Reference Groups and Family
Dr. Naveen Pol
Reference Groups
• Groups that serve as sources of comparison, influence,
and norms for people’s opinions, values, and behaviors.
Social Class Culture Subcultures Word of Mouth
The division of members of The collective values, customs, A group that shares certain An oral or written
society into a hierarchy of norms, arts, social institutions, beliefs, values, and customs, communication in which
distinct status and and intellectual achievements of stemming from ethnicity, satisfied customers tell others
members of all other a particular society which religion, geographic location, how much they like a
classes have either higher express its principles, age, or gender, while also business, product, service, or
or lower status standards, and priorities being a part of a large society event.
The Credibility and Persuasive Power of Reference Groups
• Formal Source (Hired or paid) vs Informal Source (Know personally)
8 to 12 Cr for a brand with 2 day shoot
Or (IPL 120 Cr – after retirement)
• Normative Influence (Socio economic groups, Family, Peers) vs Comparative
Influence (Whom they admire)
- Membership Group vs Symbolic Group
Consumption Related Reference Groups
• Friends (Real / Virtual)
Oxford University:150 avg frds, 27%
real
• Fellow Shoppers (Costco reward for referrals)
• Virtual Communities (Discuss about TV show)
Membership Model
• Advocacy Groups
https://www.thehindu.com/news/national/tamil-nadu/women-shgs-to-
spearhead-campaign-against-liquor/article5209549.ece
Factors Affecting Reference Group Influence
• Conformity (Companies not market leaders and ask to try – Experience, create awareness)
• Group Power (More likely to adhere reference from power house)
Mothers Against Drunk and Driving
https://www.thefinancialexpress.com.bd/trade/facebook-group-we-emerges-a-storehouse-of-desi-products-1599104767
Factors Affecting Reference Group Influence
• Product Expertise (Existing Users / no to new)
• Product Conspicuousness (Product well noticed)
https://www.thefinancialexpress.com.bd/trade/facebook-group-we-emerges-a-storehouse-of-desi-products-1599104767
Endorsers and Spokespersons
• Source Credibility
Independent
• 2003 November Dependent
– Worms found in Cadbury Silk, Maharashtra
Variable
• 2003 December Variable
– Advised by a Sales Person (Amith Upadhya – Delhi) Bharat Puri
Former MD Cadbury India
• 2004•January
Expertise • Reputation
– Amitabh Bachchan, Increased spending on ads by 15 percent
• 2004• Feb
Trustworthiness
- Installed new machinery worth• Rs 150 Cr, increased raw
Information
material cost by 13 percent
• Attractive • Brand building
• 2004 March – Launch Campaign “Vishwas” (Retailers confidence)
• Likeability • Regain Trust
• 2004 June – Regained confidence and sales were normal (A C Nielsen India)
• Institution Credibility
https://www.cnbctv18.com/business/backstory-how-cadbury-chose-amitabh-bachchan-to-be-its-mascot-after-bar-of-worms-crisis-7533241.htm
Celebrities
• Celebrity Testimonial (Celebrity Use)
• Celebrity Endorsement
• Celebrity Actor
• Celebrity Spokesperson
Adidas Celebrity to image based ads as Nike
Reference Groups
• Salesperson Credibility
• Vendor Credibility
• Medium Credibility
Ford – Paid Media to Unpaid Media
• 2009 – Ford gave 100 free cars to Youtubers
(ask them to make videos)
• Social Media was in its infancy stage (TV,
Radio, Hoardings etc)
• 6.2 million views on Youtube
• 750000 views on flickr
• 40 million tweets
• 6000 Advance Booking Most Successful
• 50000 Sales in a year Campaign till 2011
• 97 percent were first time ford buyers (5:1)
Diffusion of Innovation
Everett Rogers
American communication
theorist and sociologist
1962
Social Class and the Consumers
Dr. Naveen Pol
The Family and its Social Standing
Family Socialization
Consumer Socialization
Two or more persons The process by which people The process by which
related by blood, marriage, learn how to behave in ways Children acquire the skills,
or adoption residing that are acceptable to other knowledge, attitudes, and
together members in their society experiences necessary to
function as consumers
Socialization Agent
Companies connecting through Socialization
Family Size and Percent of Population
60
51.23
50
49.49
41.64
40
30 27.89 27.31 27.6 26.94
20 18.81
14.53
10
6.64
4.11 3.81
0
1 Member 2-3 Members 4-5 Members 6+ Members
China United States India
The Family and its Social Standing
• 85 percent of the products are repetitive
• Housing
• Transportation
• Food
• Insurance
• Education
Types of Family
• Nuclear Family
• Single Parent Family
• Extended Family
• Step Family
• Grand Parent Family
Japan – Changing Family Dynamics
Work weekly 90 Heavy Fertility Rate 1.4
to 100 hrs consumption of India 2.5
Alchol
http://family-romance.com/
Stages of Consumer Socialization
• Perceptual (3 - 7 years old)
• Analytical (7 - 11 years old)
• Reflective (11 - 16 years old)
Parent Styles and Consumer Socialization
European Journal of Marketing: “Siblings as Socialization Agents”
~ Karrane, Ben, Shona, and Bettany (2015)
Permissive
Indulgent Parents Neglecting Parents
Very Nurturing Not Nurturing
Authoritative Parents
Authoritarian Parents
Restrictive
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The Family Supportive Roles
• Economic Well-Being
• Emotional Support
• Suitable Lifestyle
Family Decision – Making and Members Roles
• Husband – Wife Decision Making
⁃ Husband – Dominated Decisions
⁃ Wife – Dominated Decisions
⁃ Joint Decisions
⁃ Autonomic Decisions
Cultural – Differences in Husband – Wife Decision – Making (Mlore /WB/ Gulf ….
Children’s Influence on Family Decision Making
⁃ Pressure
⁃ Exchange
⁃ Rational
⁃ Consultation
⁃ Ingratiation
Family Members Roles
Control Source of Information (Indulgent)
• Gatekeepers
• Influencers Control Information / Influencer Providers
• Deciders Control Finances
Spenders
• Buyers
Buy on behalf of others (Women for children and husband)
• Preparers
In-charge of maintaining
• Maintainers
Decide on discontinuing
• Disposers
The Family Life Cycle
• Bachelorhood
• Honeymooners
• Parenthood
• Post Parenthood (Empty Nest)
• Dissolution
Opinion Leaders and Word of Mouth
• Opinion Leadership: The process by which one person (the opinion leader)
informally influences others, who might be either opinion seekers or recipients.
This influence occurs between two or more people neither of whom represents a
commercial seller nor would gain directly from providing advice or information.
Characteristics of Opinion Leaders
• Knowledgeable
• Self Confident, Outgoing, and Sociable
• Specialized Search
• Same socioeconomic and age groups (kids)
Measuring Opinion Leadership
• Questioning – Likert Scale
• Social Interactions – Sociometric Method
• Identifying Experts – Key member in the group (Opinion by group members)
• Online Influence – Klout Score
Word of Mouth Strategic Applications
• Online Reference Groups
⁃ Social Networks
1. Tie Strength (frequency of interaction)
2. Similarity (demographic and lifestyle)
3. Source Credibility (perception of followers about the leader)
Word of Mouth Strategic Applications
• Brand Community
• Blog
• Twitter
• Buzz Agent (Free products / Ford)
• Stimulating Word of Mouth
• Going Viral:
• Viral Advertising
• Advergames (Video Games)
Xiaomi
• 2015 – 3 percent market share
• 2021 – 26 percent market share
⁃ 52 percent change after 2 Years
⁃ 27 percent change after 1 year
⁃ Gap (Apple and Samsung)
⁃ Indian consumers needed extra in the category of around 10K
⁃ Cost of distribution is high
⁃ Karbonn and Micromax struggle to innovate (4G – Jio)
• Launched fewer products
• Online only –Flash Sales
• Promote features through social media (WOM)
Managing turmoil and Negative Rumors
In July, Kalyan Jewellers filed
a plea in Kerala high court,
seeking supervision of social
media websites, after a fake
video about one of the
company’s stores being raided
went around YouTube
https://producthabits.com/dominos-pizza-drove-90x-increase-stock-value-acting-like-tech-startup/
How to regain trust of Consumers
• About an entrepreneur from Kerala
• Son of “Coolie”, dropped from school (6 km walk), breakfast / food. (6th fail)
• Setup a small Kirana Shop – School fees
• Topper of school, Completed Engineering from NIT – Calicut, got Job in Middle east. (Salary – Surprised
father)
• Started working on app (Free video calls and voice calls) 2 Lakh Cr opp cost
• Came to India and did MBA from IIM-B
• Start family business near to home town
• Food from batter (Cousin) – Quality and Cockroach
• Started supplying 50 packets daily
• 2006 - Shifted to Bangalore (50 sq feet factory)
How to regain trust of Consumers
• Key focus of business
⁃ Quality of product
⁃ Right Packaging
⁃ Right Service
• Own distribution network (20000 stores / 320 delivery setup)
⁃ Less inclination on marketing spending (zero till 8years)
Rs. 100 Cr
2015 Rs150
Cr
How to regain trust of Consumers
• Do you feel the issue will distort
consumer perception or may
influence consumer buying
behavior.
• What is the way ahead for the
company? What are the possible
avenues for the organization to
over come the turmoil?
Happy Learning….
