Product Positionality as a Signal of Social Status

Abstract

This study is concerned with the effect of social comparisons on consumers’ budget allocation across different product categories. We propose that consumers allocation is influenced by each category’s ability to signal social status, herein referred to as the category’s positionality. To test this assertion, we propose a metric of positionality that accounts for both visibility and expensiveness. Accordingly, we operationalize positionality as the product of visibility scores and consumption cost. The relevance of this metric is tested empirically by showing that it explains consumers’ budget allocation. The validity of the metric is established by proving that it strongly correlates with structural estimates of positionality. In addition, we investigate the conditions under which positionality is most influential. We demonstrate the moderating roles of: a) consumption disparity; b) consumers’ degree of social involvement; and c) consumers’ social class. The results indicate that the degree of social involvement is positively associated with levels of spending on positional goods. Comparison discrepancy, as approximated by income inequality, correlates negatively with levels of spending on positional product categories. However, income inequality also has a positive correlation with status consumption. Social class, as measured by occupational prestige, negatively correlates with the expenditure shares of positional goods. Implications to marketing and public policy are discussed.