Republic of the Philippines

BATANGAS STATE UNIVERSITY– LIPA

Marawoy, Lipa City

College of Accountancy, Business and Economics

MKT. 102- Consumer Behavior

Chapter 6. Families & Group Influences on Consumer Behavior

Lesson No. 1. Role of family in buying decision making

In a family unit in the twenty-first century, independent of the family structure, the youngest
members of the family are gaining more buying power by the day. This power has grown to go
over the things that they use themselves but even in major family decisions such as buying a car
or deciding where to go on a vacation (White, 2013). Families act like democracies where every
member‘s opinion is valued and taken into consideration the same way (ibid).
Another surprising fact is that even younger children nowadays are starting to request specific
brands when it comes to the products that they use. A study conducted on little children showed
that 52% of three-year-olds and 73% of four-year-olds usually ask their parents to buy them
specific brands (Greninger, 2017, para 1). The majority of people has been a witness or
experienced this first hand. You are in a grocery store and out of the sudden; you hear a little kid
throws a tantrum because its favorite brand of cereals did not get picked up. Most of the time you
see a parent surrender and buy them what they want but some do not.

A lot of literature is writing about this phenomenon and how children‘s empowerment has
increased over the years. Goodwin (2013, para 4) explains that ―children's spending has
roughly doubled every ten years for over three decades, and had tripled in the 1990s. Children 4-
12 spent $2.2 billion in 1968, and $4.2 billion in 1984. But by 1994 the figure climbed to $17.1
billion, and by 2002 their spending exceeded $40 billion‖. He continues by saying that the
numbers presented above are what children directly spend because if the influence that they have
on their parent‘s decision is to be taken into consideration the numbers would be staggering.
This is shown by an example of the year 2012 where children‘s buying power and the influence
that they had on their parents buying decisions reached 1.2 trillion dollars with an emphasis on
the ―T‖ (Goodwin, 2013).
Time writes that 71% of parents ask their children about the purchases they make (White, 2013).
Almost all parents let children give an opinion about things like toys, clothes, and food that is
bought for them, and around two-thirds of parents take into consideration what their children
want when making family decisions (ibid).

Forbes attributes this change in children buying power to millennials parenting style: ―as
parents, Millennials are evolving the decision-making process to include their children.
According to the Family Room, 76% of Millennial parents identify with the ―Family Meeting‖
decision-making style, which means they will discuss decisions, small and large, with the whole
family. This means that even a minor purchase will be made with input from both parents and
kids‖ (Fromm, 2015, para. 6). Furthermore, children have received more responsibilities and
more direct-purchasing power, as a result of the changes that our society has gone through the
years, like mothers spending more time outside their houses because of work and the increase in
single-parent families (Greninger, 2017, para 2). Mothers feel guilty for not being able to spend
more time with their children because they have to work full-time and that is why they try to
compensate by giving children more decision power (Rindfleisch et al., 1997). Living in single-
parent family children have more influence on what the family eats because sometimes they are
the ones who do the shopping for the whole family (ibid).
White (2013) states that even though there might be a temptation to blame it all on the American
parents, this is a global phenomenon and there is research that parents in Israel, India, China,
Fiji, and the Philippines are giving deference to the smallest members of their families. This
information is relevant for parents and marketers as well. On the one hand, it can help parents set
limits to their children‘s buying behavior or make them more part of the family decision process
depending on what is better for that specific family. On the other hand, it can help marketers
focus more on children as a target group for future products and advertising. With the children´s
increase in influence on family buying behavior, they should be considered more like a market
segment, hence more ads should target them Goodwin (2013). Marketers should consider also
that the children of today are the consumers of tomorrow and if they gain them as a consumer on
a young age, they might be loyal customers for life (Medialit, 1987; White, 2013).

Family plays an important role in most of our buying decisions. Our selections are based upon
several important considerations, many of them influenced by our families and our roles in them.
Whether it is your fashion or food, family and friends are bound to have a limited but certain
influence upon your choice. The influence of family remains on our buying decisions throughout
our lives from the time we are kids to the time we become grandparents. From the time others
make purchases for us to the time we are self -dependent and start making our own decisions,
family’s role is significant. It is just as inseparable from consumer behavior as an individual from
the family.

You must have marked how your buying preferences changed as you grew up. From the time
you used to select your favorite toys to the time you started having an I-pod, these preferences
have changed a lot.  From the time, you were a teenager to the time you got married and started
having kids, several things have changed that have influenced your buying behavior. Many times
you are the primary shopper for your family, buying grocery, shopping for other small and big
things and making important purchasing decisions. Sometimes, you let your spouse decide what
to buy and sometimes the kids. A husband buys a tie of a color his wife likes and wife wears
a color her husband loves. All these things do not have any major science behind them.
Similarly, parents like to know their kids preferred color before they buy a new car.
Marketers also target families in their marketing and advertising campaigns. Particularly, it is
true about the products where the entire family is involved in the buying decision. Moreover,
there are several things that differ from family to family including preferences. While one family
likes having a small car, another one prefers a SUV. One would like holidaying in Manila,
another in Dubai. There are other factors as well that influence how a family makes
its purchasing decisions. A family where the level of cohesion and communication between the
family members is high, buying decisions are made keeping others’ preferences in mind. In case
of families where the emotional bonding is low between the families members, buying decisions
are less affected by group preferences. Individual members like to buy independently as per their
individual choice. Apart from it, how flexible a family is regarding its power structure also
affects the buying process. How much liberty parents provide their kids also affects buying
decisions in the family.

A family is a group of two or more persons related by blood marriage or adoption who reside
together. The nuclear family is the immediate group of father, mother, and children living
together. The extended family is the nuclear family, plus other relatives, such as grandparents,
uncles and aunts, cousins, and parents-in law. The family into which one is born is called the
family orientation, whereas the one established by marriage is the family procreation.

A family is an important element that affects the consumption and disposal of products by an
individual. A family may be defined as two or more people living together, related by blood or
marriage who share a common house, common income and similar status and values.
It is important for a marketer to know the family structure, family compositions, buying patterns,
Buying roles and motives of family members, life cycle stages etc. in order to understand family
influence on consumer behavior and position a product efficiently in the market.
There may be two types of families:
Nuclear Family – A small family comprising of a married couple and their children. Joint Family
– It refers to a large family comprising of married couples, their parents, their children and their
relatives.

FAMILY INFLUENCES & DECISION MAKING

The family is a major influence on the consumer behaviour of its members. There are many
examples of how the family influences the consumption behaviour of its members. A child learns
how to enjoy candy by observing an older brother or sister; learns the use and value of money by
listening to and watching his or her parents. Decisions about a new car, a vacation trip, or
whether to go to a local or an out-of-town college are consumption decisions usually made
within the context of a family setting. As a major consumption unit, the family is also a prime
target for the marketing of many products and services.
THE FAMILY
The importance of the family or household unit in consumer behavior arises for two reasons:
1. Many products are purchased by a family unit.
2. Individuals’ buying decisions may be heavily influenced by other family members.
How families or households make purchase decisions depends on the roles of
the various family members in the purchase, consumption, and influence of products. Household
products like food and soaps may be purchased by a person but consumed by many, whereas
personal care items, such as cosmetics or shaving cream, might be purchased by an individual
family member for his or her own consumption. Homes and cars, on the other hand, are often
purchased by both spouses, perhaps with involvement from children or other member of the
extended family. Visits to shopping malls often involve multiple family members buying
clothing and accessories, something with a heavy dose of influence by family member’s children
may buy clothing paid for and approved of by parents, whereas teenagers may influence the
clothing purchase of a parent. Regardless of how many family members are present when items
are being purchased, the other family members play an important role in the purchase. Just
because of being mother for two young children, it is her responsibility for buying food for the
family and act as an individual in the market. It does not mean that her decisions are not
influenced by the preferences and power of other family members. Although marketing
communications are usually directed to individuals, marketers should consider the consumption
circumstances and the family structure before deciding on specific communication or advertising
methods to attract their segment.
This study examines the role of children in family buying decision-making and investigates
factors that seem to have effect on children’s level of involvement in family buying decisions.
The study was conducted using two samples (children and parent respondents). The respondents’
choice and justification thereof was shown in a detailed manner. Data for the study were
collected with the instrument of questionnaire, personal interview and secondary sources. The
data collected has been empirically analysed through ANOVA, correlation and regression as well
as cross tabulation procedure with SPSS. The findings of the study revealed that family-buying
decisions in contemporary times is more of an outcome of a joint effort in which children play
significant and multiple roles in relation to a wide variety of products needed by their families,
not just to the items that directly relate to their needs. It was also found that there exists a nexus
between perceived level of children involvement in buying decision making and some selected
demographic, socio-cultural and economic factors. The study recommended that parents should
adopt a democratic approach in arriving at family purchase decisions in order to avoid family
conflict. It is also imperative that marketers understand the changing dynamics of family buying
decision-making process and the elevated power of children’s roles and influences in order to
design better marketing strategies that can effectively serve and satisfy the needs of emerging
market segment for improved marketing performance.
Family Influence on Consumer Behavior
A family is a social group and all members of a family influence and get influenced by each
other. Family bonds are stronger than bonds in any other group and all members of the family
form a single decision unit in case of purchase of products and services for common
consumption. Each member influences and gets influenced by a family member depending upon
his/her role, life cycle stage and relationship dynamics in the family.
Therefore, family influence on consumer behavior can be understood by studying the buying
roles, family dynamics and life cycle stage of a family member.

Buying Roles of a Family

The various roles played by members of a family while making a purchase decision are:
 Influencer – The family member or family members who provide information about a
product or service to other family members
 Gate Keeper – Family members who controls the flow and direction of the contents of
information
 Decider – The one with the power to select the product whether individually or jointly
 Buyer – The one who makes the actual purchase
 Preparer – The family member or family members who prepare the product for family
consumption
 User – The consumers of the product or service Maintainer – The members who maintain
the product for continued use and satisfaction
 Disposer – The member who disposes the product.

Role and importance of children in purchase decision

The powers of children in family buying process are because of numerous reasons. They exercise
their influence through various ways, which varies in relation to products. Children influence
significantly based on the parent education, their occupation, earnings, whether single working
parent or both. Our research thesis is based on children in the age group of 6-13 in Pakistan.
The children tend to pressurize their parent maximum for the products relating to their hobbies.
Significant important influence operating on family purchase behavior is the budget allocation,
and consumption pattern. The birth of a child generates need for products that couple never
considers for buying previously. The current development of consumer behavior has established
much new scope in the field of marketing. Family as customer has preserved important role in
marketing and consumer behavior. With passage of time as children emerge as a consumer; their
influence on family buying may also be increase. It is likely to say that, the cultural variables
effect the process of socialization of the children.

Lesson No. 2. Effects of Group Influences on Consumer Behavior

Factor affecting Consumer Behavior

Cultural Factors
Consumer behavior is influenced by cultural factors like social class, buyer’s culture, and
subculture. There are three types of cultural factors include social class, culture, and subculture.
Culture can be different by region, different groups and even countries.

Social Factors
Social factors greatly influence the purchasing behavior of consumers. Social influencers are
diverse and include family, school or work communities, social interaction or any group with
which an individual interacts. It also includes an individual’s social class which comprises of
education level, living conditions, and income.
Personal Factors
Personal factors impact buying decisions and include age, economic situation and occupation. In
considering personal factors, buying behavior is also influenced by habits, opinions and interests
along with other personal issues.

Psychological Factors
Psychological factors that impact buying decision includes perception, motivation and beliefs
and attitudes. Every consumer will respond to marketing message based upon their attitudes and
perceptions.

What affects consumer behavior?

1. Marketing campaigns
Marketing campaigns influence purchasing decisions a lot. If done right and regularly, with
the right marketing message, they can even persuade consumers to change brands or opt for more
expensive alternatives.
Marketing campaigns can even be used as reminders for products/services that need to be
bought regularly but are not necessarily on customers’ top of mind (like insurance for example).
A good marketing message can influence impulse purchases.
2. Economic conditions
For expensive products especially (like houses or cars) economic conditions play a big part.
A positive economic environment is known to make consumers more confident and willing to
indulge in purchases irrespective of their personal financial liabilities.
Consumers make decisions in a longer time period for expensive purchases and the buying
process can be influenced by more personal factors at the same time.
3. Personal preferences
Consumer behavior can also be influenced by personal factors, likes, dislikes, priorities,
morals, and values. In industries like fashion or food personal opinions are especially powerful.
Advertisements can, of course, help but at the end of the day consumers’ choices are greatly
influenced by their preferences. If you’re vegan, it doesn’t matter how many burger joint ads you
see, you’re probably not gonna start eating meat because of that.
4. Group influence
Peer pressure also influences consumer behavior. What our family members, classmates,
immediate relatives, neighbors, and acquaintances think or do can play a significant role in our
decisions.
Social psychology impacts consumer behaviour. Choosing fast food over home-cooked
meals, for example, is just one of such situations. Education levels and social factors can have an
impact.
5. Purchasing power
Last but not least, our purchasing power plays a significant role in influencing our behavior.
Unless you are a billionaire, you will take your budget into consideration before making a
purchase decision.
The product may be excellent, the marketing could be on point, but if you don’t have the
money for it, you won’t buy it.
Segmenting consumers based on their buying capacity will help marketers determine
eligible consumers and achieve better results.

Influence of Family on Consumer Behavior

Families influence purchases in many ways. At first, the influence of parents is significant
because of how parents help their children to develop political and religious beliefs, lifestyle
choices, and consumer preferences. Most people are who they are because of their parents. A
spouse and children, however, can exert an even more significant force on a consumer’s
purchases. Interaction between spouses and the number and ages of children play a particularly
powerful role on buying behaviors. These family influences affect how consumers look at
purchases more directly than most other social influences on consumer purchasing.

Consumers Trust Reference Groups

Consumers are influenced by different types of reference groups they believe they are a part
of or aspire to be. Group influence goes both ways; sometimes, consumers avoid brands they
believe would put them into a group they don’t want to be included in. People buy things to help
form and express their self-concept and their connections with like-minded people. Many things
a person buys, especially showy items such as clothing, accessories, vehicles, restaurants or club
memberships, are symbolic of what he thinks is acceptable to a certain reference group such as
his family, social circle, workplace, community or culture.
An individual buyer might make purchases that appeal to a few different types of reference
groups. For example, a consumer who wants to appear eco-friendly may purchase a Toyota
Prius. That same consumer might also feel connected to Nintendo's gaming community and opt
to buy Nintendo consoles over Sony or Microsoft products. Group influence comes from many
directions and in most cases, different types of reference groups do not clash in the buyer's mind
because the products that signify them are in completely separate categories.

The group’s power of influence on consumer’s behavior will depend on a number of

factors. For example degree of visibility of the product or trademark used by the group members.
The group’s power of influence is higher for the products used visibly such as shoes, cars and
fashion products compared to non-visibly products. In the Harley Davidson subculture their
power to influence other members is through visible displays such as tattoos and motorcycle
customization, this is done to emphasize the commitment to the group. The product’s degree of
necessity for example the group’s power of influence is higher for the luxury products such as
jewels, fashion etc and lower for necessity products. For example the baby boomers subcultures
are likely to influence other members in purchasing luxury products than necessity products.

The group’s power of influence will depend on the individual’s degree of involvement for
example if an individual is reliant to a group; it is more likely to conform to the group. The
group’s influence will depend on the degree of confident of the buyer during the buying process.
The group influence is noticeable when there are specialized products such as PC sets or
mobiles. These are the products for which the buyer depends on the expert knowledge of the
reference group. The influence of the reference groups is not influential for all types of products
or services that consumers purchase. For example products that are not complex, that are low in
perceived risk are unlikely to be influenced by the reference groups. The impact of the reference
groups can vary. Reference group might determine the choosing of a certain kind of product
instead of others. It can further influence the option of a brand or trademark of a product such as
Iphone or Blackberry. An individual will want to belong to a group because of their significance
and position they obtain. They will want to be associated with groups that have an attractive
social position. Due to the unique characteristics certain groups are seen to have a greater social
power influence than other groups.

Groups have power due to their ability to influence individuals to become members. The
group’s ability to influence the behavior of various individuals that are members or non-
members of the group is called social power and can have a number of types. These social
powers can influence the consumer behavior in buying certain products and brands. Research
found that reference groups are very important for marketers. This is because they can influence
and inform members to purchase specific products and brands. It can provide the members with
factors to compare with their own values, with the values and behavior of the group. This can
therefore influence the members to adopt the groups’ values and attitudes.

Group influence is “non controllable” by the marketer but must be taken into consideration
when designing new products. The marketer will need to seek out to understand all the group
influences that affect consumers so that the marketing mix can be adjusted to give the maximum
effect. Consumer behavior is greatly influenced by cultural, social, personal, and psychological
factors. Culture is the most fundamental determinant of a person’s wants and behavior. Culture
contains smaller subcultures or groups of people with shared values systems based on common
life experiences and situations. These subcultures can influence the consumer behavior.
Subcultures include nationalities, religions, racial groups and geographic regions. Age subculture
(age cohort) is an example of how consumers cultural bond with each other. This is because
these consumers are more likely to face similar experiences and share common memories by
growing up and living in the same time frame. Many subcultures make up important market
segments and marketers often need to design products and marketing programmers’ tailored to
their needs and want. For example the automobile industry are taking on the baby boomer
subculture market and dealing with boomers changing needs in the industry. Toyota’s campaign
of the redesign of the new Avalon was to provide a youthful image that reminds the baby
boomers of the late 1960s.

The reference group is used to confirm the consumer’s attitudes, norms and actual behavior.
The individual behaves reliable with the group’s norms and beliefs because the individual’s and
the group’s norms, attitudes and beliefs are the same. For example, this can be seen in Harley
Davidson subculture in which the members view the subculture as a ‘religious icon’ sharing the
same values and norms as other members.

Reference groups are groups that consumers compare themselves to or associate with.
Reference groups are similar to opinion leaders in that they can have a profound influence on
consumer behavior. Reference groups are considered a social influence in consumer purchasing.
They are often groups that consumers will look to to make purchasing decisions. So if a
reference group endorses a product, either through use or statements about the product, those that
look to the group will often purchase that product. On the other hand, if a reference group
disapproves of a product, those that associate with that group will probably not purchase the
product.

Types of Reference Groups

Reference groups can be either formal or informal. Schools, friends, and peers are examples
of informal reference groups. Clubs, associations, and religious organizations are usually formal
reference groups. Individuals can also be reference groups (usually known as opinion leaders).
Additionally, celebrities can be used as a reference group. A company might use a celebrity it
feels will match its target market to get that market to purchase its product. For example, a few
years ago Shaquille O’Neal was used to endorse Pepsi because Pepsi felt he represented the spirit
of teenagers of the time.

Influence of Reference Groups

Reference groups can and do have a tremendous influence on purchasing decisions. This is
evident in a number of ways, such as through roles. Everyone is expected to behave in a certain
way based on the reference group we belong to. Students act like students. In keeping with this
idea, people will often modify their own behavior to coincide with group norms (even those that
profess non-conformity are in some ways conforming with other people who want the same
thing). Reference groups communicate through opinion leaders, who influence what others do,
act, and buy. In the consumer world, this means that if a reference group purchases a product,
those that associate with the group likely will as well.
Reference groups affect consumers through a variety of means: through norms, through
information, and through influencing the value expressive needs of consumers. They influence
consumers through bringing about attitude changes by encouraging the expression of certain
values and attitudes expressed through the group. Because an individual wants t be a part of a
group, he or she will be influenced by the values and attitudes of the group. Furthermore, groups
whose members exhibit similar social characteristics are more susceptible to attitude change than
groups whose members are less homogeneous. Thus people frequently buy products that others
in their group buy.

Our purchase decisions are influenced by any number of people or groups. We often look to
opinion leaders for help in our consumer decisions. Opinion leaders are usually people who are
more knowledgeable about a certain product or service than the average consumer. As such,
opinion leaders can shape how a product is viewed. Consumers are constantly seeking out the
advice of knowledgeable friends or acquaintances who can provide information, give advice, or
actually make the decision. For some product categories, there are professional opinion leaders
who are quite easy to identify–for instance, auto mechanics, beauticians, stock brokers, and
physicians. All these professionals can influence the decisions consumers make within their area
of expertise. Sometimes, these opinion leaders can actually be groups, known as reference
groups.

A major influence on one’s purchasing habits and consumer behavior is the social class in
which one finds him or herself. Social class is considered an external influence on consumer
behavior because it is not a function of feelings or knowledge. Social class is often hard to
define; in fact, many people dispute the existence of social classes in the United States. Usually,
however, people are grouped in social classes according to income, wealth, education, or type of
occupation. Perhaps the simplest model to define social class is a three-tiered approach that
includes the rich, the middle class, and the poor. Other models have as many as a dozen levels.
People in the same social class tend to have similar attitudes, live in similar neighborhoods, dress
alike, and shop at the same type of stores.

Social class can have a profound effect on consumer spending habits. Perhaps the most
obvious effect is the level of disposable income of each social class. Generally, the rich have the
ability to purchase more consumer goods than those with less income, and those goods are of
higher quality. There is also a distinction in the type of goods purchased. For example, the upper
class tend to be the primary buyers of fine jewelry and often shop at exclusive retailers. The
lower class, in contrast, are much more concerned with simply getting by; they focus more on
necessities.

Culture can have a profound effect on consumer behavior and impact how a product is
marketed. In this sense, culture is defined as the distinct way peoples’ experiences, customs and
beliefs define how they behave. American culture, for example, values hard work, thrift and
achievement. There are generally three components of a culture: beliefs, values, and customs.
Culture can be further divided into subcultures. One’s race, religion and class are all ways
subcultures can be established. For example, a person can be a part of the larger “American”
culture and still be a member of other subcultures based on his or her socioeconomic
background. Each of these subcultures will have specific influences on consumer behavior.

Consumer behavior can be affected by several factors. It can be different from person to
person based on his age, income, sex, education and marital status. You can easily notice the
difference between the buying decisions and consumer behavior of two different people from
different economic groups. A person with high level income makes big ticket purchases whereas
one from lower economic strata makes small ticket purchases. These factors are evident at the
surface. However, there are several factors affecting buying decisions and consumer behavior.
Some of these differences are easily noticeable whereas the others might be a little difficult to
observe.
 This article focuses on four important demographic factors and the effect they have on
consumer behavior. These factors are age, sex, education and income. Consumer behavior is
affected as these factors change. You can observe a change in the consumer behavior of
someone who has grown richer or more educated.

Age
Age is an important demographic factor that affects consumer behavior. As people grow,
their needs change. Similar changes come to their buying decision making patterns. With age,
our health needs change and so do many other needs. Age brings changes to people’s lifestyle
and with it their needs and personal values are also affected. When people are young, they spend
more on their lifestyle needs from fun and movies to fashion. As they grow older, their expenses
on these things shrink. Elderly people mostly remain indoor, however, their health related
expenses may rise. In this way, age becomes one of the fundamental demographic factors
affecting consumer behavior and buying decisions.

Age does not just affect buying behavior, it is also an important factor affecting market
segmentation and marketing strategy. Marketers segment their target market on the basis of age.
There are several products that are marketed only to the millennial. Similarly, there are products
meant for the elderly and which meet the needs of people past their middle ages. Lifestyle
gadgets and magazines are mostly marketed to the youth or the millennial generation. Since, the
taste of this generation is vastly different and they are more digitally inclined, this affects not just
the choice of marketing strategy but also the marketing channels used to market to them.

People’s choice of brands and products start changing as they grow older. A young man’s
choices can be vastly different from the elderly since age brings changes that affect our flavor.
An older person may have more serious choices and will be less fun loving than when he was
young. Chocolates are meant for kids and young people. Their consumption among the elderly is
much lower. Age determines several things and when we retire our consumption patterns also
change according to the change in income. Elderly people are less digitally inclined and
therefore their consumption of digital products can also be lower.

Sex
Between male and female sexes, several things are different and these differences also
affect their buying choices. The two sexes have different needs in terms of fashion and lifestyle.
So, their consumer behavior in these two areas can be vastly different. It is mainly the difference
in needs that lead to differing choices. However, there are several areas where consumption
patterns can be similar too like in terms of food and fun. The same movies and same fast food
brand may appeal to both the sexes. The same is true about technological gadgets too. However,
there are still several products in the market which are meant for either of the sexes not each.
Decision making patterns may also vary between the two sexes. The homemakers are less likely
to be involved in impulse buying. So many advertisements that you daily come across are
directed at either of the sexes. From beer adverts to the grooming products, the same adverts do
not appeal to both the sexes. In most of the households, it is the women that influence most of
the product choices.

Income
Income is a very important factor that affects the buying decisions and consumer behavior
of people. Across different income levels, the difference in product choices and buying patterns
can easily be marked. A person in the middle class makes his buying decisions based on utility.
However, someone from the upper class would want style, design and special features while
making a purchase. The channels for the marketing of luxury items are different from those for
the ordinary ones. Luxury items are mostly marketed through luxury magazines. The level of
income determines what kind of products someone regularly purchases. A buyer with higher
disposable income will spend more on luxury or lifestyle items. People with higher disposable
income also spend more on vacations and tours. Customer service and after sales support also
become important factors when it comes to big ticket purchases.

Education
Education affects how people view things around them. It affects the level of discretion they
employ while making purchases. In this era, education has also become the determinant of social
class and the easiest method to climb up in the society. The more educated a person is, the higher
the level of discretion he will employ in making purchases. People’s preferences can change with
education. Every customer is well informed in this era. However, the more educated ones take
more time before deciding a purchase. Education affects a number of things including the
fashion you wear and the programs you watch. It affects even your choice of stationary and the
magazines you are reading. It is why same ads do not work with all customers. Highly educated
customers look for information and do not rely on ads alone. They question the information
served before them. If observed carefully, education’s effect can easily be seen on consumer
behavior. An educated customer would weigh his options carefully before going for a purchase.

Consumer behavior is affected by several factors, chief among them being age, sex, income and
education. While our preferences change with age and level of education, sex and income also
affect our product choices and decision making patterns. The economic crisis has passed.
However, during the crisis, people’s disposable incomes had declined and this had affected their
purchasing behavior. In this way, in a period of economic turbulence people grow more careful
with their expenses, which is also a proof that income affects consumer behavior. However, apart
from these demographic factors, psycho-graphic and geographic factors too have an effect on
consumer behavior. These factors too can have a deep impact on how people buy and spend and
how marketing must be done to achieve higher sales.

Lesson No. 3. Factors Effects of Group Influences on Consumer Behaviour

Each consumer in society is a member of different groups depending on their culture,

various subcultures or even social class can influence their consumer purchase. A group can be
formed when two or more individuals share a set of norms and beliefs. A group becomes a
reference group when an individual recognize with the group and takes on many of the values,
attitudes or personal standards of group members and use it as the base of his/her day to day
behavior. Reference group is defined as having significant relevance upon an individual’s
evaluations, aspirations or behavior influencing the consumer. The nature of reference group
influence can take three forms, this is because some groups and individuals are able to influence
greater than others and affect a range of consumption.

1. Informational influence: This is when the reference group is used as a knowledgeable

source in the different parts of the buyer’s decision process. This type of influence
emerges when an individual or the member uses the behaviors and beliefs of the
reference group as dependable sources. This influence is based either on the similarity of
the buyer’s desires with the ones of the group members. For example in the biker
subculture the members all share similar desires for purchasing Harley Davidson
products therefore influencing the individual decision process in selecting certain
products. The members in baby boomer subculture are also likely to purchase similar
latest fashion products.
2. Normative influence known as (utilitarian influence): The reference group creates a level
of values and norms of an individual, in the process of purchasing brands or products. For
example both the Harley Davidson biker subculture and baby boomer subculture will
have an influence on the member’s decisions on which types of products to consumer to
fit in with the values and attitudes of the subculture. Harley Davidson subculture values
can affect the characteristics of the member’s lives such as their ‘social, political and
spiritual’ aspects.
 3. Identification influence known as (value-expressive influence): The reference group is
used to confirm the consumer’s attitudes, norms and actual behavior. The individual
behaves reliable with the group’s norms and beliefs because the individual’s and the
group’s norms, attitudes and beliefs are the same. For example this can be seen in Harley
Davidson subculture in which the members view the subculture as a ‘religious icon’
sharing the same values and norms as other members.

The group’s power of influence on consumer’s behavior will depend on a number of

factors. For example degree of visibility of the product or trademark used by the group members.
The group’s power of influence is higher for the products used visibly such as shoes, cars and
fashion products compared to non-visibly products. In the Harley Davidson subculture their
power to influence other members is through visible displays such as tattoos and motorcycle
customization, this is done to emphasize the commitment to the group. The product’s degree of
necessity for example the group’s power of influence is higher for the luxury products such as
jewels, fashion etc and lower for necessity products. For example the baby boomers subcultures
are likely to influence other members in purchasing luxury products than necessity products.

The group’s power of influence will depend on the individual’s degree of involvement for
example if an individual is reliant to a group; it is more likely to conform to the group. The
group’s influence will depend on the degree of confident of the buyer during the buying process.
The group influence is noticeable when there are specialized products such as PC sets or
mobiles. These are the products for which the buyer depends on the expert knowledge of the
reference group. The influence of the reference groups is not influential for all types of products
or services that consumers purchase. For example products that are not complex, that are low in
perceived risk are unlikely to be influenced by the reference groups. The impact of the reference
groups can vary. Reference group might determine the choosing of a certain kind of product
instead of others. It can further influence the option of a brand or trademark of a product such as
Iphone or Blackberry. An individual will want to belong to a group because of their significance
and position they obtain. They will want to be associated with groups that have an attractive
social position. Due to the unique characteristics certain groups are seen to have a greater social
power influence than other groups.

There are many factors affecting consumer behaviour. These all factors jointly shape
consumer behaviour. Due to impact of various factors, consumers react or respond to marketing
programme differently. For the same product, price, promotion, and distribution, their responses
differ significantly. The factors do not affect equally to all the buyers; they have varying effect
on their behaviour. However, some factors are more effective, while others have negligible effect
on consumer behaviour.

(A) Cultural Factors:

A group of people are associated with a set of values and ideologies that belong to a
particular community. When a person comes from a particular community, his/her behavior is
highly influenced by the culture relating to that particular community.
Cultural factors have the broadest and deepest impact on consumer behaviour. This set of factors
mainly includes broad culture, sub-culture, and culture of social classes.

Broad Culture:
Culture is a powerful and dominant determinant of personal needs and wants. Culture can
be broadly defined as: The way of living, way of doing, and way of worshiping. Culture
determines the total patter of life. Culture has a tremendous effect on needs and preference.
People react according to the culture to which they belong.

Every culture has its values, customs, traditions, and beliefs, which determine needs,
preference, and overall behaviour. The child acquires a set of values, perception, attitudes,
interest, preference, and behaviour from family and other key social institutions that control
his/her behaviour. Every member is bound to follow cultural values to which he belongs. These
cultural factors determine the way of reacting toward product and marketing strategies.

Culture is reflected in terms of followings:

i. Family life/social system
ii. Role of women
iii. Woman education
iv. Approach to work and leisure
v. Approach to life
vi. Ethics in economic dealings
vii. Residence pattern
viii. Geographic factors
ix. Impact of other cultures, and so on.

These all factors affect what, when, where, how much, from whom, and how many times
the product should be purchased and used. Marketer must be aware of the relevant cultural
aspects, and marketing programme should be designed accordingly.

Subcultures:
Each culture consists of smaller subcultures. Each subculture provides more specific
identification of members belong to it. Product and marketing programme should be prepared in
light of subcultures to tailor their needs.

Within a cultural group, there exists many subcultures. These subcultural groups share the
same set of beliefs and values. Subcultures can consist of people from different religion, caste,
geographies and nationalities. These subcultures by itself form a customer segment.

Subculture includes:
i. Nationality:
Every nation has its own unique culture that shapes and controls behaviour its citizens. For
example, Indian culture, American culture, Japanese culture, Chinese culture, African culture,
etc. Consumers of different nations hold different behaviour toward the company’s products and
strategies. The company can concentrate on one or more nations to serve.

ii. Religion:
It is a powerful determinant of consumer needs and wants. Every religion has its culture in
terms of rules, values, rituals, and procedures that have impact on its followers. Commonly,
consumer behaviour is directly affected by religion in terms of products that are symbolically
and ritualistically associated with the celebration of various religious events and
festivals/holidays.

Religious requirements or practices, sometimes, take on an expanded meaning beyond

their original purpose. For example, Christians, Hindus, Muslims, Buddhists, etc., influence food
preference, clothing choice, career aspiration, and overall pattern of life.

Even, in each religion, there are several sub-religions. For example, Hindu Religion includes
Vaishnav, Swaminarayan, Shivpanthi, Swadhiyai, and likewise; Christian Religion includes
Protestants and Catholics; and similar is the case with Muslim and Jain.

iii. Racial Groups:

In each culture, we find various racial groups; each of them tends to be different in terms
of needs, roles, professions, habits, preference, and use of products. Each group responds
differently to marketing offers due to different cultural backgrounds.
 For example, in our country, we find a number of racial groups like Kshatriya, Banya, Patel,
Brahmin, Scheduled Caste, Scheduled Tribe, Shepherded, and so forth. These racial groups have
their cultural values, norms, standards, habits, etc., that govern their overall response toward the
company’s products.

iv. Geographical Regions:

Each geographic region represents specific culture and differs in terms of needs,
preference, habits, usage rates, and uses of products. Clothing, residence, food, vehicle, etc., are
determined by regional climate and culture.

Culture of Social Classes:

Philip Kotler defines: “Social classes are relatively homogeneous and enduring divisions in
a society, which are hierarchically ordered and whose members share similar values, interest, and
behaviour.” In many cases, social classes are based on caste system. Members of different castes
have their cultures and, accordingly, they perform certain roles.

Social classes reflect differences in income, occupation, education, their roles in society,
and so on. Every social class has its culture that affects behaviour of its members. Social classes
differ in their dress, speech patterns, recreational preferences, social status, value orientation, etc.

They show distinct product and brand preferences in many areas like clothing, home
furniture, education, leisure activities, and automobiles. Kotler identifies following social
classes, each of them differs significantly in term of income, skills, needs, habits, preference,
career orientation, approach toward life, etc.

i. Upper-upper
ii. Lower upper
iii. Upper middle
iv. Middle class
v. Working class
vi. Upper lower
vii. Lower-lower

Normally, with reference to India, on the basis of income level, or status in society, we can
identity three social classes like upper class, middle class, and lower class. In every society,
percentage of each of these classes is subject to differ. Marketer should design his marketing
programme to cater the needs of specific social classes.

(B) Social Factors:

Here, we examine the effect of social factors on consumer needs and preferences
(behaviour). Social factors affect consumer behaviour. Consumer response to product, brand, and
company is notably influenced by a number of social factors – family, reference groups, and
roles and statuses. Marketer needs to analyze these social factors of his target market to cater its
needs effectively.

Let’s briefly comment on some dominant social factors influencing consumer behaviour:

1. Family:
Family is one of the most powerful social factors affecting consumer behaviour. This is more
significant where there is joint family system, in which children use to live with family for
longer time. Values, traditions, and preferences are transmitted from parents to children
inherently.

Family members constitute the most influential primary reference group. From family, its
member acquires an orientation toward religion, politics, ambition, self-worth, love, respect, and
so on. Need, preference, buying habits, consumption rate, and many other aspects determined by
family affect one’s behaviour.

In every family, elders, husband-wife, other members, and children have varying degree of
influence on purchase decision, which is the matter of interest for the marker to appeal them.
Some products are children dominant; some products are husband dominant; some products are
wife dominant; while some products are equal dominant.

2. Reference Groups:
Philip Kotler states: “A person’s reference group consists of all the groups that have a direct
(face-to-face) or indirect influence on the person’s attitudes or behaviour.” Groups having a
direct influence on the person are called membership groups.

Normally, following reference groups affect behaviour of their members:

i. Primary Reference Groups:

They are informal groups such as family members, friends, neighbors, relatives, and co-
workers with whom the person interact fairly continuously. Habits, life-style, and opinions of
these groups have direct impact on the person.

ii. Secondary Reference Groups:

They tend to be more formal groups such as religious groups, professional groups, trade
unions or associations, etc., that affect buying decisions of an individual buyer.

iii. Aspiration (Aspired) Groups:

A person is not the member of such groups. But, he likes to belong to those groups. He
imitates habits, preference and buying pattern of such groups. For example, college students
imitate/like to belong to film stars, sportsmen, or professional groups.

iv. Dissociative (Disliked) Groups:

These reference groups include such groups whose values or behaviour a person rejects or
dislikes. He tends to behave differently than those groups. A marketer should identify reference
groups of his target market and should try to influence those groups. In case of television,
automobile, clothing, home furniture, books and magazines, cigarettes, etc., the reference groups
have more direct impact on buyers’ purchase decision.

3. Roles and Statuses:

A person plays various roles in many groups throughout his life. He has to play different
roles in family, club, office, or social organisation. A role consists of the activities that a person
is expected to perform. For example, a person is father for his children, husband for his wife, son
for his parents, friend for his friends, boss for his department, and a member of social
organisation.

Each role carries status. For example, sales manager has more status than sales officer.
People choose those products that communicate or represent their roles and statuses in society.
Therefore, marketer must be aware of the status symbol potential of products and brands. The
marketer should also try to associate products and brands with specific roles and status.

4. Social Customs and Traditions:

Social customs, beliefs or traditions can be associated with religion, caste, or economic
aspects. Such customs determine needs and preference of products in different occasions and,
hence, affect consumer behaviour.

5. Income Level:
Income affects needs and wants of consumers. Preference of the rich consumers and the
poor consumers differ notably. In case of quality, brand image, novelty, and costs, there is wide
difference between the rich and the poor buyers. Marketer must be aware of expectations of
different income groups of his target market.

(C) Personal Factors:

Along with cultural and social factors, personal factors also affect one’s buying decision.
Personal factors are related to the buyer himself. These factors mainly include age and stage in
life cycle, occupation, economic circumstances, life style, personality, and self-concept. Let us
briefly examine the effect of personal factors on consumer behaviour.

i. Age and Stage in Life Cycle:

A man passes through various stages of his life cycle, such as infant, child, teenager,
young, adult, and old. Need and preference vary as one passes through different stages of life
cycle. For example, child and adult differ to a great extent in terms of needs and preference.
Marketer may concentrate on one or more stages of his target consumers’ life cycle. Use of
different product depends on age and stage of buyers’ life cycle.

ii. Occupation:
Buying and using pattern of consumer, to a large extent, is affected by a person’s
occupation. For example, industrialist, teacher, artist, scientist, manager, doctor, supervisor,
worker, trader, etc., differ significantly in term of need, preference, and overall buying pattern.
Company can specialize its products according to needs and wants of special professional
groups.

iii. Economic Circumstances:

Product preference, frequency of buying, quality, and quantity are largely affected by
consumers’ economic circumstances. Economic circumstances consist of spendable income,
income stability, level of savings, assets, debts, borrowing power, and attitudes toward saving
versus spending. People buy products keeping in mind these economic circumstances.

iv. Life Style:

People with the same culture, social class, and occupation may differ in term of their life
style. Knowledge of life style of the target market is essential for marketer to design more
relevant marketing programme. Kotler defines: “Life style is the person’s pattern of living in the
world as expressed in the person’s activities, interest, and opinions.”

Life style portrayed the “whole person” interacting with his/her environment. It is generally
reflected in terms of activities, interest, clothing patterns, status consciousness, spending and
savings, helping others, achievements, working style, etc. Every product has potential to suit
different life styles.

v. Personality:
Personality is a distinguished set of physical and psychotically characteristics that lead to
relatively consistent and enduring response to one’s environment. Personality characteristics,
such as individualism, difference, self-confidence, courage, firmness, sociability, mental balance,
patience, etc., have a strong influence on needs and preferences. Every person buys that product
which suits his personality. In case of clothing, automobiles, shoes, perfumes, etc., products are
influenced by users’ personality characteristics.

vi. Self-concept:
It is also referred as self-image. It is what person believes of him. There can be actual self-
concept, how he views himself; ideal self-concept, how he would like to view himself; and
others-self-concept, how he thinks other see him. Person purchases such product that matches
with his/her self-image. Marker must identify self-concept of his target buyers and must try to
match the products with them.

vii. Gender:
Gender or sex affects buying behaviour. Some products are male-dominated while some are
female-dominated. Male customers react to those products which are closely suit their needs and
styles. Cosmetics products are more closely related to female customers than male. Marketer
must be aware of gender-effect on buying behaviour of the market.

viii. Education:
Education makes the difference. Highly educated, moderately educated, less educated, and
illiterates differ considerably in terms of their needs and preferences. In the same way, stage of
education (like primary, secondary, college, etc.) affects buyers’ behaviour.

Education factor seems more relevant to academic institutes, book publishers, magazines,
and newspapers. Education affects one’s mindset. Buyers’ colour choice, quality-orientation,
services, and other aspects have more or less educational significance.

(D) Psychological Factors:

Buying behaviour is influenced by several psychological factors. The dominants among
them include motivation, perception, learning, and beliefs and attitudes. It is difficult to measure
the impact of psychological factors as they are internal, but are much powerful to control
persons’ buying choice. Manager must try to understand probable role the factors play in making
buying decisions.

i. Motivation:
It has a significant impact on consumer behaviour. Motivation is closely related to human
needs. One has many needs at a given time. Some needs are biogenic or physiological in nature
arising from physiological states of tension, such as hunger, thirst, or discomfort.

Other needs are psychogenic or psychological in nature arising from psychological state of
tension, such as recognition, esteem, or belonging. Motivation comes from motive; motive is
expression of needs; or intensified need become a motive. Thus, a motive is the need that is
sufficiently pressing to drive the person to act. Satisfying the need reduces the felt tension.

ii. Perception:
Person’s motivation to act depends on his perception of situation. It is one of the strongest
factors affecting behaviour. The stimuli – product, advertising appeal, incentives, or anything –
are perceived differently by different people due to difference in perception. Marketer should
know how people perceive marketing offers.

Bernard and Gary define:

“Perception is a process by which an individual select, organize, and interpret information
inputs to create a meaningful picture of the world.” Perception depends on physical stimuli and
stimuli’s relation to surrounding field, too. People perceive the same stimulus differently due to
selective attention, selective distortion, and selective retention. So, all consumers may not see the
product or message in a way the marketer wants.

Marketer should take these perceptual processes carefully while designing marketing
programme. It is necessary that the product or marketing offer must be perceived in a way the
market wants to be perceived. Marketer is also required to know the factors that affect people’s
perception. Tactful interview or questionnaire can help to measure perception of target groups.

iii. Learning:
Most human behaviour is learned. Learning is basically concerned with experience of an
individual. Learning can be defined as: Relatively permanent changes arising from experience. If
an individual has satisfactory experience of buying and using the products, he is more likely to
talk favourably or repeat the same.

Most of purchase decisions depend on self-experience or experience of others, whose

opinion carry value in buying decisions. Learning is produced through the interplay of drives,
stimuli, cues, responses, and reinforcement. Learning theories help marketer to build up demand
for the product by associating it with strong drives, using motivating cues, and providing positive
reinforcement.

New company can enter the market by using competitions’ drives, cues and reinforcement.
Sufficient knowledge of learning is an important input for the marketer to design the meaningful
marketing programme.

iv. Beliefs:
People hold beliefs about company, company’s goods or services, and they act
accordingly. Beliefs of the buyers affect product and brand image. We can define the term as:
Belief is a descriptive thought that a person holds about something. Beliefs may be based on
knowledge, opinion, or faith.

Note that beliefs have nothing to do with facts or reality. People may have wrong beliefs
for the superior product, or they hold positive beliefs for inferior product. Positive and negative
beliefs have their impact on purchase decisions. Marketer can create positive belief by
associating strong aspects related to product and brand, or can correct wrong beliefs by proper
campaign.

It is clear that people buy only if they believe it is worthwhile to buy. So, beliefs play
decisive role in the buying decision. Marketer must try to know what type of beliefs people hold
about company, products, and brands. Such knowledge must be incorporated in preparing an
effective marketing programme.

v. Attitudes:
An attitude is a person’s enduring favourable or unfavorable evaluations, emotional
feelings, and action tendencies toward some object or idea. These emotional feelings are usually
evaluative in nature. People hold attitudes toward almost everything, such as religion, politics,
clothes, music, food, product, company, and so on.

Attitudes decide liking or disliking of object. People can judge good or bad, beautiful or
ugly, rich or poor, or desirable or undesirable about an object, a product, or a person. Attitudes
play a vital role in accepting or rejecting, appreciating or criticizing the product or brand. People
do not react to every object in a fresh way. Object is evaluated by attitudes.

So, it is imperative that marketer must know what type of attitudes people hold about the
company, products, and brands. Attitudes can be learned or developed. Learning plays an
important role in developing attitudes. Even unfavorable attitudes can be changed into
favourable ones by systematic campaign. Mostly, beliefs and attitudes are taken simultaneously.

(E) Economic Factors :

The consumer buying habits and decisions greatly depend on the economic situation of a
country or a market. When a nation is prosperous, the economy is strong, which leads to the
greater money supply in the market and higher purchasing power for consumers. When
consumers experience a positive economic environment, they are more confident to spend on
buying products.

Whereas, a weak economy reflects a struggling market that is impacted by

unemployment and lower purchasing power.

Economic factors bear a significant influence on the buying decision of a consumer. Some
of the important economic factors are:

i. Personal Income
When a person has a higher disposable income, the purchasing power increases
simultaneously. Disposable income refers to the money that is left after spending towards the
basic needs of a person.

When there is an increase in disposable income, it leads to higher expenditure on various

items. But when the disposable income reduces, parallelly the spending on multiple items also
reduced.

ii. Family Income

Family income is the total income from all the members of a family. When more people
are earning in the family, there is more income available for shopping basic needs and luxuries.
Higher family income influences the people in the family to buy more. When there is a surplus
income available for the family, the tendency is to buy more luxury items which otherwise a
person might not have been able to buy.

iii. Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes higher spending.
Sellers are making it easy for the consumers to avail credit in the form of credit cards, easy
installments, bank loans, hire purchase, and many such other credit options. When there is higher
credit available to consumers, the purchase of comfort and luxury items increases.

iv. Liquid Assets

Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid
assets are those assets, which can be converted into cash very easily. Cash in hand, bank savings
and securities are some examples of liquid assets. When a consumer has higher liquid assets, it
gives him more confidence to buy luxury goods.

v. Savings
A consumer is highly influenced by the amount of savings he/she wishes to set aside from
his income. If a consumer decided to save more, then his expenditure on buying reduces.
Whereas if a consumer is interested in saving more, then most of his income will go towards
buying products.
ELVIS B. LUMANGLAS, MDM
Course Instructor

ACADEMIC INFRASTRUCTURE
Textbook
T1 : Phillips, Jean M., Organizational Behavior Tools for Success,
International Edition, 2014 Wadsworth, Cengage Learning

References:
R1 : Newstrom, John W., 2007. Organizational Behavior; Human
Behavior at Work, McGraw Hill International Edition,
R2 : Medina, Roberto G. 2011. Human Behavior in Organization.
Quezon City: Rex Bookstore, Inc.

Online References:
https://www.yourarticlelibrary.com/marketing/consumer-behavior/factors-affecting-consumer-
behaviour-with-diagram/48599

https://clootrack.com/knowledge_base/major-factors-influencing-consumer-behavior/?amp