While it’s easy to see these households as victims of the marketplace, they are making the best choices available, given the broader systemic issues facing them. Similarly, those who provide goods and services to ALIC, including used car dealers, sub-prime lenders and rent-to-own outlets, are seen as villains rather than entrepreneurs seeking to meet the needs of underserved consumers.
John Mittelstaedt, Associate Professor of Marketing, Clemson University; President of the Macromarketing Society

At the recent joint conference of the Macromarketing Society and the International Society for Marketing and Development, held in Washington, DC, scholars from Clemson University and business leaders from VOX Global Mandate and Dollar Financial Corporation reported on findings of the “ALIC” Project, a multi-stage research project designed to better understand the production, consumption and household patterns of asset-limited, income-constrained (ALIC) families.

Key findings of the study are:

- ALIC households earn between $25,000 and $45,000 a year, income well above the poverty line but below the median household income, is a long-term condition;

- ALIC are the permanent lower middle class. Marketing scholars and social scientists know very little about this group, but understanding it is critical because they represent an important and growing component of American society;

- ALIC is not poor, ALIC works hard, has a family, rent living space and in some cases owns his home and need access to all the goods and services of production that more affluent families do.

Who is ALIC? “ALIC is a truck driver, who became a security guard to try to save his marriage,” said Jim Witte, Professor of Sociology at Clemson University, and director of the Center for the Advancement of Marketing and Social Science. “ALIC is a school teacher paying back student loans, an aspiring real estate agent who has not sold a house in months, but still hopes to sell a simple starter home in a sagging housing market. ALIC gets up and goes to work, clips coupons, plays the lottery, will do just about anything to balance the checkbook – anything, that is, but give up on the bundle of goods and services that they feel they are entitled to as members of America’s middle class.”

ALIC is Anita, 41, who wanted to be a veterinarian, but instead runs a pet sitting service, and makes ends meet by working as a mystery shopper. ALIC is David, 26, who wants to buy a house, like his father did in 1955. “My dad said, you know, the rule of thumb back then was that your mortgage was one week’s salary,” but wonders whether he will ever find a house on what he earns as a technician.

“ALIC bears more of the risk than higher income households, whether it’s the lack of a warranty or manufacturer financing for a car, or paying more for medicine because they lack health insurance,” said John Mittelstaedt, Associate Professor of Marketing at Clemson University and President of the Macromarketing Society. “While it’s easy to see these households as victims of the marketplace, they are making the best choices available, given the broader systemic issues facing them."

"It is imperative that businesses focus resources on reaching and serving this growing and important population demographic,” commented Jeff Weiss, CEO of Dollar Financial Group, a leading international financial services company serving under-banked customers. “Providing these consumers with basics like food and healthcare and access tools like credit and education are essential to helping them move ahead in the economic system.”

“Similarly, those who provide goods and services to ALIC, including used car dealers, sub-prime lenders and rent-to-own outlets, are seen as villains rather than entrepreneurs seeking to meet the needs of underserved consumers. In production and consumption systems, decisions we make have effects far beyond ourselves, for better or worse. ALIC feels the impact of these choices more immediately than the rest of us,” added Mittelstaedt.

Jim Witte, Professor of Sociology at Clemson University, said, “In previous generations, ALIC would have worked at the local factory, owned a modest house, and dreamt of seeing his kids graduate from college. Today, ALIC works at a call center because the factory is gone, rents because she can’t get a mortgage, and isn’t sure how she’ll pay for her kids’ education. ALIC is getting by, but not getting ahead.”

Macromarketers are interested in the complex systems that make up production and consumption for households. The results of this project suggest that ALIC’s needs are served by very different marketing systems than for upper income households. ALIC rents while upper income households own. ALIC spends as much of their income on transportation as higher income households, but typically buys used cars instead of new. And while upper income households are consuming insurance and pensions, ALIC is worried about housing, food and healthcare.

Using data from the Bureau of Labor Statistics, and focus groups in Las Vegas and Tampa, Witte and his colleagues found that ALIC is as likely to be divorced or single as married, has a high school diploma but not a college degree, and lives on a single income. By comparison, households in the upper two income quintiles are predominantly married (75%), have a college degree, as do their spouses, and have two or more incomes.

"Given the stunning growth in the ALIC demographic over the past 15 years and how relatively little we know about them, it is a core audience that elected officials need to understand and learn to communicate with," said Robert Hoopes President of VOX Global Mandate and Adjunct Faculty at The George Washington University.

Next phases of the ALIC project will involve further data collection and analysis, particularly focusing on how individual consumers and goods and service providers adapt to the economic, social and political needs of this increasingly important segment of the middle class.

For more information, contact Clemson University, James Witte, 864-656-3816.