BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Unit 3
ENVIRONMENTAL DETERMINANTS OF CONSUMER
BEHAVIOUR
CULTURE, SUBCULTURE & CROSS CULTURE

CULTURE: -
 For the purpose of studying consumer behaviour, culture can be defined as the sum total of
learned beliefs, values and customs that serve to guide and direct the consumer behaviour of all
members of that society.
 Howard and Sheth have defined culture as “A selective, manmade way of responding to
experience, a set of behavioral pattern”. Thus, culture consists of traditional ideas and in
particular the values, which are attached to these ideas.
 It includes knowledge, belief, art, morale, law, customs and all other habits acquired by man as a
member of society.
 An accepted concept about culture is that includes a set of learned beliefs, values, attitudes,
habits and forms of behaviour that are shared by a society and are transmitted from generation to
generation within that society.

Culture is learned through the following three ways:-

1. Formal learning: parents and elders teach children the proper way to behave. For instance, you have
been taught that you need to study to be successful and happy in life. This learning may influence your
response both as a student and individual towards education.
2. Informal learning: we learn by imitating the behaviour of our parents, friends, or by watching TV
and film actors in action
3. Technical learning: instructions are given about the specific method by which certain things to done
such as painting, dancing, singing etc.

CHARACTERISTICS OF CULTURE
Although the definitions of culture presented earlier are excellent, they seek to characterize
culture in only a few words. It is evident that the concept is difficult to convey clearly in any definition.
However, despite the challenges involve in defining the concept, many social scientists agree that the
following features are essential.

1. Culture is invented
Culture does not simply “exist” somewhere waiting to be discovered. People invent their culture. This
invention consists of three interdependent elements:
(1) An ideological component that consists of the ideas, beliefs, values and ways of reasoning
that human beings learn to accept in defining what is desirable and undesirable
(2) A technological component that consists of the skills, crafts, and arts that enable humans to
produce material goods derived from the natural environment
(3) An organizational component (such as the family and social class) that makes it possible for
humans to coordinate their behavior effectively with the actions of others.

2. Culture is learned
Culture is not instinctive, but is learned beginning early in life and is charged with a good deal of
emotion. The great strength of this cultural stamp handed down from one generation to another is such
that at an early age, children are firmly imbued with their culture’s ways of acting, thinking, and feeling.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

This obviously has important implications for the behavior of consumers because these preconditions of
that behavior are moulded by their culture from birth.

3. Culture is Social Shared

Culture is a group phenomenon, shared by human beings living in organized societies and kept relatively
uniform by social pressure. The group that is involved in this sharing may range from a whole society to
a smaller unit such as a family.

4. Cultures are Similar but Different

All cultures exhibit certain similarities. For example, each of the following elements is found in all
societies: a calendar, cooking, courtship, dancing, education, family, gestures, government, housing,
language, law, music, and religious ritual. There is, however, great variation from society to society in
nature of each of these elements, which may result in important consumer-behavior differences around
the world.

5. Culture is Gratifying and Persistent

Culture satisfies basic biological needs as well as learned needs. It consists of habits that will be
maintained and reinforced as long as those who practice them are gratified. Because of this gratification,
cultural elements are handed down from generation to generation. Thus, people are comfortable doing
things in the customary way, such as traditional marriage found in Nigeria. Our thorough inculcation
with culture causes it to persist even when we are exposed to other cultures. No matter where we go or
what we do, we cannot escape our cultural heritage.

6. Culture is Adaptive
In spite of our resistance to change, cultures are gradually and continuously changing. Some societies
are quite static, with a very slow rate of change, while others are more dynamic, with very rapid changes
taking place.

7. Culture is Organized and Integrated

A culture “hangs together” that is, its parts fit together. Although every culture has some inconsistent
elements, it tends to form a consistent and integrated whole.

8. Culture is Prescriptive
Culture involves ideal standards or patterns of behavior so that members of society have a common
understanding of the right and proper way to think, feel, and act. Norms are society’s rules or guidelines
specifying what behavior are appropriate or inappropriate in given situations.
Culture also determines what is acceptable with product advertising. Culture determines what people
wear, eat, reside and travel. Cultural values in India are good health, education, respect for age and
seniority. But in our culture today, time scarcity is a growing problem, which implies a change in meals.

SOME CHANGES IN OUR CULTURE:

1. Convenience: as more and more women are joining the work force there is an increasing demand for
products that help lighten and relieve the daily household chores, and make life more convenient. This is
reflected in the soaring sale of Washing machines, microwaves, Pressure cookers, Mixer grinders, food
processors, frozen food etc.

2. Education: People in our society today wish to acquire relevant education and skills that would help
improve their career prospects. This is evident from the fact that so many professional, career oriented
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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

educational centers are coming up, and still they cannot seem to meet the demand. As a specific instance
count the number of institutions offering courses and training in computers that has opened in your city.

3. Physical appearance: Today, physical fitness, good health and smart appearance are on premium
today. Slimming centers and beauty parlors are mushrooming in all major cities of the country.
Cosmetics for both women and men are being sold in increasing numbers. Even exclusive shops are
retailing designer clothes.

4. Materialism: There is a very definite shift in the people’s cultural value from spiritualism towards
materialism. We are spending more money than ever before on acquiring products such as air-
conditioners, cars CD players etc, which adds to our physical comfort as well as status.

ROLE OF CUSTOMS, VALUES AND BELIEFS

Variation in Cultural Values
There are three broad forms of cultural values: -

I. Other Oriented Values

This shows the relationship between individuals and the society. The relationship influences marketing
practices. If the society values collective activity, decisions will be taken in a group. It gives rise to
following questions which affect consumer behaviour.
• Individual/ collective: Whether individual initiation has more value than collective activity?
• Romantic orientation: This depicts whether the communication is more effective which
emphasizes courtship or otherwise. In many countries a romantic theme is more successful.
• Adult/ child theme: Is family life concentrated round children or adults? What role do children
play in decision-making?
• Masculine/ Feminine: Whether the society is male dominant or women dominant or balanced.
• Competitive/ Cooperation: Whether competition leads to success. This is achieved by forming
alliances with others.
• Youth/ age: Are prestige roles assigned to younger or older members of the society. American
society is youth oriented and Korean is age oriented. Decisions are taken by mature people in
Korea.

II. Environment Oriented Values

• Cleanliness: If a culture lays too much stress on cleanliness. There is scope for the sale of beauty
creams, soaps, deodorants, insecticides, washing powder, vacuum cleaner, etc. In western
countries, a lot of emphasis is placed on this aspect and perfumes and deodorants are widely
used.
• Performance/ status: A status oriented society cares for higher standards of living, and chooses
quality goods and established brand names and high prices items. This is true for the United
States, Japan, Singapore, Malaysia, Indonesia, Thailand and most Arabic countries. In
performance oriented societies, where rewards and prestige is based on an individual's
performance, less importance is given to brand names. Products which function equally well and
may not be big brand names are used. Germans do not give the same amount of emphasis to
brand names. The marketers adopt strategies accordingly.
• Tradition/ change: Traditional oriented societies stick to the old product and resist innovation or
new techniques. In traditional societies, there is less scope for new products and old traditional
for modern methods, new products, new models and new techniques.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

• Risk taking/ security: An individual who is in a secure position and takes a risk can be either
considered venturesome or foolhardy. This depends on the culture of the society. For developing
new entrepreneurs risk taking is a must. It leads to new product development, new advertising
themes and new channels of distribution. Security oriented societies have little chances of
development and innovation.
• Problem solving/fatalist: A society can be optimistic and have a problem solving attitude or, be
inactive and depend on fate. This has marketing implications on the registering of complaints
when consumers are dissatisfied with the purchase of the products. Advertising plays an
important part and gives guidance to the consumer, and removes these doubts to a great extent.
• Nature: There are differences in attitude over nature and its preservation. Consumers stress on
packing materials that are recyclable and environment friendly. Some countries give great
importance to stop environmental pollution and to recycling of products. Companies like P&G,
Colgate-Palmolive captured a great extent of the market by offering products which are less
harmful to the environment. They also use ingredients in the products which are not harmful in
any way.

III. Self-Oriented Values

• Active/passive: Whether a physically active approach to life is valued more highly than a less
active orientation. An active approach leads to taking action all the time and not doing anything.
In many countries, women are also taking an active part in all activities. This makes the society a
highly active one, where everybody is involved in work.
• Material/ non-material: In many societies money is given more importance, and a lot of
emphasis is on being material minded. While in many societies things like comfort, leisure and
relationships get precedence over being materialistic. Materialism can be of two types.
o Instrumental materialism, which is the acquisition of things to enable one to do something
or achieve something. Cars are used for transportation. People like to possess things of
material value which would help them to bring efficiency.
o Terminal materialism is the requisition of materialism for the sake of owing it rather than
for use-Art is acquired for owing it. Cultural differences play art important role in this
type of materialism. Instrumental materialism is common in the United States of
America; where as Japanese advertisements are mostly dominating terminal materialism.
• Hard work/leisure: This has marketing implications on labour saving products and instant foods.
Some societies value hard work and consider it as a fuller life. Others adopt labour saving
devices and instant foods to have more leisure time at their disposal.
• Postponed gratification/ immediate gratification: Should one save for the rainy day or live for
the day? Sacrifice the present for the future, or live only for the day? Some countries like The
Netherlands and Germany consider buying against credit cards as living beyond one's means,
whereas credit cards are very popular in America and other countries having a different cultural
orientation, some prefer cash to debt. Some societies save for tomorrow; others enjoy the present
and spend lavishly.
• Humor/ serious: Should we take life lightly and laugh it off on certain issues or, take everything
seriously? This is an- other aspect of culture. Advertising personnel selling techniques and
promotion may revolve around these themes and the way the appeal for a product is to be made
in various cultures.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

SUBCULTURES AND CONSUMER BEHAVIOUR

Culture can be divided into subcultures. A subculture is an identifiable distinct, cultural group,
which, while following the dominant cultural values of the overall society also has its own belief, values
and customs that set them apart from other members of the same society.

Sub-culture categories are:

Nationality: Indian, Sri Lanka, Pakistan
Religion: Hinduism, Islam
Race: Asian, black, white
Age: young, middle aged, elderly
Sex: Male, Female
Occupation: Farmer, teacher, business
Social class: upper, middle, lower
Geographic regions: South India, North-eastern India.

1. NATIONALITY SUBCULTURES
Although most U.S. citizens, especially those in the United States, see themselves as American, they
frequently retain a sense of identification and pride in the language and custom of their ancestors. When
it comes to consumer behavior, this ancestral pride is manifested most strongly in the consumption of
ethic food, in the purchase of numerous cultural artifacts (ethic clothing, art, music, foreign-language
newspapers). Interest in these goods and services has expanded rapidly as younger Americans attempt to
better understand Dominant Cultural Traits of United –States Citizens and more closely associate with
their ethnic roots.

2. RELIGIOUS SUBCULTURES
The United States reportedly has more than 200 different organized religious groups. The members of
all these religious groups at time are likely to make purchase decisions that are influenced by their
religious identity. Consumer behavior is directly affected by religion in term of products that are
symbolically and ritualistically associated with the celebration of various religious holidays. For
example, Christmas has become the major gift –purchasing season of the year.
In our earlier discussion of the family we indicate that husband and wife decision making also was
related to religious orientation. It was reported that husbands in pro-religious and catholic families were
the major influence in making specific purchase decisions, husband and wives shared equally in most
decisions. Religious requirements or practices sometimes take on an expanded meaning beyond their
original purpose.

3. GEOGRAPHIC AND REGIONAL SUBCULTURES

The United States is a large country, one that enjoys a wide range of climatic and geographic conditions.
Given the country's size and physical diversity, it is only natural that many Americans have a sense of
regional identification and use this identification as a way of describing others (such as "he is a true
Southerner). These labels often assist us in developing a mental picture and supporting stereotype of the
person in question. Anyone who has travelled across the United States has probably noted many regional
differences in consumption behavior, especially when it comes to food and drink. For example, a mug of
black coffee typifies the West, while a cup of coffee with milk and sugar is preferred in the East.

There also are geographic differences in the consumption of a staple food such as bread. Specifically, in
the South and Midwest, soft white bread is preferred, whereas on the East and West coasts firmer breads
(rye, whole wheat, and French and Italian breads) are favoured. And regional differences also include

brand preferences. Why do you suppose Skippy is the best-selling brand of peanut butter on both the
East and West coasts, while Peter Pan sells best in the South and Jif sells best in the Midwest? For some
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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

food categories, there is even a difference between states in the same general region of the country. For
example, what could explain the fact that 27 percent of Alabama residents consider pecan pie to be their
favourite Thanksgiving dessert, whereas only 9 percent of Georgia residents and 10 percent of
Tennessee residents feel similarly?

4. RACIAL SUBCULTURES
The major racial subcultures in the United States are Caucasian, African-American, Asian- American,
and American Indian. Although differences in lifestyles and consumer spending patterns exist among
these groups, the vast majority of racially oriented consume research has focused on consumer
differences between African-Americans and Caucasians. Only recently has particular research attention
been given to Asian-American consumers.

Asian-American Consumers
The Asian-American population is currently more than seven million in size and is the fastest growing
American minority. For example, between 1980 and 1990, the white, African- American, and Hispanic
populations in the United States grew 6, 13 and 53%, respectively; during this same time period, the
Asian population grew by 108%. Asian- Americans are largely family-oriented, highly industrious and
strongly driven to achieve a middle-class lifestyle, they are an attractive market for increasing numbers
of marketers.

Where Are the Asian-American?

Asian-Americans are largely urban people, who are presently concentrated in a small number of large
American cities. Most Chinese, as well as most Asian-Americans, do not live in downtown urban areas;
they live in the suburbs.
Understanding the Asian-American Consumer
Local newspapers and weekly newsmagazines frequently portray the accomplishments of Asian-
Americans, who have shown they to be hardworking, very family-oriented and strivers for excellence in
educational pursuits. Asian-American children have consistently won a substantial share of academic
awards and scholarships.

5. AGE AS SUBCULTURES:-
Each major age sub grouping of the population might be thought of as a separate subculture, because
important shifts occur in the demand for specific types of product and services. Age subculture has three
additional groups: Generation X, baby boomers and the mature and elderly.

The Generation X Market:

This age grouping often referred to as Xers, busters or slackers and twenty something consists of
approximately 46 million 18 to 29 years old who spend about $125 billion yearly. For Generation X
consumers, job satisfaction is typically much more important than salary. Xers reject the values of older
coworkers who may neglect their families while striving to secure higher salaries and career
advancement.

Appealing to Generation X:-

Members of generation X often pride themselves on their sophistication. Although they are not
necessarily materialistic, they do purchase good brand name e.g. Sony but not necessarily designer
labels. Xers are not against the advertising but only opposed to insincerity.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

The baby boomer Market:

Marketers have found baby boomers a particularly desirable target audience because
1.) They are the single largest distinctive age category alive today
2.) They frequently make important consumers purchase decision; and
3.) They contain a small sub segment of trend setting consumers who have influence on the consumer
taste of other age segment of society.
Baby boomers age, the nature of the products and services they most need or desire changes. For
example, because of the aging of this market segment, Levi Strauss is featuring “relaxed fit” jeans, sales
of “lineless” bifocal glasses to new customers are up substantially, and sales of walking shoes have
grown rapidly.

Mature and elderly Consumer:-

Baby boomers are starting to hit 50, there are plenty of pre boomers (i.e. those 45 to 65 years), and the
no. of elderly consumers is growing twice as fast as the overall United States population.

6. GENDER AS A SUBCULTURE:-
Consumer products and sex roles
Within every society, it is quite common to find products that are either exclusively or strongly
associated with the members of one sex. In the United States, for example, shaving equipment, cigars,
pants, ties, and work clothing were historically male products; bracelets, hair spray, etc generally were
considered feminine products.
Despite the fact the line between “male only” and 1”female only” products has become blurred in recent
years, consumers tend to impute a sex, or gender, to products. For this reason, advertising executives
should consider not only the sex of their target market but also the perceived sex of the product category
in the development of their advertising campaigns.

CROSS CULTURAL CONSUMER BEHAVIOUR

Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of two or
more nations are similar or different. This will facilitate marketers to understand the psychological,
social and cultural aspects of foreign consumers they wish to target, so as to design effective marketing
strategies for each of the specific national markets involved.”
A company can enter a foreign market as a
1. Domestic exporter
2. Foreign importer
3. Foreign government-solicit the firm to sell abroad

The firm’s objectives could be:-

1. To determine how consumers in two or more societies are similar/different and devise suitable,
appropriate strategies
2. Devise individualized marketing strategy if cultural beliefs, values and customs of a specific country
are different
Characteristic features of a firm going global:
1. High market share in the domestic market
2. Advantageous economies of scale
3. Access to marketing/manufacturing bases across global borders
4. Availability of resources and capability to absorb huge losses
5. Product/technology clout
6. Cost and differentiation advantages

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Problems in Cross Cultural marketing

1. Problems related to product selection: The marketer going for cross cultural marketing has to select
the customers/ market not on the basis of the superficial similarities of age or income, but by using the
real motivating factors that prompt them to accept or reject products.
2. Problems related to promotion/marketing communication: e.g. Ariel in the Middle East and also
Pepsi
3. Problems related to pricing: the marketer has to adjust his pricing policies according to the local
economic conditions and customs.
4. Problems related to selection of distribution channels: in Japan, P & G used this to sell soap

Cross-Cultural Consumer Analysis

To determine whether and how to enter a foreign market, we need to conduct some form of crosscultural
consumer analysis. Cross-cultural consumer analysis can be defined as the effort to determine to what
extent the consumers of two or more nations are similar or different. Such analysis can provide
marketers with an understanding of the psychological, social, and cultural characteristics of the foreign
consumers they wish to target, so that they can design effective marketing strategies for the specific
national markets involved.

Similarities and differences among people

A major objective of cross-cultural consumer analysis is to determine how consumers in two or more
societies are similar and how they are different.

Japanese Culture American Culture

Traits Traits
 Japanese language  English language
 Homogenous  Diverse
 Harmony to be valid and preserved  Fight for one’s beliefs/positions
 Group, not individual, important  Individualistic
 Ambiguous  Clear-cut
 General  Specific
 Unspoken agreement  Get the facts straight
 Hold back emotions in public  Display emotions in public
 Process oriented  Result oriented
 Fun-oriented  Humor oriented
 Make a long story short  Make a short story long
 Nonverbal communication important  Verbal communication important
 Interested in who is speaking  Interested in what is spoken

GROUPS

Groups exist in every formal and informal type of organizations. Such groups are created by the
members for its satisfaction. Very often groups get formed automatically because of the operation of
various socio psychological factors. Such groups affect the behaviour of its members.

Group dynamics is related to determining the interactions and forces between group members in a social
situation. The term dynamics originated from the Greek word meaning force. Thus if this term can be
extended to group dynamics, it refers to the study of forces operating within a group.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Here it would be proper to mention the difference between aggregates and groups. Aggregation of
individuals refers to where individuals are not aware of each other, or if aware, do not interact with each
other in a meaningful way.
A group will comprise of:
1. Two or more people who are interdependent on each other, with group members and
2. The group share a set of beliefs, valves and norms, which regulates their mutual conduct.

Meaning of Group:
Marvin E. Shaw has defined groups as “two or more persons who are interacting with one another in a
such a manner that each person influences and influenced by each other”
• People generally tend to define a group differently, mainly because it is difficult to define a group
independent of some specific reference or purpose.
• As per the above definition when two or more people interact together such that each member is
influence as well as be influenced by other group members, it is referred to as a group

Clouis R. Shepherd defined groups as “A group may be defined as the aggregation of small number of
persons who work for common goals, develop a shared attitude and are aware that they are part of a
group and perceive themselves as such”.

Characteristics of Groups:
1. Two or more persons: To form a group there should be at least two persons, because a single
individual cannot interact. Though no maximum limits have been set, the size of the group should be
such so as to allow meaningful interaction among the members of group.
2. Collective identity: Each member of the group must believe that he is member of the group and also
be aware of his participation in the group activity. For instance a group of boys are room-mates staying
together in the hostel. Though they may not be studying in the same class but because of their identity of
room-mates they would prefer to go out together for shopping.
3. Interaction: Members of the group will interact with each other. Though it is not necessary for all
members of the group to interact simultaneously but each member must at least occasionally interact
with the members of the group.
4. Shared goal interest: Members of the group should concur to the attainment of objectives each one
must at least share one of the groups concerns

Reasons for formation of groups:

The reasons for the formation of groups are as follows
1. Solution for mindedness: Though the group members bring with them expertise in the form of
knowledge and experience sometimes due to want of time the group members may pressurize all
concerned with the group to arrive at solution to the problem quickly. In such cases the decisions arrived
at may be improper/ hasty/ premature one and need not be the correct one.
2. Compromised results: In case of problems the group members though interactions and discussions
will understand the problem hold discussions and try to arrive at a consensus. However sometimes when
consensus is arrived at, the group may perceive group harmony as more important than any given task
decision. This results in a compromise on the solution arrived at. Under the circumstances this may not
be the best solution but rather a compromised one.
3. Untimely decisions: One of the characteristic features of a group is that decisions can be taken very
fast. But at a times leader of the group will as a rule of the thumb take a decision and then communicate
it group. In such cases the very purpose for formation of a group is defeated. By following the thumb
rule the group leader will be taking a unilateral decisions and not the united one. Moreover since the
decision taken is single handedly and also arrived at quickly it may be an untimely decision.
4. Conflicts: Since the informal group exist to meet and satisfy the social needs of its members, there are
chances of occurrences of role conflict. This problem arises when the individual group member becomes

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

more committed to his/her own goal and seem to undermine their group members problems. In case of
imbalance between the two and if the group as such is not constituted properly conflict may arise.
5. Dominance: Groups are useful for transmitting and sharing information. In case of a problem all
members can discuss it together and decisions can be arrived at with opportunities for clarification.
However there is always a fear of a single person a dominant personality assuming unofficial authority.

Types of Groups:
To simplify our discussion, we will consider four different types of group classification: -
1. Primary versus Secondary Groups
If a person interacts on a regular basis with other individuals (with members of his or her family, with
neighbors, or with co-workers whose opinions are valued), then these individuals can be considered as a
primary group for that person. On the other hand, if a person interacts only occasionally with such
others, or does not consider their opinions to be important, then these others constitute a secondary
group for that person. From this definition, it can be seen that the critical distinctions between primary
and secondary groups are the frequency with which the individual interacts with them and the
importance of the groups to the individual.

2. Formal versus Informal Groups

Another useful way to classify groups is by the extent of their formality; that is, the extent to which the
group structure, the members' roles, and the group's purpose are clearly defined. If a group has a highly
defined structure (e.g., a formal membership list), specific roles and authority levels (a president,
treasurer, and secretary), and specific goals (to support a political candidate, improve their children's
education, increase the knowledge or skills of members), then it would be classified as a formal group.
The local chapter of the American Red Cross, with elected officers and members who meet regularly to
discuss topics of civic interest, would be classified as a formal group. On the other hand, if a group is
more loosely defined, if it consists, say, of four women who were in the same college union and who
meet for dinner once a month, or three co-workers who, with their spouses, see each other frequently
then it is considered an informal group.

3. Large versus Small Groups

It is often desirable to distinguish between groups in terms of their size or complexity. A large group
might be thought of as one in which a single member is not likely to know more than a few of the
group's members personally, or be fully aware of the specific roles or activities of more than a limited
number of other group members. Examples of large groups include such complex organizations as
General Motors, with its numerous subordinate divisions, and the American Bar Association, with its
many state, county, and city chapters. In contrast, members of a small group are likely to know every
member personally and to be aware of every member's specific role or activities in the group. For
example, each staff member of a college newspaper is likely to know all the other members and be
aware of their duties and interests within the group. In the realm of consumer behavior, we are
principally concerned with the study of small groups, since such groups are more likely to influence the
consumption behavior of group members.

4. Membership versus Symbolic Groups

Another useful way to classify groups is by membership versus symbolic groups. A membership group
is a group to which a person either belongs or would qualify for membership. For example, the group of
women with whom a young homemaker plays golf weekly or with whom she hopes to play golf when an
opening occurs would be considered, for her, a membership group. In contrast, a group in which an
individual is not likely to receive membership, despite acting like a member by adopting the group's
values, attitudes, and behavior, is considered a symbolic group. Clearly, actual membership groups offer
a more direct, and thus a more compelling, influence on consumer behavior.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

FAMILY

The changing structure of family

Three other basic functions provided by the family are particularly relevant to a discussion of consumer
behavior. These include: -
Economic well being
Emotional support
Suitable family lifestyles

Emotional well-being
Although families in the affluent nations of North America, Europe and Asia are no longer formed
primarily for economic security, providing financial means to its dependents unquestionably a basic
family function. How the family divides its responsibilities for providing economic well-being has
changed considerably during past 30 years. No longer are traditional husband as economic provider and
wife as home maker and child-rearer still valid. For instance, it is very common for married women with
children in the United States and other industrial countries to be employed outside the home for their
husbands to share household responsibilities.
The economic role of children also has changed. Today, despite the fact that many teenage children
work, they rarely assist the family financially. Instead, many teenagers are expected to pay for their own
amusements.

Emotional support
The provision of emotional nourishment (including love, affection, and intimacy) to its members is an
important core function of the contemporary family. In fulfilling this function, the family provides
support and encouragement and assists its members in coping with decision making and with personal or
social problems. To make it easier for working parents to show their love, affection, and support to their
children, greeting card companies have been increasingly creating cards for parents to give to their
children (vice versa)

Suitable family lifestyle

Another important family function in terms of consumer behavior is the establishment of a suitable
determine the importance placed on education or career, on reading, on television viewing, on the
learning of computer skills, on the frequency quality of dining out, and on the selection of other
entertainment and recreational activities. Family lifestyle commitments, including the allocation of time,
are generally influencing consumption patterns.

FAMILY LIFE CYCLE STAGES

The concept of household or family life cycle is important for marketers in segmenting the market.
In 1966, William wells and George Gubar proposed eight stages to describe the family life cycle.
The following life cycle stages are typical of families:
1. The bachelor stage: young, single person under age of 35 years. Incomes are generally low since they
have started careers, but they may have few financial burdens and sufficient discretionary income.
2. Newly married: young couples, no children. If both spores are employed, they will have high level of
discretionary income.
3. Full nest 1: young married couples with youngest child less than 6 years of age. There would be
greater squeezes on income because of increased on childcare. However, if they are members of a joint
family, the level of discretionary income is likely to be high.
4. Full nest 2: young married couples with children from 6 years to 12 years of age. Better financial
position because income of both parents rising. Children spend more hours outside their parents
influence.
5. Full nest 3: older married couples with dependent teenage children living at home. Financial position
of family continues to improve. There are increasing costs of college education for children.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

6. Empty nest 1: older married couples with no children living with them, parents still employed.
Reduced expenses result in greater savings and highest discretionary income.
7. Empty nest 2: older married couples with no children living with them and parents retired. Drop in
income and couple relies on savings and fixed income from retirement benefits.
8. Solitary survivor 1: older single persons with low income and increasing medical needs.

Family decision making and consumption-related roles

When two or more family members are directly or indirectly involved in the decision making process, it
is called family decision making. Such family decisions differs from individuals decisions in many
ways. For example, if we consider the purchase of a bicycle for a child, some of the relevant aspects to
think about can be: who recognizes the need for bicycle? How a brand is selected? What role the
concerned child plays? Joint decisions are more likely to operate in the early stages of family life cycle
when both spouses are relatively less experienced. After gaining experience, they usually delegate
responsibilities concerning buying decisions to each other.

Key family consumption roles

For a family to function as a cohesive unit, tasks such as doing the laundry, preparing meals, setting the
dinner table, taking out the garbage, and walking the dog must be carried out by one or more family
members. In a dynamic society, family related duties are constantly changing however, we can identify
either distinct roles in the family decision making process.
For example, a family member may be walking down the cookie aisle at a local supermarket when she
picks out an interesting new fat-free cookie. Her selection does not directly involve the influence of
other family members. She is the decider, the buyer and, in a sense, the gatekeeper, however, she may
not be the sole consumer. Products may be consumed by a single family member, consumed or used
directly by two or more family members, or consumed indirectly by the entire family.

Dynamics of husband-wife decision making

Marketers are interested in the relative amount of influence that a husband and a wife have when it
comes to family consumption choices. The relative influence of husbands and wives can be classified
as: husband dominated, wife dominated, joint, and autonomic.
The relative influence of a husband and wife on a particular consumer decisions depends in part on the
product and service category. For instance, during 1950s, the purchase of a new automobile was
strongly husband dominated, whereas food and financial banking decisions more often were wife
dominated. Fifty years later, the purchase of the family’s principal automobile is still often husbands
dominated in many households. However, in other contexts or situations, female car buyers are a
segment to which many car manufacturers are currently receiving a great deal of marketing attention.
Also, in the case of financial decision making, there has been a general trend over the past decade to
have the female head of household make financial decisions.
Husband wife decision making also appears to be related to cultural influence. Research comparing
husband wife decision making patterns in the people’s republic of china and in the United States revels
that among Chinese there were substantially fewer “joint” decisions and more “husband dominated”
decisions for many household purchases. However, when limiting the comparison to urban and rural
Chinese households, the research showed that in a large city such as Beijing, married couples were more
likely than rural couples to share equally in purchase decisions. Still further, because of china’s “one
child” policy and the ensuring custom of treating a single child as a “little emperor”, many of the parents
purchase decisions are influenced by the input of their child.
In another recent cross-culture study, husband-wife decision making was studied among three groups:
Asian Indians living in India, Asian Indians living in the United States, and American nationals. Results
show a decrease in husband decisions and an increase in wife dominated decisions, going from Asian
Indians in India, to Asian Indians in the United States, to American nationals. This pattern seems to
indicate the impact of assimilation on decision making.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

The expanding role of children in family decision making

Over the past several decades, there has been a trend toward children playing a more active role in what
the family buys, as well as in the family decision making process. This shift in influence has occurred as
a result of families having fewer children, more dual income couples who can afford to permit their
children to make greater number of the choices. Also the single parent households often push their
children toward household participation and self reliance. For example kids in supermarkets with a
parent make an average of 15 requests, of which about half are typically granted. The table shows some
of the tactics employed by children to influence their parents.

Tactics used by children to influence their parents

• Pressure tactics
The child makes demand uses threats, or intimidation to persuade you to comply with his /her request
• Upward appeal
The child seeks to persuade you, saying that the request was approved or supported by an older member
of the family, a teacher, or a family friend
• Exchange tactics
The child makes an explicit or implicit promise to give you some sort of service such as washing the car
in return for the favour
• Coalition tactics
The child seeks the aid of others to persuade you to comply with his /her request or uses the support of
others as an argument for you to agree with him/her
• Ingratiating tactics
The child seeks to get you in a good mood or think favourably of him or her before asking you to
comply with a request.
• Rational persuasion
The child uses logical arguments and factual evidence to persuade you to agree with his/her request
• Inspirational appeals

The child makes an emotional appeal or proposal that arouses enthusiasm by appealing to your values
and ideas
• Consultation tactics
The child seeks your involvement in making a decision
There is also research evidence supporting the notion that the extent to which children influence a
family’s purchases is related to family communication patterns. Teenagers who spend considerable time
on the internet and know how to search for and find information and respond to requests from others to
provide information. It has been shown that teen internet mavens contribute significantly to the family’s
decision making.

Traditional Family Lifecycle

The traditional family life cycle is a progression of stages through which many families pass, starting
with bachelorhood, moving on to marriage, then to family growth, to family contraction, and ending
with the dissolution of the basic unit. The traditional FLC models proposed over the years can be
synthesized into just five basic stages, as follows.
Stage I: Bachelorhood – young singles adult living apart from parents
Stage II: Honeymooners – young married couple
Stage III: Parenthood – married couple with at least one child living at home
Stage IV: Post parenthood- an older married couple with no children living at home
Stage V: Dissolution – one surviving spouse

Stage I: Bachelorhood
The first FLC stage consists of young single men and women who have established households apart
from their parents. Although most members of this FLC stage are employed, many are college or

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

graduate students who have left their parents’ home. Young single adults are apt to spend their incomes
on rent, basic home furnishings, the purchase and maintenance of automobiles etc. They have sufficient
disposable income. Marketers target singles for a wide variety of products and services. In cities there
are travel agents, housing development, health clubs sport clubs, and other service and product
marketers that find this FLC stage lucrative target niche.

Stage II: honeymooners

The honeymoon stage starts immediately after the marriage vows are taken and generally continues until
the arrival of the couple’s first child. This FLC stage serves as a period of adjustment to married life.
Because many young husbands and wives both work , these couples have available a combined income
that often permits a lifestyle that provides them with the opportunities of more indulgent purchasing of
possessions or allows them to save or invest heir extra income. Honeymooners have considerable start
up expenses in establishing a new home.

Stage III: parenthood

When a couple has it first child, the honeymoon is considered over. The parenthood stage usually
extends over more than a 20 year period. Because of its long duration, this stage can be divided into
shorter phases the preschool phase, the elementary school phase, the high school phase and the college
phase. Throughout these parenthood phases, the interrelationships of family members and the structure
of the family gradually change. Furthermore, the financial resource of the family change significantly, as
one parents progress in a career and as child rearing and educational responsibilities gradually increase
and finally decreases as children become self supporting.

Stage IV: post parenthood

Because parenthood extends over many years it is only natural to find that post parenthood when all the
children have left home, is traumatic for some parents and liberating for others. This so called empty
nest stage signifies for many parents almost a rebirth, a time for doing all the things they could not do
while the children were at home and they had to worry about soaring educational expenses.
It is during this stage that married couples tend to be most comfortable financially. Today’s empty nester
has more leisure time. They travel more frequently, take extended vacations, and are likely to purchase a
second home in a warmer climate. They have higher disposable incomes because of savings and
investments and they have fewer expenses.

Stage V: dissolution
Dissolution of the family unit occurs with the death of one spouse. When the surviving spouse is in good
health, is working or has adequate savings, and has supportive family and friends, the adjustment is
easier. The surviving spouse often tends to follow a more economical lifestyle. Many surviving spouses
seek each other out for companionship; others enter into second marriages.

Modifications –the non-traditional FLC

The traditional FLC model has lost its ability to fully represent the progression of stages through which
current family and lifestyle arrangements move. To compensate for these limitations, consumer
researchers have been attempting to search out expanded FLC models that better reflect diversity of
family and lifestyle arrangements. Figure presents an FLC model that depicts along the main horizontal
row the stages of the traditional FLC and above and below the main horizontal row are selected
alternative FLC stages that account for some important non-traditional family households that marketers
are increasingly targeting. The underlying socio demographic forces that drive this expanded FLC model
include divorce and later marriages, with and without the presence of children. Greater reality is
provided by this modified FLC model, it only recognizes families that started in marriage, ignoring such
single-parent households as unwed mothers and families formed because a single person or single
persons adopt a child.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Non traditional FLC stages

The table presents an extensive categorization of non-traditional FLC stages that are derived from the
dynamic socio demographic forces operating during the past 30 years or so. These non traditional stages
include not only family households but also nonfamily households: those consisting of a single
individual and those consisting of two or more unrelated individuals. At one time, nonfamily households
were so uncommon that it was not really important whether they considered or not.

Noteworthy Non traditional FLC stage = Alternative family stages and definition

Childless couples
It is increasingly acceptable for married couples to elect not to have children. Contributing forces are
more career oriented married women and delayed marriages

Couples who marry later in life (in their late 30s or later)
More career oriented men and women and greater occurrence of couples living together. Likely to have
fewer or even non children

Couples who have first child later in life (in their late 30s or later)
Likely to have fewer children. Stress quality lifestyle: ‘only the best is good enough’.

Single parent I
High divorce rates (about 50 percent) contribute to a portion of single parent households

Single parent II
Young man or woman who has one or more children out of wedlock

Single parent III

A single person who adopts one or more children

Extended family
Young single adult children who return home to avoid the expenses of living alone while establishing
their careers. Divorced daughter or son and grandchild return home to parents. Frail elderly parents who
move in with children. Newlyweds living with in-laws.

Non Family Households

Unmarried couples
Increased acceptance heterosexual and homosexual couples

Divorced persons (no children)

High divorce rate contributes to dissolution of households before children are born.

Single persons (most are young)

Primarily a result of delaying first marriage; also, men and women who never marry.

Widowed persons (most are elderly)

Longer life expectancy, especially for women, means more over 75 single person households.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

REFERENCE GROUPS

Reference groups are groups that serve as a frame of reference for individuals in their purchase
decisions. This basic concept provides a valuable perspective for understanding the impact of other
people on an individual's consumption beliefs, attitudes, and behavior. It also provides some insight into
methods that Groups can be used to effect desired changes in consumer behavior.

What is a Reference Group?

A reference group is any person or group that serves as a point of companion (or reference) for an
individual in the formation of either general or specific values, attitudes, or behavior. The usefulness of
this concept is enhanced by the fact that it places no restrictions on group size or membership, nor does
it require that consumers identify with a tangible group (i.e., the group can be symbolic: prosperous
business people, rock stars, and sports heroes).
Reference groups that influence general values or behavior are called normative reference groups. An
example of a child's normative reference group is the immediate family, which is likely to play an
important role in moulding the child's general consumer values and behavior (e.g., which foods to select
For good nutrition, appropriate ways to dress for specific occasions, how and where to shop, what
constitutes "good" value).
Reference groups that serve as benchmarks for specific or narrowly defined attitudes or behavior are
called comparative reference groups. A comparative reference group might be a neighbouring family
whose lifestyle appears to be admirable and worthy of imitation (the way they maintain their home, their
choice of home furnishings and cars, the number and types of vacations they take).
Both normative and comparative reference groups are important. Normative reference groups influence
the development of a basic code of behavior; comparative reference groups influence the expression of
specific consumer attitudes and behavior. It is likely that the specific influences of comparative
reference groups are to some measure dependent upon the basic values and behavior patterns established
early in a person's development by normative reference groups.

TYPES OF REFERENCE GROUPS

Reference groups can be classified in terms of a person's membership or degree of involvement with the
group and in terms of the positive or negative influences they have on his or her values, attitudes, and
behavior. Four types of reference groups that emerge from a cross-classification of these factors: -

1. A contactual group is a group in which a person holds membership or has regular face-to-face
contact and of whose values, attitudes, and standards he or she approves. Thus a contactual group has a
positive influence on an individual's attitudes or behavior.

2. An aspirational group is a group in which a person does not hold membership and does not have
face-to face contact, but wants to be a member. Thus it serves as a positive influence on that person's
attitudes or behavior.

3. A disclaimant group is a group in which a person holds membership or has face-to-face contact but
disapproves of the group's values, attitudes, and behavior. Thus the person tends to adopt attitudes and
behavior that are in opposition to the norms of the group.

4. An avoidance group is a group in which a person does not hold membership and does not have face-
to face contact and disapproves of the group's values, attitudes, and behavior. Thus 'the person tends to
adopt attitudes and behavior that are in opposition to those of the group.

Consider Ram, a senior majoring in advertising at the state university in the south western United States.
The school's Advertising Club, of which he is vice president, serves as one of Ram's contractual groups.
Ram believes that continuing his education to obtain an MBA will enhance his career opportunities.
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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

It is clear that individuals who hold the MBA degree serve as an aspirational group for him. Still further,
although he enjoys his position as a reporter on the university's newspaper, the recent editorials
(endorsed by most of the staff) urging students to adopt a more conservative political philosophy run
counter to his own views. Thus the newspaper staff is currently a disclaimant group. Finally, Ram
personally knows a number of students who have quit college during their final year; these former
students serve as an avoidance group.

Factors that Affect Reference Group Influence

The degree of influence that a reference group exerts on an individual's behavior usually depends on the
nature of the individual and the product and on specific social factors.
1. Information and Experience
An individual who has firsthand experience with a product or service, or can easily obtain full
information about it, is less likely to be influenced by the ad vice or example of others. On the other
hand, a person who has little or no firsthand experience with a product or service, and does not expect to
have access to objective information about it (e.g., a person who believes that relevant, advertising may
be misleading or deceptive), is more likely to seek out the advice or example of others. Research on
imitative behaviours provides some interesting insights on how insufficient experience or information
concerning a product makes consumers more susceptible to the influence either positive or negative, of
others. For example, if a medical school student wants to impress his new girl-friend, he may take her to
a restaurant that he knows from experience to be good or to one that has been highly recommended by
the local newspaper's Dining- Out Guide. If he has neither personal experience nor information he
regards as valid, he may seek the advice of friends or imitate the behavior of others by taking her to a
restaurant he knows is frequented by physicians whom he admires.

2. Credibility, Attractiveness, and Power of the Reference Group

A reference group that is perceived as credible, attractive, or powerful can induce consumer attitude and
behavior change. For example, when consumers are concerned with obtaining accurate information
about the performance or quality of a product or service, they are likely to be persuaded by those they
consider to be trustworthy and knowledgeable. That is, they are more likely to be persuaded by sources
with high credibility. When consumers are primarily concerned with the acceptance or approval of
others they like, with whom they identify, or who offer them status or other benefits, they are likely to
adopt their that a person or group can exert over them, they might choose products or services that
conform to the norms of that person or group in order to avoid ridicule or punishment. However, unlike
other reference groups that consumers follow either because they are credible or because they are
attractive, power groups are not likely to cause attitude change. Individuals may conform to the behavior
of a powerful person or group but are not likely to experience a change in their own attitudes. Different
reference groups may influence the beliefs, attitudes, and behavior of an individual at different points in
time or under different circum- stances.
For example, the dress habits of a young female attorney may vary, depending on her place and role.
She may conform to the dress code of her office by wearing conservative business suits by day and
drastically alter her mode of dress after work by wearing more conspicuous, flamboyant styles.

3. Conspicuousness of the Product

The potential influence of a reference group varies according to how visually or verbally conspicuous a
product is to others. A visually conspicuous product is one that can be seen and identified by others, and
that will stand out and be noticed (e.g., a luxury item or novelty product). Even if a product is not
visually conspicuous, it may be verbally conspicuous it may be highly interesting or it may be easily
described to others. Products that are especially conspicuous and status-revealing (a new automobile,
fashion clothing, home furniture) are most likely to be purchased with an eye to the reactions of relevant
others. Products that are less conspicuous (canned fruits, laundry soaps) are less likely to be purchased
with a reference group in mind. The success of a brand of status running shoes like Reebok is aided by
the fact that it is relatively easy to spot a person wearing them-given the distinctive flag symbol on the
side of each shoe.
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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Important Reference groups

1. Friendship groups:
An individuals for his/her protection self awareness and enhancement needs others around him/her
Leon Festinger in his ‘A theory of social comparison processes’ has claimed that there exists in the
human organisms a drive to evaluate his opinions and abilities. If objective non social means are not
Available of others. In other words human beings prefer the company of other and these people’s
opinion also matters to them. Consumers also enjoy the company of their friends when purchasing
certain types of goods. Such friendship group influence the consumer especially products like clothing,
fine jewellery, cosmetics and personal care items, food items etc.
The influence of the friends is also seen in buyers choice of food habits and drinks. Marketers have
realised the important role played by the friends in influencing the consumption pattern of individuals in
certain category of products and also involved in designing suitable marketing communication
programmes. To mention a few advertisements- coca-cola,(all soft drinks) close up, colgate etc (tooth
paste) rin bar , life bouy, life bouy plus,(soaps and detergents) Hero tribe ranger (cycle) Four square,
Gold Flake etc. (cigarettes) and so on are based on themes of evolved around friendship.

2. Formal social clubs:

Human beings are generally considered to be sociable in nature, spend much of his/her time in group
situations. They like to be associated with formal social clubs like the Rotary Club, Lions Club etc. The
reason for their getting associated with such social groups may be to achieve a specific goal like making
new friends, career advancement or pursuing a special interest or promoting a specific cause. Such
formal social
Activities are the tasks that people perform. Interactions are the behaviour that occurs between people in
performing the tasks. And the sentiments are the attitudes that develop between individuals within the
group. George C. Homans argues that these concepts through separate and closely related. A change in
any of these three elements will produce some change in the other two.
In a formal organisation setup, job (activities) has to be done that require people to work together
(interactions). These jobs must be sufficiently satisfying (sentiments) for people to continue doing them.
With more and more positive interaction with each other, more and more positive sentiments will be
developed by the people towards each other. As, this process continues there is tendency for the group
members to become more alike in their activities and their sentiments. Markets releasing the role played
by the formal groups on their individual members can work out a suitable sales promotion and
communication programme and deliver the same to its target segment.

3. Shopping friends/groups:
According to psychology ‘group’ refers to the number of people who interact with one another are
psychologically aware of one another and perceive themselves to be a group. In the same way, shopping
groups can be assumed to exists because the friends or the group members need to relate to each other
mainly because of the physical location of the people same perception of things matching personality,
styles, outlooks etc. These factors are responsible for the increase in the frequency of the interactions
between the members of a shopping group.
So depending on the product category and target market segment the marketer should develop a
marketing programme keeping in mind the shopping group who are likely to be involved in the decision
making process and who will are also likely to influence the individual buyer.

4. Work Group:
This group can comprises of formal work group and informal work group. The formal work groups are
those which are deliberately created by companies in order to fulfil specific tasks or functions clearly
related to the total organisational goals and objectives. Based on their duration, the formal work groups
can be of two types.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

a).Permanent formal work group: are parts of the top management team, work units in various
departments of the organisation staff groups proving specialised services to the line people in the
organisation, permanent committees and so on.

b) Temporary formal work groups: are committees or tasks forces created for a particular
purpose/mission. They may be created to study and review the salary policies to suggest measures to
improve the relationship between the union and management or to think of new products and services
and so on. These temporary formal groups may exist till the tasks assigned to them have been
completed. Very often the committee/temporary work group will comprise of members, who are already
on the permanent payroll of the company. However till the completion of work assigned to the
committee there will be close interactions between the members.
Markets must realise that the work group also plays a very important role in promoting their products
and work out marketing programmes to communicate information about their product and its usage to
the work groups.

5. Consumer Action groups:

A particular kind of consumer group-a consumer action group- has emerged in response to the
consumerist movement. This type of consumer group has become increasingly visible since the 1960s
and has been able to influence product design and marketing practices of both manufacturers and
retailers. Consumer action groups can be divided into two broad categories: those that organize to
correct a specific consumer abuse and then disband, and those that organize to address broader, more
pervasive, problem areas and operate over an extended or indefinite period of time. A group of tenants
who band together to dramatize their dissatisfaction with the quality of service provided by their
landlord, or a group of irate community members who unite to block the entrance of a fast-food outlet
into their middle-class neighbourhood, are examples of temporary, cause-specific consumer action
groups.

Reference Group Impact on Product and Brand Choice

In some cases, and for some products, reference groups may influence both a person's product category
and brand (or type) choices. Such products are called product-plus, brand-plus items. In other cases,
reference groups influence only the product category decision. Such products are called product-plus,
brand minus items. In still other cases, reference groups influence the brand (or type) decision. These
products are called product-minus, brand-Plus items. Finally, in some cases, reference groups
influence neither the product category nor the brand decision; these products are called product-minus,
brand-minus items. The idea of classifying products and brands into four groups in terms of the
suitability of a reference group appeal was first suggested in the mid- 1950s, along with an initial
classification of a small number of product categories.

Reference Groups and Consumer Conformity

Marketers are particularly interested in the ability of reference groups to change consumer attitudes and
behavior (i.e., to encourage conformity). To be capable of such influence, a reference group must
1. Inform or make the individual aware of a specific product or brand
2. Provide the individual with the opportunity to compare his or her own thinking with the attitudes and
behavior of the group
3. Influence the individual to adopt attitudes and behavior that are consistent with the norms of the
group;
4. Legitimize an individual's decision to use the same products as the group. The ability of reference
groups to influence consumer conformity is demonstrated by the results of a classic experiment
designed to compare the effects.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Benefits of the Reference Group Appeal

Reference group appeals have two principal benefits for the advertiser: they increase brand awareness
and they serve to reduce perceived risk.

1. Increased Brand Awareness

Reference group appeals provide the advertiser with the opportunity to gain and retain the attention of
prospective consumers with greater ease and effectiveness than is possible with many other types of
promotional campaigns. This is particularly true of the celebrity form of reference group appeal, where
the personality employed is generally well known to the relevant target segment. Celebrities tend to
draw attention to the product through their own popularity. This gives the advertiser a competitive
advantage in gaining audience attention, particularly on television where there are so many brief and
similar commercial announcements.

2. Reduced Perceived Risk

The use of one or more reference group appeals may also serve to lower the consumer's perceived risk in
purchasing a specific product. The example set by the endorser or testimonial-giver may demonstrate to
the consumer that uncertainty about the product purchase is unwarranted: Following are examples of
how reference group appeals serve to lower the consumer's perceived risk.
a) Celebrity. Consumers who admire a particular celebrity often have the following reactions to the
celebrity's endorsement or testimonial. For eg. "She wouldn't do a commercial for that product if she
didn't believe it was really good."
b) Expert. When consumers are concerned about the technical aspects of a product, they welcome the
comments of an acknowledged or apparent expert. For eg. "If he says it works, then it really must
work."
c) Common Man. When consumers are worried about how a product will affect them personally, they
are likely to be influenced by a common man endorsement or testimonial. For eg. "People just like me
are using that product,"

SOCIAL CLASS

Social class can be thought of as a continuum which includes a range of social positions on
which each member of society can be placed, divided into a small number of specific social classes or
strata. Social class is defined as the division of members of a society into a hierarchy of distinct status
classes, so that members of each class have relatively the same status and members of all other classes
have either more or less status. To appreciate more fully the nature and complexity of social class, now
consider several underlying concepts pertinent to this definition: -

Social Class and Social Status

 Researchers often measure social class in terms of social status, that is, they define each social
class by the amount of status the members of that class have in comparison with members of
other social classes.
 Socioeconomic variables such as family income, occupational status or prestige, and educational
attainment, as expressions of status are used by marketing practitioners to measure social class.
 Sometimes it is called social stratification – status is frequently thought of as the relative
rankings of members of each social class in terms of specific status factors.
 For instance, relative wealth (amount of economic assets), power (the degree of personal choice
or influence over others), and prestige (the degree of recognition received from others) are three
status factors frequently used when estimating social class.

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 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Social class is hierarchical and a form of segmentation

 Social class categories usually are ranked in a hierarchy, ranging from low to high status.
 Therefore, social class categories suggest that others are either equal to them (about the same
social class), superior to them (higher social class), or inferior to them (lower social class).
 Consumers may purchase certain products because these products are favoured by members of
either their own or a higher social class, and many consumers may avoid other products because
they perceive the products to be lower class products. Thus, the various social class strata
provide a natural basis for market segmentation. The classification of society’s members into a
small number of social classes has also enabled researchers to note the existence of shared
values, attitudes, and behaviour among members within each social class and different values,
attitudes and behaviour among social classes.

Social class characteristics

Characteristics which determine your social class
 Money
 Investments, e.g. stock & bonds
 Allowances
 Public assistance of any type
 Coupons
 Other wealth/assets
 Did you get what you wanted or only what was needed

 Education
 Level attained of self, siblings, parents
 Literacy level
 Private/public
 Tutors
 Financial aid, e.g. scholarships, grants, loans, bursaries
 Types of books and other reading material in the home
 Study in or out of state

 Employment
 which parents worked
 what type of work, i.e. occupation
 hours of work, e.g. shift, part-time, full-time, overtime
 self-employed or salaried

 Housing
 rented or owned
 size of home and surrounding land
 number of floors of home
 second homes
 purpose, e.g. to live in or investment
 safety of neighbourhood/crime rate
 location, e.g. inner city, suburb, rural location
 maintenance/repairs done by family or outside help
 abandoned buildings nearby

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KRISHNAMURTHY BN
 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

 Food
 ate only at home
 ate with family together
 ate at restaurants, what kind of restaurants, how often
 prices on menu were or were not of concern

 Clothing
 new or 2nd hand
 name brand
 need or want

 Shopping
 name brands
 no-name brands
 paid in cash or credit card or check
 coupons

 Parents
 married
 divorced
 remarried
 adoption
 number of children

 Transportation
 car, type, age, new or used, and how many
 repair and insurance payment covered by whom
 children got cars when turned a certain age
 public
 bicycle
 walking
 other forms of non-essential transportation, e.g. boats, snowmobiles

 Health
 types of doctors
 Dentists
 emergency room visits and/or family doctor
 public or private health insurance, type of coverage
 vision care
 "alternative" health care options

 Sports
 need for equipment or not
 pool or basketball court at home
 Domestic duties
 hired help
 which parent doing what chores (Everyday jobs)

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KRISHNAMURTHY BN
 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

 children doing chores (Everyday jobs) and receiving allowance or not

 childcare, babysitting

 Furnishings
 type in home, new or used, style
 electronic goods, e.g. stereo, computers, appliances
 Antiques
 china or silverware, special occasion items

 Leisure activities
 after school
 Hobby
 of parents and children
 private lessons, e.g. piano or tennis

 Summer activities
 stay at home
 Vacations
 Camps

 Vacation
 places stayed e.g. tents or motels or hotels
 where ate food, e.g. cooked own or ate out
 transportation, e.g. cars or flying
 visiting relatives or new places
 outside the country or "exotic" places

Social – class categories in India

The upper-upper class – club establishment

 Small number of well established families
 Belong to best clubs and sponsor major charity events
 Serve as trustees for local colleges and hospitals
 Prominent physicians and lawyers
 May be heads of major financial institutions, owners of major long-established firms
 Accustomed to wealth, so do not spend money conspicuously

The lower-upper class - new wealth

 Not quite accepted by the upper crust of society
 Represent “new money”
 Successful business executives
 clear users of their new wealth

The upper-middle class – achieving professionals

 Have neither family status nor unusual wealth
 Career oriented
 Successful professionals, corporate managers, and business owners

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KRISHNAMURTHY BN
 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

 Most are college graduates, many with advanced degrees

 Active in professional, community and social activities
 Have a keen interest in obtaining the “better things in life”
 Their homes serve as symbols of their achievements
 Consumption is often conspicuous

The lower-middle class – faithful followers

 Primarily non managerial white collar workers and highly paid blue collar workers
 Want their children to be well behaved
 Religious
 Prefer a neat and clean appearance and tend to avoid faddish or highly styled clothing
 Constitute a major market for do it yourself products

The upper-lower class – security minded majority

 Solidly blue collar
 Strive for security
 View work as a means to buy enjoyment
 Want children to behave properly
 High wage earners in this group may spend impulsively
 Interested in items that enhance their leisure time
 Mares are sports fans, heavy smokers, drinkers

The lower-lower class – rock bottom

 Poorly educated, unskilled labourers
 Often out of work
 Children are often poorly treated
 Tend to live a day to day existence

Social Class Mobility

 Social mobility is the movement of individuals or groups in social position over time.
 It may refer to classes, ethnic groups, or entire nations, and may measure health status, literacy,
or education — but more commonly it refers to individuals or families, and their change in
income.
 It also typically refers to vertical mobility—movement of individuals or groups up (or down)
from one socio-economic level to another, often by changing jobs or marriage.
 It can also refer to horizontal mobility—movement from one position to another within the same
social level.
 Social mobility can be the change in status between someone (or a group) and their
parents/previous family generations ("inter-generational"); or over the change during one's
lifetime ("intra-generational").
 It can be "absolute"—i.e. total amount of movement of people between classes, usually over one
generation (such as when education and economic development raises the socio-economic level
of a population); or "relative" -- an estimation of the chance of upward (or downward) social
mobility of a member of one social class in comparison with a member from another class.
 A higher level of intergenerational mobility is often considered praiseworthy, and the sign of
greater fairness, or equality of opportunity, in a society.

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KRISHNAMURTHY BN
 BGS INSTITUTE OF MANAGEMENT STUDIES, CHICKABALLAPUR

Mobility is enabled to a varying extent by economic capital, cultural capital (such as higher
education), human's capital (such as competence and effort in labour), social capital (such as support
from one's social network), physical capital (such as ownership of tools, or the 'means of production'),
and symbolic capital (such as the worth of an official title, status class, celebrity, etc.)

People in community can move from one strata to another. They can move either up or down the
social class; this mobility gets exhibited in two forms. One, individuals can move either up or down in
social-class standing across generations, i.e. while their parents may have belonged to one strata, they
begin to belong to another, either upper or lower. Two, such a transition may also be seen through one’s
life, i.e. as a person becomes independent and starts earning, he may belong to one class and as he
progresses in life, he may begin to belong to another.

Upward mobility is more common and is generally the trend these days. As mentioned above, the
higher social classes often become aspirational and reference groups for people of lower social status.
Marketers realize this and use symbols of higher-class status into their products, as also the
advertisement, both in terms of content and context. It has also been seen that that products and services
that were traditionally within the realm of one social class, are now getting into the realm of lower social
classes. The influence of upper classes on lower, has also benefited the “me-too” marketers, who come
up with counterfeiters

Geo – Demographic Clustering

 The objective of geo-demographic clustering is to understand the relationship between social
class and geo-demographic clusters.
 This is to say that families of similar socioeconomic backgrounds tend to reside in the same
neighbourhoods or communities – i.e. they cluster together.
 In India there are dispersed communities made up a similar people with similar geographic
profiles.
 Traditional social class measures have been enhanced by linking consumer related geographic
and socioeconomic data to create comprehensive geographic clusters.

Social Stratification7
Social stratification is the hierarchical arrangement of social classes, castes, and divisions
within a society. These hierarchies are not present in all societies, but are quite common in state-level
societies (as distinguished from hunter-gatherer or other social arrangements).
Stratification is a hierarchy of positions with regard to economic production which
influences the social rewards to those in the positions.

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KRISHNAMURTHY BN