Reference group Influence on Product and Brand purchase decisions

About article
Reference group : An actual/imaginary individual/group of people who significantly influence an individuals behaviour
E.G :
Can be a cultural figure(Michelle Obama)
or
consumer’s immediate environment(Popular students in your college)

Reference group influences a person in 3 ways

Which influence type is more prominent across purchase situations.

Spending day with

Uses : celbrity
Advertisers leveraging – group influence on consumer behaviour
• Portraying products being consumed in socially pleasant situations
• Use of prominent/attractive people for endorsing products
• Use of obvious group members as spokesperson in advertisements
 Value expressive
Informational Influence Utilitarian Influence
influence
• Desire to make an • Desire to comply to the • Need for psychological
informed decision wishes of others which association by with
• Airtel is India's Fastest might result in rewards reference group
Network - YouTube or punishment • Trying to resemble the
• TVS Jupiter group / liking for the
Commercial(Oct 2013)- group
Test Ride(Latest Indian • Nerolac Suraksha -
TV Ad) - YouTube Postman - YouTube
Product and Brand decisions
Luxuries

Product

Owned
(Exclusive)
Necessities
Reference
group
influence Public
Brand

Consumed
(Seen or
Identifiable)
Private
 Conditions underlying the study
Product
Weak reference group Strong reference group influence
influence (-) on product (+) on product purchase
purchase

Strong reference group

influence (+) on Brand
Publicly consumed
Necessities (PUN)-
e.g., Wristwatch
selected
Publicly consumed
Luxuries (PUL) –
e.g., Golf club,

,automobiles snow skis

Brand

Privately Privately
Weak reference group
influence (-) on Brand

consumed consumed
Necessities (PRN)- Luxuries (PRL) –
e.g., Mattress, e.g., TV game,
selected

refrigerator Trash compactor

 Research Method followed

Primary Findings &

Research Preliminary Survey Follow-up
(panel)
Hypothesis procedures design study Insights
study
Panel study – Primary
 Sample (n) – 645 (out of 800)
 Median family income – $18000 - $24000
 Average education – 14.4 years
 Scale – 6 pointer ,Agree – Disagree statements scale(higher value giving greater
influence perception)
At the beginning of each section “product decisions” or “brand decisions” written
 sample product or brand question was presented.
 Exhibit B
Research Design layout
 Product vs Brand
decision significant only
for the informational
reference group
Variation in PC
were significant
for VE and
utilitarian
 All significant
with differences
in pattern of
result
 LN dimension
appeared sensitive
regarding perception
of informational
reference group

All significant
with differences
in pattern of
result
 LN dimension
appeared sensitive
regarding perception
of informational
reference group

All significant
with differences
in pattern of
result

PP dimension affected
VE and utilitarian
perceptions to greater
degree
 LN dimension
appeared sensitive
regarding perception
of informational
reference group

All significant
with differences
in pattern of
result

PP dimension affected
VE and utilitarian
perceptions to greater
degree
 3 reference groups
measured does not imply
their necessary presence
or absence e.g., men's suit
– VE >> I or U
Research – Follow up study
 Objective – To extend the findings of panel study as the data collected was by
customers exposed to either product or brand decisions

 Method – In this study each respondent was first asked about reference group
influence on Product and then brand

 Sample (n) – 151 (out of 300)

Differences in PC used to
form questionnaires
affected respondents
perception of VE and
Utilitarian influence
 Unlike panel study-
Decision factor marginally
significant for
Informational and
significant for VE and
utilitarian
Utilitarian as an exception
– VE and Informational
again found to be
significant for LN factor
Takeaways
Product decisions : public necessities (PUN) involved more value expressive
and utilitarian influence than private luxuries (PRL)
Reason : fear of embarrassment of not owning a product which many may feel
are required for normal living

Brand decisions: Public necessities (PUN) involved less Informational

influences than private luxuries (PRL)
Reason : Necessity ownership is so common, less information seeking is
necessary
Way forward
Differential role that varying groups have on an Individuals product and brand
decision can be explored

Situational variations, socioeconomic and attitudinal variables and their impact on

complexity of studying reference group need to be addressed.
Thank You