Consumer Behavior MM-3201: 12/08/21 Prof. U.M. Amin, CMS, JMI 1

Consumer Behavior
MM-3201
12/08/21 Prof. U.M. Amin, CMS, JMI 1

Environmental influences
on consumer behavior

Reference Groups, Personal,
Family and Household influences

Group and personal influence
Learning objectives:
• Defining group and reference groups.
• Types of groups.
• How reference groups influence consumers.
• Reference groups and consumer conformity.
• Influence through Dyadic exchanges.
• Opinion leadership.
• Family and household influences.
• Spousal roles in family decision process.
• Family Life cycle, FLC stages and consumer behavior.

What is a group?
• A group is defined as two or more people who interact to

accomplish either individual or mutual goals.
• The definition also includes a kind of one sided grouping in

which an individual consumer observes the appearance or
actions of others who unknowingly serve as consumption related
role models.
• A reference group is any person or group that serves as frame

of reference for individuals in their purchase or consumption
decisions.

• Also, Reference groups refer to any person or group of people

that significantly influence an individual’s behavior.
• The values, attitudes, behaviors and norms of this group are

perceived to have relevance upon evaluations, behaviors and
aspirations of other individuals.
• Reference groups can be individuals like celebrities, athletes and

political leaders.
• They can also be groups of individuals like political parties,

sports teams or musical groups.

• Reference groups that influence general or broadly defined

values or behavior are called normative reference groups.
• Normative reference groups influence the development of

basic code of behavior.
• Reference groups that serve as benchmarks for specific or

narrowly defined attitudes or behavior are called comparative
reference groups.
• Comparative reference groups influence the expression of

specific consumer attitudes and behavior.

Individual
Major consumer reference groups: Family
Friends
Social class
Selected
Subcultures
Own culture
Other cultures
R ef
eren
ce G
rou
ps

Type of Groups Primary

Primary
Secondary
Secondary
Formal
Formal
Informal
Informal
Membership
Membership
Aspirational
Aspirational
Dissociative
Dissociative
Virtual
Virtual
12/08/21 Prof. U.M. Amin, CMS, 9
JMI, New Del
Types of groups:
• Primary: It refers to a social aggregation that is sufficiently

intimate to permit and facilitate unrestricted face to face
interaction.
• Cohesiveness and motivated participation exists and hence

members exhibit marked similarities in beliefs and behavior.
Example, Family.
• Secondary: They also have face to face interaction but it is

more occasional, less comprehensive and less influential in
shaping thought and behavior. Example, Trade associations etc.

• Formal: These are characterized by a defined structure and a

known list of members and requirements for memberships.
Examples are RWAs, Community service organizations.
• Informal: These have far less structure and are likely to be

based on friendship or interest.
• There is high degree of intimate and face to face interaction.
• Membership: When individuals are recognized as members of a

group, they have achieved formal acceptance status in the
group. Membership can be in formal or informal groups.

• Aspirational: They exhibit a desire to adopt the norms, values

and behavior of others with whom the individual aspires to
associate.
• Dissociative: Groups from which an individual tries to avoid

association are called dissociative groups.
• This may occur when someone changes his/her social class by

abandoning certain behaviors.
• Virtual: Internet has given rise to new groups based on virtual

communities rather than geographic ones.

Personal and group influence on individuals

High degree of influence
 High desire for social acceptance
 Little experience in situation
 Conspicuousness (public use/display)
 Complex products or luxury items
Personal
Influences:
 Groups Types of influence

 Normative
Transmission
Primary VS. Secondary  Value expressive
Formal VS. Informal  Informational
 Low desire for social acceptance
Aspirational VS. Dissociative
 More experience in situation
 Private use of product
 Individuals
 Simple products or necessities
Low degree of influence
Lifestyles
12/08/21 Prof. U.M. Amin, CMS, JMI Behaviors 13
Purchases & consumption
Factors that affect reference group influence
• Information and experience: A consumer who has first hand

experience or has full information of the product or service is less
likely to be influenced by the advice or example of others.
• Credibility and power of the reference group: A reference group

that is perceived as credible, attractive or powerful can induce
consumer attitude and behavior change.
• Conspicuousness of the product: The influence varies according

to how visually or verbally conspicuous the product is to others.

How Reference groups influence consumers
• Reference groups influence consumers in following ways:
1. Create socialization of individuals.

2. Influence in developing and evaluating one’s self concept.
3. Through social comparison.
4. Act as device for obtaining compliance.
• The process of socialization permits the individual to know

what behavior is likely to result in stability both for the
individual and the group.

• People protect and modify their self concept in their

interactions with others in the reference groups.
• People also maintain their self concept by conforming to the

roles they have learnt.
• Social comparison refers to the need of individuals to assess

themselves by comparing themselves to others.
• In addition to gaining information from groups, individuals

also use reference groups as benchmarks to measure their
own behaviors, opinions, abilities and possessions.

• The desire of an individual to fit in with a group often leads to

conformity – a change in beliefs or actions based on real or
perceived group pressures.
• Conformity is of two types: compliance and acceptance.
• Compliance occurs when an individual conforms to the wishes

of the group without accepting all its beliefs or behaviors.
• Acceptance occurs when the individual changes his/her beliefs

and values to those of the group.

Reference groups and consumer conformity
• Marketers have different objectives with regard to consumer

conformity.
• Market leaders are interested in the ability of reference groups

to change consumer attitudes and behavior by encouraging
conformity.
• To achieve the objective, reference group must accomplish the

following:
 Inform and make consumer aware of the product/brand.

 Provide the consumer with the opportunity to compare his/her

thinking with the attitudes and behavior of the group.
 Influence the consumer to adopt attitudes and behavior that

are consistent with the norms of the group.
 Legitimize the decision to use the same product as the group.
• Marketers of new brands may wish to select a strategy that asks

consumers to strike out and be different. Shun the herd
mentality.

Reference Group influences on
Product & Brand Purchase Decisions
PRODUCT
Weak reference group influence Strong reference group influence
Public necessities Public Luxuries

Strong
Reference Influence: Weak Product and Strong Influence: Strong Product and Strong
Group Brand Brand
influences Examples: Wristwatch & automobiles Examples: Golf clubs
BRAND
(+)
Private necessities Private luxuries

Weak Influence: Strong Product and Weak
Reference Influence: Weak Product and Weak Brand Brand
Group Examples: Mattress, refrigerator Examples: TV or computer games
Influences
(-)

Celebrities and other reference group appeals in advertising
• Celebrities like movie stars, TV stars and sports persons are

very powerful assets in marketing and ad campaigns.
• There are four ways celebrities can appear in ads. These are:
 Give testimonials
 Endorse the product
 Be an actor
 Be a spokesperson (Brand ambassador)
• Other reference group appeals include expert appeals and

‘common man appeals’.

Types of celebrity appeals
TYPES Description
Testimonials Based on personal usage, a celebrity

attests the quality of product or service.
Endorsement Celebrity lends his/her name and appears

on behalf of a product with which he/she
may not be an expert.
Actor Celebrity presents a product or service as

part of character endorsement.
Spokesperson Celebrity represents the brand or company

over an extended period of time.

Influence through Dyadic exchanges

• Person to person exchange is one of the most effective ways
to transmit group influences.
• Individuals may chose to adopt a new behavior and then

decide to continue it or drop it based on the opinions of their
peers and other primary reference groups. Such exchanges
are called dyadic exchanges.
• Word of mouth (WOM) communication and service encounter

are two of many forms of dyadic exchanges.

• WOM refers to informal transmission of ideas, comments,

opinions and information between two people neither one of
which is a marketer.
• In the WOM process there exists a sender and a receiver. The

receiver gains information about behaviors & choices and also
feedback about current behavior.
• Sender increases his/her confidence in the product or

behavior choice by persuading others to do the same. The
sender receives psychological benefits of prestige, power and
helpfulness in the process.

Benefits of Word of Mouth

Hedonic Functional
Benefits Benefits
• Decrease risk of new behavior. • More information about options.

• Increase confidence of choice. • More reliable/credible information.
• Decreased cognitive dissonance. • Less time spent on search.
Receiver • Increase likelihood of acceptance • Enhanced relationship with another
by a desired group or individual. individual.
• Feeling of power and prestige of • Potential reciprocity of exchange.

Sender influencing others’ behaviors. • Increased attention and status.
• Enhanced position within a group. • Increase in number of individuals
• Decreased doubt about one’s own with similar behaviors.

behaviors. • Increased cohesion within group.

Opinion leadership:
• The sender of information and opinion in the WOM process is

referred to as the opinion leader.
• Personal influence in the form of opinion leadership is likely to

occur when:
 An individual has limited knowledge of a product/brand.

 The person lacks the ability to evaluate the product.
 The consumer does not believe or trust advertising and other
sources of information.

 Other sources of information has low credibility with the

consumer.
 The individual has a high need for social approval.
 Strong social ties exist between sender and receiver.
 The product is complex.
 The product is difficult to test against objective criterion.
• Opinion leaders and receivers share similar demographic

characteristics and lifestyles.
• Opinion leaders are involved with the product and tend to

read specialized publications about the product category.

• Service encounter refers to a personal communication

between a consumer and a marketer. It is a form of dyadic
exchange.
• A service encounter can be a consumption experience with a

store and the various transactions that occur during a
purchase or an experience with a specific service.
• During a service encounter, the buyer and the seller assume

specific roles with the store acting as a stage.
• Any deviation from expected roles results in dissatisfaction

with the process if the expectations are not met.

• “ A family is a group of two or more persons related by blood,

marriage, or adoption who reside together.”
• A nuclear family is the immediate group of father, mother, and

children living together.
• The extended family is the nuclear family, plus other relatives

like uncles & aunts, cousins and in-laws.

• The family into which one is born is called family of

orientation, whereas the one established by marriage is called
family of procreation.
• “Household is used to describe all persons, both related and

unrelated, who occupy a housing unit .”
• Structural variables affecting the families and households are:
# Age of the head of household or family.

# Marital status.

# Presence of children.
# Employment status.
• Children increase demand for clothing, food, medical care and

education etc. and decrease demand for travel and higher
priced
restaurants.
• Sociological variables that help explain how families function are:
# Cohesion
# Adaptability
# Communication

• Cohesion refers to the emotional bonding between family

members.
• Adaptability measures the ability of a family to change its

power structure, role relationships, and relationship rules in
response to situational and developmental stress.
• Communication is a facilitating dimension critical to movement

on the other two dimensions.

Structure of the
household
Household
Household decision Purchase Marketing Strategy
process And
Consumption
Behavior
Stages of the household

Life cycle

Roles in the family decision making process
• Families exhibit Instrumental and Expressive role behaviors.
• Instrumental roles also known as functional or economic roles

involve financial, performance and other functions performed by
group members.
• Expressive roles involve supporting family members in the

decision making process and expressing the family's aesthetic or
emotional needs including upholding family’s norms.

Individual roles in family purchases
• The individual roles are:
1) Initiators/Gate keepers: Family members who initiate family

thinking about buying products or services and gathering
information to aid the decision.
2) Influencers: Family members whose opinions are sought
regarding criteria to be used for purchases and which products
or brands fit those evaluative criteria.
3) Decider: The person with financial authority to chose how the
family’s money will be spent and on which product/brand.

4) Buyer: The person who acts as the principal purchasing agent

by visiting the store, calling suppliers, making payments and
bringing products home.
5) Users: Family members who use the products.
• Marketers need to communicate with consumers assuming

each of these roles.
• Family marketing focuses on the relationships between family

members based on the roles they assume, including the
relationship between purchaser & family consumer and
between purchaser & purchase decision maker.

Spousal roles in family purchases

• The following role structure is used to analyze spousal roles:
1) Autonomic: An equal number of decisions is made by each

spouse but each decision is made by one or the other
spouse.
2) Husband dominant: Husband or the male head of the family

makes majority of decisions.
3) Wife dominant: The wife or the female head of the family

makes the majority of the decisions.

4. Syncratic: Most decisions are made by both husband and wife.
• The type of product, stage in the decision process and the

nature of situation surrounding the decision determine which
of the above situation exists.
• There has been a trend toward children playing a more active

role in what the family buys.
• This is attributed to families having fewer children and more

dual income couples.

Family Lifecycle
• Families pass through a series of stages that change over time.

This process is called Family Life Cycle (FLC).
• In the present times, the traditional FLC describes family

patterns as consumers pass through bachelorhood, move on to
marriage, have children, leave home, lose a spouse and retire.
• Many variants of the FLC exist but it can be synthesized into

nine basic stages.

Stages of FLC
S. no. Stage Description
1 Bachelor Young, single
2 Newly married Young, no children
3 Full nest I Young married couples, child under 6

4 Full nest II Young married couples, child over 6
5 Full nest III Older married with dependent children
6 Empty nest I Old married with no children living with them
& house hold head working
7 Empty nest II Old married with no children living with them
& house hold head retired
8 Solitary survivor I Older single, working
9 Solitary survivor II Older single, retired

• FLC stages lend themselves to market segment strategies.
• Contemporary developments such as delayed marriages,

smaller family size and divorce etc. affect consumption
activities of these stages.
• Family household purchase and consumption is influenced by

the FLC stages.

Consumption patterns of families in life cycle strategy
S. no. Stage Consumption patterns
1 Bachelor Outdoor sports goods, fashion clothing and
Entertainment & recreation services
2 Newly married with Recreation & relaxation, insurance, home furnishings,
no children travel and home appliances
3 Full nest I Invest in housing, insurance, medical services for

children and Toys & games for children
4 Full nest II & III Large food purchases, higher priced furniture, fast
food restaurants, auto and housing
5 Empty nest I Luxury products, travel, restaurants, making gifts and
recreation
6 Empty nest II and Healthcare, home security, recreation geared for the
Solitary survivor I retired and specialized food
7 Solitary survivor II Money saving products, frozen foods and time saving
appliances

Learning objectives:
• Defining group and reference groups.
• Types of groups.
• How reference groups influence consumers.
• Reference groups and consumer conformity.
• Influence through Dyadic exchanges.
• Opinion leadership.
• Family and household influences.
• Spousal roles in family decision process.
• Family Life cycle, FLC stages and consumer behavior.

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Consumer Behavior

12/08/21 Prof. U.M. Amin, CMS, JMI 1

12/08/21 Prof. U.M. Amin, CMS, JMI 2

12/08/21 Prof. U.M. Amin, CMS, JMI 3

12/08/21 Prof. U.M. Amin, CMS, JMI 4

• A group is defined as two or more people who interact to

• The definition also includes a kind of one sided grouping in

• A reference group is any person or group that serves as frame

12/08/21 Prof. U.M. Amin, CMS, JMI 5

• Also, Reference groups refer to any person or group of people

• The values, attitudes, behaviors and norms of this group are

• Reference groups can be individuals like celebrities, athletes and

• They can also be groups of individuals like political parties,

12/08/21 Prof. U.M. Amin, CMS, JMI 6

• Reference groups that influence general or broadly defined

• Normative reference groups influence the development of

• Reference groups that serve as benchmarks for specific or

• Comparative reference groups influence the expression of

12/08/21 Prof. U.M. Amin, CMS, JMI 7

12/08/21 Prof. U.M. Amin, CMS, JMI 8

Type of Groups Primary

• Primary: It refers to a social aggregation that is sufficiently

• Cohesiveness and motivated participation exists and hence

• Secondary: They also have face to face interaction but it is

12/08/21 Prof. U.M. Amin, CMS, JMI 10

• Formal: These are characterized by a defined structure and a

• Informal: These have far less structure and are likely to be

• There is high degree of intimate and face to face interaction.

• Membership: When individuals are recognized as members of a

12/08/21 Prof. U.M. Amin, CMS, JMI 11

• Aspirational: They exhibit a desire to adopt the norms, values

• Dissociative: Groups from which an individual tries to avoid

• This may occur when someone changes his/her social class by

• Virtual: Internet has given rise to new groups based on virtual

12/08/21 Prof. U.M. Amin, CMS, JMI 12

Personal and group influence on individuals

 Groups Types of influence

Low degree of influence

• Information and experience: A consumer who has first hand

likely to be influenced by the advice or example of others.

• Credibility and power of the reference group: A reference group

• Conspicuousness of the product: The influence varies according

12/08/21 Prof. U.M. Amin, CMS, JMI 14

How Reference groups influence consumers

• Reference groups influence consumers in following ways:

1. Create socialization of individuals.

• The process of socialization permits the individual to know

12/08/21 Prof. U.M. Amin, CMS, JMI 15

• People protect and modify their self concept in their

• People also maintain their self concept by conforming to the

• Social comparison refers to the need of individuals to assess

• In addition to gaining information from groups, individuals

12/08/21 Prof. U.M. Amin, CMS, JMI 16

• The desire of an individual to fit in with a group often leads to

• Conformity is of two types: compliance and acceptance.

• Compliance occurs when an individual conforms to the wishes

• Acceptance occurs when the individual changes his/her beliefs