Group+Influences+Consumer+Buyer+Behavior+and+Different+Buyer+Behaviors Session4 Dated+29!11!09 (1)

8/4/2019 Group+Influences+Consumer+Buyer+Behavior+and+Different+Buyer+Behaviors Session4 Dated+29!11!09 (1)

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Group Influences on Consumer

Behavior, Consumer buying Process

and Different Kinds Of Buying

behaviors

By : -Neeraj Gupta


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Sources of influence on consumer behaviour can be described as marketer

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

personally

Marketer dominated Non-marketerdominated

(1)

AdvertisingSales promotions

Publicity

(2)

NewsCritiques/revi ews

Programme contentExternal endorsementsCultural heroes/heroines Clubs/

organisations

(3)

Salespersons

(4)

Family Friends

Neighbours ClassmatesCo-workers

Massdelivered

DeliveredPersonality

Special: Opinion leadersSources: Market mavens

Reach

High

Reach

Low

Low

Two-wayCommunication

High

Low High

Credibility


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MarketMaven

Individuals whose

influence stems from a

general knowledge or

market expertise that

leads to an early

awareness of new

products and services.


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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.


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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.


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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


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Membership Non membershipPositiveattitude

Negativeattitude

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/Businessgroups

Teachers/IAS Association

Types of Reference Groups


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Aspiration Groups

Anticipatory 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


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Symbolic

Aspiration

Groups: The

individual

admires these

groups but is

unlikely to join

them despite

acceptance of

the group's

beliefs andattitudes.

Famous soccer player (David Bekham)endorses Police Sunglasses


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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 NegativeEvaluation


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Nature of Reference Groups

Reference groups establish certain norms, roles, status,socialisation and power. These characteristics exert theirinfluence 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 orinappropriate. 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 groupobjectives.


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Nature of Reference Groups

'Status' is the achieved or ascribed position that theindividual occupies within the group's hierarchy. Asone may expect, greater power and influence goes withhigher status.

'Socialisation' refers to the process by which new

members learn the group's system of values, normsand expected behaviour patterns.

Power A groups influence on its members behaviour isclosely related to its power.

Reward Coercive

Expert

Referent


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PerceivedNature of Objectives source Type of

Behaviourinfluence 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.


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Groups Influences and Consumer Behavior


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Relative Importance of Informational, Comparative

and Normative Influence

Product Characteristics: - Consumers tend to be susceptible toinformational influence when products are technologically complexsuch as computers and peripherals, autos, air conditioners andwashing machine etc.

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

For example, the group will probably not influence whether amember buys Colgate toothpaste or Aquafresh. But the group mightinfluence the purchase of products such as a brand of latest mobilephone, or watch.


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Cont.

In Private In Public

Influence weakRazor

Toilet soapWater heaterMattress

Influence weakClothing

WatchesShoesConveyance

Influence strongBody massageDVD playerHot bath tub

Private swimming-pool

Influence strongCamcorderJewelryHealth club

Custom-madeCar

Where Consumed

Necessity

Type of Product

Luxury

Reference Group Influences on Publicly andPrivately Consumed Luxuries and Necessities


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Relative Importance of Informational, Comparative

and Normative Influence

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

Those susceptible to interpersonal influence seek to enhance theirself-image by possessing products that they believe others will

approve of.

A personality characteristic referred to as "attention to socialcomparison information" (ATSCI) is also related to normativeinfluence. Those individuals who are high on this personality trait are

likely to pay a great deal of attention to what others do and use thisinformation as a guide to their own behaviour.


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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 productfeatures and performance.

Using Persons like Amitabh Bachan to prove to audience thatNavrattan Oil is the best, Binani Cement is the best as peoplebelieve him to be a credible authority.

Advertising applies comparative influence by using either an actualreferent in the form of a typical consumer or use a celebrity as a

symbolic referent with whom consumers identify because she/he islikeable or attractive. The typical consumer (Lalitaji of Surf ad)persuades consumers that people like themselves have used theadvertised product.

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


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


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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 OrientPSPO, Coca Cola, Pepsi, Taj Mahal tea, brands of paints, clothingand personal care products etc. are examples of advertising ssimulation of social approval.

Celebrities are best used as experts when consumers view them as

knowledgeable about the product category and conveying legitimacyin their message.


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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 orservice.

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


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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 asreactions 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.


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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


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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 tomass 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.


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OpinionLeadership

The process by which

one person (the

opinion leader)

informally influences

the consumptionactions or attitudes of

others who may be

opinion seekers oropinion recipients.


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What Is Opinion Leadership?

Opinion

Leader

Opinion

Receiver

OpinionSeeker


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Word of Mouth in Action

Figure 15-1


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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


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Many not-for-

profit

organizations that

hope to changebehavior, count on

opinion leaders.


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Motivations Behind Opinion Leadership

The Needs of

Opinion Leaders

The Needs ofOpinion Receivers

Purchase Pals Surrogate Buyers

versus OpinionLeaders

Self-involvement

Social involvement

Product involvement

Message involvement

Issues


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The Needs of

Opinion Leaders




New product or new usage

information

Reduction of perceivedrisk

Reduction of search time Receiving the approval of

the opinion leader

Issues


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The Needs of

Opinion Leaders




Actually accompany

consumers onshopping trips

Used 25 percent of thetime for purchases of

electronic equipment

Issues


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The Needs of

Opinion Leaders




Surrogate buyers may

replace opinionleaders

An example is awardrobe consultant

who helps in thepurchase of businessclothes

Issues


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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.


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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


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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 byindependent dental associations in 30 countries."


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Consumers Buying Decision Process


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Problem Recognition


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Desired consumer lifestyle Current situationThe way consumer would Temporary factors affecting

like to live and feel the consumer

Desired state Actual stateThe 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 discrepancyDifferences between the consumer's desired and

perceived conditions

Desired state Actual stateNo difference exceeds actual exceeds desiredstate state

Satisfaction Problem recognised

The Problem Recognition Process


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Immediacy of solution

Expectancy Immediate Immediate

Of solution solution notproblem required required

Occurrence of

Problem Routine Planning

expectedOccurrence of

problem 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 onhis/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


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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 decisionsNormal depletionBrand/productperformanceIndividual growth

EmotionsGovt./consumergroupProduct availabilitySituation

Non-marketing Factors Influencing Problem Recognition


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Cont.

Role of emotion in problem recognition

The five of the most common situationsare:

1. Depletion of stocks

2. Dissatisfaction with goods in stock

3. Environmental changes

4. Change in financial situation

5. Marketer initiated activities.


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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.


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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 inIndia.


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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

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

skin

N t f I f ti S h


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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.

Evaluativecriteria?

Existing

solutions?

Performancelevel of eachsolution on

each criterion?

Is the informationenough to make a

balanceddecision?

Yes

No

Informationsearch

terminates

Information

searchcontinues

2 Appropriate Alternatives


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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 alternativesKnown and unknown

Awareness set

Brands known to Brands not knownconsumer to consumer

Unawareness set

Evoked set Inept set Inert set

Brands Brands BackupConsidered avoided brands

Brand Brands consideredpurchased but not purchased

3 Attributes of Alternative


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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.


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Cont.

Sources of Information for Purchase Decision-making

Sources ofInformation

ExternalinformationInternalinformation

Acquiredactively

Marketercontrolled

Others

experiences

Acquiredactively

Acquiredpassively

Pastsearches

Personalexperience

Low-involvementlearning

Personalsources

Independentsources


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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.


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Cont.

Marketing Strategy Implications

1. Maintenance strategy

2. Disrupt strategy

3. Capture strategy

4. Intercept strategy

5. Preference strategy6. Acceptance strategy.

Nominal decision Limited decision Extended decisionmaking 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


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Cont.

1. Maintenance Strategy

2. Disrupt Strategy

Product improvement as part ofmaintenance strategyThis ad attempts to disrupt habitual purchase


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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 ispart of the evoked set of consumers in the targetmarket and the approach to decision-making involvesextensive information search.

Acceptance Strategy

The basic objective of the marketer is to move the

brand in theevoked set of consumers, rather than try

to "sell" the brand.

This ad is part of capture

or Intercept Strategy as itoffers consumers an immediateincentive


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Evaluation of alternatives

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

Purchase Decision


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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 Brandarousal processing evaluation

- Purchase needs - Outlet attributes- Shopping needs - Outlet image

Feed back

Post-purchase Retail outletEvaluation choice

P P h l i


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Post-Purchase Evaluation

Cognitive dissonance occurs as a result of some discrepancybetween 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 toreduce it and (2) individuals experiencing dissonance will avoid

situations that produce more dissonance.

The probability that a consumer will experience dissonance and themagnitude 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


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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

L l f C D i i M ki


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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 basislike food items, soap, shampoo etc. For theseproducts purchase is routinised. Command LowInvolvement

L l f C D i i M ki


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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 acertain purchase.

Product involvementrefers to a consumers level of interestin a certain product. Marketers communicate many sales

promotions to increase consumer involvement in a product. Advertising involvementrefers to the consumers interest in

processing the ad messages. Television is said to be a lowinvolvement medium and consumers process information in apassive manner. In contrast, print is a high-involvement

medium as the readers actively process information. Purchase situation involvementmay occur while buying the

same item in different contexts.


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Limited and E tensi e Problem Sol ing Beha io r


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Limited and Extensive Problem Solving Behaviour

N i l D i i ki


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Nominal Decision-making

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

referred to as nominal problem solving, habitual decision making, orroutine problem solving. Nominal decision-making is generally theoutcome of continued satisfaction with a brand which was initiallychosen after an extended decision-making process, or the consumerdoes not attach much importance to the product category orpurchase.


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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.


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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 desiredcharacteristics. 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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Group+Influences+Consumer+Buyer+Behavior+and+Different+Buyer+Behaviors Session4 Dated+29!11!09 (1)