The role of Social Class in segmenting markets

It is evident that the concept of social class should help us to understand better the behavior of the various market segments. However, the marketing practitioner wants to know if segmentation on the basis of social class is an advantageous approach.

Social class segmentation involves two basic issues. First, opinions differ concerning which procedures are best for identifying social classes. This issue is beyond the scope of our discussion. However, it should simply be noted here that there are various approaches to social class measurement with each one offering certain advantages and disadvantages. A second and lower fundamental problem is whether even to use social class (which is, in effect a composite index consisting of several variables) in segmenting markets, or whether to use a single proxy variable such as income (for which data more readily exist) Thus, the basic question here is, which approach better explains consumer behavior?

Social class and Income related to lifestyle patterns:

While we are addressing this issue, it may be useful to examine the results of a study that correlated more than 200 lifestyle items with both social class and income. Although none of the correlations was as high as might be desired in order to clearly support the contention that lifestyle is the essence of social class. Those correlations obtained for social class were generally higher than those obtained for income. Two conclusions from this study should cited.

1) Many lifestyle items showed significant correlations with the index of social class, indicating definite but small differences between the social classes in terms of lifestyles.
2) Some items showed a much greater correlation with social class than with income, suggesting that social class is a better predictor of consumers’ living patterns than in income.

Those items that were more related to social class than to income seemed to comprise two clusters one representing cultural activities the other representing a group of social interaction items. Cultural activities (such as concerts, ballet, and bridge games) are available to people of almost any income level. The fact that some people choose to engage in them and others do not is one of the things that makes social class a meaningful concept. Social interaction items (such as confidence, outgoingness, or good looks) may result from higher class people feeling a sense of belonging and recognition from having a secure place higher up in the social structure. However, upper social class people also seem to have less interest in the home in general and in children in particular that do upper income / lower class individuals.

How can the marketer use such information? General lifestyle items that correlate well with product usage might well explain characteristics of the markets activity, interest, and opinion to the seller. Such finding could give the marketer some direction for product, promotion, channel and pricing decisions. A preferred approach, however would be to design a lifestyle study especially for the particular firm or its product line.

A fundamental question not specifically addressed above, however, is whether social class or income is more closely associated with specific consumer activity, particularly with product purchase patterns.

Those who believe that social class is much better than income for market segmentation claim that income categories are quite often irrelevant in analyzing markets and explaining consumers’ shopping habits store preferences and media usage. An example of the superiority of social class to income is the following comparison of three families, all earning approximately the same amount per year, but belonging to different social classes with radical differences in their spending patterns.

An upper middle class family headed, perhaps by a young lawyer or a college professor is likely to spend a relatively large share of its income on housing in a prestige neighborhood, on expensive furniture, clothing from quality stores, and on cultural amusements or club memberships.

A middle class family headed, let’s say, by an insurance salesman or a successful grocery store owner probably has a better house, but in not as fancy a neighborhood as full a wardrobe although not as expensive; more furniture but none by name designers; and a much bigger savings account.

A working class family headed perhaps by a welder or cross country truck driver is likely to have a smaller house and neighborhood than the others; however it will have a larger newer car, more expensive kitchen appliances, and a larger TV set in the living room. This family will spend less on clothing and furniture but more on food and sports.