1. Definitions of Reference Groups
Park and Lessig (1977) defined a reference group as an actual or imaginary individual or group conceived of having significant relevance upon an individuals’ evaluations, aspirations or behaviour. Barron’s marketing dictionary (2007), on the other hand, defines reference groups as the class, group or category of people to which individuals believe they belong, whether or not they actually do.
The relationship of individuals to their reference group in turn influences their buying behaviour. In a bid to identify with a particular group, consumers may use the products that the group uses. For example, if one considers himself a green consumer and most of the people in his reference group of green consumers own an eco-friendly car such as Prius, then this individual would aspire to own Prius to give full expression to his belief in green consumerism.
2. Reasons why people affiliate with Groups
People affiliate with reference groups for three major reasons. Firstly, to either obtain rewards or escape punishments. There are several rewards and benefits in groups that one can only enjoy if one becomes a member of that group. For example, membership to a polo club paves the way for one to avail himself of the rewards in that group.
Similarly, one may affiliate with a particular group to avoid punishments. Secondly, people affiliate with groups to acquire useful knowledge for living and profit. Thirdly, people may join a group to gain meaning to their self-concept. Through group affiliation, one can maintain, construct or modify his self-concept depending on the feedback he receives from the group.
3. Functions and types of Reference Groups
According to Kelley (1965) reference groups have two main functions, namely a normative function and a comparative function. The former establishes and enforces standards for the individual, whereas the latter serves as a comparison mark upon which an individual assesses himself and significant others. Within the context of a group, one function may be more prevalent than the other at a given period.
Reference groups come in different forms. They can however be divided broadly into two groups, namely direct and indirect groups. Within, the direct reference group, we have primary and secondary membership groups, whereas aspirational and non-aspirational or dissociative reference groups make up the indirect reference group. Reference group can also be categorized on the basis of structure into formal and informal reference groups. The former is characterized by a structural system, where as the latter is without such a system. There are also individuals described as Group or Opinion leaders.
Such people possess the ability to influence others and therefore constitute an important segment of reference groups. There is also the influence that is exerted on an individual that comes from his or her family. This is called the family reference group. According to Bachmann, John and Rao (1993) reference groups are usually conformed by the social network of an individual, namely family members, friends, colleagues and inspirational figures. In the subsequent pages of this review, attempt would be made to look into the different types of reference groups in greater detail.
3.1 Formal and Informal Groups
Formal reference groups have well laid down structures that govern them. Informal reference groups, on the other hand, donot have such structures. These structures for governance see to the shaping of behaviour and maintenance of values within the group.
3.2 Primary Membership Groups
Wikipedia (2007) defines primary membership groups as those that consist of small groups with intimate and kin-based relationships. According to this definition, this group commonly lasts for years. Examples of primary memberships groups include one’s family and friends.
3.3 Secondary Membership Groups
Lamb, Hair and McDaniel (2000) defined secondary membership group as reference group with which people associate less consistently and more formally than a primary membership group. Examples of secondary membership groups, according to these authors, include clubs and professional groups.
3.4 Aspirational Groups
People within this category of reference group aspire to join or emulate the group. As the name therefore suggests such individuals draw a great deal of inspiration from the group. To be accepted in an aspirational group, one must be prepared to abide by the values that govern the group. For example, if one aspires to join a charitable organization, then that individual must be prepared to commit him or herself to doing charitable deeds. Failure to bid by these values, may result in the expulsion of that individual from the organization, as his values are not consistent with that of the organization or group.
Aspirational reference groups influence the brands that adherents use. Escalas and Bettman (2003) demonstrated that brands used by aspirational groups can become connected to consumers’ mental representation of self as they use these brands to define and create their self-concepts.
These research workers also showed that the degree to which aspiration group usage influences individual self-brand connections is contingent on the degree to which the individual belongs to a member group or wishes to belong to an aspiration group. They also found that for individuals with self-enhancement goals, aspiration brand use has a greater impact on self-brand connections.
3.5 Dissociative (Non-Aspirational) Groups
With non-aspirational or dissociative groups, individuals seek to avoid them or dissociate themselves from them. This is shown in the behavioural choices one makes. For example, if one wants to dissociate himself from a reference group, then if that group is known for its love for Prius car, then that individual may decide not to purchase a Prius car. This tendency would show itself in many of the choices that particular individual makes. White and Dahl (2006) studied the effects of dissociative reference groups on consumer preferences.
They used gender to manipulate the reference groups as well as self-presentation concerns or self-monitoring. They discovered that males had more negative evaluations of and were less inclined to choose a product associated with a dissociative ( female) reference group than a neutral product. This finding was moderated by whether the product was consumed in public or private and public self-consciousness. On the basis of this finding, the research workers suggested that the mechanism underlying these effects was a desire to present the self to others positively.
3.6 Opinion Leaders
Opinion leader can be described as a person who influences the actions and attitudes of others. Characteristically, opinion leaders are repository of information or knowledge and also are innovators. By virtue of the characteristics they possess, other people look up to opinion leaders and they become a source of reference to significant others. Marketers and communicators have long recognized the important role opinion leaders play in information dissemination and have been capitalizing on their strength.
According to Lamb, Hair and McDaniel (2000) many products and services that are integral parts of people’s lives today received their initial boost from influential opinion leaders. Opinion leaders make direct recommendations to significant others for them to purchase products and services. The above authors (Lamb et. al., 2000) cited a study conducted by Roper Starch Worldwide Incorporated which showed the average number of people to whom opinion leaders recommended products and millions of recommendations made in 1995 as follows:
Average Number of recommendations by opinion leaders Millions of recommendations made
Restaurant 5.0 70
Vacation destination 5.1 44
Television Show 4.9 45
Car 4.1 29
Retail Store 4.7 29
Clothing 4.5 24
Consumer electronics 4.5 16
Office equipment 5.8 12
Stock, mutual fund, CD, etc 3.4 12
The above data clearly explains why marketers focus on opinion leaders in their bid to sell their products and services to others in a given marketplace. The use of opinion leaders in actively promoting products and services are not without demerits. Sometimes, such promotional activity can be risky. For example, if the opinion leader misconducts himself it can have a telling effect on the product and brand he is helping to promote.
3.7 The Family and Peers as a reference Group
The family is made up of a group of at least two people, who are related by marriage, blood relationship or adoption. The family plays enormous role in self awareness, goal setting, role definition and decision-making of individuals. Consequently, the family exerts considerable influence on individuals in their buying behaviour and therefore is a subject of immerse importance to marketers. Even though family socialization is a rich field in consumer behaviour, it is a less explored area in marketing research.
Recognizing this need, Cotte and Wood (2004) studied the influence of family on consumer innovativeness using 137 families and triadic analysis (Parent and two siblings). They discovered that both parents and siblings influence innovative consumer behaviour, but that parental influence was stronger than sibling influence. Childers and Rao (1992) also replicated and extended the study performed by Bearden and Etzel. In this particular study, the influence of peers on individual’s products and brand decisions for products that range in their degree of conspicuousness was examined in the United States and Thailand to assess validity across cultural context.
The results of the study provided insight into how reference group influence on products and brands may vary depending on whether the influence was exercised by a member of a peer group or by a family member. Lachance, Beaudoin and Robitaille (2003) studied the wearing of clothes with prestigious brand names in the context of consumer socialization. They examined the influence of three agents of socialization, namely parents, peers and television on the development of adolescents’ brand sensitivity.
They found that for both genders, brand sensitivity is related to peer influence. Girls’ brand sensitivity is related to the importance fathers gave to clothing brands. They also discovered that for both boys and girls, peers represent the most important predictor of consumer socialization. Adolescents are more fashion-conscious than their older counterparts. Yoh (2005) also investigated how socialization agents such as parents, peers and television influence teenagers’ purchasing of athletic shoes. He used 558 teenagers for the study. He found that overall peers exert the greatest influence when it comes to the purchasing of athletic shoes. On the basis of the findings, he advocated for family and consumer educators to use it as a guide to give better education to teenagers as consumers. The findings were not too surprising since teenagers are generally more fond of athletic shoes than older people.
The influence of family and friends are not always positive on individuals socially. Strong and Eftychia (2006) investigated the influence of family and friends on teenage smoking in Greece as distinct from tobacco marketing. The study revealed that smoking among Greek teenagers was strongly influenced by the family from which the person comes from and also the type of friends he keeps.
They found that one in ten of the respondents were offered a cigarette by a relative and two-thirds of the respondents came from families with at least some smokers. The study concluded tentatively that experimentation with smoking by Greek teenagers and continuation with the practice is an outcome of consumer socialization.
4.0 Influence of reference groups on Products, Services and Brands
Reference groups exert an enormous influence on products and brands that people use. According to Escalas and Bettman (2005) reference groups serve as a critical source of brand meaning. Consequently, people use others as a source of information for arriving at and evaluating one’s beliefs about the world around them, especially significant others whose shared beliefs are similar on relevant dimensions.
Based on studies they conducted, they demonstrated that brands with images consistent with an in-group enhance self-brand connections for all consumers, whereas brands with images that are in line with an out-group have a stronger negative effect on independent versus interdependent consumers. They also found that this influence of in-group versus out-group brand usage differs depending on whether the consumer has a primary independent or interdependent self-construal.
Compared to products, reference group influence on services has been a less researched area (Arora and Stoner, 1995; Subhash, Lalwani and Ping, 2001). Recognizing this knowledge gap, Arora and Stoner (1995) examined the significance of reference groups in the selection of services. The services studied were categorized into four, namely publicly consumed luxuries, publicly consumed necessities, privately consumed luxuries and privately consumed necessities. The results of the study revealed that reference group influence was greatest for publicly consumed services.
According to Mourali, Laroche and Pons (2005) interpersonal influences play a major role in shaping consumer choice decision, especially with services where intangibility and variability add to the decision difficulty. They conceded that while all consumers are susceptible to interpersonal influence, some individuals are chronically more susceptible to social influence than others.
From the study conducted, Mourali and co-workers found that French Canadians were significantly more susceptible to normative influence than English Canadians. They also found that French Canadians scored significantly lower than English Canadians on measures of individualism. Individualism in this case was observed to have a significant negative effect on consumer susceptibility to normative influence. These differences in Canadians were traced in part to cultural differences in individualistic orientation.
Hsu, Kang and Lam (2006) segmented travelers based on their perceptions of various reference groups’ influences about visiting Hong Kong as a destination. They profiled each segment according to travelers’ benefits sought, attitudes, behaviours and socio-demographic characteristics. From a two-step cluster analysis generated, three distinctive segments with different benefits sought, perceived behavioural control, attitudes and behavioural intentions were identified.
5.0 The influence of reference groups on Consumer behaviour
Reference groups influence greatly the way and manner consumers behave towards products, services and brands. According to Leigh and Gabel (1992) many products are purchased due to their symbolic significance to important reference groups. They further pointed out the important role symbolic interactionism plays in customer behaviour and also suggested that marketing practitioners could develop symbolic relevance through the use of appropriate marketing strategy. Bearden and Etzel (1982) reported that publicly consumed and luxury products are better able to convey symbolic meaning about an individual than privately consumed and necessity products, respectively.
Subhash, Lalwani and Ping (2001) investigated reference group influence on services using the research paradigm originally proposed by Bearden and Etzel (1982). The study also explored the perceived risk of services on consumer behaviour in working women in Singapore. Results of the study revealed that informational reference group was the most pervasive form of influence for all types of services studied.
Furthermore, publicly consumed services were found to have higher reference group influence than privately consumed services. However, in some services the study found that certain unique perspectives were noted due to the nature of the services in question. Luxury services were also found to have higher reference group influence and financial and psychological risk than necessity services.
Reference group influence is not restricted only to offline. Its influence is very much evident among internet users. Trocchia and Janda (2000) showed that reference group affiliation is among six characterizing differences between internet using and internet non-using older individuals. This finding has useful marketing implication for internet marketers. Yang, He and Lee (2007) also investigated the influence of different reference groups (utilitarian, informational and value-expressive) on consumer purchasing behaviour between mobile phone users of the United States of America and China. Of the three reference group influence examined, only the utilitarian influence was found to be different between China and the United States of America mobile phone buyers. Informational and value-expressive influences were found not to be significant.
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