Group Influences on Consumer Behavior,

Consumer buying Process and Different Kinds Of

Buying behaviors

By : -Neeraj Gupta

Sources of influence on consumer behaviour can be described as marketer

dominated or non-marketer dominated and as delivered by mass media or

personally

Marketer dominated Non-marketerdominated

(1)

Advertis ingSales promotionsPublicity

(2)

NewsCrit iques/revi ewsProgramme contentExternal endorsementsCultural heroes/heroines Clubs/organisations

(3)

Salesp ersons

(4)

Family FriendsNeighbours ClassmatesCo -wor ker s

Massdelivered

DeliveredPersonality

Special: Opinion leadersSources: Market mavens

Reach

High

Reach

Low

Low

Two-wayCommunication

High

Low HighCredibility

Market Maven

Individuals whose influence stems from a general knowledge or market expertise that

leads to an early awareness of new

products and services.

When do Groups Exert Influence?

The group influence on an individual's buying behaviour depends on three factors:

Attitude Towards the Group: According to William O. Bearden and

Richard Rose, individual's susceptibility to group influence varies widely.

The buying behaviour of a consumer is more likely to be influenced by the

group if the individual:

1. Views the reference group as a credible source of information about the

product or service.

2. Values the views and reactions of group members with regard to buying

decisions.

3. Accepts the rewards and sanctions allotted out by the group for proper or

improper behaviour.

Nature of the Group: James H. Leigh and Terrance G. Gabel note that reference groups are more likely to influence a group member's behaviour if they are:

i. Cohesive, that is having similar values and norms.

ii. Frequently interacting and thus creating more opportunities to influence members.

iii. Distinctive and exclusive, that is, the membership in the group is highly regarded.

As is case with the Harley-Davidson group example, the group is closely knit and for many members biking has become a full-time hobby. Membership is exclusive and distinctive as they refer to each other as "brothers" and outsiders as "citizens.“

Nature of the Product: The nature of the product also determines the degree of influence a group has on an individual. Groups are more likely to be influential for products, which are: (a) visible such as clothing and (b) exclusive that might speak of status such as a Mercedes.

Cont….

Types of Reference Groups

Reference groups furnish points of comparison by which one can evaluate attitudes and behaviour. An individual can be a member of a reference group such as the family and would be said to be part of a membership group. This same individual may aspire to belong to a cricket club and would be said to be apart of an aspiration group. A disclaimant group is one to which an individual may belong to or join and then reject the group's values. An individual may also regard the membership in a specific group as something undesirable and to be avoided. Such a group is a dissociative group.

Membership Groups

1. Primary Informal Groups

2. Primary Formal Groups

3. Secondary Informal Groups

4. Secondary Formal Groups

Membership Non membershipPositive attitude

Negative attitude

Primary

Secondary

Types of aspiration groups

Contact

Types of membership groups

Informal Formal

No Contact

Anticipatory

Symbolic

Positive membershipgroup

Aspiration group

Dissociative groupDisclaimant-group

Family/Peer Group

Sports/Kitty Party -group

School/Business groupsTeachers/IAS Association

Types of Reference Groups

Aspiration GroupsAnticipatory Aspiration Groups: These are groups that an individual anticipates to join at some future time. The individual, generally, has some direct contact with such group(s). For instance, the individual may wish to join a group higher in the organisational hierarchy.

The ad appeal focuses on anticipation of ultimately reaching at the top in the business organisation.

Appealing to Increase Position

Symbolic

Aspiration

Groups: The

individual

admires these

groups but is

unlikely to join

them despite

acceptance of

the group's

beliefs and

attitudes.

Famous soccer player (David Bekham) endorses Police Sunglasses

Table 10.1 Positive Influences on Conformity

Group Characteristics Attractiveness Expertise Credibility Past Success Clarity of Group Goals

Personal Characteristics Tendency to Conform Need for Affiliation Need to be Liked Desire for Control Fear of Negative

Evaluation

Nature of Reference Groups

Reference groups establish certain norms, roles, status, socialisation and power. These characteristics exert their influence on consumers.

Norms: - 'Norms' are generally defined rules and

standards of behaviours that the group establishes. 'Values' are shared beliefs among group members

regarding what behaviours are appropriate or inappropriate. Cultures and sub-cultures largely define the values.

'Roles' refer to functions that an individual assumes or that the group assigns to her/him to accomplish group objectives.

Nature of Reference Groups

'Status' is the achieved or ascribed position that the individual occupies within the group's hierarchy. As one may expect, greater power and influence goes with higher status.

'Socialisation' refers to the process by which new members learn the group's system of values, norms and expected behaviour patterns.

‘Power’ A group’s influence on its members behaviour is closely related to its power. Reward Coercive Expert Referent

Perceived Nature of Objectives source Type of Behaviour influence characteristics power

Informational Knowledge Credibility Expert Acceptance

Comparative Self-maintenance Similarity Referent Identification and enrichment

Normative Reward Power Reward or Conformity coercion

Groups Influences and Consumer Behavior

Types of Reference Group Influences

Informational influence is likely to be more important when consumers perceive financial, social, or performance risk in buying a product.

Groups Influences and Consumer Behavior

Relative Importance of Informational, Comparative and Normative Influence

Product Characteristics: - Consumers tend to be susceptible to informational influence when products are technologically complex such as computers and peripherals, autos, air conditioners and washing machine etc.

Researchers have hypothesised that reference groups can influence two types of decisions: (1) whether we buy a product within a given product category and (2) what brand we buy. The influence would also depend on whether the product is typically consumed in private or public and whether it is a necessity or luxury.

For example, the group will probably not influence whether a member buys Colgate toothpaste or Aquafresh. But the group might influence the purchase of products such as a brand of latest mobile phone, or watch.

Cont….

In Private In Public

Influence weakRazorToilet soapWater heaterMattress

Influence weakClothingWatchesShoesConveyance

Influence strongBody massageDVD playerHot bath tubPrivate swimming-pool

Influence strongCamcorderJewelryHealth clubCustom-madeCar

Where Consumed

Necessity

Type of Product

Luxury

Reference Group Influences on Publicly and Privately Consumed Luxuries and Necessities

Relative Importance of Informational, Comparative and Normative Influence

Consumer Characteristics: - Some consumer personalities are such that make them readily susceptible to influence by others.

Those susceptible to interpersonal influence seek to enhance their self-image by possessing products that they believe others will approve of.

A personality characteristic referred to as "attention to social comparison information" (ATSCI) is also related to normative influence. Those individuals who are high on this personality trait are likely to pay a great deal of attention to what others do and use this information as a guide to their own behaviour.

Marketing Strategies Based on Reference Group Influence Marketers employ informational, comparative and normative group

influences to develop marketing communication strategies. Advertising often makes use of informational influence through

expert spokespersons who communicate information about product features and performance.

Using Persons like Amitabh Bachan to prove to audience that Navrattan Oil is the best, Binani Cement is the best as people believe him to be a credible authority.

Advertising applies comparative influence by using either an actual referent in the form of a ìtypical consumerî or use a celebrity as a symbolic referent with whom consumers identify because she/he is likeable or attractive. The typical consumer (Lalitaji of Surf ad) persuades consumers that people like themselves have used the advertised product.

The ad for Fiat Palio uses Sachin Tendulkar as a symbolic referent.

(a) Actual referent is a “typical” consumer (b) Symbolic referent The famous cricketer

Marketing Strategies Based on Reference Group Influence Marketers frequently use normative influence approach by showing

group approval in ads for a particular brand. Commercials of Orient PSPO, Coca Cola, Pepsi, Taj Mahal tea, brands of paints, clothing and personal care products etc. are examples of advertising ís simulation of social approval.

Celebrities are best used as experts when consumers view them as knowledgeable about the product category and conveying legitimacy in their message.

Cont….

Word-of-mouth Communications

Word-of-mouth is interpersonal communication that takes place between two or

individuals such as members of a family or reference group. All of these people

exert an influence on the consumers' purchase behaviour through such

communications. The saying "a satisfied customer is your best salesperson"

shows the importance of favourable word-of-mouth to the marketer, because

satisfied customers influence relatives and friends to buy the product.

Consumers learn about new products or service and retail outlets etc., from

family members, friends and other reference groups in two ways:

1. By observing or participating with them as they consume a product or

service.

2. By asking for information or advice about a product or service from them.

Cont….

Conditions for Word-of-mouth Communication

Research study by Herr, Kardes and Kim has shown that word-of-mouth is not the dominant influence in each situation. For example, they found that word-of-mouth is not important in the evaluation of an automobile if (1) consumers already have strong impression of the product and/or (2) negative information about the product is available.

1. The product is visible and, thus, purchase behaviour becomes obvious.

2. The product is distinctive and reflects a particular style, taste and other personal norms.

3. The product is new and consumers have not established impressions and attitudes about it.

4. The product conforms to important group norms and belief systems such as reactions to a new soft drink, or teenagers' reactions to pop and rock music.

5. Consumers perceive the purchase of the product as risky and, due to this reason, are more likely to discuss about it and seek information and advice from friends and relatives.

Cont….

Word-of-mouth Communication Process

Two-step Communication Flow

Elihu Katz and Paul F. Lazarsfeld were among the first to identify and describe word-of-mouth communication. According to them, it is two-step flow of information : (1) from the mass media to opinion leaders and (2) from opinion leaders to their followers. They believed that opinion leaders' exposure to mass media is greater than that of followers.

Mass media Opinion leaders Followers

b. Multi-step word-of-mouth communication flow

Mass media Opinion leaders Followers

Gatekeepers

Multi-step Communication Flow

1. Followers may not be active seekers of information; yet they are not totally

passive and may deliberately initiate requests for information. They may

also pay attention to unsolicited opinion of others.

2. Opinion leaders are also likely to receive information from followers and

may be influenced by their word-of-mouth. So, word-of-mouth frequently

turns out to be a two-directional flow of communication between leaders and

followers.

3. Mass media is not restricted only to opinion leaders. They are not the only

ones who receive all the communications. Followers too are exposed to

mass media advertising and are influenced by it. Realisation of this fact led

Katz and Lazarsfeld to think that there may be others who function as

"information gatherers" or "gatekeepers," serving this function.

Opinion Leadership

The process by which one person (the opinion leader)

informally influences the consumption

actions or attitudes of others who may be opinion seekers or opinion recipients.

What Is Opinion Leadership?

Opinion Leader

Opinion Receiver

Opinion Seeker

Word of Mouth in ActionFigure 15-1

Dynamics of the Opinion Leadership Process Credibility Positive and Negative Product Information Information and Advice Opinion Leadership Is Category-Specific Opinion Leadership Is a Two-way Street

Many not-for-profit organizations that hope to change behavior, count on opinion leaders.

Motivations Behind Opinion Leadership

The Needs of Opinion Leaders

The Needs of Opinion Receivers

Purchase Pals Surrogate Buyers

versus Opinion Leaders

Self-involvement Social involvement Product involvement Message involvement

Issues

Motivations Behind Opinion Leadership

The Needs of Opinion Leaders

The Needs of Opinion Receivers

Purchase Pals Surrogate Buyers

versus Opinion Leaders

New product or new usage information

Reduction of perceived risk

Reduction of search time Receiving the approval of

the opinion leader

Issues

Motivations Behind Opinion Leadership

The Needs of Opinion Leaders

The Needs of Opinion Receivers

Purchase Pals Surrogate Buyers

versus Opinion Leaders

Actually accompany consumers on shopping trips

Used 25 percent of the time for purchases of electronic equipment

Issues

Motivations Behind Opinion Leadership

The Needs of Opinion Leaders

The Needs of Opinion Receivers

Purchase Pals Surrogate Buyers

versus Opinion Leaders

Surrogate buyers may replace opinion leaders

An example is a wardrobe consultant who helps in the purchase of business clothes

Issues

Cont….

Characteristics of Opinion Leaders

Much research has been conducted to identify traits of opinion leaders but so far the research is inconclusive. Despite difficulties in identifying opinion leaders, some general traits have been identified.

1. The most salient characteristic of opinion leaders is their greater long-term involvement with the product category compared to non-opinion leaders in the group. This trait is referred as enduring involvement and according to G. M. Rose, L. R. Kahle and A. Shoham, it leads to enhanced knowledge about the product and experience with the product category or activity. This enhanced knowledge and experience makes opinion leadership possible.

2. Opinion leadership functions primarily through interpersonal communications and observations. These activities occur most frequently

among individuals with roughly the same social-class position as non-leaders but opinion leaders are likely to be viewed as having higher status in their social-class. It is important to note the significant role family members play in opinion leadership.

3. Opinion leaders tend to be more gregarious and are willing to act differently

even if it attracts the attention of peers. Their exposure to mass media,

relevant to their interest, is greater. For example, opinion leaders to ladies

fashions could be expected to have greater exposure to magazines such as

Femina, Vogue and Women's Era etc. Exposure to interest relevant mass

media helps enhance their potential as opinion leaders.

Knowledge about product/service

High Low

Moderate High

Low Moderate

High

Product/purchaseinvolvement

Low

Situations in which People Seek an Opinion Leader

Marketing Implications

An obvious fact is that consumers talk to other consumers about their personal

experiences with products, services and retail stores. Therefore, it is extremely

important that marketers pay serious attention to product quality and service and

meet or exceed consumer expectations with regard to their products or services.

The firm must make arrangements to respond to customer complaints quickly

and fairly.

Stimulating opinion leadership involves having an acknowledged opinion leader.

For example, the print ad of Colgate Total toothpaste says, "Approved by

independent dental associations in 30 countries."

Consumers’ Buying Decision Process

Problem Recognition

Desired consumer lifestyle Current situation The way consumer would Temporary factors affecting like to live and feel the consumer

Desired state Actual state The condition the consumer The condition the consumer would like to be in at this perceives to be in at this point of time point of time

Nature of discrepancy Differences between the consumer's desired and perceived conditions

Desired state Actual state No difference exceeds actual exceeds desired

state state

Satisfaction Problem recognised

The Problem Recognition Process

Immediacy of solution

Expectancy Immediate ImmediateOf solution solution not

problem required required

Occurrence ofProblem Routine Planning

expected

Occurrence ofproblem Emergency Evolving

unexpected

Example of an Active Problem

Emergency problems are possible but are unexpected and necessarily need immediate solutions. For example, say a consumer meets an accident while on his/her way to office, gets injured and the vehicle is badly damaged. In such an emergency, she/he needs a quick solution to reach hospital's emergency room. Subsequently, she/he may plan to get the vehicle repaired or buy a new one.

Types of Problem Recognition

Cont….

Situations that can Cause Problem Recognition

Influencers

Culture/sub-cultureSocial statusReference groupFamily characteristicsFinancial situationEarlier decisionsIndividual growthEmotionsMotivesSituation

Desiredstate

Evaluation

- Less than?

- Equal to?

- More than?

ActualState

Influencers

Past decisions Normal depletion Brand/productperformance Individual growthEmotionsGovt./consumergroup Product availabilitySituation

Non-marketing Factors Influencing Problem Recognition

Cont….

Role of emotion in problem recognitionThe five of the most common situations

are:

1. Depletion of stocks

2. Dissatisfaction with goods in stock

3. Environmental changes

4. Change in financial situation

5. Marketer initiated activities.

Cont….

Approaches to Activating Problem Recognition

1. Generic problem recognition focuses on helping consumers feel a discrepancy that a number of brands within a product category can reduce. Generally, a marketer will use this approach when the problem is either latent or of low importance and one of the following conditions exists.

i. Product is in the early stage of its life cycle.

ii. The marketer has very high market share.

iii. After problem recognition, consumers' external search tends to be limited.

iv. It is a situation of industry-wide cooperative effort.

Generic problem recognition. Ordinary tap water is not safe.

Cont….

2. Selective problem recognition

focuses on a discrepancy that only a

particular brand can solve. Marketers use

this approach to causing problem

recognition in an attempt to increase or

maintain market share

Selective problem recognition. Getting a job is high priority for most students in India.

Marketing Strategy and Problem Recognition

1. Activity Analysis- Such as cleaning house, preparing meal, or travel etc.

2. Product Analysis- Examining the purchase and or use of particular product, service or brand

3. Problem Analysis

4. Human Factors Research-Helpful in identifying consumer functional Problems they are not aware about.

5. Emotion Research

Influencing the desired state

Marketers also attempt to influence consumers' perceptions about their existing state. Women do not want to use a soap that dries their skin. They desire to have fresh and smooth skin and the advertisement of Dove soap is designed to generate concern about the existing state of their skin

Nature of Information SearchExtended decision-making represents a significantly more involving purchase

situation. External information can refer to any of the following:1. The opinions, beliefs, attitudes, behaviours and feelings of relatives, friends,

neighbours and strangers contacted on the Internet.2. Professional information contained in handouts, pamphlets, articles,

magazines, the Internet and provided by personal professional contacts.3. Direct experiences with product through trial, or inspection. 4. Marketer-initiated info included in advertisements, and by sales personnel.

Consumer decision-making requires three types of information:

1. The Evaluative Criteria : An important objective of internal and external search for information is the determination of appropriate evaluative criteria.

Evaluative criteria?

Existing solutions?

Performance level of each solution on

each criterion?

Is the information enough to make a

balanced decision?

Yes

No

Information search

terminates

Information search

continues

Cont….

2. Appropriate Alternatives

Once the consumer has established the evaluative criteria, she/he probably starts searching for the appropriate alternative which could be brands or perhaps stores. As a result of internal search or inquiry, the consumer may recall or learn that the available brands of computers include IBM, Compaq, Dell, Wipro, Zenith, Vintron and Apple.

Decision-alternative Categories

All alternatives Known and unknown

Awareness set Brands known to Brands not known consumer to consumer

Unawareness set

Evoked set Inept set Inert set Brands Brands Backup

Considered avoided brands

Brand Brands considered purchased but not purchased

3. Attributes of Alternative

Consumers compare brands in the evoked set to make their choice. This process of evaluation requires consumers to collect information about each brand on each relevant evaluative criterion. In case of computer purchase, the consumer might collect information about the price, processor, memory, graphic card, monitor, accompanying software and warranty etc., for each brand.

Cont….

Sources of Information for Purchase Decision-making

Sources of Information

External information

Internal information

Acquiredactively

Marketer controlled

Others’ experiences

Acquiredactively

Acquiredpassively

Past searches

Personalexperience

Low-involvementlearning

Personalsources

Independentsources

Cont….

Cost/Benefit View of External Search

Four basic factors influence the perceived benefits and costs of search:

1. Market conditions

2. Product characteristics

3. Consumer characteristics

4. Situational factors.

Cont….

Marketing Strategy Implications

1. Maintenance strategy

2. Disrupt strategy

3. Capture strategy

4. Intercept strategy

5. Preference strategy

6. Acceptance strategy.

Nominal decision Limited decision Extended decision making making making

Position (No search) (Limited search) (Extended search)

Brand in Maintenance Capture Preferenceevoked set strategy strategy strategy

Brand not in Disrupt Intercept Acceptance evoked set strategy strategy strategy

Type of Target Market Decision-Making

Cont….

1. Maintenance Strategy

2. Disrupt Strategy

Product improvement as part of maintenance strategy

This ad attempts to disrupt habitual purchase

Cont….

Capture Strategy

The marketer's objective should be to capture a large share of consumers' purchases.

Intercept Strategy

Intercept strategy is also related to consumers' limited decision-making approach. If the marketer's brand is not part of the evoked set of target market, the appropriate strategy is to intercept consumers during their information search on the brands in evoked set. Preference StrategyPreference strategy is appropriate when the brand is part of the evoked set of consumers in the target market and the approach to decision-making involves extensive information search.

Acceptance Strategy

The basic objective of the marketer is to move the

brand in the evoked set of consumers, rather than try

to "sell" the brand.

This ad is part of capture or Intercept Strategy as it offers consumers an immediate incentive

Evaluation of alternativesChoice Based on Attitude vs. Attributes Affective Choice (feeling-based choice)

Purchase Decision• Outlet Selection

• Outlet Image

• Retailer Brands

• Retail (local) Advertising

• Location of Outlet and Size

• Consumer Attributes and Outlet Selection

• Risk Perception in Store Choice

• Sales Personnel

Need Information Brand arousal processing evaluation - Purchase needs - Outlet attributes - Shopping needs - Outlet image

Feed back

Post-purchase Retail outlet Evaluation choice

Post-Purchase Evaluation

Cognitive dissonance occurs as a result of some discrepancy between a consumer's prior evaluation and the purchase decision. The dissonance theory was derived from two basic principles: (1) dissonance is unpleasant and will motivate the person to reduce it and (2) individuals experiencing dissonance will avoid situations that produce more dissonance.

The probability that a consumer will experience dissonance and the magnitude of such dissonance, is a function of the following factors:

The degree of irrevocability of the decision The importance of decision to the consumer The difficulty of choosing among the alternatives The individual's tendency to experience anxiety

The consumers may use one or more of

the following approaches to minimising

the dissonance:

1. Increase the desirability of the brand

purchased

2. Decrease the desirability of alternatives

not selected

3. Decrease the importance of the purchase

decision

4. Return the product before using it.

After purchase, customers are more receptive to reinforcing advertisements

Levels of Consumer Decision Making Extensive Problem Solving

A lot of information needed Must establish a set of criteria for evaluation

Limited Problem Solving Criteria for evaluation established Fine tuning with additional information

Routinized Response Behavior Usually review what they already know. There are

some products which are used on a daily basis like food items, soap, shampoo etc. For these products purchase is routinised. Command Low Involvement

Levels of Consumer Decision Making Purchase Involvement is the level of concern for, or interest

in, the purchase process stimulated by the need to consider a certain purchase.

Product involvement refers to a consumer’s level of interest in a certain product. Marketers communicate many sales promotions to increase consumer involvement in a product.

Advertising involvement refers to the consumer’s interest in processing the ad messages. Television is said to be a low involvement medium and consumers process information in a passive manner. In contrast, print is a high-involvement medium as the readers actively process information.

Purchase situation involvement may occur while buying the same item in different contexts.

Limited and Extensive Problem Solving Behaviour

Nominal Decision-making At one end of choice continuum is nominal decision-making, also

referred to as nominal problem solving, habitual decision making, or routine problem solving. Nominal decision-making is generally the outcome of continued satisfaction with a brand which was initially chosen after an extended decision-making process, or the consumer does not attach much importance to the product category or purchase.

Cont….

Limited Decision-Making

Limited decision-making is usually more straightforward and simple. It involves internal (long-term memory) and limited external search, consideration of just a few alternatives, simple decision rules on a few attributes and little post-purchase evaluation. As pointed out earlier, it covers the middle ground between nominal and extended decision-making. Buyers are not as motivated to search for information, or evaluate each attribute enthusiastically, but actually use cognitive shortcuts. According to Wayne D. Hoyer, when the level of consumer involvement is lowest, limited decision-making may not be much different than nominal decision-making. For example, while in a store, the consumer notices a point-of-purchase display of Nescafe and picks up one pack based on her/his memory that its aroma and taste is good. If the consumer's decision rule is to buy the cheapest brand of instant coffee available, she/he looks at different brands of coffee for prices and buys the least priced brand. Sometimes, emotional factors may influence limited decision-making.

Extended Decision-Making

Consumer purchases involving extended decision-making correspond most closely to

the traditional decision-making perspective. Such decisions involve extensive internal

(long-term memory) and external (outside sources) information search followed by a

rigorous evaluation of several alternatives because consumers do not possess any

meaningful information about the product or service and need much of it. The

evaluation often involves careful consideration of attributes of one brand at a time and

taking stock of how the attributes of each brand measure up to a set of desired

characteristics. All this happens in response to a high level of consumer's

involvement in making a purchase decision. Such complex decisions are relatively

few and may relate to buying a computer, stereo system, washing machine, laser

printer, or a new house etc. Post purchase evaluation is more likely to be complex

and dissonance causing.

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