Group Dynamics and Consumer Behavior

Group Dynamics and Consumer Reference Groups

• Humans are social and greatly influence each other.
• Consumer behavior is influenced by reference groups, family, social roles, and statuses.

Reference Groups

• All formal and informal groups influencing an individual’s buying behavior.
• Consumers may use products/brands to identify with or join a group.
• They learn consumption habits and decision-making criteria from these groups.
• Reference groups can be direct (face-to-face) or indirect.
• Primary membership groups involve regular, informal interactions such as family/friends/co-workers.
• Secondary groups involve less consistent/formal interactions like clubs/professional/religious groups.
• Non-membership reference groups also influence consumers.
• Aspirational reference groups are groups someone wants to join, requiring conformity to their norms.
• Norms are values/attitudes deemed acceptable by a group.
• Reference groups influence consumers in three ways:
  • Exposure to new behaviors/lifestyles.
  • Influence on attitudes and self-concept.
  • Creation of pressure for conformity re: product and brand choices.
• People can be influenced by groups they aspire to join and groups they want to distance themselves from.
• Marketers try to identify target customers' reference groups.
• Reference groups strongly influence both product and brand choices.
  • This is most evident in automobiles/color televisions.
  • Brand choice in furniture/clothing.
  • Product choice in beer/cigarettes.

Opinion Leaders

• Manufacturers must target opinion leaders to leverage group influence.
• Opinion leaders offer product advice/information through informal communication.
• They are found across society and can be leaders in some areas, followers in others.
• Marketers identify opinion leaders through demographics/psychographics.
• They then target media and messages to them.
• Trends often start in urban areas and spread to the suburbs.
• Clothing companies monitor urban leaders' styles to appeal to fashion-conscious youth.

Reference Group Influence

• Each group sets behavioral standards for its members.
• Families and friend circles are examples.
• Members are expected to share values and conform.
• Influence can occur even without membership through groups one aspires to or admires.
• Teenagers are highly influenced by reference groups, aligning their dress accordingly.
• Personal advice from face-to-face groups is more effective than advertising
  • This is true for product selection/brand changes.
  • This is especially true when the advice comes from a trusted/knowledgeable source.
• Influence extends to purchasing decisions and brand choice.
• Reference groups influence whether to buy a luxury versus a necessity.
  • They also influence whether the item will be consumed publicly or privately.
• Publicly consumed luxuries influence both the decision to buy and the brand choice.
• Publicly consumed necessities only influence brand choice.
• Privately consumed necessities have no reference group influence.
• Opinion leaders are knowledgeable and highly interested in products.
• They are more involved in product categories with local friendships and high credibility.
• Opinion leaders are self-confident, sociable, cosmopolitan, and willing to take risks while disseminating information.
• Opinion leaders reduce distance processes for products they have bought.
• Younger, more educated people with higher incomes are more likely to influence neighbors and friends.
• Opinion leaders confirm their choices to their peers.

Family and Consumer Behavior

• The family is a key social unit that influences consumer values, attitudes, self-concept, and behavior.
• Families socialize children by passing down cultural values/norms, shaping consumption patterns.
• Individuals belong to families of orientation (birth) and procreation (marriage).
• Birth families shape core values/attitudes.
• Marriage families directly influence specific purchases.
• Example: family size impacts car purchases.
• Families of orientation consist of parents and siblings.
• They instill orientations toward religion, politics, economics, ambition, self-worth, and love.
• Influence on behavior remains significant, even with limited interaction.
• Influence is substantial where parents live with their grown children.
• One's spouse and children most directly influence daily buying behavior.
• Marketers should understand family structure and consumption patterns.
• Families, as subsets of households, are basic consumption units for most goods.
• Major items are used more by households than individuals.
• Sharing items is common in households.
• Nuclear families consist of two opposite-sex adults and their offspring.
• Joint families include nuclear families plus other relatives.

Family Decision-Making

• Family decision-making roles vary by item type.
• Key roles include:
  • Initiators: suggest the purchase.
  • Influencers: offer valued opinions: mom/price-range watchdog, brother/bicycle makes.
  • Decision-makers: family member who makes the purchase decision following input.
  • Purchasers: those who exchange money.
  • Consumers: the actual users, for example sister/bicycle.
• Marketers need to consider family purchase situations, decision-maker roles and:
  • Sometimes more than one decision-maker is involved.
  • More than one consumer is often involved.
  • Decision makers and consumers may differ.
• Roles vary across cultures/social classes.
• Example: Vietnamese-Americans adhere to traditional purchase structures.
• Example: Korean-American ads may feature men unless it is for female specific items.
• The wife traditionally acts as the main purchasing agent for food and clothing in the US.
• Joint decision-making is common for expensive products/services.
• Marketers must identify which member has the most influence.
• Women have rapidly gained household purchasing power.
• Women in non-traditional jobs are shifting household purchasing patterns.
• Social values shifts have weakened traditional conceptions re: women's household labor.
• Boomer husbands/wives are more willing to shop jointly.
• Marketers should target women as potential buyers because women have significant buying power.
• Automakers are paying attention to women because women make 34% of luxury car market purchases.
• Children also significantly influence purchases.
• $24.4 billion was spent by children aged 4-12.
• Indirect influence: parents know children’s preferences.
• Direct influence: children directly request purchases as needed.
• Marketers are figuring out that targeting the child is the fastest route to the parents wallets.

Family Life Cycle Themes

• As people age, they advance in their careers and see rises in income.
  • Although maternity leave, divorce or retirement provide exceptions to this
• Obligations increase with time, especially with mortgages children
• Singles may have lower income but can afford more discretionary items.
• Two common family types are the family of orientation and the family of procreation.
• Families of orientation primarily determine core values and attitudes.
• Families of procreation have more influence on specific purchases.
• Consumer behaviors are influenced by families significantly.

Personality and Consumer Behavior

• Personality traits influence behavioral responses.

Defining Personality

• Each consumer has a unique personality consisting of psychological makeup and environmental forces.
• Personality is defined as an individual's pattern of traits that influence behavioral responses.
• Patterns include being self-confident, aggressive, shy, dynamic, secure, introverted, and friendly.

Personality Influence

• Personality traits affect perceptions and buying behavior.
• The type/brand of products purchased can reflect personality
• Common traits include adaptability, aggressiveness, autonomy, emotionalism, and orderliness.
• Traits influence perceptions/behavior although the nature of the relationship may be unclear.
• The influence of brands is inconclusive because too many outside factors occur.

The Psychoanalytic Theory of Freud

• Every individual's personality results from the dynamic interaction of three forces
  • Id
  • Ego
  • Super Ego
• These three forces are fully developed and are balanced in a healthy person.
• Imbalances lead to dissatisfaction.
• The id is the source of strong, basic, and instinctive drivers that demand instant gratification. even violating social norms.
• The ego operates on the reality principle and seeks to achieve the demands of the id realistically.
• The ego helps develop cognition and controls impulsive behavior.
• The superego is the individual's moral code.
• The superego restrains aggressive impulses to strive for perfection.
• Consumers have competing desires, and marketers create fantasies about products.
• Hedonism appeals to the pleasure principle for an affluent society.
• Psychoanalytical theory appeals to the buyer's dreams, hopes and fears.
• The id is the strong urge that drives consumer motivation/personality.
• The id operates on the pleasure principle that strives to discharge tension and desires.
• The ego operates on the reality principle and tries to achieve the demands realistically.
• The ego controls impulsive behavior and develops ways to postpone the desires of the id.
• The ego is an individual's social control that acts as an internal monitor and balance the demand of id.
• The superego helps in striving for perfection and has an individual’s moral code.
• It restrains the aggressive impulse of the id.

Emotions

• Emotions control behavior through uncontrolled feelings.
• Environmental factors and events trigger emotion.
• Physiological and mental changes accompany emotions.
• Emotions categorize into fear, anger, joy, sadness, acceptance, disgust, expectancy, and surprise based on the Plutchik categorization.
• Pleasure, arousal, and dominance are 3 basic emotions.

Self-Concept

• Self-concept describes how one perceives himself and his behavior in the marketplace.
• The self-concept includes an unconcious component and can be divided into six types:
  • Actual self
  • Ideal self
  • Social self
  • Ideal social self
  • Expected self
  • Situational self
• The self-concept is a social phenomenon that influences the way we dress, what products we use, and what services we use.

Motivation and Involvement

Herzberg's Theory

• A two factor theory which:
  • Distinguishes dissatisfiers (cause dissatisfaction).
  • Satisfiers or motivators (cause satisfaction).
• Sellers avoid dissatisfiers and identify major satisfiers or motivators.

Freud's Theory

• Unconscious forces shape behavior and people don't fully understand motivations.
• Laddering traces motivations from stated to terminal ones.
• Shape, size, weight, material, color, and brand name triggers associations and emotions.
• Researchers collect "in-depth interviews" or use "projective techniques."
• Each product is capable of arousing a unique set of motives.
• Different brands may specialize to different appeals in motivational positioning.

Learning

• Consumer behavior derives through experience/practice.
• Experiential learning occurs where an experience changes behavior.
• Conceptual learning isn't learned through an experience.
• Reinforcement and repetition boost learning as behavior is positively and negatively reinforced.
• Learning theory reinforces consumer behavior.
• Stimulus generalization extends response to similar stimulus.
• Stimulus discrimination differentiates among similar products.

Types of Involvement

• Routinised response behavior or least involvement describes buying routines.
• Lower values involve no risk which allows consumer to keep trying different brands.
• Low Involvement decisions are needed when some involvement is necessary.
• High Involvement Decision Making is most important because product are more expensive/higher value.
• Considerations are needed (speed, economy, comfort...).

Diffusion of Innovation

• Diffusion describes process in which a new product spread through a market.
• Innovation describes idea, practice, or product, perceived to be new.

Types of Innovation

• Factors can be:
  • Firm Oriented
  • Product Oriented
  • Market Oriented

Innovation

• Continuous innovation is when smaller behavior changes are required for adoption.
• Dynamically, continuous innovation requires communicator change to adopt products.
• Discontinuous Innovation requires major behavior changes to adopt due to the product being more new/involving.

Diffusion Process

• Diffusion: process in which innovation spreads throughout market for the product with continuing regularity.

Key factors of innovation spread

• Group selection (young etc.)
• Perceived Risk
• Type of Decision
• Marketing Effort
• Trial
• Need and Compatibility
• Strategies for Target Market are always moving.

Five Adopter groups

• Innovators
• Early Adopters
• Early Majority
• Late Majority
• Laggards