UNIT-3

Group Dynamics & consumer reference groups

SHREYA JHA
Topics to be covered-
● Group Dynamics & consumer reference groups:
○ Different types of reference groups,
○ factors affecting reference group influence,
○ reference group influence on products & brands,
○ application of reference groups.
● Family & Consumer Behaviour:
○ Consumer socialization process,
○ consumer roles within a family,
○ purchase influences and role played by children,
○ family life cycle.
● Social Class & Consumer behaviour:
○ Determinants of social class,
○ measuring & characteristics of social class. SHREYA JHA
Topics to be covered-

● Culture & Consumer Behaviour:

○ Characteristics of culture,
○ core values held by society & their influence on consumer behaviour,
○ introduction to sub-cultural & cross-cultural influences.
● Opinion Leadership Process:
○ Characteristics & needs of opinion leaders & opinion receivers,

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Group Dynamics & consumer reference groups

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Reference groups

A reference group is "an actual or imaginary individual

or group conceived of [as] having significant relevance
upon an individual's evaluations, aspirations, or
behavior."

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Influences of reference groups
• an association of professionals or independent group of
Informational experts
Influence • friends, neighbors, relatives, or work associates
• individual’s observation of what experts do

• people with whom he or she has social interaction.

Utilitarian • preferences of family members.
Influence • individual’s brand choice.

• enhance the image

Value- • characteristics that he or she would like to have.
Expressive • type of person advertisements show using a particular brand.
Influence • what he or she is or would like to be. SHREYA JHA
Influences of reference groups
Informational Influence
● The individual seeks information about various brands from an association of professionals or
independent group of experts.
● The individual seeks information from those who work with the product as a profession.
● The individual seeks brand-related knowledge and experience (such as how Brand A’s
performance compares to Brand B’s) from those friends, neighbors, relatives, or work
associates who have reliable information about the brands.
● The brand the individual selects is influenced by observing a seal of approval ol an independent
testing agency (such as Good Housekeeping).
● The individual’s observation of what experts do (such as observing the type of car that police
drive or the brand of television that repairmen buy) influences his or her choice of a brand.
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Influences of reference groups (Contd.)

Utilitarian Influence
● The individual’s decision to purchase a particular brand is influenced by the
preferences of people with whom he or she has social interaction.
● The individual’s decision to purchase a particular brand is influenced by the
preferences of family members.
● The desire to satisfy the expectations that others have of him or her has an impact on
the individual’s brand choice.

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 Influences of reference groups (Contd.)

Value- Expressive Influence

● The individual feels that the purchase or use of a particular brand will enhance the image others
have of him or her.
● The individual feels that those who purchase or use a particular brand possess the characteristics
that he or she would like to have.
● The individual sometimes feels that it would be nice to be like the type of person that
advertisements show using a particular brand.
● The individual feels that the people who purchase a particular brand are admired or respected by
others.
● The individual feels that the purchase of a particular brand would help show others what he or she is
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or would like to be (such as an athlete, successful business person, good parent, etc.).
Different types of reference groups

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 Different types of reference groups (Contd.)
Membership Groups

● Membership group can be further divided into

○ primary or secondary and
○ informal or formal.
● If a person has regular contact with certain
individuals such as family, friends etc., those
individuals form a primary group.
● If the group members have less frequent
contact amongst themselves, they from a
secondary group like shopping groups, sports
club etc. SHREYA JHA
Different types of reference groups(Contd.)
Membership Groups

● Marketers are interested in studying

the primary group as they help in
developing product beliefs, tastes and
preferences and also directly
influence the purchasing behaviour of
an individual. It is seen through
research that members of groups with
the greatest contact in a variety of
situations are more likely to buy the
same brands. SHREYA JHA
 Different types of reference groups(Contd.)
Membership Groups
● Family/peer groups represent primary informal

groups which is important because of frequency

of contact and closeness between individual &

group members.

● Primary formal groups have a more formal

structure. These are groups with which the

consumer frequently comes into contact. For

example – business executive’s who-are assigned

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Different types of reference groups(Contd.)
Membership Groups

● Secondary formal groups are not important to

the consumer, as they meet infrequently, are

structured, and are closely knit. For example-

alumni Groups, business clubs etc. This group

is of least interest to the marketer.

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Different types of reference groups(Contd.)

Aspiration Groups

There are two types of aspiration groups. These are:

● Anticipatory aspiration groups are those groups, in

which an individual plans to join at a future time and
also in most cases he/she has direct contact. For
example- when an individual aspires for a group
higher in the organizational hierarchy, this is basically
for rewards like power, status, prestige and money.
Marketers specially of clothing and cosmetic
industry’s appeal to the desire to enhance one’s
position by climbing to a higher aspiration group.
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Different types of reference groups(Contd.)

Aspiration Groups

● Symbolic aspiration groups are those groups, in

which an individual is not likely to belong, despite
acceptance of the group’s beliefs and attitudes.
Marketers appeal to symbolic aspirations by using
celebrities to advertise certain products.

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Different types of reference groups (Contd.)
● Aspirational groups- these are groups in which people are not members but desires to become one on
a future date. The aspiration may become true once they are ready to join the group at the future point
of time. The influences exerted by such group members on consumer make them join many groups
every now and then.
● Primary & Secondary groups- Primary groups are basically ones whose members are closely knit.
Family and relatives fall in this group. Secondary groups are not as closely knit as primary groups.
They may be memberships in clubs where the meeting may happen only once in a while. The influence
exerted by both the primary and secondary group members play a crucial role in decision making
process pertaining to purchase of goods and services.

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 Different types of reference groups (Contd.)

● Non-membership and Membership Groups- Membership groups are the ones which insist on
people to become members to avail benefits offered by the same. Non-membership group are general
groups in which one associate them for keeping self updated about certain aspects of their interest.
Such groups do not insist on any type of memberships. The influence exerted by membership groups
on consumers and their purchase decisions are many times higher than that of same from non-
membership groups. This is mainly because of adherence levels exhibited in membership groups.
● Formal and Informal Groups- While formal groups are bound by set rules and regulations, informal
groups lack the same. The unstructured nature of informal groups tend to exert lesser influence over
consumer preferences than the formal groups which are highly structured. Due to the structure nature
of formal groups, the influence on group members w.r.t various aspects is generally high.
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Reference group influence on brands

Factors on which group membership affects brand choice are:

● The nature of the product, (example-burger versus toothpaste).

● The type of social relationship (example-friends, etc.).
● The social structure of the group. This means the extent of personal ties between
group members.

Through research it was observed, members of close-knit groups were more likely to
reveal a preference for the same brands.
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Application of reference groups

informational

To develop advertising
comparative and personal selling
strategies

normative
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 Application of reference groups (Contd.)

Marketers and advertisers use reference group appeals very effectively to communicate with their customers. They use
three types of group influence informational, comparative and normative to develop advertising and personal selling
strategies.
Informational Influence:
Marketers usually use two approaches to portray expert spokespersons.
● One is to portray the role the expert plays. Marketers use expert spokesperson to convey informational influence
through advertising. They are used then to communicate product features and performance. For example – doctor is
used for a medical product, an engineer for a technical product.
● A second approach is to show a celebrity who has expertise in the product area. For example-using a cricket star’s
testimonial for a cricket bat. The second approach uses celebrities to provide product testimonials. Such testimonials
are accepted only to the degree that consumers view the spokesperson as being an expert on the product.For example
– when for Nike athlete shoes some sports star like P.T. Usha is used as an expert consumer are likely to view a
testimonial from P.T. Usha for the product category as credible. SHREYA JHA
Application of reference groups (Contd.)
Comparative Influence:

● Advertisers use a “typical consumer” approach to persuade consumers that people like themselves have chosen
the advertised product. This is used to portray comparative influence and here typical consumer is referent
because, by citing common needs and problems, he or she is portrayed as similar to the prospective purchase.
● For example – in Dove, “typical consumer” approach is used i.e. those ladies who don’t have time to spend
hours for looking beautiful. A consumer in the market for soap could easily identify with these individuals.
● Another way advertisers convey comparative influence is to use a celebrity as a referent. This approach is
effective if a segment of consumers wants to identify with the referent because he or she is likable and/or
attractive.

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Application of reference groups (Contd.)

Normative Influence:

● Marketers convey this type of influence by showing group approval in advertising. For
example- in ads like shampoo, car, floor cleaner etc. In all these ads glorious and shiny hair,
smooth and comfortable ride, shiny and clean floor are used as advertising’s simulation of social
approval.
● In all the above cases, an individual who is important to the consumers (i.e. a friend, neighbour,
spouse etc.) has expressed approval of the consumer’s choice.

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Application of reference groups (Contd.)

Personal Selling Strategies: Marketers also use the three types of reference group influences to
develop sales strategies to influence.

Customers: Sales strategy implications of informational and comparative influence.

Applications of Informational and Comparative Influence Suggest Two General Approaches to

Customers-sales Person Interactions:
● The salesperson can be a objective source of information that is he/she acts as an expert.
● The salesperson can attempt to reinforce the customer’s ego and social needs by demonstrating
similar needs, concerns and predispositions. In this he/she acts as a referent.

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Family & Consumer Behaviour

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Consumer socialization process
1. Pre-operational stage: Between the age of 3 and 7, children’s understanding and language skills
develop. The consumption behavior of the children at this age is different that they depend mainly on
parents as consumers. At the same time they are allowed certain choices for items such as chocolate,
ice-cream, etc.
2. Concrete operational stage: Children in the age group of 8 to 11 are in concrete complex stage.
During this stage, children acquire complex abilities and develop a taste. Children use persuasive
techniques to get what they want. They also apply reasoning power.
3. Formal operational stage: Children in the age group of 12 to 15 pass through formal operational
stage. They have better understanding of their surroundings and power of argument. They disagree
with their family members in matters affecting them. They develop their own perception and values. In
advanced countries, children at this stage work part time and earn money. So, they make purchase
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decisions of their own. Many of them get gifts and financial assistance from their grandparents.
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Consumer roles within a family

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Consumer roles within a family

Families make two types of decisions:

1. Consensual- Consensual purchase decisions are those for which members
agree on the desired purchase, differing only in terms of how it will be
achieved.
2. Accommodative- Accommodative purchase decisions are those for which
members have different preferences or priorities and they cannot agree on a
purchase to satisfy the minimum expectations of all involved .

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Consumer roles within a family (Contd.)

Resolving decision conflict in Families

The factors that determine how much conflict there will be include interpersonal need, product
involvement and utility, responsibility, and power.

● Interpersonal need refers to the level of involvement of a person in the group.

● Product involvement and utility refers to the degree to which a person will use the product to
satisfy a need.
● Responsibility refers to the person who has responsibility for procurement, maintenance,
payment, and so on.
● Power refers to the degree to which one family member exerts influence over the others.
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Consumer roles within a family (Contd.)

Who Makes decision in the Family?

● Autonomic decision: one family member chooses a product.

● Syncretic decision: involve both partners
○ Used for cars, vacations, homes, appliances, furniture, home electronics,
interior design, phone service.
○ As education increases, so does syncretic decision making.

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Family Life cycle
● The Family Life Cycle classifies consumers based on
○ trends in income,
○ family composition, &
○ demands placed upon income.
● Life cycles determine which product categories are bought, but not how much is spent on each
category.
● Factors that determine how couples spend money:
○ Whether they have children
○ Whether both spouses work

Family life cycle (FLC) concept combines trends in income and family composition with change in
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demands placed on income.
Variables affecting Family Life Cycle

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Social Class & Consumer behaviour

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 Social Class and its characteristics

Social Class = a consumer’s standing

Determined by a complex set of variables including income, family background, and occupation
within a particular culture.
● Social class can be thought of as a continuum which includes a range of social position on which each
member of the society can be placed, divided into a small number of specific social classes or strata.
● Example − A person from a low-income group may focus on price while making the purchase while a
person from a higher income group may consider the quality and uniqueness of the product.
● For example, in a college a student is in no need to buy a smartphone but purchases it to be part of
that group and be accepted by them.
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Characteristics of Social Class

● Is hierarchical

● Is a natural form of segmentation

● Provides a frame of reference for consumer behaviour

● Reflects a person’s relative social status

● Individuals can go up or down the social class hierarchy

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Determinants of social class

● Occupational prestige
● Income
● Personal performance
● Interaction
● Possessions
● Value orientations
● Class consciousness
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Social Stratification

● It refers to the perceived hierarchies in which consumers rate others as

higher or lower in social status.
○ Those who earn a higher status due to work or study have
achieved status, whereas those who are lucky to be born wealthy
or beautiful achieve ascribed status.

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Market segmentation based on Social class

Social class can be used to segment markets. Here are the procedures for market
segmentation-
● Identification of social class usage of product.
● Comparison of social class variables for segmentation with other variables

(income, life cycle and so on).

● Description of social class characteristics identified in market target.

● Development of marketing program to maximize effectiveness of marketing

mix based on consistency with social class attributes.

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Social class Measurement

● Subjective Measures- individuals are asked to estimate their own social

class positions.
● Reputational measures- Informants make judgements concerning the social
class membership of others within the community.
● Objective measures- individual answer specific socioeconomic questions
and then are categorized according to answers.

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Objective Measures

Single- Variable indexes Composite-variable indexes

● Occupation ● Index of status characteristics- A composite

● Education measure of social class that combines occupation,
● Income source of income, house type into a single weighted
● Other variables index of social class standing.
● Socioeconomic status score- A multivariate social
class measure used by the United States of Bureau of
Census that combines occupational status, family
income, and educational attainment into a single
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Culture & Consumer Behaviour

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Culture

● Culture is the accumulation of shared meanings, rituals, norms, and

traditions.
● Culture is a society’s personality.
● It includes both abstract ideas, such as values and ethics, and material objects

and services, such as the automobiles, clothing, food, art, and sports a society
produces.

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Characteristics of Culture
● Versatility
● Sharing
● Accumulation
● Patterns

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Characteristics of culture (Contd.)

● Versatility: Culture can change and adapt. Someone from the state of Orissa, in India, for example,
may have multiple identities. She might see herself as Oriya when at home and speaking her native
language. At other times, such as during the national cricket match against Pakistan, she might
consider herself Indian. This is known as situational identity.
● Sharing: Culture is the product of people sharing with one another. Humans cooperate and share
knowledge and skills with other members of their networks. The ways they share, and the content
of what they share, helps make up culture. Older adults, for instance, remember a time when long-
distance friendships were maintained through letters that arrived in the mail every few months.
Contemporary youth culture accomplishes the same goal through the use of instant text messages
on smartphones.
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Characteristics of culture (Contd.)
● Accumulation: Cultural knowledge is cumulative. That is, information is “stored.” This means that
a culture’s collective learning grows across generations. We understand more about the world today
than we did 200 years ago, but that doesn’t mean the culture from long ago has been erased by the
new. For instance, members of the Haida culture—a First Nations people in British Columbia,
Canada—profit from both ancient and modern experiences. They might employ traditional fishing
practices and wisdom stories while also using modern technologies and services.
● Patterns: There are systematic and predictable ways of behaviour or thinking across members of a
culture. Patterns emerge from adapting, sharing, and storing cultural information. Patterns can be
both similar and different across cultures. For example, in both Canada and India it is considered
polite to bring a small gift to a host’s home. In Canada, it is more common to bring a bottle of wine
and for the gift to be opened right away. In India, by contrast, it is more common to bring sweets,
and often the gift is set aside to be opened later.
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Core values held by society & their influence on consumer behaviour

● A value is a belief that some condition is preferable to its opposite. In some cases, values
are universal.
● We all value health, wisdom, and peace. What sets cultures apart is the relative
importance of these universal values. This set of rankings constitutes a culture’s value
system. It is usually possible to identify a general set of core values that uniquely define
a culture.
● Core values such as freedom, youthfulness, achievement, materialism, and activity
characterize American culture.
● The process of learning the beliefs and behaviors endorsed by one’s own culture
enculturation.
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Core values held by society & their influence on consumer behaviour (Contd.)

● The process of learning the value system and behaviors of another culture
acculturation.
● Crescive norms discover as we interact with others and these include customs and
conventions.
● A custom is a norm that controls basic behaviors such as division of labor in a
household.
● A more is a custom with a strong moral overtone. It may involve something that is
taboo or forbidden like cannibalism.
● Conventions are norms that regulate how we conduct our everyday lives. They may
be subtle like how we furnish a room or what we wear to a dinner party.
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Core values held by society & their influence on consumer behaviour (Contd.)

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Introduction to sub-cultural & cross-cultural influences

● Social identity is that part of the self that our group memberships define. The
categories that matter in establishing our consumer identity are subcultures.
● An ethnic subculture is a self-perpetuating group of consumers who share common
cultural or genetic ties where both its members and others recognize it as a distinct
category.
● In countries like Japan, ethnicity is synonymous with the dominant culture because
most citizens claim the same cultural ties.

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Introduction to sub-cultural & cross-cultural influences (Contd.)

The Context of Culture

● An important subcultural difference is how abstract or literal a group is. Sociologists

make a distinction between high- context cultures and low-context cultures.
● In a high-context culture, group members are tightly knit and they infer meanings that
go beyond the spoken word.
● Symbols and gestures are used instead of words to carry the weight of the message. In
contrast, people in a low-context culture are more literal.
● Compared to Anglos, many minority cultures are high-context and have strong oral
traditions. This means that consumers are more sensitive to nuances in advertising.
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Opinion Leadership Process

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Characteristics of opinion leaders & opinion receivers
● Opinion leadership is defined as the process in which one person influences the
attitudes or actions of other person informally, who may be identified as opinion
leader.
● They offer informal advice about the product or service.
● Opinion leaders are part of the social groups.
● They have social communication network.
● The communication is informal and interpersonal in nature which happens between
those who are not associated with the commercial selling source directly.
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Needs of opinion leaders

● They are technically competent, so they possess expert power.

● They prescreen, evaluate, and synthesize product information in an unbiased way, so they possess knowledge power.
● They are socially active and highly interconnected in their communities.
● They are likely to hold offices in community groups and clubs and to be active outside of the home. As a result,
opinion leaders often wield legitimate power by virtue of their social standing.
● They tend to be similar to the consumer in terms of their values and beliefs, so they possess referent power. Note that
although opinion leaders are set apart by their interest or expertise in a product category, they are more convincing to
the extent that they are homophilous rather than heterophilous. Homophily refers to the degree to which a pair of
individuals is similar in terms of education, social status, and beliefs.
● Effective opinion leaders tend to be slightly higher in terms of status and educational attainment than those they
influence, but not so high as to be in a different social class.
● Opinion leaders are often among the first to buy new products, so they absorb much of the risk. This experience
reduces uncertainty for the rest of us who are not as courageous.
Thank you for your particpation

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