A Contemporary Analysis of the Low Income Consumer: an International Perspective



Citation:

William K. Darley and Denise M. Johnson (1985) ,"A Contemporary Analysis of the Low Income Consumer: an International Perspective", in SV - Historical Perspective in Consumer Research: National and International Perspectives, eds. Jagdish N. Sheth and Chin Tiong Tan, Singapore : Association for Consumer Research, Pages: 206-210.

Historical Perspective in Consumer Research: National and International Perspectives, 1985     Pages 206-210

A CONTEMPORARY ANALYSIS OF THE LOW INCOME CONSUMER: AN INTERNATIONAL PERSPECTIVE

William K. Darley, Indiana University-Bloomington

Denise M. Johnson, Indiana University-Bloomington

ABSTRACT -

This paper synthesizes the existing literature pertaining to low-income consumers and critically examines the two perspectives ("culture of poverty" and "situational") on poverty. It develops a new framework in which to study the low-income consumer. Finally, it delineates directions and suggested implications for future research.

In his recent American Marketing Association address, Kotler (1982) emphasized that one of the most neglected areas in marketing is that of marketing to the poor. Referring to the United States, he noted that "the poverty market is becoming one of the biggest growth sectors, yet only a handful of research papers are published each year about it" (p. 3). This paper attempts to synthesize the existing literature on low-income consumers and to delineate directions for future research in this field.

Over the past few decades the predominance of isolated studies among the majority of marketing academicians shows a general lack of concern in the area of low-income consumer behavior. However, the number of low-income consumers will increase rapidly in the next few decades, as explosive world population growth will occur mainly in those countries which can afford it least. In addition, growing world-wide inflation has depreciated the purchasing power of many consumers, placing an increasing number of them into the low-income category. Also, for many Less Developed Countries (LDC's) the large proportion of GNP which has been required to meet debt servicing obligations has increased, and the amount of national income remaining to meet the basic needs of much of their population has been extremely limited. The above factors have greatly increased global poverty. Accordingly, it is essential to develop a better understanding of this important and enlarged, but often neglected, segment of the world population.

The first step toward examining the international poverty picture then, is to develop a definition of poverty which will encompass its relative aspects. Orshansky (1969, p. 37) notes that "Poverty (low income) is a value judgement, it is not something one can verify or demonstrate except by inference and suggestion, even with a measure of error. To say who is poor is to use all sorts of value judgements. The concept has to be limited by the purpose which is to be served by the definition." Clearly, the concept of poverty must be viewed in relative terms, for in absolute terms poverty in a developing country is a very different situation from "poverty" in a developed country.

This paper focuses on low-income consumers, that is, on individuals who lack the goods and services needed for an "adequate" standard of living. Low income consumers include individuals whose financial resources or income are inadequate to provide a "socially acceptable" standard of living. The poor are those whose incomes are insufficient to meet their basic needs. The terms "poverty," "low-income," and "poor" are used interchangeably throughout this paper. Specific topics to be addressed are: (1) a review of literature pertaining to the low-income consumer in particular, and other literature that may have a bearing on consumption behavior of the low-income consumer; (2) discussion of the two different perspectives on poverty (culture of poverty and situational); (3) development of a framework in which to study the low-income consumer; and (4) suggestions for future research to increase our understanding of low-income consumers as well as to contribute to the development of consumer behavior research.

SYNOPSIS OF THE LITERATURE

The urban uprisings in the United States during the 1960's sparked a number of problem-focused, one-shot research projects (for example, do the poor pay more?, Dixon et al., 1968) attempting to explain the behavior of low-income consumers (Sturdivant & Deutscher, 1977). At that time much interest in low-income consumer research was stimulated by the pioneering work of Caplovitz (1967). Throughout the 1970's, however, interest in the area waned as researchers concentrated on various other problems. In addition, much research undertaken in the study of low income consumers has been descriptive in nature. In terms of a general description of the poor, Orshansky and Bretz (1976) have noted that men and women without a highschool diploma tend to have difficulty keeping their families above the poverty line, particularly if the family is large. This description has been corroborated by a United States Census Bureau Study (1980) which shows that the poor largely consists of those families wherein children live under households headed by females and where the persons heading the households did not complete highschool. Studies based outside of the United States by Watanabe and Mueller (1984) and Musgrove and Ferber (1979) provide similar findings. Watanabe and Mueller (1984) compiled a "poverty profile" of rural Botswana based on government statistical data, visits and questioning of 950 randomly selected households. The poor households were likely to lack a male of prime working age, to be headed by a woman and to have a large number of children under 15 years old.

Musgrove and Ferber (1979) in an explanatory study based on 1967-9 data obtained from Bogata and Medellin, Columbia and Lima, Peru, found that in all three cities studied, poverty households were mostly characterized by low labor incomes. Education was the most powerful discriminatory variable, although not very powerful in locating the poor.

Recent estimates of poverty in Africa indicate that poverty ranges from between 50% to 70% of the total population and in some cases may be as Much as 90%, particularly in the rural areas (Kodjo, 1984). In Africa, while poverty is principally a rural problem, it exists to a considerable extent in the urban areas as well.

Several studies have investigated the shopping behaviors of low-income consumers, but findings in this area have been conflicting. For example, Goodman (1968) and Berry and Solomon (1971) found that most of the low-income families surveyed in Philadelphia and Denver respectively did their principal grocery shopping at chain supermarkets, all of which were outside the survey area. However, Wall (1969) and Groom (1969) found low-income consumers to have a strong propensity to shop at small food stores within their neighborhoods. Similarly, Goldman (1976) in a study of 120 households in Jerusalem concluded that low-income consumers do have a more restricted shopping scope and know less about the store alternatives available to them. The later set of findings is supported by the writings of Andreasen (1975), Sturdivant (1973) and Berry (1972) who have indicated that the poor have physical and psychological restrictions on mobility. A different interpretation is given by Newton (1971). Based on insights gathered during a year of field study of three families, Newton argues that the low-income consumers may forego search either because it is irrelevant to their purchasing decisions or psychologically too costly.

Further expanding the area of information search, Coe (1971), in a study of 50 low and 50 middle income consumers, found that the low-income group had a low identification with private brands, preferring to obtain information about well-known brands, thus raising the cost of food. This was substantiated by Shah (1983) who found that Indian consumers even at low income levels preferred high cost foods. In another information related study, Sargert and Stemple (1968) examined the media habits of low-income consumers. They concluded that the poor use newspapers less while using the radio more than the non-poor persons. In addition, research completed in Norway by Thorelli (1971) shows that low-income consumers are less aware of the existence and nature of specialized consumer information services. Indeed, Andreasen (1975) also notes that there is considerable evidence in the literature that the poor are less knowledgeable than the non-poor about many aspects of the marketplace. Finally, in a study completed in the Netherlands, Verhallen (1975) compared the income allocation and spending decision process of 150 low and 150 medium and high income families. Verhallen found the following: (1) the problem recognition aspects take more time for the poor; (2) the search for information and evaluation and choice processes of the poor tend to be less extensive and more diffused and (3) the buying process of the poor tends to be irregular due to financial and social factors which in turn tend to cause a higher degree of uncertainty and regret as to their choices.

An interesting study by Mason and Smith (1974), examining the market-related behaviors of low-income senior citizens found that this group exhibited (1) a tendency to engage primarily in morning shopping and not to shop at night, (2) a tendency to favor the Central business District as a place for the purchase of consumer durables, and (3) a tendency to engage in a process of physical search to a greater extent than do other groups of shoppers. This last finding is in conflict with much of the past research on low-income consumers which would predict reduced, rather than intensified search. The foregoing may indicate the fact that all low-income consumers cannot be lumped into one category. Apparently, these senior citizens were behaving as senior citizens first and as low income consumers second.

In sum, much of the research in the area of low-income consumer behavior has been descriptive. For example, we know that the typical low-income consumer is likely to live in the rural area of a developing country, is likely to belong to a family that is headed by a woman, has no man of prime working age and has many children under fifteen. However, with the exception of a few studies (for example, Verhallen, 1975), much of the research in this area has been ad hoc and unrelated to existing theories of consumer behavior. The research generally has failed to consider the variety of choice heuristics used in decisions as well as other phenomena that are related to choice, thus revealing little i-nsight as to how and why these behaviors occur. Andreasen (1975), for example, contends that in the main, the research contributions have been too little, too trivial and too late. While more is now known than in 1975, research in this area gains if viewed generally in the broader context of consumer behavior. A programmatic and theory based approach definitely will advance the quality and meaningfulness of pertinent research,

PERSPECTIVES ON POVERTY

Two antipodal theoretical perspectives have characterized the research on poverty. The first perspective, "the culture of poverty," arises from conventional cultural anthropology. The second perspective, the "situationalist perspective," arises from economics.

The first view draws heavily on the work of Oscar Lewis (1959). This view argues that a culture of poverty is universal and that it occurs whenever certain cultural and material conditions exist. Four characteristics that seem particularly central to this perspective, according to Hannan (1973, p. 7) are: (1) the poor are assumed to be disengaged from the major social institutions of society; (2) members of poverty subcultures are aware of society's values, verbalize them and even claim some of them as their own, but on the whole do not abide by them; (3) on a family level the major traits of the culture of poverty are the absence of prolonged and protected childhood, the abandonment of wives and children, in addition to sibling rivalry for limited goods and material affection, and (4) at the individual level, the major characteristics of cultural poverty are strong feelings of marginality, helplessness, dependency, and inferiority, lack of impulse control, little ability to defer gratification and to plan for the future, resignation and fatalism.

Allen (1970) has raised several interesting criticisms of this theory. He notes that: (1) behavior cannot be equated with values--simply because a person behaves in a certain way does not mean he desires to do so or does so because of his beliefs or values; (2) the concept is tautological--values inferred from behavior are used to explain the same behavior and (3) the concept implies a certain degree of homogeneity and consensus, certainly a matter for empirical investigation.

In contrast to the broad view identified in the "culture of poverty" approach, in the narrow situational perspective, the state or condition of poverty is thought of as a state where lack of material resources exerts severe constraints on choices. Poverty is seen as a situation or condition facing an individual. Hence, rates of family break-ups, ego strength, or personality characteristics do not imply cultural differences between the poor and the non-poor, but represent rational adaptations to some different externally imposed conditions (Hannan, 1973, p. 7). Thus, for example, the fact that the poor engage in less long range planning and have short time perspectives is only a reasonable adaptation when facing an incredibly variable environment. It is worth noting that the situational perspective is unquestionably a narrow conception of poverty that focuses on material deprivation.

The distinction between the two aforementioned views is not solely academic; it has different and far-reaching research and policy implications. The culture of poverty view refers to a way of life or design for living that is handed down from generation to generation and accounts for the behavior of the poor by imposing on them a system of values different from those of the middle class. Thus, the poor are posited to be the same anywhere in the world. In the case of the situationalist view however, it is the material situation which is characterized, rather than any qualities of the actor or the person who is faced with the situation (Hannan, 1973).

Of the two views, "the culture of poverty thesis" predominates (Hannan, 1973). By taking a culture of poverty perspective, the studies have tended to introduce an element of bias, in that the writings about the life of the poor have been influenced by a middle class point of view. Having one characteristic in common (that is, lack of financial resources), however, does not necessarily imply the common possession of other characteristics (such as psychological traits) (Allen, 1970). Thus, for this reason we believe it is imperative to look at the low-income consumer in his environment as well as at his psychological and social state.

The proposed model (Figure 1) provides a new perspective. The model differs from the aforementioned perspectives in that it is interactive and looks at the consumer in his environment as well as at his psychological and social state. Its three unique properties are that it is: (1) "culture free," (2) adaptive in nature, and (3) interactive. The accompanying model has three key components: (a) situational factors, (b) social factors, and (c) individual person factors.

A FRAMEWORK FOR LOW-INCOME CONSUMER RESEARCH

(A) Situational Factors

Behavior has been characterized as being influenced by such internalized environmental forces as anticipated circumstances (Engel, Kollat & Blackwell, 1978). Examples of anticipated circumstances are the availability of goods, access to retail stores, general attitudes toward future prospects, state of present income, economic conditions and other factors. The actual choice process may be modified by anticipated circumstances such as sudden changes in income, change in residence or physical circumstances, price deals and coupons.

FIGURE 1

A FRAMEWORK FOR LOW-INCOME CONSUMER RESEARCH

To really understand the low-income consumer, one needs to understand the individual's external situation. For example, situational variables such as living arrangements, family size, household composition, and sex of child are critical factors associated with variation in maternal or paternal behavior. These factors are also likely to affect family decision making processes. Similarly, the role of such geographic factors as density of settlement, relative location within the national economy, accessibility to transport and markets need to be taken into account since they are likely to affect consumption behavior.

Thus there is need for greater emphasis on situational variables and their dynamic nature or properties. Allen (1970) notes that "such research holds advantage of being particularly appropriate for understanding poverty" (p. 378) and thereby the low-income consumer. Also, Belk (1975) and Engel, Kollat and Blackwell (1978) contend that situational variables or circumstances must be given a more explicit recognition in our conceptualization of decision processes. As Belk (1975) points out, "Growing recognition of limitations on the ability of individual consumer characteristics to explain variation in buyer behavior has prompted a number of appeals to examine situational influences on behavior .... suggestions to include situational variables in research on consumer behavior have gone largely unheeded " (p. 157). This area offers considerable potential, not only for marketing in general, but for those particularly interested in the behavior of low-income consumers.

(B) Social Factors

In the areas of psychology and sociology, several theories of cognitive behavior have stressed the necessity to view poverty as a relative concept. Thus, those theories which evaluate the individual in his situation relative to the situations of others should be valuable in helping to understand consumer behavior under poverty. Social evaluation theories (Pettigrew, 1968) such as reference group theory, social comparison theory, and relative deprivation theory, in assuming that the meaning attached to a given behavior depends upon the individual's evaluation of his behavior relative to another individual or group, should enable researchers to better understand low-income consumer behavior.

In addition, little attention has been given to the area of other persons (both poor and non-poor) in influencing the behavior and attitudes of the low-income consumer (Allen, 1970). It is likely that the beliefs and behaviors of the poor are greatly influenced by the attitudes and expectations of other persons.

(C) Individual Factors

Situational and social factors alone are not enough to explain consumer choices. Individual person factors present yet a third variable. Behavior often depends on the interactions among these three. Individual differences can exist in background influences (for example, demographics, life styles)., interpersonal relationships (for example, family decision making) and product-related mediators (for example, perceived risk, use experience). Internal to the individual are his brand or product related knowledge structures and his current goals. The former is likely to affect comprehension and evaluation of advertising messages and to affect subsequent marketplace behavior. The latter is likely to affect strategies used in processing information presented. One significant trend in psychology is the greater emphasis being given to cognitive processes (Allen, 1970). Nonetheless, at least from the low-income perspective, cognitive dimensions of individual person factors may be one of the least explored areas.

The aforementioned factors suggest that research on the low-income consumer may be appropriately pursued from an interdisciplinary perspective. Although most psychologists would affirm that behavior is always a joint function of the external situation and personal disposition (Allen, 1970, p. 374), such a view ignores the importance and interaction of social factors. Besides the interdisciplinary pursuit, direct and indirect relationships need to be investigated in the general context of a contingency view and based on the theoretical foundations provided in the consumer behavior literature.

SUGGESTIONS FOR FUTURE RESEARCH

Any research that hopes to contribute to the better understanding, explanation and prediction of the consumption behavior in the marketplace of the poor must be made within the framework of an overall research strategy to contribute meaningfully to the existing body of knowledge. This strategy can be based on such commonly accepted comprehensive consumer behavior models as an information processing approach, and the Engel, Blackwell and Kollat (EKB) model (Engel, Blackwell & Kollat, 1978). It can also be based on attribution theory or on social evaluation theories (Pettigrew, 1968).

The "perspective" selected should probably depend on the issue examined. one "perspective may be more useful for one issue, while another may be more useful for another. Whereas the "culture of poverty" view argues for special theories of poverty and special kinds of research designed for understanding poverty (Hannan, 1973), the present authors see no need to create "new" theories for studying the low-income consumer. A cue should be taken from the economists. Schultz (1980) notes:

The major mistake has been the presumption that standard economic theory is inadequate for understanding low-income countries and that a separate economic theory is needed. Models developed for this purpose were widely acclaimed until it became evident that they are at best intellectual curiosities.

Research contributions that are based on, or influenced by, the existing models (for example, information processing theory, attribution theory, the Engel, Kollat and Blackwell model) will definitely make a more meaningful and lasting contribution to the better understanding, prediction and explanation of both low-income consumer and consumer behavior as a whole. The framework presented in the previous section should aid in this regard.

For example, one such existing theory which may prove to be extremely valuable in understanding low-income consumer behavior is the Information Processing Theory (IPT) of Newell and Simon (1972) Briefly stated, the theory sees behavior as a function of the individual's goals, information processing constraints and the external task environment. Thus, information processing is adaptative in nature and depends heavily on (a) the nature of the task, (b) the context within which that task must be undertaken, and (c) the individual himself. Hence, the external task environment (number of brands available, number of stores available, proximity to the stores, transportation availability, etc.) or choice environment to a large measure influences the individual's behavior. Also, IPT provides a theoretical framework incorporating all the recognized determinants of consumer behavior, forces a more empirical approach to the study of consumer decision making, has the ability to make unambiguous and precise predictions about detailed aspects of consumer behavior, and draws a distinction between what is "psychological" about consumer behavior, (and therefore constant), and what is "sociological and "environmentally" determined (Olshavsky, 1975). In addition, the theory's "culture free" properties and adaptive nature may prove useful in contributing to our understanding of, the low-income consumers within specific countries and across nations.

Quite recently, Andreasen (1980) pointed out some of the critical questions that need to be addressed or answered, questions pertaining to consumption behavior responses to economic downturns, nature and extent of credit usage and the current status of ghetto market structures. All these suggested areas of highest priority for research can have more meaning and make a positive contribution if studied within the aforementioned framework.

SUMMARY AND IMPLICATIONS

This paper has reviewed relevant existing literature and provided a consumer behavior perspective in an attempt to consolidate the existing body of information on the low-income consumer. It suggests the need for a programmatic and pragmatic research which builds on and extends existing knowledge in this area.

The foregoing analysis suggests the following implications for future efforts directed toward the low-income consumer: (1) a need for public policy based on adequate understanding of the low-income consumer, (2) a need for consumer information/education and (3) a need for a managerial understanding to better provide the right 4P's (product, promotion, place and price) to the low-income consumer. These points are discussed more fully below.

(1) The programmatic and pragmatic approach will recognize and consider the heterogeneity of the consumers and thus aid in making a meaningful contribution to public policy formulation which can then take into account differing economic resources, values, expectations, etc. of consumers. Such an approach also has (1) the potential of providing valuable inputs in the formulation of public policy designed to regulate programs of consumer influence and (2) the greater potential for understanding the causes of failed governmental regulations and policies that affect the consumer and for providing inputs for improvements in present and potential regulations. A thorough understanding of the low-income consumer in particular, and consumers in general, should facilitate the design of acceptable consumer public policy and should efficiently provide solutions to societal problems.

(2) Consumer information intended to influence marketplace behavior should take into account ' the interactive nature of the individual's environment as well as psychological and social state. Since one important dimension of the task or choice environment is the information (amount, quality and format) within the choice environment, one can change the choice environment by increasing the amount and quality of the information, and by improving the information format about the alternatives available to the consumer. Such information, be it via governmental agencies or corporations, could, for example, use radio rather than newspapers to make information on competitive product characteristics available to the decision maker to increase efficiency of choice for the low income consumer.

(3) The proposed framework should have implications for managers. It should aid corporations in better understanding the low-income consumer so corporations can more efficiently and effectively offer products for the benefit of this consumer.

REFERENCES

Allen, Vernon L. (1970), "The Psychology of Poverty: Problems and Prospects," in Psychological Factors in Poverty, ed. Vernon L. Allen, Chicago: Markham Publishing Company, 367-383.

Andreasen, Alan R. (1980), "Marketing Educators Still Face Disadvantaged Consumer Challenge," Marketing News, XIV, No. 2 (July 25), 1, 16.

Andreasen, Alan R. (1975), The Disadvantaged Consumer, New York: The Free Press.

Belk, Russell W. (1975), "Situational Variables and Consumer Behavior," Journal of Consumer Research, vol. 2 (December), 157-164.

Berry, Leonard L. (1972), "The Low-Income Marketing System: An Overview," Journal of Retailing, (Summer), 44-63, 90

Berry, Leonard L. and Paul J. Solomon (1971), "Generalizing About Low Income Food Shoppers: A Word of Caution," Journal of Retailing, vol. 47, #2, 41-51.

Caplovitz, David (1967), The Poor Pay More, New York: The Free Press.

Characteristics of Population Below Poverty Level: 1978 (1980), Washington, D.C.: Bureau of Census, U.S. I Department of Commerce, Series P-60, No. 124.

Coe, Barbara D. (1971), "Private vs. National Preference Among Lower and Middle-Income Consumers, Journal of Retailing, (Fall), 61-72.

Dixon, D, F. and D. J. McLaughlin, Jr. (1968), "Do the Inner City Poor Pay More for Food?" Economic and Business Bulletin, 20 (Spring), 6-12.

Engel, James F., David T. Kollat and Roger D. Blackwell (1978), Consumer Behavior, Hinsdale, Il.: The Dryden Press.

Goldman, Arieh (1976), "Do Lower-Income Consumers Have a More Restricted Shopping Scope?" Journal of Marketing, 30 (January), 46-54.

Goodman, Charles S. (1968), "Do the Poor Pay More?" Journal of Marketing, vol. 32, #1, 18-24.

Hannan, Michael (1973), "Sociological Perspectives on Poverty," in Perspectives on Poverty, eds. Dennis J. Dugan and William H. Leahy, New York: Praeger Publishers, 6-22.

Johnson, D. Gale (1981), "The World's Poor: Can They Hope for a Better Future," Social Science Review, vol. 55, #4, 544-556.

Kotler, Philip (1982), "Neglected Areas Demand Attention of Scholars if Marketing Discipline is to Reach Maturation," Marketing News, September 3, p. 3.

Lewis, Oscar (1959), Five Families: Mexican Case Studies in the Culture of Poverty, New York: Basic Books.

Mason, J. B. and B. E. Smith (1975), "An Exploratory Note on the Shopping Behavior of the Low Income Senior Citizen," Journal of Consumer Affair 8, 204-210.

Musgrave, Philip and Robert Ferber (1979), "Identifying the Urban Poor: Characteristics of Poverty Households in Bogata, Medellin, and Lima," Latin America Research Review, vol. XIV, #2, 25-

Newell, Allen and Herbert Simon (1972), Human Problem Solving, Englewood Cliffs, New J_e_rsey: Prentice Hall.

Newton, j. M. (1977), "Economic Rationality of the Poor," Human Organization, 36 (Spring) 50-61.

Olshavsky, Richard W. (1975), "Implications of an Information Processing Theory of Consumer Behavior," in 1975 Combined Proceedings, ed. Edward M. Mazze, Chicago: American Marketing Association, 151-155.

----------------------------------------

Authors

William K. Darley, Indiana University-Bloomington
Denise M. Johnson, Indiana University-Bloomington



Volume

SV - Historical Perspective in Consumer Research: National and International Perspectives | 1985



Share Proceeding

Featured papers

See More

Featured

Market Structure and Firm Engagement in Divisive Political Issues

Chris Hydock, Georgetown University, USA
Neeru Paharia, Georgetown University, USA
Sean Blair, Georgetown University, USA

Read More

Featured

Don’t Stop! Partitioning Increases Satiation to Food

Cammy Crolic, University of Oxford
Yang Yang, University of Florida, USA
Yangjie Gu, HEC Paris, France

Read More

Featured

E1. Effects of Recipients’ Emotional Expressions on Donors’ Preference for Helping with Development versus Survival

Xue Wang, University of Hong Kong
He (Michael) Jia, University of Hong Kong
Sara Kim, University of Hong Kong

Read More

Engage with Us

Becoming an Association for Consumer Research member is simple. Membership in ACR is relatively inexpensive, but brings significant benefits to its members.