RNS FIRST GRADE COLLEGE

Channasandra, Bengaluru-98

DEPARTMENT OF BBA
V SEMESTER

CONSUMER BEHAVIOUR
UNIT 3

Madhusudhan T K
Asst. Professor
RNS First Grade College

Name: ………………………………………………

Class: ……………………………………………….

SYLLABUS
 CONSUMER BEHAVIOUR UNIT 3 5 SEM BBA

M.K 5.5 CONSUMER BEHAVIOUR

Unit 3: ENVIRONMENTAL DETERMINANTS OF CONSUMER BEHAVIOUR 12 Hrs
Family influences; Influence of culture; subculture & cross cultural influences; group dynamics and
consumer reference groups; social class & consumer behavior.

FAMILY INFLUENCES
Meaning of Family: The family is a group of two or more people related by blood, marriage or
adoption or living together.

The family is the most important social institution for many consumers, strongly influencing values,
attitudes, self concept-and-buying behavior. For example, a family that strongly values good health
will have a grocery list distinctly different from a family that views every dinner as a gourmet
event. Moreover, the family is responsible for the socialization process, the passing down of
cultural values and norms to children. Children learn by observing their parents’ consumption
patterns, and so they will tend to shop in a similar pattern.

Types of Family

 Nuclear family: It consists of two adults of opposite sex living in a socially approved sex
relationship. It consists of husband, wife and their offspring.

 Joint family: It includes a nuclear family and other relatives such as parents of husband/
wife, aunts, uncles, and grandparents, also.

Functions of Family

 Economic Well-Being
 Emotional Support
 Suitable Family Lifestyles
 Socialization of Children and Other Family Members

Family Life Cycle and Buying Roles

 It is important for a marketer to know the family structure and its consumption
characteristics.

 He should be able to understand the family which is a subset of a household. A household is

made up of persons who live and occupy a housing unit. These include both, nuclear and
extended families. A household is a basic consumption unit for most consumable goods.
Major items such as housing, automobiles, electrical appliances, washing machine, etc. are
used more by households than individuals. In a household, many items can be shared and
possessed, whereas individuals sometimes do not posses many such items individually

 Generally, there are two main themes in the Family Life Cycle, subject to significant
exceptions:

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o As a person gets older, he or she tends to advance in his or her career and tends to
get greater income (exceptions: maternity leave, divorce, retirement).

o Unfortunately, obligations also tend to increase with time (at least until one’s
mortgage has been paid off). Children and paying for one’s house are two of the
greatest expenses.

 Note that although a single person may have a lower income than a married couple, the
single may be able to buy more discretionary items.

The bachelor stage- young and single.

The newly married couples—young, no children.

Full nest 1—young, married, with child.

Full nest 2—older, married, with children.

Full nest 3– older, married, with dependent children.

Empty nest—older, married, with no children living with them.

Solitary survivor —older, single, retired people.

Family Decision Stages

1. Problem recognition

2. Search for information

3. Evaluation of alternatives

4. Final decision

Husband-wife influence studies, classify consumer decisions as:

 Wife-dominant decisions, e.g., food, purchase of groceries.

 Husband-dominant decisions, e.g., automobiles, life insurance

 Syncratic decisions (joint), e.g., vacations, choice of schools for children

 Automatic decisions (unilateral)

Decisions may either be:

 Consensual: Everyone in the family may agree with the desired outcome.

 Accommodative: Need conflict resolution by persuasion or bargaining.

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Element of power within the family is obtained from:

 Economic resources: Persons making greater economic contribution have more economic

power.

 Cultural norms: In a male dominated society—husband has greater powers.

 Expert power: More knowledge a person possesses. Husband may know more about cars.

 Legitimate power: This depends on the role the family members play.

 Bargaining power: Power through give and take method.

 Reward/referent power: Giving rewards to others which are liked and appreciated.

 Emotional power: Purchase decisions are influenced by emotions, sentiments and feelings of
one partner.

Key Family buying/ Consumption Roles

1. Influencers: Those family members who provide information and advice and thus influence the
purchase. The housewife tells her family about the new eatery that has opened in the
neighborhood and her favorable description about it influences her husband and teenaged
children.

2. Gatekeepers: Those family members who control the flow of information about a
product/service thus influencing the decisions of other family members. The teenage son, who
wants a racing bicycle, may withhold from his father much of the relevant information on all
brands except the one that he fancies, thereby influencing his father’s decision in favour of his
preferred brand.

3. Deciders: Family members who have the power to unilaterally or jointly decide whether or not
to buy a product or service. The husband and wife may jointly decide about the purchase of a
new refrigerator.

4. Buyers: Those family members who actually buy a particular product or service. A housewife
may be the person who actually buys all the foodstuffs, rations and toiletries, which are
consumed by all the family members.

5. Preparers: Those family members who transform or prepare the product into the form in which
it is actually consumed. The housewife may prepare the family meal using raw vegetables,
lentils, spices, oil and other ingredients.

6. Users: Those family members who use or consume a particular product or service. All family
members may use the car, watch the television, and listen to the stereo music system
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7. Maintainers: Family member(s) who service or repair the product so that it will provide
continued satisfaction.

8. Disposers: Family member(s) who initiate or carry out the disposal or discontinuation of a
particular product or service.

What is a Household?
The term household is used to describe all person, both related and unrelated, who occupy a
housing unit. There are significant differences between the terms household and family even though
they are sometimes used interchangeably. It is important to distinguish between these terms when
examining data.

INFLUENCE OF CULTURE; SUBCULTURE & CROSS CULTURAL INFLUENCES

Culture is part of the external influences that impact the consumer. That is, culture represents
influences that are imposed on the consumer by other individuals. A consumer’s buying behavior is
influenced by the psychological factors. These are the major factors influencing buying behavior. In
this lesson culture and consumer behavior are connected. Cultural factors exert the broadest and
deepest influence on consumer behavior.

Culture is the set of values, norms, attitudes, and other meaningful symbols that shape human
behavior, as well as the artifacts, or products, of that behavior ‘as they are transmitted from one
generation to the next.

- (Mc Daniel, 1999). Zaltman (1965)

Culture is the most fundamental determinant of a person’s wants and behavior. Culture is
environmentally oriented. The nomads of Finland have developed a culture for Arctic survival.

Characteristics of Culture

 Culture is invented by 3 inter-dependent systems

(i) Ideological system—mental system consisting of ideas, beliefs, values and ways of reasoning
(good or bad).

(ii) Technological system consists of skills, techniques to produce.

(iii) Organizational system (family and social class) coordinates behaviour.

 Culture is learned: It begins early in life and is learned through generations.

 Culture is socially shared by human beings living in societies.

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 Culture as similar yet different. Athletics, sports language music rituals are observed by all
but are different.

 Culture is gratifying and persistent: You get satisfaction yet change is difficult.

 Culture is integrated and organized.

 Culture forms no runs and is prescriptive.

 Culture is acquired. It can be acquired from the family, from the region or from all that has
been around us while we were growing up and learning the ways of the world.

 Culture forms a boundary within which an individual thinks and acts. When one thinks and
acts beyond these boundaries, he is adopting a cross-cultural behavior and there are cross-
cultural influences as well
Types of Culture
 National culture : The culture prevalent in a nation, common to everyone
 Popular culture : The culture of the masses with norms of mass appeal
 Subculture: The culture of a group within the larger society. Group identification based on
nationality of origin, race, region, age, religion, gender, etc.
 Corporate culture : The company‘s values, rituals, customs, myths and heroes

SUBCULTURES AND CONSUMER BEHAVIOR

Culture can be divided into subcultures. A subculture is an identifiable distinct, cultural group,
which, while following the dominant cultural values of the overall society also has its own belief,
values and customs that set them apart from other members of the same society.

A Sub culture: is a homogeneous group of people who share elements of the overall culture as
well as cultural elements unique to their own group. Within subcultures, people’s attitudes, values,
and purchase decisions are even more similar than they are within the broader culture.

Subculture differences may result in considerable variation within a culture in what, how, when,
and where people buy goods and services.

Sub-culture categories are:

 Nationality: Indian, Sri Lanka, Pakistan
 Religion: Hinduism, Islam
 Race: Asian, black, white
 Age: young, middle aged, elderly
 Sex: Male, Female
 Occupation: Farmer, teacher, business
 Social class: upper, middle, lower
 Geographic regions: South India, North-eastern India

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Regional, Ethnic, and Religious Influences on Consumer Behavior

I. Regional Influences
A. Regions within the Country
B. Regions across the World
II. Ethnic Influences
A. Ethnic Groups Within the Country
B. Multicultural Marketing
C. Ethnic Groups Around the World
III. Religious Influences
The three major aspects of culture that have important effects on consumer behavior are regional,
ethnic, and religious differences.
 Firstly, consumption patterns may differ in various regions of India and the world, and
marketing strategy can sometimes be tailored specifically to these regions.
 Secondly, our country has a number of different ethnic groups, and population trends will
dramatically alter the demographic profile of the country in the next 50 years.
 Ethnicity: Ethnic origin refers to the genetic heritage group a person is born in
·
Marketplace behavior and marketer response
· Vary mainstream marketing for ethnic markets
· Pay attention to customs
· Product adaptation
· Use of multicultural models in advertising

This diverse population is described in terms of its distinct identity and language, strong family and
religious orientation, solid work ethic, and youthfulness. The broad characteristics can influence
consumption (e.g., brand loyalty and the desire for prestige products) and have important
implications for product development, advertising, media targeting, promotions, and distribution.

Age, Gender, and Household Influences on Consumer Behavior

 Among the four major age groups, Teens, who need to establish an identity, are the
consumers of tomorrow and have an increasing influence on family decisions.
 Gender is consistent throughout lifetime, influencing customer values and preferences.
Gender shows different consumption patterns and perceptions of consumption situations.
E.g. the wedding ceremony.

 Households play a key role in consumer behavior. The proportion of non-traditional

households has increased due to factors such as
(1) Later marriages,
(2) Cohabitation,
(3) Dual-career families,
(4) Increased divorce, and
(5) Fewer children.

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CROSS CULTURAL CONSUMER BEHAVIOR

Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of
two or more nations are similar or different. This will facilitate marketers to understand the
psychological, social and cultural aspects of foreign consumers they wish to target, so as to design
effective marketing strategies for each of the specific national markets involved.”
Problems in Cross Cultural marketing
 Problems related to product selection
 Problems related to promotion/marketing communication
 Problems related to pricing
 Problems related to selection of distribution channels

Basic areas to be understand for cross cultural marketing

1. Language & meaning
2. Difference in market segmentation opportunities
3. Differences in the criteria for evaluating products and services: Apparel firms in India believe
that that the quality of the fabric determines the quality of the garment whereas, the Japanese think
that every aspect of the garment from sewing to packaging decides quality.
4. Differences in consumption pattern and perceived benefits of products and services: leather
exports by India
5. Differences in the economic and cultural social condition and family structure: Social class
differences have been useful in explaining differences in consumer behavior in relation to
(a) Preferences for products and brands
(b) Store patronage or shopping behavior
(c) Exposure to promotion media and
(d) Savings and the use of the credit for purchasing products

Cross-Cultural Consumer Analysis

 Similarities and differences among people (India v/s Japan)
 Alternative Multinational Strategies
o Favoring a World Brand
o Adaptive Global Marketing
Product Strategy Standardized Localized Communications
Communications
Standardized Product Global strategy: Uniform Mixed strategy: Uniform
product/ Uniform Message Product/ Customized message

Localized Product Mixed Strategy: Customized Local strategy: Customized

Product/ Uniform Message Product/ Customized Message

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GROUP DYNAMICS

A group may be defined as two or more people who interact to accomplish some goals. Within the
broad scope of this definition are both an intimate “group” of two neighbors who informally attend
a fashion show together and a larger, more formal group, such as a neighborhood.

Group dynamics is related to determining the interactions and forces between group members in a
social situation.

Types of Groups
1. Primary versus Secondary Groups (Depend on amount of interaction)
2. Formal versus Informal Groups
3. Large versus Small Groups
4. Membership versus Symbolic Groups

REFERENCE GROUPS
A reference group is any person or group that serves as a point of comparison (or reference) for an
individual in the formation of either general or specific values, attitudes, or behavior. The
usefulness of this concept is enhanced by the fact that it places no restrictions on group size or
membership, nor does it require that consumers identify with a tangible group (i.e., the group can be
symbolic: prosperous business people, rock stars, and sports heroes).

Reference groups that influence general values or behavior are called normative reference groups.
An example of a child’s normative reference group is the immediate family, which is likely to play
an important role in molding the child’s general consumer values and behavior (e.g., which foods to
select for good nutrition, appropriate ways to dress for specific occasions, how and where to shop,
what constitutes “good” value).

Reference groups that serve as benchmarks for specific or narrowly defined attitudes or behavior
are called comparative reference groups. A comparative reference group might be a neighboring
family whose lifestyle appears to be admirable and worthy of imitation (the way they maintain their
home, their choice of home furnishings and cars, the number and types of vacations they take).
Both normative and comparative reference groups are important.

Normative reference groups influence the development of a basic code of behavior; comparative
reference groups influence the expression of specific consumer attitudes and behavior. It is likely
that the specific influences of comparative reference groups are to some measure dependent upon
the basic values and behavior patterns established early in a person’s development by normative
reference groups.

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Types of Reference Groups

1. A contractual group is a group in which a person holds membership or has regular face-to-face
contact and of whose values, attitudes, and standards he or she approves. Thus a contactual group
has a positive influence on an individual’s attitudes or behavior.

2. An aspirational group is a group in which a person does not hold membership and does not
have face-to-face contact, but wants to be a member. Thus it serves as a positive influence on that
person’s attitudes or behavior.

3. A disclaimant group is a group in which a person holds membership or has face-to-face contact
but disapproves of the group’s values, attitudes, and behavior. Thus the person tends to adopt
attitudes and behavior that are in opposition to the norms of the group.

4. An avoidance group is a group in which a person does not hold membership and does not have
face-to-face contact and disapproves of the group’s values, attitudes, and behavior. Thus the person
tends to adopt attitudes and behavior that are in opposition to those of the group.

Factors that Affect Reference Groups Influence

1. Information and Experience
2. Credibility, Attractiveness, and Power of the Reference Group
3. Conspicuousness of the Product
4. Reference Group Impact on Product and Brand Choice
5. Reference Groups and Consumer Conformity

Benefits of the Reference Group Appeal

1. Increased Brand Awareness
2. Reduced Perceived Risk

SOCIAL CLASS AND CONSUMER BEHAVIOR

Social Class is the relative standing of members of a society. Higher positions imply higher status.
We can say that Social class is more of a continuum, i.e., a range of social positions, on which each
member of society can be place. But, social researchers have divided this continuum into a small
number of specific classes. Thus, we go by this framework, social class is used to assign individuals
or families to a social-class category.

We can now define social class as the division of members of a society into a hierarchy of distinct
status classes, so that members of each class have relatively the same status and the members of all
other classes have either more or less status.

Characteristics of Social Classes

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1. Persons within a given social class tend to behave more alike

2. Social class is hierarchical
3. Social class is not measured by a single variable but is measured as a weighted unction of one’s
occupation, income, wealth, education, status, prestige, etc.
4. Social class is continuous rather than concrete, with individuals able to move into a higher
social class or drop into a lower class.

Prominent Social Classes

Upper-Uppers are the social elite who live on inherited wealth and have
well known families. They maintain more than one home and send their
children to the best schools. They are in the market for jewelry, antiques,
Upper-Uppers
homes, and foreign vacations. While small as group they serve as a
reference group to others to the extent that other social classes imitate
their consumption decisions.
Lower Uppers are persons who have earned high income or wealth
through exceptional ability in their profession or business. They usually
come from the middle-class. They tend to be active in social and civic
Lower Uppers affairs and seek to buy the symbols of social status for themselves and
their children, such as expensive cars, homes and schooling. Their
ambition is to be accepted n the upper-upper status, a status that is more
likely to be achieved by their children than themselves
Upper Middles possess neither family status nor unusual wealth. The
primarily concerned with “career”. They have attained positions as
professionals, independent businesspersons, and corporate managers.
Upper Middles They believe in education and want their children to develop professional
or administrative skills so that they will not drop into the lower stratum.
They are civic minded and are a quality market for good clothes, homes,
furniture and appliances.
The middle class is average paid white and blue-collar workers who try to
do the proper things. Often they will buy products to “keep up with the
middle class trends”. The middle class believes in spending more money on “worth-
while experiences” for their children and aiming them towards
professional colleges.
Working class consists of “average pay blue collar workers and those who
lead a “working class life-style”, whatever income, school or job they
have. The working class depends heavily on relatives for economic and
Working class emotional support, for tips on job opportunities, advice on purchase, and
for assistance in times of trouble. The working class maintains a sharp
sex-role division and stereotyping. They are found to have larger families
than the higher classes.

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Upper Lowers are working, though their living standard is just above the
poverty line. They perform unskilled work and are poorly paid. Often they
Upper Lowers
are educationally deficient. Although they fall near the poverty line, they
manage to maintain some level of cleanliness.
Lower Lowers are visibly poverty-stricken and usually out of work. Some
are not interested in finding permanent jobs and most are dependent in
Lower Lowers
charity for income. Their homes and possessions are “dirty, ragged, and
broken-down”.

Impact of Social Class

 Provides a sense of identity
 Imposes a set of ‘normative’ behaviors
 Classes share values, possessions, customs and activities
 Marketing response to customers of different economic means
 Marketing to the low-income consumer
 Some marketers ambivalent as not perceived as long-term customers
 Constitutes a substantial group
 Target with value-oriented strategies
*****

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