HOUSEHOLD MATERIAL STATUS AND CONSUMPTION PATTERNS: IMPLICATIONS FOR DIFFERENTIATED MARKETING STRATEGIES

Abstract

Material differences between households have a significant impact on the structure of their consumption. Households of lower material status allocate a larger part of the total consumption to basic foodstuffs, while households of higher material status have greater flexibility in allocating funds to non-essential products, other goods and infrastructure elements.
The research is focused on examining the relationship between the household material status index and the Engel coefficient, expressed as the share of food consumption in total consumption, for urban and rural households in the Republic of Srpska, in the periods 2015 and 2021/22. The material status index is defined as a composite indicator of the economic position of a household, based on the amount and structure of consumption, and the possession of tangible goods and infrastructure, including assets such as cars, computers, air conditioners, household appliances, etc.
Analysis by Pearson’s correlation coefficient showed a strong negative correlation (r = -0.927), which confirms the basic principle of Engel’s law: an increase in the material standard leads to a decrease in the relative share of food expenditure. The results indicate that a higher material status index contributes to greater diversification of diet and total consumption, while urban and rural households differ in the structure of expenditure on meat, milk, beverages and other food categories.
The findings of the research provide an empirical basis for the creation of differentiated marketing strategies, based on the material status index, as well as for the design of measures aimed at improving living standards and reducing unequal spending on basic needs.