Module 5 External Influence on Consumer Behavior A. B. C. D. E. F. Social Class Culture & Subculture Cross culture Groups Family References A. Social Class • Social Class Basics: • Social Class is defined as the division of members of a society into a hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either or less status. • Social class & social status • Researcher often measure social class in terms of social status. • Specific status factors- Relative Wealth (amount of economic assets), power (the degree of personal choice or influence over others), and prestige (the degree of recognition received from others) • Usually, the marketing society believes that the status is often associated with consumer’s purchasing power. What is Social Class • The dynamics of status consumption: • Status consumption is the process by which consumers endeavor to increase their social standing through conspicuous consumption and possessions. • Conspicuous consumption: Measures the extent to which a consumer is to consume conspicuously (noticeably). Ex: Sitting in the big hotel where every body can see. • Socio-economic variables of status are family income, occupational status or prestige, & educational attainment. Social Class Impact on Consumption • Conspicuous Consumption-acquisition and display of goods to show off one’s status • Conspicuous Waste-Visibly buying products that one never uses • Compensatory Consumption-Buying products to offset frustrations or difficulties in life Social-Class Profiles THE UPPER-UPPER CLASS--COUNTRY CLUB • Small number of well-established families • Belong to best country clubs and sponsor major charity events • Serve as trustees for local colleges and hospitals • Prominent physicians and lawyers • May be heads of major financial institutions, owners of major longestablished firms • Accustomed to wealth, so do not spend money conspicuously THE LOWER-UPPER CLASS--NEW WEALTH • Not quite accepted by the upper crust of society • Represent “new money” • Successful business executive • Conspicuous users of their new wealth Social Class - continued THE UPPER-MIDDLE CLASS--ACHIEVING PROFESSIONALS • Have neither family status nor unusual wealth • Career oriented • Young, successful professionals, corporate managers, and business owners • Most are college graduates, many with advanced degrees • Active in professional, community, and social activities • Have a keen interest in obtaining the “better things in life” • Their homes serve as symbols of their achievements • Consumption is often conspicuous • Very child oriented Social Class - continued THE LOWER-MIDDLE CLASS--FAITHFUL FOLLOWERS • Primary non-managerial white-collar workers and highly paid blue-collar workers • Want to achieve “respectability” and be accepted as good citizens • Want their children to be well behaved • Tend to be conservatives and are often involved in spirutual-sponsored activities • Prefer a neat and clean appearance and tend to avoid faddish or highlystyled clothing • Constitute a major market for do-it-yourself products Social Class - continued THE UPPER-LOWER CLASS--SECURITY-MINDED MAJORITY • The largest social-class segment • Solidly blue-collar • Strive for security • View work as a means to “buy” enjoyment • Want children to behave properly • High wage earners in this group may spend impulsively • Interested in items that enhance leisure time (e.g., TV sets) • Husbands typically have a strong “macho” self-image • Males are sports fans, heavy smokers, beer drinkers THE LOWER-LOWER CLASS--ROCK BOTTOM • Poorly educated, unskilled laborers • Often out of work • Children are often poorly treated • Tend to live a day-to-day existence Social class is hierarchical & a form of segmentation (Features of Social class) • Social-class categories usually are ranked in a hierarchy, ranging from low to high status. • Thus, members of a specific social class perceive members of other social classes as having either more or less status than they do. • Social class categories suggest that other are either equal to them (same social class), superior to them (higher social class), or inferior to them (lower social class). • Social-class categories: • • • • Two-category social class schemas: Blue collar, white collar Three-category: Blue collar, gray collar, white collar (Lower, middle, upper) Four: Lower, lower-middle, upper-middle, upper Five: Lower, working class, lower-middle, upper-middle, upper Measurement of Social Class • Subjective measures • Here individuals are asked to estimate their own social-class positions. • Usually, these will be collected by questionnaires. • • • • Lower class Lower-middle class Upper-middle class Do not know/refuse to answer • Reputations measures • Reputational approach for measuring social class requires selected community informants to make initial judgments concerning the social-class membership of others within the community. • Objective measures • Here though questionnaires it is asked respondents several factual questions about themselves, their families, or their places of residence by which their social class are measured. Social Class Mobility • Individuals in a social class can move either up or down in social-class standing from the class position held by themselves or their parents. • Example: Dhirubhai Ambani moved from a low social class to high social class. • This kind of mobility is known as Social Class Mobility. • The marketing relevance of social class mobility is that – the marketer should always present those goods to the customer which make them move from a lower social class to a higher social class. • Example: Relience Mobiles- claimed that every body can enjoy the luxury of speak on a mobile. This made consumers to think that I can also own a mobile now which will increase my living style. • This is why celebrities are shown using the products. • This is the Social Class Role & Status Differentiation & Evaluation in Marketing process. Geodemographic Clustering • Marketing managers who have developed socio-economic (demographic) profiles of their target markets can locate these markets in different geographies is known as Geo-demography. • The segmentation of the complex market into mixed – demographic (socio-economic) & geographic profiles is known as Geo-demography Clustering. • These can be done by using multi-variate analysis called Cluster Analysis. • Social Satisfaction: Social satisfaction is usually based on satisfying the customer’s needs & desires in a socially acceptable & socially valued ways. Factors Responsible for Social Stratification The important factors for Social Stratification are: Education Income Occupation Family life cycle Ethnicity Housing Urbanization House location etc.. B. Culture & Subculture Major Focus on Indian Perspective • • • • Culture Subculture Cross-cultural consumer analysis Cross-cultural marketing strategy Culture • Culture: Basic, Meaning, Characteristics: • Culture is the study of character of the total society, including such factors as language, knowledge, laws, religions, food customs, music, art, technology, work patterns, products etc.. • In a sense, culture is a society’s personality. • We have to understand the influence of culture on consumer behavior. • Culture is defined as the sum total of learned beliefs, values, and customs that serve to direct the consumer behavior of members of a particular society. • Values: Important and enduring beliefs or ideals shared by the members of a culture about what is good or desirable and what is not. Values exert major influence on the behavior of an individual and serve as broad guidelines in all situations. See also value. • Belief- consist of large no. of mental or verbal statements. Characteristics of culture • • • • • • It is a learned response Includes inculcated values It is a social phenomenon It is a gratifying & continues for long time Cultures are similar & yet different Culture prescribes the ideal standards of behavior. Factors Affecting Culture • The factors affecting culture are: • • • • • • • • • • Language Knowledge Laws Religions Food customs Music Art Technology Work patterns Products etc.. are some of the factors which affect culture. Role of Customs, Values & Beliefs in Consumer Behavior • Belief & value components refer to the accumulated feelings & priorities that individuals have about “things” & possessions. • Ex: People in rural areas believe that ladies should not work, and they value ladies a lot. These thinks might not be the same as you move towards Metro Cities and Western countries. • Customs are clear modes of behavior that constitute culturally approved or acceptable ways of behaving in specific situations. • Customs consist of everyday or routine behavior. • Ex: Serving tea if guests arrive, in Indian context. Serving drinks for guests in American context. Customs vary from place to place. • All beliefs, values, & customs are widely accepted by the members of a society. The Measurement of Culture • • • • • Projective tests Attitude measurement test Depth interviews & group discussions Observation Content analysis Cont… • Content analysis: • Content analysis, focuses on the content of verbal, written, and pictorial communication (such as the copy & art composition of an ad). • This measure is used in finding out what social & cultural changes have occurred in specific society. • Ex: The researcher can see ads of other companies in the particular area and he can find out the social & cultural being in that area. • Consumer field work: • Here the researchers select small sample of a society & carefully observe their behavior. • Based on the observations they draw conclusions • Value measurement survey instruments • Here behaviors are observed & the dominant or underlying values of the society are drawn. Subculture • Subculture: Meaning • Subculture is a distinct cultural group that exists as an identifiable segment within a larger, more complex society. • They are smaller subgroups that consist of people who are similar in terms of their ethnic origin, their customs, & the ways they behave. Subculture Division & Consumption Pattern in India • India is a subcontinent and it has unity in diversity. • India population is constituted with many religions, cultures, tribes, races, languages, etc.. • Marketers explores the opportunities created by the existence of certain beliefs, values, & customs shared by members of specific sub-cultural groups within a Indian society. • Even the consumption pattern is definitely influenced by all the socio-economic, demographic, & geographic factors and it is very complex. Types of Subculture 1. 2. 3. 4. 5. 6. Nationality subcultures Religious subcultures Geographic & Regional subcultures Racial subcultures Age subcultures Gender as a Subculture` Cross-Cultural Consumer Analysis • Similarities & differences among people: • A major objective of cross-cultural consumer analysis is to determine how consumers in two or more societies are similar & how they are different. • Such similarities & differences between nations is critical to the multinational marketers for strategy formulation. • More similarities will yield similar or same marketing strategies in each nation. • The growing global middle class: • The middle class is growing in the countries of Asia, South America, and Eastern Europe. • Although the per capita income may be low, but there is nevertheless considerable buying power in these countries. • This has attracted many well established marketers from different countries which has initiated the necessity of doing cross-cultural consumer analysis. Cross-Cultural Consumer Analysis Acculturation is a needed marketing viewpoint: • Acculturation is a process where marketers have to thoroughly orient themselves to the values, beliefs, & customs of the new society to appropriately position & market their products. • They should also gain acceptance for their culturally new product in a foreign society & sometimes they should develop strategies to encourage people to break their own traditions to purchase the product. • They have to learn everything that is relevant about the usage or potential usage of their products & product categories in foreign countries. Applying research techniques: • • • Research techniques should vary from place to place. Some facilities like telephone interviews may not be available in some places. Research methodologies should be flexible for different countries. Cross-Cultural Marketing Strategy • Cross-Cultural Marketing Problems in India • There is a controversy over the extent to which cross-cultural strategies should be followed in India- because of its diverse cultures. • Standardized strategies can result in substantial cost savingsparticularly advertising strategies. • The ads can be the same but have to be dubbed in the regional languages. • The company should select appropriate channels for appropriate products. Also appropriate timings (serials). Ex: Huggies in Cartoon Network channel. • Again the different cultures are found across Urban, Semiurban, & rural. So different ad strategies should be used. Problems • Symbols, color & name selection • Product selection • Related to promotion/ marketing communication • Related to price • Distribution channel Deciding on Strategies to Overcome CrossCultural Problems • • 1. 2. 3. 4. 5. 6. 7. There are 7 key considerations for each geographic market that a firm is contemplating (considering). By answering these 7 questions, provides background for deciding strategies to overcome cross-cultural problems. If the Geographic Area Homogeneous or Heterogeneous with respect to culture? What needs can this Product or a Version if it Fill in this culture? Can enough of the people Needing the Product Afford it? What Values or Patterns of Values are relevant to the purchase & use of this product? What are the Distribution, Political, & Legal Structures for the product? In what ways can we Communicate about the product? What are the Ethical Implications of Marketing this product in this country? What is a Group? • Group: – Is defined as two or more persons who share a set of norms, values or beliefs and have certain implicit or explicit defined relationships to one another such that their behaviour are interdependent Importance of groups • Play an important role in consumer socialization • The process by which we acquire the skills, knowledge and attitudes necessary to function as consumers • As consumers we learn to think and behave according to society’s expectations as modeled by the groups we interact with Types of Groups Classification of Groups: Regularity of Contact Extent of Formality: Formal Group: Well defined structure, roles and authority levels Informal Group: Loosely defined structure Membership Status: Primary Group: Interaction on a regular basis Secondary Group: Occasional Contact Membership Group: Qualifies certain norms / standards to be a member Symbolic Group: Aspires to be a member of the group Influence of Group Individual Family Friends Social Class Subculture Degree of Influence (More to Less) Culture Types of social groups • Primary groups: small and intimate groups we come together with frequently and face-to-face • Secondary groups: less intimacy and personal interaction • Key difference is the extent of influence over one’s attitudes, beliefs, behavior, etc. • Formal groups: organized, hierarchical groups where structure is defined, roles delineated, etc. • Informal groups: often emerge from formal groups, but may also emerge between neighbors, friends, etc. Roles • • Patterns of behavior expected of individuals within a given social context May develop in one of three ways 1. Formal role definitions prescribed by the group 2. Informal rules of the group 3. History of prior experiences • Roles influence consumption behavior • A role-related product cluster is a set of goods necessary to play a given role Status • The relative position of a person in a group’s social spectrum • Consumers often purchase goods and services appropriate to their status within a group Group Functions • Task behaviours; • Maintenance behaviours; • Self-interest behaviours. Task Behaviours • • • • • initiating; information seeking/giving; clarifying ideas; brining closure; consensus testing. Maintenance Behaviours • • • • • encouraging; improving group atmosphere; harmonizing; compromising; gate-keeping. Self-interest Behaviours • • • • • dominating/controlling; blocking; manipulating; belittling; splitting hairs. C. Family • Family is defined as two or more persons related by blood, marriage, or adoption who reside together. • Ex: Married couple, children, blood relatives, etc.. • Family remains the central or dominant institution in providing for the welfare of its members and is the major household consumer & consuming unit. • Family & other Households are treated as no different while studying consumer behavior. • Other Households- such as unmarried couples, family friends, roommates. • 3 types of families are: Nuclear family, extended family, & single parent family. Types of Households • Nuclear family consists of a married couple with their own or adopted children. • Extended family household includes the nuclear family plus additional relatives. • Nonfamily households are made up of persons living alone or with other nonrelatives. • Blended family consists of a couple living with children from a previous marriage. Functions of Family • • • • Economic Well Being Emotional Support Suitable Family Life Styles Socialization of Family Members Key family consumption roles Or Roles in the Family Decision Making • Influencers: Family members who provide information to other members about a product or service. • Gatekeepers: Who control the flow of information about a product or service into the family. • Deciders: Who have power of making purchase decisions • Buyers: Who make actual purchase of a product/service • Preparers: Who transform the product into a form suitable consumption. • Users: Who use or consume a particular product or service • Maintainers: Who service or repair the product • Disposers: Who initiate or carry out the disposal. Dynamics of husband-wife decision making • The relative influence of husbands & wives can be classified as: Husband dominated, Wife dominated, Joint , and autonomic (either solitary or unilateral or separate). • The husband-wife decision making has been changing from decades and it is related to cultural influences. • Rural couples have more husband dominated decisions when compared to urban husband-wife shared decisions. • In India, husband related decisions include- buying Automobiles, where as food & other household minor items are wife related decisions. The expanding role of children in family decision making • Over past few years, there has been a trend toward children playing a more active role in what the family buys. • They play an important role in family decision making process. • This shift is because the families have fewer children and more dual income couples who can afford to permit their children to make greater number of choices. • Some of the tactics used by children to influence their parents: Pressure tactics, upward appeal, exchange tactics (with parents), coalition tactics (other support), ingratiating tactics (good mood), rational persuasion (logical arguments), inspirational appeals (emotional appeal), consultation tactics (seeking our involvement in DM). • Major influence product are: Computers, automobiles, movies, trips, holiday vacations, outside meals, cloths, TV etc.. Children Decision Making Pressure-tactics-Uses threats Upward appeal-Demand supported by older member of family Exchange tactics-Makes promise in return of favor Coalition tactics-Aids of others to fulfill the demand Ingratiating tactics Rational Persuasion-Logical arguments Inspirational Appeals-Emotional appeal Consultation tactics-Seeks involvement in making decision Family Life Cycle • A series of Predictable Stages • A progression of stages through which many Family members pass • It is a composite variable created by systematically combining demographic variables as Marital Status, Size of Family, Age of Family members & Employment Status • Helps to understand the behavior of consumers at various stages of their lives so as to effectively design the right Marketing Strategy The family life cycle & marketing strategy • FLC means series of stages through which families progress. • There has been a decline in the percentage of families that progress through a traditional FLC (to be explored shortly). • The FLC remains a useful marketing tool. • FLC is a composite variable created by systematically combining such commonly used demographic variables as martial status, size of family, age of family members (focusing age of the oldest or youngest child), and employment status of the head of household. • The ages of the parents and the relative amount of disposable income usually are inferred from the stage in the family life cycle. Family Life Cycle • Five Basic Stages : – Bachelorhood : Young Single Adult living alone – Honeymooners : Young Married Couples with no children – Parenthood :Married Couples with at least one child – Post parent Hood: Older Married Couple with no children at home – Dissolution: One Surviving Spouse Family Life Cycle Traditional family life cycle & marketing implications • Stage I: Bachelorhood- young single adult living apart from parents. Ex: Marketer can target youthful products- automobile, clothes, beauty-creams, electronic gadgets, etc.. • Stage II- Honey mooners:young married couple. Ex: Purchase appliances, furniture, dishes, utensils, TV, etc.. • Stage III: Parenthood- married couple with at-least one child living at home. It is divided into 4 stages: pre-school, elementary school, high school & college stage. • Stage IV: Post-parenthood- an older married couple with no children living at home. It gives more time for themselves. Ex: For travel holidays, extra hobbies etc.. • Stage V: Dissolution- one surviving spouse. Ex: Purchase of old age things. Family Life Cycle • Stage One:Bachelor Hood: – Single Working Men/Women Two Groups: – Living with Parents: • Entertainment, Clothes & Personal Care – Living Independently: • Rent, Home Furnishings, Automobile , Clothes & accessories Family Life Cycle • Stage Two:Honeymooners : – Post Marriage before Kids – Lifestyle shifts to Joint Lifestyle – Joint Decisions & Shared Roles – Savings, Household Furnishings, Major Appliances and host of utensils and accessory items – Movie Tickets, Expensive Cloths and outings Family Life Cycle • Stage Three:Parenthood: – Changes in Lifestyle after addition of child • Three Stages: • Full Nest I: Immediately after birth of child – New Purchase in areas of Baby Clothes, Furniture, Food and Health Care Products • Full Nest II: Improved Financial Position of Family – Better Buying Experiences – Relatively Low Influence of Advertising Family Life Cycle • Full Nest III: • Children Start getting employed • High Expenditure for Durable Goods, New Furniture, Luxury Appliances and Cars Family Life Cycle • Stage Four:Post Parent Hood: • Children Leave homes • Empty Nest I: Satisfactory Financial Position – Leisure Time, Frequent Traveling, Vacations & Gifts • Empty Nest II: Low Income – Medical Care, Health Product a& basic necessities Family Life Cycle • Dissolution Stage : – Death of one Spouse – Simple Pattern of living and very economical Marketing Applications • Understand the Differences in consumption Patterns of different households • Develop Product & Promotional Strategies with recognition of changing roles & responsibilities • Use Concept of Family Life Cycle as a basis for Segmenting the Markets • Target Products & Services Properly for Family Roles in Decision making Reference Groups Understanding the power & benefits of reference groups • • • The concept of reference groups is an extremely important & powerful idea. A reference group is any person or group that serves as a point of comparison (or reference) for an individual in forming either general or specific values, attitudes, or a specific guide for behavior. For marketing perspective, reference groups are groups that serve as frames of reference for individuals in their purchase or consumption decisions. A broadened perspective on reference groups • The meaning of “reference group” has changed over the years. • Originally- they were narrowly defined to include only those group with which a person interacted on a direct basis (such as family & close friends). • Now the concept has gradually broadened to include both direct & indirect and individual or group influences. • Indirect Reference Groups consists of those individuals or groups with whom a person does not have direct face-to-face contact, such as movie stars, sports heroes, political leaders, TV personalities, or even well-dressed and interesting-looking people on the street. • Major reference groupings are- family, friends, social class, selected subcultures, one’s own culture, other cultures. Reference Group Influences Reference Group Influences 1.Informational 2.Utilitarian 3.Value Expressive SOCIAL POWER: “the capacity to alter the actions of others” Factors that affect reference group influence • Information & experience: Most times if the person does not have information or experience, he is likely to be influenced by the advice or example of others. • Credibility, attractiveness, & power of the reference group: A reference group that is perceived as credible, attractive, or powerful can induce consumer attitude & behavior change. • Conspicuousness of the product: A Visually conspicuous product is one that will stand out & be noticed (luxury items) and verbally conspicuous product may be highly interesting. Ex: Automobile, fashion clothing, sleek laptop computer, or home furniture. Shaving cream or soap are less conspicuous as they are less likely to be purchased. • Reference groups & consumer conformity: It is the reference groups ability to encourage conformity (traditionalism). Ex: “follow the crowd” purchase decision. Types of reference groups 1. Friends groups 2. Shopping groups 3. Work groups 4. Virtual groups (internet communities & brand communities) 5. Consumer-action groups (these groups assist consumers to make the right purchase decisions. Ex: MADD- Mothers Against Drunk Driving) Types of Reference Groups 1. Formal vs. Informal 2. Brand Community 3. Membership vs. Aspirational 4. Positive vs. Negative 5. Antibrand Community Get together in a groups of three and come up with ideas as to how we might use each of these to our advantage as Marketers. Pick two types and create one example for each of the two. Reference group appeals a. Celebrities (movie stars, sports icons) b. The Expert (reference group appeal used by marketers Ex: Shampoo experts, Colgate ads) c. The Common Man (using testimonials of satisfied customers is common-man approach) d. The Executive & Employee Spokesperson (company employees speak about the products- Intel Processors) e. Trade or Spokes-characters (here company trade partners speak about the brand) f. Other reference group appeals (retailers, consumer reports, third party reports etc.. • Power of Reference Groups Referent Power – Based on admiration of an individual or group – Patterns of consumption are copied • Legitimate Power – Power granted by virtue of social agreements • Reward Power – Power based on the ability to provide positive reinforcement • Information Power – Based on access to information that others seek • Expert Power – The individual possesses a special knowledge or skill • Coercive Power – Effective in the short term, requires surveillance to ensure compliance Conformity Conformity: A change in beliefs or actions as a reaction to real or imagined group pressures Susceptibility to Influence Gender Differences Cultural Pressures Likelihood of Conforming Group unanimity, size, expertise Fear of Deviance Commitment Resistance to Influence • Anti-Conformity – Defiance is the root of this behaviour • Paradox: being intentionally different requires a concerted effort • Independence – The individual is oblivious to expected social patterns • Reactance – Consumer resistance to stimuli • “boomerang effect” WOM Communications The Dominance of WOM: Guerilla Marketing Viral Marketing Encouraging Factors http://www.youtube.com/watch?v=ad4fagTy aM4 Negative WOM: Rumours Distortion Opinion Leadership Reduce Risk Similar Values “referent power” Legitimate Power “first to buy” Key Characteristics of Opinion Leaders Technically Competent Knowledge Power Social Networks COMPONENTS • Social networks (set of socially relevant nodes) = social graphs • Nodes = members in a network • Ties = relationships among nodes • Nodes (members of the network) – Have interactions (behaviour based ties) – Have flows (exchange information, influence, etc.) ELEMENTS • Media multiplexity – flows are in many directions • Social object theory – object of common interest (more powerful if there is a way to activate relationship between people and objects) • Object sociality – extent objects can be shared Virtual Communities • Virtual community of consumption – – – – Common love of a product Remain anonymous – through cyberspace only Operation is similar to any community Social media provides the connection • Virtual World Communities: – – – – Presence Collective interest Democracy Standards of behaviour - flaming • Levels of participation – – Tourists: Lack strong social ties to group, and maintain only a passing interest in the activity. – Minglers: Maintain strong social ties, but are not very interested in the central consumption activity. – Devotees: Express strong interest in the activity, but have few social attachments to the group. – Insiders: Exhibit both strong social ties and strong interest in the activity Thank You PERCEPTION IS REALITY IN THE LIFE