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QUESTION 
Socio-economic status
 
'Comparing people's income is a simple matter. All you need to do is compare income after direct tax 
and social security contributions to see how well off people are.' 
Do you agree with this statement? 
ANSWER 
Unfortunately the issue is not that simple. Firstly, there is indirect taxation (for example, sales tax). 
Households on different incomes are more or less exposed to this. Secondly, there is the issue of 
mortgage interest relief which is available in some countries. It is not available to people renting their 
accommodation. Thirdly, there are additional social benefits such as education. It is difficult to combine 
these factors. 
 
7.7 Buying patterns 
Buying behaviour is an important aspect of marketing. Many factors influence the buying decisions of 
individuals and households. Demography and the class structure are relevant in that they can be both 
behavioural determinants 
and 
inhibitors
. 
(a) 
Behavioural determinants encourage
people to buy a product or service. They include the 
individual's personality, culture, social class, and the importance of the purchase decision (eg a 
necessity such as food or water, or a luxury). 
(b) 
Inhibitors
are factors that make the person 
less likely 
to purchase something (eg low income). 
Socio-economic status can be related to buying patterns in a number of ways, both in the amount 
people have to spend and what they spend it on. It affects both the quantity of goods and services 
supplied and the proportion of their income that households spend on goods and services. 
BPP Tutor Toolkit Copy

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CHAPTER 2
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THE BUSINESS ENVIRONMENT