Special Session Summary Marketing and the Poor

Linda F. Alwitt, DePaul University
[ to cite ]:
Linda F. Alwitt (1995) ,"Special Session Summary Marketing and the Poor", in NA - Advances in Consumer Research Volume 22, eds. Frank R. Kardes and Mita Sujan, Provo, UT : Association for Consumer Research, Pages: 366.

Advances in Consumer Research Volume 22, 1995      Page 366



Linda F. Alwitt, DePaul University

Since the late 1970's, most marketers have paid a lot of attention to the affluent sector of society because therein lies much of their profit. The demographic profile of the U.S. has changed since the 1970's, and current stereotypes of the poor by marketers and other members of society are sometimes inaccurate. Identifying the poor and knowing how poor people manage within their economic constraints is essential to the development of appropriate actions by regulators, social service agents, and for-profit marketers. This special topic session examined problems of disadvantaged consumers and some implications for marketers and social policy makers.

Linda Alwitt summarized and gave examples of problems faced by poor American consumers, concluding that current problems are very similar to those described twenty years ago by Andreasen (1975). She also discussed problems faced by marketers when they enter into transactions with poor consumers, and proposed five classes of solutions based on a model of exchange which includes poor consumers, marketers and other components. The classes of solutions are: increase what the poor consumer has to exchange; increase the exchange power of poor consumers; decrease the exchange power of the marketer; alter what marketers have to exchange; reduce marketer risk.

The gradual process by which people become homeless, moving from self-sufficiency to living with other people to homelessness, was described in a paper by Renya Reed and Ronald Hill. This description of the process is supported by a re-analysis of 1988 New York City data on 1228 families using a continuous time Markov chain model. The model also offers ways in which social service workers can predict the propensity for people to become homeless. They include: having ever been in a mental hospital; substance abuse; being a young black mother (and, due to shelter assignment rules at that time, also pregnant); having fewer children; having experienced dislocation from the family as a child; partner having lost a job; having worked full-time (rather than part-time). Indicators negatively associated with homelessness were: having worked part-time; ever had mental therapy; had a nervous problem in the past year.

Roger Baran reported that the wife is the key financial decision maker in low income families in which both husbands and wives are present. Baran's conclusions arc based on a survey of a nationwide sample of 641 low-income couples with annual incomes less than $15,000 from a marketing panel. The survey examined husband-wife involvement in various family decisions and tasks, in perceptions about who is the 'financial officer' (e.g., who decides how much money to save and how much to put in a checking account) and who performs financial tasks (e.g., who carries the checkbook or withdraws money from an account). Some public policy implications were discussed.

The fourth paper, by Anusree Mitra, Manoj Hastak, Gary T. Ford and Debra J. Ringold, was concerned with a specific public policy issue: can educationally disadvantaged consumers interpret nutrition information in the presence of a health claim? While the FDA perceives that health claims on food labels arc potentially misleading and may undermine nutrition information, others suggest that health claims offer benefits such as making diet and health more salient. In an empirical study of 410 adults, the presence of health claims on a TV dinner package ("It does your heart good!") and healthfulness based on nutrition information was varied in a forced viewing situation. Low levels of fat, cholesterol and sodium increased ratings of how good the product was for the heart. Moreover, education level of respondents did not interact with either the presence of the health claim or with nutrition information in evaluating the product as good for the heart. The authors conclude that consumers appear to be capable of making appropriate judgments about health claims in the presence of nutrition information - education notwithstanding.

Alan Mathios, formerly with the FTC and currently on the faculty of Consumer Economics at Cornell University, discussed the papers within the framework of the five classes of solutions discussed by Alwitt. The paper by Reed and Hill, which argues that financial assistance can be directed at high risk groups identified by their model, increases what the poor consumer has to exchange. Baran's conclusion has implications for increasing the exchange power of poor consumers. The Mitra et al paper examines issues related to limiting the exchange power of the marketer, increasing the exchange power of the poor, and changing what marketers have to offer. Mathios pointed out that this paper implies that less educated consumers do gain information from health claims as well as from nutrition information. This is important because the Nutrition Labeling and Education Act bans certain classes of claims, presuming that less educated consumers cannot evaluate them effectively. He also showed evidence that when health claims were permitted in advertising starting in 1985, there were declines in the ingestion of fat, saturated fat and cholesterol. Mathios also discussed the role that is and should be played by governmental agencies in protecting consumers, particularly those who are educationally disadvantaged.