jobs.
Members of this class live in marginal
housing, often located in depressed and
decayed neighborhoods. Crime, drugs, and
gangs are often close at hand and represent
very real threats. They are concerned about
the safety of their families and their children's
The marketing system has not serviced this
group effectively.
 Social Structure in the United States
                  Lower Americans
The Lower-Lower Class has very low incomes and minimal
education. This segment of society is often unemployed for
long periods of time and is the major recipient of government
support and services provided by nonprofit organizations.
Marketing to the lower classes is often controversial. For
The rent-to-own business when firms charge exorbitant
interest rates.
The marketing of “sin” products such as cigarettes and
Not marketing to this group when there is a clear need.
    The 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.

     The 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.

   The Measurement of Social Class
• Multi-Item Index
  Hollingshead Index of Social Position
    Index of Social Position (ISP)

  Warner’s Index of Status Characteristics
    Index of Status Characteristics (ISC)

  Census Bureau’s Index of Socioeconomic
    Socioeconomic Status Scale (SES)

     The 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
Unless the marketer is interested social standing per se,
he/she will most likely focus on demographic
characteristics as direct influencers on consumer

Social Stratification and Marketing Strategy

While social stratification does not explain all consumption
behaviors, it is certainly relevant for some product
You can clearly see this by visiting a furniture store in a
working-class neighborhood and then an upper-class
furniture store.
A product or brand may have different meanings to
members of different social strata, for example, a watch.
Likewise, different purchase motivations for the same
product may exist between social strata.