Consumerbehaviour Externalfactors(Lecture 3)

7/27/2019 Consumerbehaviour Externalfactors(Lecture 3)

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External Influences in

Consumer Behavior


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ConsumerPurchaseDecision

Motives

Personality

Needs

Perception

Learning

Attitudes

Busin

ess

Economic

Fam

ily

External Factors

Internal Factors


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Consumer purchasing decisions are often affected by factors that are outsideof their control but have direct or indirect impact on how we live and what weconsume.

Consumers are faced with many external influences, including an individualsculture, subculture, household structure, and groups that he/she associateswith.

Marketers and business owners call these external influences because thesource of the influence comes from outside the person rather than frominside.

Today consumers are faced with an array of product selection, andcompetition is fierce among companies. This is why your understanding ofconsumer behaviour is vital to the success of your business.

Both internal and external factors are inter connected and work together toassist the consumer decision making process.


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Man is social animal who loves to be in groups. Groupsrepresent two or more individuals who share a set of norms,values, or beliefs and interact to accomplish individual or mutual goal.

Almost all consumer behavior takes place in a group setting of some sort. A group's norms cover usually all the important behavioural aspects for

the functioning of that group and breaking those rules can bring up penalties. When do Group Exert Influence?- The group influence on an individuals

buying behavior depends on three factors-

Attitude towards the group: This includes Pride, Status, etc.

Nature of the group: This includes, Cohesive, Frequently interacting,Exclusive membership.

Nature of the Product: This includes visibility of the product, Uniqueness ofthe product.

Examples: Hardly Davidson Bike group, Friends connection, Aluminas of aninstitute, etc.


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A reference group is any person or group that serves as apoint of comparison for an individual in forming eithergeneral or specific values, attitudes, or a specific guide for behavior.

In marketing prospective, reference group are groups that serve as a frames

of reference for individuals in their purchase or consumption decisions. Often a distinction is made between group and reference group. Group is

defined as two or more individuals who share a set of norms, values, orbeliefs and have certain implicit and explicit relationship. Where as referencegroup is one whose presumed perspective or values are being used by an

individual to take decisions. Examples: Shopping with friends, family, educational

decisions.


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Classification of Groups:

Regularity of Contact

Primary Group: Interaction on a regular basis (family, peer group, friendsetc)

Secondary Group: Occasional Contact (Kitty Party, sports club)

Extent of Formality:

Formal Group: Well defined structure, roles and authority levels (Businessgroup)

Informal Group: Loosely defined structure (friends group) Membership Status:

Membership Group: Qualifies certain norms / standards to be a member(CA associations, Pharma Group)

Symbolic Group: Aspires to be a member of the group (Red Cross society,Silicon Valley,Harley Davidson)


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Contactual / Membership Reference Group: Individual holds membership of this group

Regular face-to-face contact with the members of the group

Approves of the values, attitudes and standards

Aspirational Reference Group:

Individual does not hold membership No face-to-face contact with the members of the group

Provide positive influence on attitudes, values and behaviors

Disclaimant Reference Group:

Individual holds membership of this group

Regular face-to-face contact with the members of the group

Does not approves of the values, attitudes and standards, eg: Dress code at bank

Avoidance / Dissociative Reference Group

Individual does not hold membership

No face-to-face contact with the members of the group

Individual avoids / has opposite attitudes and values, eg: Quality paper book-Breedapart, Chav


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Membership No Membership

Positive Influence

Negative Influence

Contactual RG

Disclaimant RG

Aspirational RG

Avoidance RG

Membership to the Reference Group is Dynamic and Changes with Time and ExternalInfluences


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Nature of Reference Group Influence: Informational Influence

Occurs when an Individual uses the behaviours and opinions of thereference group members as potentially useful information

Influence is based on similarity to group members / expertise of the

influencing member E.g.: Purchasing a NOKIA cell phone because my friends have one

Normative Influence Occurs when an individual fulfills group expectation to gain a direct

reward or to avoid a sanction

Influence is based on strong ties to the group and the product involved issocially conspicuous

E.g.: Purchasing Close-Up toothpaste to avoid bad breath

Identification Influence: Occurs when the individual has internalized the groups values and norms

E.g.: Purchase of health foods because I belong to a fitness group


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Norms

Norms are generallyrules and standardsof behavior.

Values

Values are sharedbeliefs among group

Roles

Roles are functionsthat an individualhold in a group.

Status

Status is theachieved or ascribedposition that theindividual holds.

Socialization

Socialization refersto the process bywhich new memberslearn the groupssystem.

Power

A groups influenceon its memberbehavior is closelyrelated to it power.


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Influence is strongest when the product or brand is visible to the group

Influence is stronger when the product or brand is a luxury (non-necessity) item

Influence is directly proportional to the identification with group

Influence is strong when a particular activity is essential to the groupfunctioning

Influence is also determined by the individuals confidence in a buyingsituation


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Personal Selling:

Asch Phenomenon

Influence by other members of the group

Word of Mouth Influences

Advertising:

Using Snob Appeal

Using Informational Influence

Using Identification Influences

Repositioning Group Norms

E.g.: A guy thinks smoking is cool, but a group of

is shown as saying smoking is un-cool

Visible Usage

High Relevance of

product to Group

Low IndividualPurchase Confidence

Strong Individual

Commitment to Group

Luxury / Non-

necessary Item`

HighDegreeofReferenceGroupInfluence

Normative Influences not used inadvertisement as they are critical of person

portrayed


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Culture influences consumers through the norms and values established bythe society in which they live.

It is the broadest environmental factor that influences consumers behavior.

Culture is inculcated- It is passed down from one generation to another

through institutions such as family members and religion.

As culture evolves, it may be possible to associate benefits of a product orbrand with new values or it may be necessary to change the product if thatvalue is no longer gratifying the society. Example: Movies, TV serials, etc.

Definition: Culture as the complex whole that includes knowledge, beliefs, art,law, morals, customs and any other capabilities and habits acquired by humansas a member of a society.


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Culture is invented: It cannot be viewed as something that

just exists and is waiting to be discovered. People areresponsible for inventing their culture.

Culture is learnt: It is not biological feature or natural.The process of learning cultural values begin early in lifelargely through social interactions among families, friends etc.

Culture is Shared: Culture by at large is shared by hugegroup of human beings, generally religion, language, etc.

Culture satisfies needs: Culture offers order, direction and guides societies inall phases of life by providing tried and trusted ways of meeting physiological,personal and social needs.


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Cultures are similar but different : There are certain similarities amongall cultures and many elements are present in all societies such ascooking, dressing, etc.

Culture is not static: Culture do change gradually and continuously.These change however may be very slow or very fast.

Ads- Nescafe (Thailand, Australia culture) & Camalin Permanent ad(Indian culture)


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A sub culture is a segment within a culture that share a set if meanings,values or activities that differ in certain respects from those of the overallculture.

Sub culture analysis enables the marketing manager to focus on beliefs,

values, and customs shared by member of a specific sub group make themdesirable candidates for special marketing attention.

Sub culture therefore can be defined as a distinct culture group that existswithin a layer, complex society as an identifiable segments in terms of itsbeliefs customs and values.

Therefore sub culture are relevant units of analysis for marketing research.

Sub culture tend to transfer their beliefs and valuesfrom generation to generation. Example: Youths


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Category Sub- Culture

Geography North Indian, South Indian, East Indian

Regional Gujarati, Marathi, Punjabi, Tamilians,

Malayalees, etc.

Age Children, Teenagers, Youth, Workingprofessional, etc.

Elderly People 50 Plus.

Women Children, Teenagers, Youth, Married women,etc.

Caste Muslims, Christians, Hindu, etc.


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Family is defined as a group of two or more people related by birth, marriage or adoption

and residing together.

House hold is a family and any

unrelated person residing in the same house

and consuming food from a common kitchen at least once a day. Eg: Hostel

All families are households but all households are not families.

An individuals immediate family members play an essential role in influencinghis/her buying behaviour.

Family consists of Parent, Siblings, Spouse, Grandparents, Relatives, etc.

What an individual imbibes from his parents becomes his/her culture. What hesees from his childhood becomes his habit or in other words lifestyle.

Family by far is the most important reference group. It is also the most basicconsumption unit for most consumer goods.


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EmotionalSupport

Suitable Life

Style

SocialRelationships

Morals and

EthicalValues

ReligiousValues

InterpersonalSkills

EconomicWell Being

Provides


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Bachelor stage Young, single person


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Communicationtargeted at Children

Communication

targeted at Parents

Influencer(Children)

Initiator(Parents,Children)

DecisionMaker

(Parents,Children)

Purchaser(Parents)

User(Parents,Children)Information

Gathering


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Some form of class structure or social stratification has existed in allsocieties throughout human history.

A consumer's social class refers to his or her standing in society. It isdetermined by a number of factors, including education, occupation and

income.

While income is an important indicator of social class, the relationship isfar from perfect since social class is also determined by such factors asplace of residence, cultural interests and world-view.

Social Class is defined as the division of members of a society intohierarchy of distinct status classes, so that members of each class haverelatively the same status and members of all other classes have eithermore or less status.

Social Class is often measured on the bases of: relative wealth, Power,prestige.


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Life-style Orientations & Purchasing Tendencies of the Different Social Classes.

Social Class Life-style Orientation Purchasing Tendencies

Upper Class Good tasteGraceful livingGood Things in lifeIndividual expression

Interest in arts and culture

Quality merchandiseExpensive hobby and recreationequipmentTravel

Art

Middle Class RespectabilityConformitysocial esteem

Items in fashionItems related to self presentationNice clothing, and home items.

Working Class Fun orientedFocus on Possessions

Work related life

Newest appliancesSporting events

Food items

Lower Class Close family relationshipsNot interested in world affairsNeighborhood oriented

Readily available productsStatus symbols


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MiddleClass

Aspirations

To belong to

upper-middle

class

Prefer

Products

consumedby upper-middle

class

Positioning

Upper classsymbolism

for middleclass

products


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Opinion leaders are those people who, in a given situation, are able to exertpersonal influence.

They are the ones most likely to influence others through word-of-mouthcommunication because others seek advice and information from them.

Opinion leaders can influence the behavior

of consumers positive and negative towardsto the product.

Opinion leadership is the process by which

one person (the opinion leader) informally

influences the actions or attitudes or others,

who may be opinion seekers or merely opinion recipients. In marketing context opinion leaders are those people who have used the

product by them self.

Young consumers often take the assistance of opinion leaders in therepurchase.

Opinion leadership is category specific an opinion leader in one productcategory is often an opinion seeker in others.


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Innovation:

Is an idea, practice or a product perceived to be new by the relevant individualor a group

Types of Innovation:

Continuous Minor change in product, continuously over a period of time

Individuals may fail to identify the innovation

May require least persuasion to adopt

Dynamic Continuous

Continuous innovation but change in product may be noticeable People may require moderate persuasion to adopt the product

Discontinuous:

Product is modified only after a long period of time

People may require high persuasion to adopt


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Diffusion Process:

Is the process through which the innovations spread through out the marketplace

Factors Affecting Diffusion Process:

Type of Group

Type of Decision

Marketing Effort

Fulfillment of felt needs

Compatibility

Relative Importance

Complexity

Observe ability

Trial

Perceived risk of adoption


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Everett M. Rogers Innovation Adoption Model

Awareness

Interest

Evaluation

Trial Adoption

R.J. Lavidge & G.A. Steiner Hierarchy of Effects Model

Awareness

Knowledge

Liking Preference

Conviction

Purchase

Cognition stage Affective Stage Behaviour stage


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E.K. Strang AIDA Model

Attention

Interest

Desire

Action Various Authors Communication Model

Exposure

Perception

Cognitive Response

Attitude Intention

Behaviour

Cognition stage Affective Stage Behaviour stage


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Innovators2.5%

Early Adopters

13.5%

Early Majority34.0%

Late Majority34%

Laggards

16.0%


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Innovators: Are venturesome risk takers

Capable of absorbing the financial and social cost of adopting an unsuccessfulproduct

Use innovators as a reference group

Generally younger, better educated and more socially mobile than others Early Adopters:

Tend to be opinion leaders in local reference groups

Willing to take a calculated risk on successful innovation but concerned with failure

Provide information to others

Generally are successful, well educated and somewhat younger than peers Early Majority:

Tend to be cautious about innovations

Adopt sooner than most but only after the product has proved successful

They are socially active

Somewhat older, well educated but less socially mobile


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Late Majority: Are skeptical about innovations

Adoption is a response to social pressures or decreased availability of previouslyused products

Tend to be older and have less social status than others

Laggards: Locally oriented and engaged in limited social activities

Tend to be dogmatic and oriented towards the past

Adoption is because of extreme necessarily and with reluctance


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Word of Mouth (WOM) Communications:

Occurs when individuals share information with other individuals verbally

Buzz Marketing:

Is defined as exponential expansion of Word of Mouth Communication

It is not supported by large advertising expenses

Buzz can be created by marketing efforts

For a buzz to be successful, the product should live up to expectations


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Exercise 2

Use the Internet to find data about sales of Harry Potter series of books and

determine whether Buzz marketing is applicable to the sales of Harry Potter

book or not?

Exercise 3

Interview two sales person of mobile phone. Determine the role that (i)

Opinion Leaders and (ii) Sales person play in influencing the purchase

Exercise 1

Use the Internet to find one advertisement which show atleast three classof reference group and one advertisement on opinion leader

Assignment

Consumerbehaviour Externalfactors(Lecture 3)

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