External Influences on Consumer Behaviour PDF

External influences on Consumer behaviour Part 1 – Reference Group Part 2 – Social Class Part 3 – Culture and Subculture Part 4 – Family and Household Part 1-Reference Group  Describe Describe a refe...

External influences on Consumer behaviour Part 1 – Reference Group Part 2 – Social Class Part 3 – Culture and Subculture Part 4 – Family and Household Part 1-Reference Group  Describe Describe a reference group Differenti Differentiate between the different types of reference ate groups within the South African society Assess the use of reference groups to segment the Assess Learning market and to describe consumer behavior Outcomes Define Define the phenomenon of social class Justify the use of social class as a way to segment the Justify market and to reflect on the role that social class plays within the South African society Explain how the changes in the social class structure Explain will influence the marketing of products and services in South Africa  Describe a reference group Reference groups are groups of people that serve as frames of reference for individuals in their purchase decisions. Consumers’ behaviour is influenced as a result of the different groups to which they belong. Reference groups form part of group dynamics and can be defined as ‘any person or group that serves as a point of comparison or reference for an individual consumer in forming certain values, attitudes and behaviour patterns’. (Brijball S. et al,2014:106)  a) Formal and informal reference groups Differentiate b) Primary and secondary reference group between the types of reference c) Membership and non-membership groups within the reference groups South African society d) Aspirational reference groups and dissociative groups  a) Formal and informal reference groups ( Formality of the reference group) Formal groups have a clearly defined structure, rules and membership. e.g. the group of people you work with or the tennis club that you belong to. membership may have impact on behavioural processes such as having a drink at tennis clubhouse after tennis match on a Saturday. Informal groups also have their own unique interactions, but there are no formal rules that members have to adhere (follow/obey). e.g. family, friends and peer groups who all of which exert a great influence on our buying decisions. some families have preferences that will pass on form generation to generation, such as preferring to drive a particular make of car, living in a specific neighbourhood or supporting a particular football club. b) Primary and secondary reference group (Importance of the reference group) Primary group would be the learners in the same class at school, who have daily contact with each other. involves the product and the services that learner acquires is of great importance. Secondary groups do not interact on a daily basis, and the importance of their interaction on buying decisions could be less. e.g. group of people who live in different countries, but who still exert some form of influence on each other’s buying behaviour. c) Membership and non-membership reference groups (Affiliation to the reference group) Membership implies that a person belongs/qualifies for membership. e.g. being a member of a specific church congregation we model our behaviour on that of other that form part of this group. Non-membership does not have membership, but may still model their behaviour on members that belong to this group. e.g. even if you are not a member of the church, you could still be influenced by the behaviour of members of that church (supporting certain initiatives). d) Aspirational reference groups and dissociative groups Aspirational groups are groups to which people aspire to belong. you may aspire to belong to the elite group of politicians who sit in Parliament and make decisions about the future of SA, and who earn substantial salaries. Dissociative groups on the other hand are groups that you avoid and reject. e.g. you may have strong objections to smoking, you would then reject associating with people who belong to a group of smokers.  Assess the use of reference groups to segment the market and to describe consumer behaviour Determinants of reference group influence 1. Group influence is strongest when a product is visible to the group A dress is visible in terms of product category and style, but the brand of the dress is less obvious, as the label is attached inside the dress. Reference group’s influence affects only those aspects of the product that are visible to the group. 2. Reference group influence is higher the less of a necessity an item is Reference groups have a strong influence on the ownership of products such as designer clothes, but less influence on the ownership of necessities such as a bread toaster. 3. The more commitment a person is to a group, the more they will conform to its norms. We are much more likely to consider group expectations when we are dressing to go out for dinner with a group we would like to join, as opposed to a group that is not NB to us. 4. The more relevant a particular activity is to the group norms concerning that activity. Dress style may be NB to a social group that frequently eats dinner together at trendy restaurants, and unimportant to a reference group that meets for tennis at the local community centre courts. Reference groups and advertising Marketers often position their products in a way that plays on people’s desire to join a certain reference groups. Using role models can have some unintended positive or negative implications for the advertiser of the product or service. Positive implications results when the person involved is an extraordinary role model, such as Nelson Mandela. After his death he became even more of an icon for young political leaders and for people in general in the world community. Before his death , he was involved with advertising for M&M (sweet similar to smarties). His death gave an extra and unexpected boost to M&M’s advertising using Mandela’s image, as his death put the Mandela name in the world spotlight for a number of weeks.  Reference groups and advertising cont. Negative impact examples: World renowned sport stars-Tiger Woods and Lance Armstrong Tiger Woods’ fall from grace started when he was accused of marital infidelity; his subsequent divorce made world news. A large group of sponsors completely dissociated themselves from him and he lost major endorsement deals with businesses such as Gillette and Accenture. Lance Armstrong after being accused of using performance enhancing drugs, actually took some of his accusers to court and won huge settlements from them, only to later acknowledge that he was indeed guilty of using these drugs. Again some of his major sponsors such as Nike, quickly disassociated themselves from Part 2- Social Class Social class A social class is a group of people within a society who possess the same socioeconomic status. It is formed mainly based on wealth, income, education, type of occupation, and membership in a specific subculture or social network. Individual’s position in society determined by: Caste system (fixed by birth & inheritance) Class system (achieved) There are different social class structures for different countries. The social class structure is broadly divided into 3 categories namely lower class, middle class and upper class + LSM (next slide) The Living Standards Measure (LSM) The South African consumer market is described by a non-racial measurement tool called The Living Standards Measure (LSM). Based on the standard of living of the population. SA population is divided into 10 LSM’s with LSM 1 being the lowest standard of living and LSM 10 being the highest standard of living. The criteria used to measure the standard of living of the South African population includes: access to flush a toilets, microwave ovens, retail credit cards, fridges/freezers, TV sets and hot running water. LSM measures social class, or living standards regardless of race, income or education. Social class influences the products people buy, the prices they are prepared to pay, the effectiveness of specific promotions and how, where and when consumers purchase products.  Application of social class Social class influences Consumption behaviour Allows for market segmentation What consumers aspire to have, where they shop & types of stores they shop in Consumer lives/lifestyle Social class determines life chances – opportunities that person has in life Application of social class & status  Applications in marketing & retailing Indicate common values & purchasing patters of members of same class Purchases reflect social class membership – status symbols Social class also influenced by education & occupation Understanding social class is helpful for Market segmentation Consumers in social class tend to be homogeneous Social class can be an aspirational reference group Part 3-Culture and Subculture Part 3  Characteristics of culture and subculture Apply measurements of culture and Learning subculture in analysing consumer markets Outcomes Apply the marketing and retail applications of culture   The knowledge, values, beliefs, habits, customs and language shared by a specific group of people, which are socially transmitted and acquired through learning from others in the group.  Material and non-material culture Definition  Culture is transmitted from generation to generation Two processes o Enculturation: learning how to act and behave according to cultural expectations of one’s own culture o Acculturation: process of learning about culture that is foreign to one’s own culture. Characteristics of culture  Four unique characteristics: Culture satisfies needs e.g. eating habits Culture is learnt – formal, informal or technical Culture guides behaviour e.g. gender roles Culture is enduring yet dynamic – shifts overtime  NB: Diversity of South Africa means that commonly shared values are fewer in general population than those shared in sub-cultures.  SUBCULTURE ‘Is a distinct cultural group that exists as an identifiable segment within a larger more complex cultural group’ Sub-cultures include nationalities, religions, language groups, racial groups and geographic regions. It is a relatively homogeneous group of people who share elements of the overall culture as well as cultural elements unique to their own group. Subcultures are grouped on the basis of demographics such as teenage subculture, older affluent (rich/ wealthy) subculture, rural, urban, English, Tsonga, Xhosa Sotho and Zulu. Hence (later) marketers should consider these subcultures when manufacturing their products. Four social institutions that transmit the elements of culture Family Is the primary agent for enculturation, and from a marketer’s point of view it teaches consumer-related values and skills. Religious institutions Places of worship provide religious consciousness, spiritual guidance and moral training. Schools Impart basic learning skills, history, citizenship and technical training. Mass media Often overlooked as transmitters of culture. They disseminate information about products, ideas and causes. We are exposed to advertising on a daily basis, and through advertisements we receive cultural information. Cultural appropriation: https://www.youtube.com/watch? v=9kFKzzqq7i8  Cultural values influence consumption Marketin behaviour & product choice g and retail Cultures attach meanings to symbols – implications for brand logos & symbols applicati ons of Marketers use terminal/instrumental culture values to develop advertising material (next slide) Terminal – emotional Instrumental - rational Human values influence the psychological functions of attitudes therefore influence consumer behaviour from now on marketers have to use: 1. Terminal advertisement Promote the symbolism or image of the product through metaphors, or by showing the types of people and social groups who use the product. Encourage consumers to take their intuition and emotional reactions into account, facilitating an effective judgement. Portray end-states/ultimate goals, which should encourage consumers to use their terminal value as criteria with which to judge the product and/or Imply how using the product will allow self-expression in general and social approval in particular. 2. Instrumental advertisement Promote the functional and physical benefits of the product Present detailed information to assist the consumer in making a judgement Illustrate product performance or what consumers can do with the product, encouraging consumers to use their instrumental values as criteria with which to judge the product and, Indicate how product usage can support more efficient environmental impact.  Part 4 Household and Family Influences  Describe how your families make decisions about certain products, perhaps a car, new furniture, breakfast cereal, or a family vacation. Discuss how family decision making might vary as a function of social class, subcultures (ethnic background, for example), age of parents, or number of people in the family. Describe the types of decisions that create conflict in your families.  1. Define the family unit as a primary reference group 2. Explain the role of the family in the customer- Learning related socialization of individuals Outcomes 3. Distinguish between family and household groups 4. List and describe the major functions and stages of the family 5. Describe the relationship between the family decision-making and customer related roles  Family is a basic social unit of the society  Group of persons, related by blood, marriage or adoption who function together for member security & perpetuation of the unit Define Family  Two types: Nuclear family Parents and their children Variations Extended family. Nuclear family + other relatives Variations. THE FAMILY AS PRIMARY REFERENCE GROUP The family is an important decision making unit for marketers Marketers use the term household because of the changes in families resulting in traditional and non-traditional households. Types of households: 1) Multiple household – one or more families or a group of two or more persons dependent on the common or pooled income living in the same house. 2)Single household – consist of one person who is financially independent of any person or a household group but may be supporting other people elsewhere. 3)Family households 4)Non-family households. Main functions of the family Emotional support of members Socialisation of members Respecting other members’ The process whereby people acquire feelings skills, knowledge and attitudes relevant Buying gifts for each other to their functioning as consumers in the Verbal expressions of love marketplace (complementing members) Sticking together during difficult Economic well-being of members times. Sharing combined resources Children dependents (reversal later in life) Husband-wife influence in family decision-making  Marketers: what is the amount of influence exerted by husband / wife in buying decisions?  Classify purchases into 4 categories: Husband-dominated decisions Wife-dominated decisions Joint/equal decisions Autonomous decisions Made independently by either husband or wife  Factors that determine influence (next slide) Role specialisation Age of the family Level of involvement.  Role specialisation If the husband is a stay-at-home dad while the wife works, he would be planning the children’s after school activities or deciding what groceries to buy each month. Age of the family Young couples mostly share household decisions until they are more confident to delegate certain decisions to one/other to save time. Level of involvement. What is your interest in the household- Financial decisions will be handled by the spouse who is a financial advisor and holiday destination by the one who is the travel agent The roles family members might take in making a family decision. These include the following: Information gatherer -- the person who takes primary responsibility of searching for and interpreting relevant information. Influencer -- the person who tries to convince the decision maker of what product/brand/model to buy. Decision Maker -- the person who actually makes the decision, usually to buy a particular item. Purchaser (buyer) -- the person who makes the purchase, exchanging money for the item that is bought. User (consumer) -- the person(s) who consumer or use the product or service. Children and family decision-making  Play important role They usually have simple requests when their parents go to the shops  Directly or indirectly  Infants require care  As children grow, influence becomes more direct  Verbal or non-verbal requests  Pocket money-used to buy their own products  Older: exert influence on purchasing decisions of others in home (having preferences , specific brands they want to use etc)  Large potential of children’s market  Marketers use messages in ads to persuade and influence kids to want/buy products.  The question still remains, how ethical is this of our marketers as they are targeting children directly.  They are not mature enough to comprehend the marketing message properly  Family life-cycle stages  Stages in the family life cycle 2. 1. 4. Post- 5. Solitary Honeymooner 3. Parenthood Bachelorhood parenthood survivor s Deviations from traditional family life cycle are common these days In South Africa the ‘family life cycle’ FLC has changed in recent years due to the growth in trends such as divorce, single parenthood, HIV/AIDS etc. What has been traditionally regarded as ‘households’ has changed and this must be taken into consideration when making decisions. Marketers use such information for market segmentation.  Family life-cycle stages(cont.).  Family life cycle and consumption activities Stage in the family Consumption activities: life-cycle Bachelorhood Lower income bracket, but higher discretionary income. Spend money on rent, clothing, basic essentials. Honeymooners Negotiated consumption decision-making. Higher income (combined) spent on durable home-furnishing products. Parenthood Child-related expenses increase, potential loss of double- income. Post-parenthood Empty-nesters, many families at their best financially, spending on entertainment & luxury items Solitary survivor Retired, no steady source of income, spending on medical  Conflict in family or household decision-making  Conflict is a common phenomenon in family or household decision-making  Causes: Differences in goals & values relating to what needs to be bought Differences in evaluations or perceptions relating to relevant product alternatives  Conflict can also occur in post-purchase stage.  Conflict in family or household decision-making (cont.).  Managing conflict in family or household decision-making Reasoning Bargaining Collecting more information on which to base a decision Politicking Asserting one’s rights.