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CHAPTER 4
DEMOGRAPHICS
AND SOCIAL
STRATIFICATION

LEARNING OBJECTIVES

• LO1: Understand the critical role that demographics play in

influencing consumer behavior
• LO2: Define the concept of generations and discuss the
generations that exist in America
• LO3: Explain the concept of social stratification and the role
that socioeconomic factors play
• LO4: Identify and discuss the major social classes in America
• LO5: Understand how social class is measured
• LO6: Discuss the role of social class in developing marketing
strategies

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DEMOGRAPHICS
• Demographics describe a population in terms of its size, distribution, and structure
• Population and Size
• Occupation:
✓ 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.
• Education:
✓ Education influences what one can purchase by partially determining one’s income and
occupation. It also influences how one thinks, makes decisions, and relates to others.
• Income:
✓ A household’s income level combined with its accumulated wealth determines its
purchasing power. While many purchases are made on credit, one’s ability to buy on
credit is ultimately determined by one’s current and past income (wealth).
✓ Subjective discretionary income (SDI) is an estimate by the consumer of how much
money he or she has available to spend on nonessentials. SDI adds considerable
predictive power to actual total family income (TFI) measures
• Age:
✓ Age carries with it culturally defined behavioral and attitudinal norms
✓ Age affects our self-concept and lifestyles
✓ Cognitive age is defined as one’s perceived age, a part of one’s self-concept

DEMOGRAPHICS (CONT.)

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DEMOGRAPHICS (CONT.)

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DEMOGRAPHICS (CONT.)

18-24 25-34 35-44 45-54 55-64 65+

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UNDERSTANDING AMERICAN GENERATIONS

• A generation, or age cohort, is a group of persons who have experienced a common
social, political, historical, and economic environment
• 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
✓ Pre-Depression: Prior to 1930 Major market

✓ Depression: 1930 to 1945

✓ Baby Boom: 1946 to 1964

✓ Generation X: 1965 to 1976

✓ Generation Y: 1977 to 1994

✓ Generation Z: 1995 to 2009

UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• How to Target the Mature Market:

o Gerontographics has identified the following four segments of the mature
market:
✓ Healthy Indulgers are physically and mentally healthy and are thus active,
independent and out to enjoy life
✓ Ailing Outgoers have health problems that limit their physical abilities, but
their positive outlook means they remain active within financial constraints.
✓ Health Hermits are physically healthy, but life events, often the death of a
spouse, have reduced their self-concept and they have become withdrawn
✓ Frail Recluses have accepted their old-age status and have adjusted their
lifestyles to reflect reduced physical capabilities and social roles

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UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Pre-depression Generation:
o The pre-depression generation faces numerous consumption-related
decisions. One is the disposition of valued belongings that they no longer
use or that are not appropriate in nursing or retirement homes. These can
be emotional decisions for both the elderly person and his or her family
members.
o Communications strategies need to consider media selection, message
content, and message structure
o Products related to the unique needs of this segment range from health
services to single-serving sizes of prepared foods

UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Depression Generation:
o Many have accumulated substantial wealth in the form of home equity and
savings, although the most recent economic downturn has eroded the
wealth of many in terms of decreased home equity and retirement portfolio
values
o Active lifestyles translate into demand for recreational vehicles, second
homes, new cars, travel services, and recreational adult education
o Marketers targeting this segment are increasingly using themes that stress
an active lifestyle and breaking with stereotypical portrayals of older
consumers

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UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Baby Boom Generation:

o Baby boomers are characterized by high education levels, high incomes, and dual
career households. They are also often characterized by time poverty (particularly
young boomers) as they try to manage two careers and family responsibilities
o Among older boomers, major health problems are increasingly likely and will
hamper their active lifestyles.
o For healthy boomers, issues of appearance are critical and demand for plastic
surgery, baldness treatments, health clubs, cosmetics for both men and women,
hair coloring, health foods, and related products continue to expand as this group
ages
o TV is still a major route through which to target this generation.

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UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Generation X:
o Generation X is highly educated, with more college attendance and graduates
than previous generations.
o Xer women are more highly educated than men, giving them increased leverage in
the workforce.
o Xer women are the highest viewers of home improvement media and the most
likely to engage in home improvement projects, including adding a room onto the
house
o Xers are more diverse and open to diversity than previous generations
o Xers are also more likely to accept alternative lifestyle choices such as gay
couples raising children, mothers working outside the home, living together without
getting married, and people of different races getting married than are those of
previous generations

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UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Generation Y:
o It is the first generation to grow up with virtually full-employment opportunities for
women, with dual-income households as the standard, with a wide array of family
types seen as normal, with significant respect for ethnic and cultural diversity, with
computers in the home and schools, and with the Internet.
o Generation Y is characterized by a strong sense of independence and autonomy.
They are assertive, self-reliant, emotionally and intellectually expressive,
innovative, and curious.
o They prefer ads that use humor or irony and have an element of truth about them.
They like the ability to customize products to their unique needs. Brand names are
important to them.
o Factors they believe make their generation unique include (a) technology use, (b)
music and pop culture, (c) tolerance, (d) intelligence, and (e) clothes.
o Gen Yers are diverse and embrace that diversity with the highest tolerance of any
previous generation for alternative lifestyles.

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UNDERSTANDING AMERICAN GENERATIONS (CONT.)

• Generation Z:
o Marketers targeting teens need to use appropriate language, music, and
images
o Honesty, humor, diversity, and information appear to be important to teens.
And alternative media approaches involving social media are critical.
o Teens have been found to be high or even the highest in terms of the use
of social network sites, sending IMs, reading or posting to blogs, and
visiting a virtual world.

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SOCIAL STRATIFICATION
• Societal rank—one’s position relative to others on one or more dimensions
valued by society
• Your social standing is a result of characteristics you possess that others in
society desire and hold in high esteem
• Your education, occupation, ownership of property, income level, and heritage
(racial or ethnic background, parents’ status) influence your social standing
• Social standing ranges from the lower class, those with few or none of the
socioeconomic factors desired by society, to the upper class, who possess many
of the socioeconomic characteristics considered by society as desirable.
• Individuals with different social standings tend to have different needs and
consumption patterns
• A social class system can be defined as a hierarchical division of a society into
relatively distinct and homogeneous groups with respect to attitudes, values, and
lifestyles.

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SOCIAL STRATIFICATION (CONT.)

Social Standing is Derived and Influences Behavior

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SOCIAL STRUCTURE IN THE UNITED STATES

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Upper Americans
o The Upper-Upper Class:
✓ Members of the upper-upper social class are aristocratic families who
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.
✓ They provide leadership and funds for community and civic activities and
often serve as trustees for hospitals, colleges, and civic organizations.
✓ These individuals live in excellent homes, drive luxury automobiles, own
original art, and travel extensively.
✓ They generally stay out of the public spotlight unless it is to enter politics
or support a charity or community event.

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Upper Americans (cont.)
o The Lower-Upper Class:
✓ The lower-upper class is often referred to as “new rich—the current
generation’s new successful elite.”
✓ These families are relatively new in terms of upper-class social status
and have not yet been accepted by the upper crust of the community.
✓ Many members of this group continue to live lifestyles similar to those of
the upper middle class. Other members of the lower-upper class strive to
emulate the established upper-upper class.
✓ Entrepreneurs, sports stars, and entertainers who suddenly acquire
substantial wealth often engage in this type of behavior
✓ Many respond by aggressively engaging in conspicuous consumption;
that is, they purchase and use automobiles, homes, yachts, clothes, and
so forth primarily to demonstrate their great wealth

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Upper Americans (cont.)
o The Upper-Middle Class:
✓ 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 social stratum, as it consists of
successful professionals, independent businesspeople, and corporate
managers.
✓ Upper-middle-class individuals tend to be confident and forward-looking.
They worry about the ability of their children to have the same lifestyle
they enjoy. They realize that their success depends on their careers,
which in turn depend on education.
✓ This group is highly involved in the arts and charities of their local
communities. They belong to private clubs where they tend to be quite
active. They are a prime market for financial services that focus on
retirement planning, estate planning, and college funding issues. They
consume fine homes, expensive automobiles, quality furniture, good
wines, and nice resorts

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Middle Americans
o The Middle Class:
✓ The middle class is composed of white-collar workers (office workers, school
teachers, lower-level managers) and high-paid blue-collar workers (plumbers,
factory supervisors).
✓ The middle-class core typically has some college education though not a
degree, a white-collar or a factory supervisor position, and an average income
✓ The middle class is concerned about respectability
✓ They generally live in modest suburban homes. They are deeply concerned
about the quality of public schools, crime, drugs, the weakening of “traditional
family values,” and their family’s financial security
✓ Members of the middle class are likely to get involved in do-it-yourself
projects.

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Middle Americans (cont.)
o The Working Class:
✓ The working class consists of skilled and semiskilled factory, service, and
sales workers.
✓ Working-class families live in modest homes or apartments that are often
located in marginal urban neighborhoods, decaying suburbs, or rural areas.
They are greatly concerned about crime, gangs, drugs, and neighborhood
deterioration. They generally cannot afford to move to a different area should
their current neighborhood or school become unsafe or otherwise undesirable.

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Lower Americans
o The Upper-Lower Class:
✓ The upper-lower class consists of individuals who are poorly educated, have
very low incomes, and work as unskilled laborers.
✓ Lack of education tends to be a defining characteristic of this group. Members
of the upper-lower class live in marginal housing that is 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 future. The lack of education, role
models, and opportunities often produces despair that can result in harmful
consumption, such as cigarettes and alcohol.
✓ The marketing system has not served this group effectively.

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SOCIAL STRUCTURE IN THE UNITED STATES (CONT.)

• Lower Americans (cont.)
o The Lower-Lower Class:
✓ Members of the lower-lower social stratum have 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

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THE MEASUREMENT OF SOCIAL CLASS

• There are two basic approaches to measuring social status:
o Single-item indexes estimate social status on the basis of a single
dimension such as education, income, or occupation. Since an
individual’s overall status is influenced by several dimensions, single-
item indexes are generally less accurate
o Multi-item indexes take into account numerous variables
simultaneously and weight these according to a scheme that reflects
societal views.
✓The Hollingshead Index of Social Position (ISP)

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SOCIAL STRATIFICATION AND MARKETING STRATEGY

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SUMMARY
LO1: Understand the critical role that demographics play in
influencing consumer behavior
• Demographics include a population’s size, distribution, and
structure.
• The structure of a population refers to its age, income, education,
and occupation makeup.
• Subjective measures can provide additional understanding of
consumption in the form of cognitive age and subjective
discretionary income

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SUMMARY (CONT.)
LO2: Define the concept of generations and discuss the generations
that exist in America
• An age cohort or generation is a group of persons who have
experienced a common social, political, historical, and economic
environment.
• 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.
• There are six major generations functioning in America today: pre-
Depression, Depression, baby boom, Generation X, Generation Y, and
Generation Z.

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SUMMARY (CONT.)
o Generational Categories (Solomon, 2020):
✓ The Interbellum Generation—People born at the beginning of the 20th century.
✓ The Silent Generation—People born between the two world wars.
✓ The War Baby Generation—People born during World War II.
✓ The Baby Boom Generation—People born between 1946 and 1964.
✓ Generation X—People born between 1965 and 1985.
✓ Generation Y—People born between 1986 and 2002.
✓ Generation Z—People born 2003 and later.
o Gen Y and Gen Z:
✓ Consumers in this age subculture have a number of needs (including some that
conflict with one another) such as experimentation, belonging, independence,
responsibility, and approval from others
✓ Four basic conflicts are common among all teens:
▪ Autonomy versus belonging
▪ Rebellion versus conformity
▪ Idealism versus pragmatism
▪ Narcissism versus intimacy

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SUMMARY (CONT.)
LO3: Explain the concept of social stratification and the role that
socioeconomic factors play
• A social class system is defined as the hierarchical division of a
society into relatively permanent and homogeneous groups with
respect to attitudes, values, and lifestyles.
• Education, occupation, income, and, to a lesser extent, type of
residence are important status dimensions
• Status crystallization refers to the consistency of individuals and
families on all relevant status dimensions (e.g., high income and
high educational level).

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SUMMARY (CONT.)
LO4: Identify and discuss the major social classes in America
• Seven major categories: upper-upper, lower-upper, upper-middle, middle,
working class, upper-lower, and lower-lower.
LO5: Understand how social class is measured
• There are two basic approaches to the measurement of social classes: (1)
use a combination of several dimensions, a multi-item index, or (2) use a
single dimension, a single-item index
LO6: Discuss the role of social class in developing marketing
strategies
• Although social class may not play a role in all products or brands, it is
obviously relevant in many situations.

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DISCUSSION QUESTIONS
1. Name two products for which each of the three following demographic
variables would be most influential in determining consumption. If you
could combine two of the three, which would be the second
demographic you would add to each? Justify your answer.
• Income
• Education
• Occupation
2. Interview 3 persons from Gen Z about their demographics, habits, and
behaviours when using social media such as Facebook, Tiktok, and
Youtube.

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