Abstract
Although the world has experienced steady rates of economic growth over the past few decades, a large share of consumers globally faces significant economic hurdles. According to the World Bank, in 2023, 10.2% of the global population lived under the global poverty threshold of $3.00 per day. While much of that share comes from consumers living in African countries, consumers in many low- and middle-income economies are also faced with challenging economic prospects. As of September 2024, three in four people worldwide lived in middle-income countries daunted by the so-called “middle-income trap”: the inability to transform into higher-income economies despite promising economic growth and decreasing poverty rates (World Bank 2024). Middle-class struggles are also evident even in advanced economies, partly due to the unequal distribution of economic output. In the United States, the share of the national income held by middle-class households fell from 62% in 1970 to 43% in 2022, with a sizable part of this fall attributed not only to an increase of high-income households but also to an increase of low-income ones (Kochhar 2024). Between 2006 and 2021, two-thirds of the European Union member states saw a shrinking middle class and a growing share of consumers living below poverty thresholds (Eurofound 2024). These figures collectively indicate that global economic growth may co-occur with consumers’ financial vulnerability. At the same time, they suggest that the promise of middle-class membership does not tautologically translate into a positive financial outlook.
Consumer financial vulnerability is commonly understood as the consumer's difficulty in meeting financial demands, including (among others) debt repayment, everyday expenses, unexpected economic shocks, or even basic leisure activities (Fernández-López et al. 2024). In the marketing literature, research on financial vulnerability largely revolves around concepts such as bottom-of-the pyramid consumer segments (Prahalad 2005), financial well-being (Brüggen et al. 2017), middle-class consumption (Cavusgil et al. 2018) and financial scarcity (Sarial-Abi et al. 2023).
Acknowledging the importance of this topic for international marketing scholars and practitioners, the
In their article, Von Janda, Shainesh, and Hillebrand (2021) challenge the restrictive definition of subsistence markets on the basis of income and attempt a segmentation of these markets using a wide range of consumer characteristics. Drawing on the theory of consumption values, they argue that subsistence markets exhibit significant heterogeneity that can be explained through a combination of demographic characteristics and consumption values. Using a multisite rapid ethnography that combines qualitative data from in-depth interviews, primary survey data, data obtained by secondary sources, and observation notes from consumers in India and South Africa, the authors reveal four segments of subsistence consumers: (1) family-oriented coworkers, (2) low-skilled price-sensitives, (3) young performers, and (4) conscious conservatives. They subsequently profile these segments and identify significant differences in their consumption values, behaviors, and choices. The authors’ findings imply that the subsistence market is by no means homogenous and that “one size fits all” marketing strategies focused exclusively on affordability and scale are not universally effective when targeting bottom-of-the-pyramid consumers.
Building on the same heterogeneity principle, Chikweche, Lappeman, and Egan (2021) attempt a segmentation of the African urban middle class. After revisiting alternative definitions of the middle class, the authors argue that the determinants of middle-class membership in African cities should expand beyond indicators of economic capital (income, wealth) and consider social and human capital dimensions including, among others, income sources, working status, future economic prospects, technology access and use, asset ownership, and purchase criteria. The authors collect quantitative data from middle-class consumers across ten African urban centers and, following a cluster analysis, identify three middle-class segments: the vulnerable, the comfortable, and the accomplished middle class. Through a detailed description of the three segments, the authors provide an overview of the most important determinants of consumption choices by middle-class consumers in Africa and call marketers to integrate factors such as lifestyle, digital connectivity, and brand features in the design of new products and marketing strategies targeted to middle-class consumers.
Expanding beyond the context of specific emerging markets, Riitsalu and Van Raaij (2022) propose a novel conceptual and operational approach to the construct of financial well-being. Questioning the direct analogy between financial well-being and wealth and revisiting objective and subjective elements of the construct, the authors propose a new definition of financial well-being that encompasses both the evaluation of consumers’ current personal finances (i.e., current money management stress) and the assessment of consumers’ future financial outlook (expected future financial security). They subsequently develop a nomological framework of the demographic, institutional, and cultural antecedents and consequences of both financial well-being dimensions. Combining primary survey data from 16 countries with data collected from secondary sources, the authors find that (1) current financial well-being is positively related to income, financial inclusion, and trust in government and is negatively related to age, while (2) future financial well-being is positively related to indulgence and is negatively related to individualism and age. The findings indicate that perceptions of financial well-being vary significantly not only within but also across countries and that institutional and cultural factors interact with individual consumer characteristics in shaping consumers’ assessment of their current financial situation and future economic prospects.
Digging deeper into the psychological underpinnings of financial vulnerability, Su et al. (2022) investigate the role of personal cultural orientations on consumers’ sense of financial vulnerability and its subsequent impact on consumption decisions that threaten their financial well-being. Specifically, the authors argue that consumers’ psychological tendency to act independently and autonomously (i.e., idiocentrism) versus their tendency to behave in ways dictated by collective influence and social group membership (i.e., allocentrism) have opposing effects on financial vulnerability through affecting cultural tendencies such as power distance, long-term orientation, uncertainty avoidance, and masculinity. Testing their predictions in the United States and China, the authors report that idiocentric consumers engage in behaviors that risk their financial well-being due to following a “living for today” orientation. In contrast, they find that allocentric consumers are more protected from financial vulnerability by following cautious avoidance of risk and embracing masculine cultures’ interpretation of material possessions as indicators of personal achievement and success. These findings reveal the cross-cultural nuances in the experience and psychological regulation of financial vulnerability.
Beyond these valuable contributions,
Collectively, the findings of these contributions indicate that the causes, outcomes, and psychological responses to (financial and nonfinancial) vulnerability are heterogenous, complex, and insufficiently understood. The conceptualization of consumer vulnerability appears to necessitate a broader, multidimensional perspective that encompasses concepts such as consumer values, lifestyles, digital habits, cultural orientations, and institutional conditions. As such, international marketing research should advance the study of consumer vulnerability as a culturally and institutionally embedded phenomenon that exhibits significant cross-cultural variation and warrants comparative research approaches across countries, cultures, and geographical regions.
From a managerial perspective, international marketing practitioners are in dire need of more actionable insights when crafting strategies (e.g., new product development, promotional efforts, positioning and microsegmentation, brand tailoring) intended to connect with middle-class consumers and/or consumers who face financial challenges of different degree and type. Specifically, there is a need to identify actionable managerial interventions that enhance the well-being of consumers living in subsistence markets or relegated to middle-class segments and to examine the cultural and institutional determinants of their effectiveness. Importantly, future research should focus on the design of products and services in industries of particular relevance for vulnerable consumers (e.g., digital finance, health care, energy and natural resources, real estate/homeownership) as well as the institutional barriers to their development and the cultural determinants of their adoption.
Toward this end, in what follows, I offer three broad research avenues that
Research Avenue 1: Consumer Vulnerability, Resilience, and Protection
Successive economic shocks, global sociopolitical instability, repeated institutional failures, and the fragile economic growth experienced globally over the last decades have left consumers worldwide disillusioned by the promise of globalization and threatened financially, socially, and politically (Davvetas, Ulqinaku, and Abi 2022). Technological advances in the domain of artificial intelligence threaten vulnerable consumers’ income/employment security and their access to critical services that are increasingly mediated by opaque algorithmic processes and carry the risk of consumer exploitation and unfair treatment (e.g., credit scoring, mortgage applications). The climate crisis, the depletion of natural resources, and the rising costs of basic necessities such as food, energy, and housing all hinder consumers’ ability to break the vulnerability ceiling and only further exacerbate climate injustice and income inequalities. In this light, the following research questions warrant particular attention:
How is financial vulnerability created, experienced, and managed across global markets, and how can firms and institutions engage with it responsibly? What are the cultural, institutional, environmental, and sociopolitical causes of consumer vulnerability across countries? Does the increasing application of algorithmic systems exacerbate inequality across countries? If so, what institutional safeguards need to be established to mitigate their impact? How can consumer resilience be conceptualized? What are its key dimensions, antecedents, and outcomes? Which coping strategies do vulnerable consumers employ to deal with the rising cost of living, and how do these differentiate across countries of various cultural profiles and levels of institutional maturity? How can firms and brands help consumers remain resilient under financial stress?
Research Avenue 2: Social Mobility and Social Class Identity
Social class membership is known to impact a wide range of consumption emotions and behaviors. Being a form of social organization encountered internationally, a consumers’ social class represents a potential basis of self-categorization that entails the psychological mechanisms of ingroup membership, outgroup derogation, and responses to intergroup and intragroup threats (Greenaway and Cruwys 2019). However, social class membership may change upward or downward in the course of a consumer's life, raising the prospect of class identity shifts, identity conflicts, and/or class identity assimilation. As such, the following questions carry particular interest:
Is there such a thing as a “global middle-class consumer identity”? How different are middle-class consumers around the world, and what causes these differences? Has globalization strengthened or weakened the global middle-class consumer? What consumption shifts do consumers exhibit when moving up (and down) the social ladder, particularly in emerging (advanced) markets experiencing economic growth (stagnation)? How are the effects of social class mobility on consumption different across cultures? What roles do brands play as consumers move up or down the social ladder in emerging and advanced markets? How do consumers deal with conflicts between social class identity and other forms of social identity (e.g., global identity, national identity, political identity)? How can brands champion middle-class consumers globally and successfully embrace middle-class symbolism?
Research Avenue 3: Intergenerational Vulnerability and Consumption Change
In most of the Western world, an increasing majority of consumers feel that their children will be financially worse off than themselves when they grow up (Pew Research Center 2022). For the first time post–World War II, younger generations are experiencing stagnant wages, facing unsustainable student debt, and perceiving homeownership as an unachievable life goal. While younger consumers are more educated, technologically savvier, and more cross-culturally conscious than their parents, they lack a positive outlook about their ability to meet their future financial needs. Consequently, the following research questions warrant particular attention:
How do younger generations (e.g., millennials, Gen Z, Gen A) react to financial vulnerability and pessimistic financial prospects compared with older generations? How do younger generations cope with financial vulnerabilities (e.g., labor market insecurity, limited homeownership) across countries? How does the interplay between postmaterialist, globalist identities and financial vulnerability shape the consumption patterns of younger-generation consumers? How can brands develop relationships and build loyalty with younger consumers who face economic challenges locally while adopting global consumerism? How can national, transnational, and global consumer protection agencies help younger consumers cope with generational uncertainty and restore their consumer well-being?
The global geopolitical, socioeconomic, and technological changes bring the issue of consumer vulnerability back to the spotlight of international marketing research and call for a comprehensive understanding of the phenomenon through a comparative, cross-cultural, and multidimensional lens. Being in the frontline of this field for years,
Footnotes
Editor
Ayşegül Özsomer
Associate Editor
Timo Mandler
Declaration of Conflicting Interests
The author declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.
Funding
The author received no financial support for the research, authorship, and/or publication of this article.
