This week, we’re going to continue our examination of the external influences on consumer decision making. We’ll discuss reference groups and how they are different from micro cultures. We’ll review how families are changing and how those changes have affected consumers. And we’ll begin learning about the consumer decision process – talking about how we identify needs and search for information.
Here’s the Consumer Value Framework we’ve been using throughout the course. You’ll see that the external influences – like the internal influences we’ve been discussing – all factor into how consumers define and seek value.
As noted here, a reference group is a group of individuals who has relevance for a consumer – AND can influence how the consumer evaluates and behaves. We BELONG to micro cultures… we may / may not belong to a reference group….
People within a reference group have common interests – they influence each other – have a set of rules and roles that help them view themselves as members of the group. The photo shows Ozzfest as an example – with heavy metal fans members of this reference group. The attached video talks about another type of reference group focused on helping members build confidence and positive self-image.
There are several types of reference groups – primary reference groups, like family, are those we interact with frequently. Secondary reference groups – like a book club or even this class, include people we interact with a bit more infrequently. Reference groups can be formal – with stated expectations about conduct – like church or your employer – or informal, like your book club. Aspirational reference groups are those you want to join to focus on your ideal self – younger children may look to teens as aspirational references about style, language and behavior. Dissociative reference groups are the ‘what not to be’ groups – I don’t want to be thought of as the ‘over 40’ crowd so will try to stay fit and aware of trends.
Reference groups can create peer pressure and conformity – two closely related ideas, with peer pressure more explicit action by reference group members to get others to behave a certain way… conformity is driven more by the individual’s choice to follow the attitudes and behaviors of the reference group members. When we hear the term peer-pressure we tend to think of the negative effects group behavior can have on young adults. Well try this on for size—billionaires using peer-pressure to increase philanthropic giving. The intent of the “giving pledge,” founded in the summer of 2010, is to encourage giving from America’s wealthiest citizens in order to address some of America’s most pressing social issues. With an impressive list of names like Warren Buffet, Bill and Melinda Gates, Michael Bloomberg, Barron Hilton, Ted Turner, and George Lucas, the hope is to generate peer-pressure among billionaires, encouraging them toward a large-scale approach to philanthropy. Some of you mentioned this type of activity when we were discussing ‘brand aids’ during our first week of class.
Reference groups contain an element of social power, with the types shown here from Exhibit 10.1 in the text.
Reference group influence can be ‘felt’ be consumers as information. A teenage girl may look at how other students dress to help her decide the type of style she wants to have…Group influence may also service a purpose… the teenager may conform to a certain style if she thinks that style will help her fit in… And the group may help the teenager express her values… she may adopt a style because she feels it demonstrates who she is…
The extent of reference group influence depends on whether consumption is private or public – with public consumption more likely to be influenced. Luxury item choices are also more likely to be affected by others. And when the brand is important, then reference groups have influence.
Here’s a diagram that helps illustrate these ideas more clearly….We’ll start in the upper left corner of the chart. Let’s say you need to buy a new car – well that’s more of a necessity in the U.S., so the decision to buy a car isn’t likely to be influenced by others – but you may rely heavily on reference groups – like your family or friends, to help you decide on the make / model – the brand of car you buy. Moving across the chart to the right, if the product is more of a luxury that is widely seen in publix – like new golf clubs -- your reference groups – say your golfing buddies – may influence you to make a decision to buy new clubs AND may also direct you to a specific brand.If the product is a luxury that you use privately – I don’t like these examples, so let’s use the example of a home theatre system – then you may feel some influence from reference groups to buy the latest technology – but you make your own decision about the brand of system that you buy. Completing the loop on the chart, if the product is a necessity – like a refrigerator, that decision may have little external influence at all – you need a new frig and you make your own decision about the brand.
Consumers aren’t influenced equally by reference groups….Those that ARE more likely to look to these external groups are consumers who want to enhance their image by conforming to others – someone may buy an imported beer when out with co-workers, and domestic beer for at-home consumption. And those who are concerned about how others react to their behavior will also be more easily influenced. Consumers who feel more connected to others -- let’s say you’re tight with a group at college -- are also more likely to seek out the opinions of that group on some decisions. Finally, the degree to which a situation is embarrassing can affect the extent to which a consumer looks to reference groups for direction about how to make a decision.Which level or levels of Maslow’s hierarchy is at play here?.... Love and belongingness… and self-esteem. And thinking back to our discussion last week about cultural differences, can you see how core societal values can affect the power of reference groups? If the level of individualism is strong in a culture, then reference groups may have less power. And cultures with high levels of masculinity may also be less likely to respond to reference groups.
While reference groups can influence consumers, family and households – as primary reference groups – can have a stronger affect than other types of groups. A family is defined as 2 or more people who are related to each other in some way who are living together. The types of families are shown here, with your nuclear or immediate family and your extended family your oriented family – the family you were born into. The procreation family is one formed through marriage and having or adopting children. A household has a broader definition – all persons living in the same housing unit. As family structure becomes less traditional, marketers are becoming more focused on households.
The middle set of boxes represents the traditional life cycle of a family… from young single, to young married, to the addition of children…all the way through older unmarried (or widowed adults). But you see that this life cycle has changed, to consider the possibility of divorce, presence of children, and presence of children without a partner. Marketers try to identify the household structure of their target audience because many products are purchased by the family – and individuals within the household can influence purchase.
Family members play different roles in the purchase process – they can be concerned with the expenditure or economics of the decision – this is called an instrumental role. For example, the family member with an instrumental role will ask how much money can we afford to spend on a vacation? Or family member can be concerned with the family’s emotional needs – in an expressive role. This family member will ask where can we take a vacation that will be fun for all of us? Family purchases can involve multiple household members, with each person playing one or more roles – the gatekeeper controls information; the influencer provides information after recognizing a need; the user is just that – the one who will use the purchase; the decision maker who makes the final decision; and the purchaser who actually bus the product. Think about a car purchase in a family with 2 adults, and 2 teenagers who drive. The mom works part-time; dad works full-time. Both teens have part-time work and the car will be the third vehicle in the household. One of the teens may likely be an influencer – I need a car to get to work – they may even provide some ideas for the family to consider. There may not be a gatekeeper in this situation…. All family members might be considered users, although the teens are likely the primary target. Mom may be the decision maker – based on her assessment of the safest car for the teens, with dad the purchasers.
The changing family structure is now affecting households – with size falling and non-family (non-related) households are projected to grow over the next decades.
Because consumers are less connected to family, they look for surrogates to help with decision making.
We talked a couple weeks ago about the power of social media. Here’s a chart showing site usage. Social media sites continue to build audiences.
And marketers are studying how to use social media to reach people. These are guidelines from a recent industry study aimed at marketers.
Social media is a primary word-of-mouth tool for consumers…. In our discussion boards, several of you have mentioned the power of word-of-mouth – in influencing companies as well as other consumers. Opinion leaders have also emerged – especially on social media sites and blogs – to influence behavior.
Here’s an example of an Opinion Leader – Lisa Belkin – who influences parents through an on-line blog. As family structures become less traditional – and families live further apart – these opinion leaders can take on the role of a trusted advisor, almost like an on-line parent, grandparent, or sibling. We may not reach out to our family for advice, instead relying on the internet to connect us with people who can help us make decisions. The video provides agood explanation of the role.
Other influences on consumers that extend beyond the family include buzz marketing – this can be viral (on line) or through word-of mouth. Take a look at the first attached video – it provided presidential candidate Herman Cain with tremendous ‘buzz’ – essentially free advertising -- based more on a key visual than any of the other content.Stealth marketing – where consumers are supposed to be unaware of marketers efforts, can occur through product placements in movies and TV. The video shows some subtle-and not-so-subtle examples. Some marketers also have employees pose as consumers to evaluate their peers – and sometimes to influence other shoppers. There are clearly some ethical considerations here… that not all marketers abide by.
Now that we’ve talked about the internal and external influences consumers face when making decisions, let’s talk more specifically about the decision making process. This diagram links the consumption process on the left that we talked about in Chapter 1 with the decision-making process on the right. All along the process is the idea of choice – with the goal to find value. Note that the process doesn’t always go in order – sometimes the process isn’t completed (we may stop after evaluating alternatives, for example, and not make a choice or purchase). And decision making is also linked to the ideas of motivation and emotion that we covered earlier in the class. We’re going to talk about need recognition and searching for information this week.
There are several perspectives consumers hold when making decisions – as shown here… are any of the perspectives aligned more with hedonic purchases? Maybe experiential and some behavioral. The rational perspective could align with hedonic and utilitarian.
How do consumers approach decision making? The approach taken depends on how involved the consumer is in the decision…. And the level of risk associated with making a wrong choice. High involvement / high risk decisions tend to take a longer time…. With low risk / low involvement decisions taking less time. Brand-loyalty tends to push consumers into the low risk / low involvement end of the spectrum – the brand and its performance are known and there’s little risk for the consumer of making a bad decision as a result. We’ve discussed how marketers LOVE to build loyalty because it contributes to faster purchase decisions
Just as participating in the decision process doesn’t always lead to a purchase, need recognition doesn’t always take consumers into the decision process, as shown above. If a consumer is relatively pleased with the current situation (their current TV), then no need for change is recognized. But if I see a great TV, it may spur me to consider a need and start the decision process, even if my current TV is still working. This ‘want’ is really a type of need – I want to feel like my TV says I’m contemporary / up-to-date (an emotional need linked to my ideal self) . Now if my TV breaks, that clearly leads to recognition that I need a new TV and I head to the store for a new one.
A relatively new concept in Consumer Behavior is the idea of ‘need states’ You’ll see above that a need state is defined by a group of consumers who are seeking the same benefits / attributes. Need states can vary within the same consumer, depending on the time / occasion of use. We’re going to have a discussion board that examines how your need states for juice may vary, depending on the time of day or occasion and the purpose or role the juice will play.
Marketers have a variety of methods for trying to understand needs… several a qualitative as noted above. Importantly, asking consumers to talk about need states helps marketers identify the context (think visuals) and the language to use when trying to position a product. Here are two examples of commercials targeting different need states for the same brand of orange juice… ….note the differences in images, language and the message content – and think about which commercial may be more relevant for you…
There are also quantitative tools that allow marketers to examine needs across a larger sample of consumers. A powerful quantitative tool is called a market structure or sometimes, a ‘decision tree’.
After consumers identify a need the search for information about their options begins. They start with an internal search – remember we talked about how the brain is like a computer with lots of files. Consumers will quickly sift through those files for existing information about alternatives for meeting their needs. Then, if internal information isn’t sufficient, they may do an external search for information, talking with friends, reference groups, and family about what THEY know that would help the consumer understand options. Some people just do on-going searches – to stay up-to-date on the latest trends … they LIKE learning about the product of interest and store the information for later decisions. Prepurchase searches are very specific – tied to an immediate need. In all of this, consumers face the risk of information overload – marketers face the challenge of communicating key benefits clearly and quickly about options – that’s why they invest in messaging that tries to create associations and memories for consumers to store – an internal search about options that leads to a choice shortens the decision process.
The amount of time dedicated to searching for options depends on the factors above. The more experience a consumer has with the product, the shorter the time. Low involvement and low risk leads to shorter decision-making. Time constraints will affect the search time… as well as how much the consumer likes shopping. If the search is considered valuable – and fits the situation – consumers will spend more time searching.We’ll have discussion board next week that focuses on the search process – and asks you to detail how YOU would search for a new computer – explaining what it takes for a computer brand to make it into your consideration set of alternatives, and the sources you use to learn about your options.This week will, though, assignments will focus on how your family influences some of your purchasing, an exploration of need states, and the needs your capstone product meets for consumers. Please let me know if you have questions about any of the content or assignments. Have a good week.
