Book by Rice professor identifies new model examining class and consumer behavior in Brazil

A new book by a Rice business professor offers insight into social class and consumer behavior in Brazil and shows how this data can be used by government and business professionals.

WAGNER KAMAKURA

Wagner Kamakura, the Jesse H. Jones Professor of Marketing at the Jones School of Business, is the co-author of “Socioeconomic Stratification and Consumption in Brazil” (“Estratificação Socioeconômica e Consumo no Brasil”). The book was released Aug. 15.

The authors explored consumption patterns of Brazilians and found that the market segmentation scheme based on socio-economic status widely used by marketers in Brazil no longer reflects the socio-economic profile of the current society. The authors developed a new model of classification based on the concept of permanent income, which indicates the ability of the household to maintain a certain standard of living.

“This concept of “permanent income” is more valid than “current income,” especially in practical terms, because “consumers try to maintain their standard of living over time, even when their income stream undergoes dramatic changes, by relying on savings, investment or credit,” Kamakura said.

In the new model, the current monthly household income is only one of several indicators of permanent income, along with the education of the head of household, access to public services (city water, sewage and paved streets) and ownership of various durable goods. The new model also considers four important variables that account for the impact of family composition on consumption needs and for geographic differences in the cost of living. These important factors are ignored in the country’s current socio-economic classification system.

The authors also analyzed consumer behavior in each class in terms of expenditures and consumption priorities and provided practical tools for the classification of households in the various strata. They also showed how these data can be used in market, opinion, media and academic research, as well as an analysis of consumer lifestyles in Brazil.

The analysis in the book used data from the latest Household Budget Survey in Brazil, which was based on a national sample of more than 55,000 households, projectable to the population of Brazilian households.

“Socio-economic status is an important factor for market segmentation in emerging economies because it differentiates consumption patterns among families,” Kamakura said. “Moreover, it helps understand the effects of economic crises on consumption. When talking about how the ‘middle class’ was affected by the recent global economic crisis, one must first understand what constitutes the so-called ‘middle class.’ One of our main purposes was to define objectively socio-economic classes in Brazilian society, based on actual data.”

The book was co-authored by José A. Mazzon, a professor of marketing at the School of Economics, Business and Accounting at the University of São Paulo.

For more information on the book, visit www.pesquisasocioeconomica.com.br.