Module IV

• Reference Groups & its impact on Consumer

Behaviour- Consumer Relevant Groups-Factors
affecting Group Influence- Application of
Reference Group Concept – Household as a
Consumption Unit -Family: Role of family
buying decisions, Family Life Cycle & its
impact on Consumer Behaviour
Group Influences
 Groups Defined
• Group: ‘Two or more individuals who share a
set of norms, values, or beliefs, and have
certain implicitly or explicitly defined
relationships which make their behaviour
interdependent’.
• Reference group: ‘A group whose presumed
perspectives or values are being used by an
individual as the basis for his or her current
behaviour’
 Reference Groups
• Reference groups serve as sources of comparison,
influence and norms for peoples opinions, values
and behaviors.
• People are strongly influenced by what others
think and how they behave.
• The most important reference group is the family
because it provides children with the skills,
knowledge, attitudes, and experiences necessary
to function as consumers, a process called
consumer socialization.
 Reference Group Influence
• Normative influence consists of learning and
adopting a group’s norms, values, and
behaviors. The most pertinent normative
influence comes from groups to which people
naturally belong, such as family, peers, and
other members of one’s community.
• Comparative influence arises when people
compare themselves to others whom they
respect and admire, and then adopt some of
those people’s values or imitate their
behaviors.
 Types of Reference Groups
• A group to which a person belongs to, or
realistically can join, is called a membership
group.
• A symbolic group is a group to which an
individual is unlikely to belong, but whose
values and behaviors that person adopts.
 Consumption-Related Reference
Groups
• Friendship groups
– Friends fulfill a wide range of needs
– They provide companionship, security, and
opportunities to discuss problems that an
individual may be reluctant to discuss with family
members.
– They may be a credible source of information
about purchases.
 Contd…
• Shopping groups : People may shop together
just to enjoy shopping or to reduce their
perceived risk; that is, they may bring
someone along whose expertise regarding a
particular product category will reduce their
chances of making incorrect purchases.
 Contd..
• Virtual communities:
– Many websites encourage consumers to leave
comments and have others respond to them.
– The fact that people can share their interests,
hobbies, and opinions with thousands of peers
online has benefited marketers.
 Contd…
• Advocacy groups:
– The objective of consumption-focused advocacy
groups is to assist consumers in making
consumption decisions and support their rights.
– There are two types of advocacy groups:
– Entities organized to correct a specific consumer
abuse and then disband, and
– groups whose purpose is to address broader,
more pervasive problem areas and operate over
an extended period of time.
 Factors Affecting Reference Group
Influence
• The degree of influence that a reference group
exerts on an individual’s behavior depends on
the individual, product, and social factors.
• These factors include conformity, the group’s
power and expertise, the individual’s
experience and personality, and the
conspicuousness of the product.
 Conformity
To influence its members, a reference group must:
• Inform members that the brand or product exists.
• Provide opportunity to compare thinking with the
attitudes/behavior of the group.
• Influence individual to adopt attitudes and
behavior that are consistent with the group’s
norms.
• Legitimize the member’s decision to use the
same products as other members.
 Group power and expertise
• Different reference groups may influence the
beliefs, attitudes, and behaviors of individuals
at different times or under different
circumstances.
• Consumers who are primarily concerned with
approval from others usually adopt the same
products and brands as those group members
who have status.
 Contd…
• When consumers are preoccupied with the
power that a person or group can exert over
them, they often adopt products that conform
to the norms of that person or group in order
to be complimented on their choices. (Power
Based)
• Reference groups can be “power groups”
which may bring about changes in behaviors.
Relevant information and experiences
• Individuals who have firsthand experience
with a product or service, or can easily obtain
detailed information about it, are less likely to
be influenced by the advice or example of
others.
• In contrast, persons who have little or no
experience with a product or service, and do
not trust advertising messages, are more likely
to seek out the advice or example of others.
 Product conspicuousness
• The degree of reference group influence on
purchase decisions varies according to product
conspicuousness. (Verbal or Visible)
• Products that are especially conspicuous and
status revealing are most likely to be
purchased with an eye to the reactions of
relevant others.
 Personality Traits
• People who are compliant, have a tendency to
conform and a high need for affiliation, need
to be liked by others, and are other-directed
are more receptive to group influences.
• Competitive people who desire to control
other people and events and are inner-
directed are less likely to look for guidance
from reference groups.
 Application of reference group
concept
• Recognize the extent of reference group
influence in a situation
• Identify the most effective type of reference
group influence
• Identify possible reference group members to
use in promotions
• Attempt to increase reference group influence
 Opinion leadership
• Opinion leadership is defined as the process
by which one person-the opinion leader-
informally influences others
• They may be opinion seekers or recipients
• Opinion leaders are influential members of a
community, group, or society to whom others
turn for advice, opinions, and views.
 Opinion Leaders
• Information provided
– Best brands
– Use of brands
– Where to buy
• Important for services
• Category specific
• Motivations
Motivations of Opinion Leaders &
Receivers
Characteristics of Opinion Leaders
• Knowledgeable in product category
• Self-confident, outgoing, sociable
• Read special-interest publications and
websites
• Often same socioeconomic & age group as
receivers
 Diffusion of Innovation
• Diffusion of innovations is a theory that seeks
to explain how, why, and at what rate new
ideas and technology spread.
• Everett Rogers, a professor of communication
studies, popularized the theory
• Not all consumers adopt new products or new
versions of existing products simultaneously
 Adopter Categories
• The concept of adopter categories is a
classification that depicts where consumers
stand in relation to other consumers in terms
of the first time they purchase an innovation
(e.g., a new product or model).
• Classification developed by sociologists
entitled it as Diffusion of Innovations consists
of 5 categories of adopters:
 Contd…
• Sociologically, the model assumes that all
members of a given society would, eventually,
adopt the innovation.
• Thus, the number of people belonging to each
category was calculated in a manner resembling a
statistical normal distribution:
• innovators— the first 2.5% to adopt; early
adopters—the next 13.5%; early majority—the
next 34%; late majority—the following 34%; and
the laggards—the last 15%.
 The Innovators
• Earliest consumers to buy new products.
• They are prepared to take the risk that the
– Product will not work well,
– Become unavailable, or
– Be quickly replaced by an improved model .
• They are often willing to pay somewhat higher
prices for newly introduced products, because
they enjoy being the first to own gadgets and
show them off.
 The Early Adopters
• Consumers who buy new products within a
relatively short period following introduction,
but not as early as the innovators.
• They are venturesome, likely to engage in
word-of-mouth, and also likely to assist others
who are considering adopting the new
products.
 The Early Majority
• Consists of consumers who buy innovations
after the early adopters have done so.
• This segment is larger than the preceding two
groups combined.
• Members of the early majority are somewhat
risk averse.
 The Late Majority
• Members of this group are risk averse and
slow to adopt innovation.
• They wait until most other consumers have
adopted the new product before buying it.
 The Laggards
• The very last consumers to adopt innovations.
• By the time they get around to make first time
purchase, the innovators and early adopters
are already switching to more advanced
models with advanced features.
• Laggards are generally high-risk perceivers
and the last ones to recognize the value of
innovative products.
 Non-adopters
• Marketers often “write off” non-adopters, but
not all non-adopters are the same, and
understanding nonusers is important.
• Prospective adopters, who could potentially
become customers.
• Persistent non-adopters, who are very unlikely
to become customers
 Family
• Two or more persons related by blood,
marriage, or adoption residing together.
• There are three types of families: married
couples, nuclear families, and extended
families.
• A married couple and one or more children
constitute a nuclear family.
• The nuclear family, together with at least one
grandparent or other relation living within the
household, is called an extended family.
 Family’s Supportive Roles/Functions
• Socialization
• Economic well being
• Emotional support
• Suitable family life styles
 Family Life Cycle
• Is a composite variable that combines
– Marital Status,
– Size Of Family,
– Age Of Family Members (Focusing On The Age Of
The Oldest Or Youngest Child),
– And Employment Status Of The Head Of
Household, and then classifies the family into a
“typical” stage.
 Family Life Cycle
• The family life cycle starts with bachelorhood
and then moves on to marriage
• Marriage usually leads to a growing family
and later on to family contraction (as grown
children leave the household).
• The cycle ends with the dissolution of the
family unit (due to the death of one spouse).
 The Bachelorhood
• Refers to young single men and women,
mostly college educated, who have incomes
that allow them to leave home and establish
their own households.
• Single persons spend considerable amounts
on clothing, cars, and travel and
entertainment.
• Marketers should differentiate between
singles who live at home (with their parents)
and those who have left it.
 The Honeymooners
• Stage refers to young and newly married
couples.
• Educated, engaged couples have a combined
discretionary income.
• If both establish career paths, their incomes
grow steadily.
• People with considerable discretionary
incomes are prime targeting prospects.
 The Parenthood
• Stage designates married couples with at least
one child living at home.
• This is the longest stage of the family life cycle.
• Also known as the “full-nest” stage usually
extends over more than a twenty-year period.
• Because of its long duration, this stage can be
divided into shorter phases: the preschool phase,
the elementary school phase, the high school
phase, and the college phase.
• The financial resources of the family change
significantly
 The Post-parenthood
• Stage refers to older married couples with no
children living at home.
• Also known as “empty nest” is traumatic for
some parents and liberating for others.
• For many parents, this stage represents the
opportunity to do all the things they could not do
or afford while their children lived home or went
to college.
• Therefore, families in the post-parenthood stage
are an important market for luxury goods, new
automobiles, expensive furniture, and vacations
to faraway places.
 The Dissolution
• Stage refers to the family with one surviving
spouse.
• If the surviving spouse is in good health, is
working or has adequate savings, and has
supportive family and friends, the adjustment
is easier.
• The surviving spouse often tends to follow a
more economical lifestyle.
 Family Decision-making And Its
Members’ Consumption-related Roles
• Marketers recognize that families operate as
units in terms of consumption behavior
• Marketers focus on husband–wife decision-
making and children’s role in family decision-
making
 Husband-Wife Decision-Making
• Four patterns of dynamics of husband–wife
decision-making:
• Husband-dominated decisions are those
where the husband’s influence is greater than
the wife’s.
• Wife-dominated decisions are those where
the wife’s influence is greater than the
husband’s.
 Contd…
• Joint decisions are those where the husband’s
and wife’s influence are equal.
• Autonomic decisions are those where either
the husband or the wife is the primary or only
decision maker.
 Children’s Influence
• Pressure: The child demands, threatens, and tries
to intimidate the parents.
• Exchange: The child promises something (e.g., to
“be good” or clean his room) in exchange.
• Rational: The child uses a logical arguments and
factual evidence.
• Consultation: The child seeks parents’
involvement in the decision.
• Ingratiation: The child tries to get the parent in a
good mood first and then makes the request.