Influence of Reference Groups on Consumer Behavior

5/11/2012 Epgp-03-121 Jaimin Dave

INDEX 1. When do Groups Exert Influence? 2. Consumer Attitude Towards the Group 3. Nature of The Group 4. Nature of The Product 5. Nature of Reference Groups 6. Conditions that reflect Informational ,Comparative and Normative Influences 7. Product Characteristics 8. Marketing Strategies based on Reference Group Influence 9. The Marketing of a Mystique : Harley Davidson Case Study Consumer Initiated New-Product Development Mass Marketing of Mystique Extraordinary Brand Identification Crossing Cultural Boundaries 10. Conclusion

When do Groups Exert Influence?:The influence of reference groups on consumers buying behavior depends on the below three factors. Consumer Attitude Towards the Group: The buying behavior of a consumer is more likely to be influenced by the group if: Reference group is cited as a credible source of information about the service or product. The views and reactions of its members are valued. Sanctions or rewards that are set by the group regarding his/her behavior are acceptable. Nature of The Group: The buying behavior of a consumer is more likely to be influenced by the group if: Cohesive i.e. having similar values and norms Frequent interactions Exclusive and distinctive i.e. membership to that group attracts higher regards or respect Nature of The Product: The buyers will get more influenced by the reference groups if Buying involves a visible item like clothing It denotes status of the person such a Mercedes car Nature of Reference Groups :There are certain norms, roles, values etc that are established by a reference group. Norms :- These are generally defines behavioral rules and standards. Values :- Shared beliefs among group members about what is considered to be appropriate and what is inappropriate. Roles :- A function assumed by an individual or assigned by the group to achive certain objective Status :- An individuals achieved or ascribed position in the hierarchy of a group. Higher the status higher the influence or power exerted by the individual within the group.

Socialisation :- It is the process by which the members learn about the groups norms, values, roles and behavior patterns expected out of them Power :- A groups influence on its members buying behavior most certainly depends on the power held by that group. Following are some of the examples of types of reference group influences

Conditions that reflect Informational ,Comparative and Normative Influences :Informational Influence : Individual tries to get the information about the different brands that produce a certain product from independent groups or experts or from those who work with the product as a profession. Indiviual gets the brand-related knowledge and experience from those friends , relatives, neighbors or work associates who have reliable information about the brands. An individuals observation of the experts choice of a brand influences him/her. Comaparative Influence : Individual feels that the use of a certain brand will improve his image or the impression over the others in his/her group. Individual feels that the purchase of a certain brand will show other about what he/she wants to become. Individual thinks that it would be nice to be seen using a certain brand that the brand ambassador of that brand is shown to be using. Normative Influence : Individual is influenced by the people with whom he has social interactions to use a particular brand Family members preference influences his/her purchase of a particular brand The expectations that others have for an individual also influences the type of brand one choses to use.

Product Characteristics : Researchers have found out that the reference groups can not influence a buyer to buy the products that are technologically complex or requires a lot of information to be scanned. They can mainly influence two types of decisions, whether to buy the product within the current product category and which brand to buy. It also depends on whether the product is consumed in private or in public. Which means whether the product has utility more attached to it or has luxury attached to itself. A reference group cant influence the brand of toothpaste or the brand of brief one buys but it can certainly influence the purchase of a mobile phone, bike or a car. Where Consumed In Private Influence weak Razor Toilet soap Water heater Mattress Influence strong Body massage DVD player Hot bath tub Private swimmingpool In Public Influence weak Clothing Watches Shoes Conveyance Influence strong Camcorder Jewelry Health club Custom-made Car

Necessity Necessity Type of product Luxury

Reference Group Influences on Publicly and privately consumed Luxuries and necessities

Marketing Strategies based on Reference Group Influence : Marketers develop communication strategies based on the normative,comparative and informational group influences. Expert spokespersons communicate the information about a product through various communications marketers employ. Videocon communicating through Shah Rukh khan and about Dish TV etc. Marketers use comparative influence by using actual referent in form of a typical consumer or use a celebrity to denote a certain class with which people identify themselves or would like to be like as he/she is likeable.

The Marketing of a Mystique : Harley Davidson Case Study :A recent study on the extent of ethnography of these kinds of consumption oriented reference groups showed that there existed a symbiotic relations ship between these groups and the companies that provide the products or services for their consumptions. This study revealed four interesting characteristic of relationship between marketers and reference groups. Consumer oriented new product development Mass-marketing of mystique Extraordinary brand identification Transcendence of national and cultural boundaries

The behavior of this different Harley Davidson groups were done at different rallies organized all over the nation. In addition to observation at rallies a lot of observation was done at other venues coupled with interviews. These interviews were conducted at informants homes, garages, motorcycle swap meets, clubs, bars and restaurants. During these we also came in touch with the various publications targeted at these biker groups. Interviews were also conducted with employees in Harley Davidsons Milwaukee office also with Vice President of the motor cycle division, the vice-president of motorcycle styling, the public relations manager, and the director of business planning. Data collected from these interviews was coded, compared, collapsed to categories and findings were abstracted from the same. The details of these findings are as mentioned below. Consumer Initiated New-Product Development :This is one of the most significant phenomena observed in Harley group that they are very much involved in technological or stylistic improvements of the bikes or their accessories or their clothings. But as a matter of fact these kind of findings are not only associated with the biker reference groups but in other subgroups such as skydivers, surfers etc also these kinds of phenomenon has been observed. Harleys heritage is also of the grass roots innovation and they maintain the same intimacy with the riders by sponsoring or partnering in organizing the rallies. Even though Harley Davidson has a wide range of accessories, field research indicated a lot of consumer initiated product development. Mass Marketing of Mystique :There are also two more subgroups in this biker group. One of them is a counter-group such as punks or outlaw bikers. Some of the products that appeal to this counter-group may not appeal to the other people in the others subgroup. Maintaining this tension which indirectly helps Harley Davidson in its marketing is a challenge for the management. Harley-Davidson, in its

promotion of the HOG (Harley Owners Group) and product line has very successfully co-opted, sanitized and marketed the mystique. Company has also made lot of efforts to promote this kind of gang affiliation and at the same time has also maintained the distance from the negative sides of the gang culture. The HOG sponsored rallies did not have any elements of outrageous behaviors such as nudity, exhibitionism or violence. Rather they were filled up with trainings of motorcycle maintenance and safety and focus group interviews that rotated around HOG merchandize. Extraordinary Brand Identification :Research indicated a strong brand identification amongst the biker groups which in time got translated into brand loyalty. This strong brand identification is in the Harley owners for years and many a times customers were noted saying that they always wanted to own a Harley.Some customers pinpoint their loyalty to remembering their elders riding Harley, some didnt remember the genesis of their liking but reported that they always wanted to own a Harley. There were also some who just started riding Harley and then developed a particular liking for the same. One thing is for certain that there is a sizeable chunk of bikers who are fiercely loyal to the Harley. One of the main interviewee said that there are mainly two types of riders out there. One type is those who would summarily stop riding the bikes if Harley was no more around. Others are those who are first devotee of riding motorcycles and just happen to like Harleys. Crossing Cultural Boundaries :Reference groups that are formed around certain ideologies of consumption also transcend ethnic, racial or national differences. Such as bodybuilding groups always identify themselves as bodybuilders first and letter identify themselves as belonging to certain nationality or race. Biker groups that were forming outside of U.S. groups also showed the same traits as those shown by those in the U.S. Conclusion:Seeing owners as a part of some provides us with a theoretical foundation through which we can understand a lot of their behaviors and also can provide us a lot of implications related with marketing. Studying behavior of highly committed consumers who also get deeply involved in the indigenous development of the products can provide company with a really important value addition. Firms that sell such a mystique it is very critical for them to completely understand to give them a sustainable advantage. This understanding has got direct connections with brand equity and promotions. One of the most important aspect of understanding mystique is also to create envy in the riders who dont own a Harley. For Harley owners wearing of the Harley apparel creates envy and strengthens the mystique and provides another hedonic benefit. Brand identification can also be converted to brand loyalty by making these Harlye licensed apparels. Possession and wearing of Harley apparels makes it easy for

people to easily connect with those who they dont know but they do possess a Harley. Such as doctors can easily connect with the patients who possess or wear Harley apparels if they are also part of Harley reference groups.