SUBJECT - Consumer Behavior

SESSION NO. – 1-12

TOPIC – Unit III
NAME OF THE FACULTY- Arijit Goswami

ITM GROUP OF INSTITUTIONS

Nature of Reference Groups:
◈ Reference groups have certain characteristics that affect their influence on
consumers. They establish norms, roles, socialization, status and power.
(i) Norms: Norms are the rules and standards of conduct established by a group.
This means group members are expected to conform to these norms and they may
relate to eating habits, makes of cars, clothes or cosmetics etc.
(ii) Roles: Roles are the functions that the group assigns to an individual to attain
group objectives. Various roles that have been identified in family decision making
are the influences, the gatekeeper, decision maker, the purchaser and the consumer.
(iii) Status: Status refers to the position an individual enjoys within the group.
High status implies greater power and influence. A person may enjoy a highest
status in the organization but may be the weakest member in the tennis club.
(iv) Consumers sometimes purchase products to demonstrate
status in a broader societal sense so that the message is one of
wealth and implied superiority.
(v) Socialization: Socialization is a process by which an
individual learns the group’s norms and role expectations.
Consumer socialization is the process by which consumers
acquire the knowledge and skills neces­sary to operate in the
marketplace.
(vi) Power: The influence that a group has on an individual is
closely related to the group’s power.
Three sources of group influence which are relevant for marketing strategy are:
(a) Expert Power: For this an individual or group must have knowledge and
experience.
(b) Reference Power: Reference power depends on the individual’s
identification with members of the group. The greater the similarity between
the individual’s beliefs and attitudes and those of group members, the greater
the reference power of the group. Either the individual is the member of the
group or he/ she aspires to belong to a group.
(c) Reward Power: It is based on the group’s ability to reward the individual.
An employer rewards an employee with money and status, family rewards the
child with praise and approval.
Factors That Affect Reference Group
Influence
Reference Groups affect consumer choice because of
following factors:
(1) Normative Influence: When reference groups affect
behaviour and attitudes through pres­sures for conformity, then
this is known as normative influence. According to Park and
Lessig, a consumer is motivated to conform to the norms and
behaviour of the group if:
(a) The group provides significant rewards for compliance and
punishment for lack of compliance and
(b) The individual’s behaviour in conforming is visible to
members of the group.
◈ Conformity pressures become most potent when there is both positive
motivation to maintain group identity and the motivation of threats of
sanctioning power in the form of rewards and punish­ments.
◈ Normative influence can occur even when others do not control tangible
outcomes because people are concerned with their perceptions of what
other think of them.
◈ This means, it may also occur for items such as mouthwash and denture
adhesive, even if these items are not visible.
◈ Market­ing studies reveal that conformity pressures do impact is buying
decisions and this is true when the product is conspicuous in its
purchase and use and when group social acceptance is a strong motiva­
tor.
◈ For example- fashion conscious women receives clear signals from their
peers which product to buy so that their choices were socially correct.
(2) Informational influence:
◈ A consumer will accept information from a group if he or she
considers the group a credible source of information and
expertise and if he/she believes the infor­mation will enhance
knowledge about product choices. The information can be
collected directly from knowledgeable persons or by
observing the behaviour.
◈ Consumer may consider the marketer’s claim with suspicion
because of the company’s vested interest in promoting the
product. Consumers usually seek expert advice from personal
sources such as friends and neighbors than from commercial
sources.
◈ Informational influence is likely to be most important
in two conditions:
◈ First, when there is social, financial performance risk in
buying the product.
◈ Second, if the individual has limited knowledge or
experience regarding the product.
◈ For example, products like car, computer, cellular phones,
fax machines etc are likely to be purchased after seeking
expert’s advice.
(3.) Comparative Influence:
◈ Comparative influence means comparing oneself to other members of the group and
also judging whether groups would be supportive. Consumers constantly compare their
attitudes to those of members of important groups. They try to associate themselves
with groups with which they agree and by dissociating themselves from groups with
which they disagree.
◈ Comparative influence implies that those being influenced should have characteristics
similar to one who is influencing. A study reveals that consumers seek information
from those whose view is similar to themselves. The study says that advertisers should
use spokespersons to whom consumers perceive as being similar to themselves.
◈ This sometimes gives the feeling to an individual that the purchase of a particular
brand helps show others what he/she is or would like to be, for example a successful
business person, a perfect housewife, athlete etc.
Factors on which group membership affects brand
choice are

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

(b) The type of social relationship (example-friends, etc.).
(c) 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.
To encourage conformity, a
reference group must
1. Inform about a product or brand.
2. Give an opportunity to an individual to compare his/her
own thinking with the attitudes and behaviour of the group.
3. Influence an individual to adopt norms of the group.
4. Legitimize him/her to use the same products as the group.
Application of Reference Group Concept
Informational Influence:
◈ Advertising strategies have portrayed informational influence through expert
spokespersons, comparative influence by using typical consumers and normative
influence by showing the rewards of using a product or the risks of not using it.
◈ Marketers usually use two approaches to portray expert spokespersons.
◈ One approach is where 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.
◈ The other approach is to show a celebrity who has expertise in the product area. 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-using a cricket star’s testimonial for a cricket bat.
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.
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.
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:
◈ (a) The salesperson can be a objective source of information that is he/she acts as an
expert.

◈ (b)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.
Conditions in which salespersons should Establish
expertise rather than similarity are

(a) If salesperson has the knowledge and credentials to be seen as an expert.

(b) If customers is engaged in a high risk, complex buying task requiring expertise.
(c) If the salesperson does not regularly sell to the buyer.
◈ Similarity, it is well established that when the salesperson is in fact similar, the buying
task is simple and low risk and the salesperson regularly sells to the buyer.
◈ The above findings show that expertise is more important in a problem-solving
approach specially for complex goods such as personal computers or C.D. system,
Television etc. due to their greater complexity and variety. Some consumer services
also comes under this category like financial offerings, insurance agents, etc.
◈ It is ultimately the role of a salesperson to develop a proper impression of the customer
and to formulate a sales strategy whether to be based on expertise or similarity.
Consumer Socialization
◈Instrumental training: In this the parent teaches the children the value of food,
which to consume which to keep away from. What choice is to be made for
clothes, what products to refrain from. How to avoid dysfunctional behaviour.
◈Modeling: When a child learns the behaviour by observing others. It can be
consciously or subconsciously learnt. One such example is smoking.
◈ Mediation: To make the children realize the facts by discussion, or by
demonstration, or by any other method available.
How children develop consumption skill?
1. Observation:
◈ Pre-adolescent children observe their parents who function as role
models. They are the important source of cues for consumption
learning.
◈ Adolescents and teenagers emulate their friends as models for
consumption behavior.
◈ Younger children react positively to advertisements involving a
spokesperson.
◈ Teens often like products for the simple reason that their parents
disapprove of them.
2. Co-shopping: Co-shopping is a way of spending time with
one’s children. Children influence family members to purchase
for many products. Working mothers are more likely to undertake
co-shopping with their children than non working mothers. This
gives children an opportunity to acquire in-store shopping skills.
3. Promise or reward of material goods: Parents control the
child’s behavior by promising rewards of material goods. Mother
reward her kid with gift when the child behaves in pleasing
manner. She may take back the gift when the child disobeys.
Adolescents say that their parents frequently promise chocolate
candy as a means of controlling their behavior.
Stages of Consumer socialization
◈ Jean piaget, the Swiss psychologist has identified three stages in consumer socialization. They
are
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
decisions of their own. Many of them get gifts and financial assistance from their grandparents.
Role of parents in Consumer- behavior:
1. Authoritarian parents: Authoritarian parents have a strict control over their children. They want
their children to be free from external influences. Owing to changes in the social system and growing
independence of children, authoritarian parents are declining in number.
2. Neglecting parents: Some parents neglect the behavior of their children. They do not pay attention
as to how their children behave. They let their children free from their control. Generally, rich parents
who do not have time to deal with their children belong to this category.
3. Democratic parents: Parents of this kind neither neglect their children nor impose strict control on
them. The way they deal with their children is democratic. Though children are let free, they are
expected to behave correctly. Parents have frank discussion with their children on matters affecting
their choice.
4. Permissive parents: Permissive parents are those who impose minimum restrictions on their
children. Permissive parents give due regard to the rights of their children. But they expect them to
behave in a responsible manner.
Adult consumer socialization
◈ Socialization is an ongoing process.
◈ It is not confined to childhood alone.
◈ In fact, socialization begins in early childhood and extends
throughout.
◈ For example, a newly married couple establishing their
own household, learns to live together in continuation of
the socialization process. Likewise, the decision of the
retired couple to move to some other place is also part of
the ongoing socialization process.
Inter generational socialization
◈ Influence is passed from one generation to next which is known as
inter generational influence. Certain product loyalties and brand
preferences are transferred from one generation to another.
◈ For example, brand preferences for products like coffee, peanut
butter, clothes etc., are frequently transferred from one generation to
another generation.
◈ Even college going consumer opines that my mother still buys almost
everything for me. Grown up people find it hard to break away from
the things they have been using since their childhood. Consumers buy
things they are accustomed to using. Children continue to be guided
in the matter of banking, insurance, repair services etc.
What is A Family

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Functions of Family

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Family Life Cycle

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Family Life Cycle

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Types of Family Decision

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Roles of Family Decision

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Children’s Influence on Family Decision -
Making
◈ Pressure
The child demands threatens and tries to intimidate the parents.
◈ Exchange
The child promises something (e.g to be good” or clean his room) in exchange.
◈ Rational
The child uses a logical arguments and factual evidence.
◈ Consultation
The child seeks parents’ involvement in the decision
◈ Ingratiation
The child tries to get the parent in a good mood first and then make the request
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Children as Three Markets

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Meaning of Social Class

◈ Social class is the relative standing of the members of a

society so that a higher position implies a higher status than
those in the lower classes . The members of a particular social
class will enjoy more or less the same status and prestige in
the community .

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Social Stratification
◈ Social Stratification is the ranking of people in a society by
other members into higher and lower positions so as to
produce a hierarchy of respect or prestige . Homes,
clothes ,cars, Jewelry etc. are the indicators of the possessions
of the particular social class. Social mobility refers to the
movement or shift of an individual or household from one
level to another.

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Nature of Social Class
Social Stratification:
The ranking of people in a society by other members into higher and lower
positions so as to produce a hierarchy of respect or prestige .
Symbolic representation of status :
Homes, clothes ,cars, Jewelry etc. are the indicators of the possessions of
the particular social class.
Social mobility:
Social mobility refers to the movement or shift of an individual or
household from one level to another.

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Determinants of Social Class
◈ Occupation
Peoples occupations reflect this social standing relative to other members of
the same society it is often considered to be the best gauge of social class and
status .An occupational prestige ranking represents society's collective
believes regarding the occupations social worth and desirability as stemming
from the knowledge required to attain it and the material rewards that
occupants receive.
◈ Income

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Determinants of Social Class
◈ Education
The more education people have the more likely it is the that they are well paid ,have
occupations and therefore belong to higher social classes than the less education.
Income
Individual or family income is frequently used to measure social standing .when using
income as a measure it is important to study the source of income, as well as its
amount. It is also important to this gives between income and wealth . Wealth is based
on savings may be included inheritance and is often the outcome of having network
and alliances, some of which expand over generations.

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Characteristics of Social Class
◈ Social class suggest Rank ordering
Social class differences are given ranks on the basic of social prestige accorded to a
particular social class.
◈ Social class are relatively permanent
Social classes are relative Lee the permanent characteristics of the family and
individuals' family's social class does not change from a day-to-day or from a year
to year basis
◈ Social classes have internal homogeneity
The social class may remain homogeneous within each strata it is observed that all
those belonging to the same social class tend to be similar in terms of the kind of
occupation the residential area occupied by them their eating habits socializing etc.

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Characteristics of Social Class
◈ Social class can be intergenerational class mobility
Although we have mentioned above about relative social class permanence it is
possible for an individual to move out of the social class of his or her birth and
shift to a higher or lower class this could be obtained by him or her acquiring the
values resources and behaviors of the new class.
◈ Social class considers determinants other than Income
Even though income is an important determinant of social class there is no one-
to-one correspondence between the two. The other determinants such as
educational qualification occupation and personal taste can also be associated
with the social class.

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Characteristic Features having Relevance to
Marketing
◈ Persons with a given Social Class tend to Behave more Alike:
Social class characteristics relevant to marketing indicate persons within a source
given social class tended to behave more alike, it is hierarchical and is measured as a
weighted function of one’s occupation, income, wealth ,education ,status ,prestige.
◈ Social class is Hierarchical
Social class is continuous with individuals able to move into higher
social class or drop into a lower class.
◈ Social Class is not measured by a single variable but is measured as a
weighted function of one’s
Ocuupation,Income,Wealth,Education,Status,prestige etc.

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Social Categories

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 Thanks!
Any questions?
You can find me at:
arijitg@itmuniversity.org

ITM GROUP OF INSTITUTIONS © 72