External Influences in Consumer Behavior

Motives Attitudes Needs

Business Consumer Purchase Decision Learning

Family

Perception Personality

Internal Factors

External Factors Economic

Consumer purchasing decisions are often affected by factors that are outside of their control but have direct or indirect impact on how we live and what we consume. Consumers are faced with many external influences, including an individuals culture, subculture, household structure, and groups that he/she associates with. Marketers and business owners call these external influences because the source of the influence comes from outside the person rather than from inside. Today consumers are faced with an array of product selection, and competition is fierce among companies. This is why your understanding of consumer behaviour is vital to the success of your business. Both internal and external factors are inter connected and work together to assist the consumer decision making process.

Man is social animal who loves to be in groups. Groups represent 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 of the product. Examples: Hardly Davidson Bike group, Friends connection, Aluminas of an institute, etc.

A reference group is any person or group that serves as a point of comparison for an individual in forming either general 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, or beliefs and have certain implicit and explicit relationship. Where as reference group is one whose presumed perspective or values are being used by an individual to take decisions.

Examples: Shopping with friends, family, educational decisions.

Classification of Groups:
Regularity of Contact
Primary Group: Interaction on a regular basis (family, peer group, friends etc) Secondary Group: Occasional Contact (Kitty Party, sports club)

Extent of Formality:
Formal Group: Well defined structure, roles and authority levels (Business group) 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)

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-Breed

apart, Chav

Membership Positive Influence Contactual RG

No Membership

Aspirational RG

Negative Influence

Disclaimant RG

Avoidance RG

Membership to the Reference Group is Dynamic and Changes with Time and External Influences

Nature of Reference Group Influence:

Informational Influence
Occurs when an Individual uses the behaviours and opinions of the reference 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 is socially 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

Norms are generally rules and standards of behavior.

Status is the achieved or ascribed position that the individual holds.

Norms
Values are shared beliefs among group

Status
A groups influence on its member behavior is closely related to it power.

Values
Socialization refers to the process by which new members learn the groups system.

Power
Roles are functions that an individual hold in a group.

Socialization

Roles

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

Influence is stronger when the product or brand is a luxury (nonnecessity) item

Influence is directly proportional to the identification with group

Influence is strong when a particular activity is essential to the group functioning Influence is also determined by the individuals confidence in a buying situation

High Degree of Reference Group Influence

Visible Usage High Relevance of product to Group Low Individual Purchase Confidence

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

Strong Individual Commitment to Group

Luxury / Nonnecessary Item`

Normative Influences not used in advertisement as they are critical of person portrayed

Culture influences consumers through the norms and values established by the 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 or brand with new values or it may be necessary to change the product if that value 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 humans as a member of a society.

Culture is invented: It cannot be viewed as something that just exists and is waiting to be discovered. People are responsible for inventing their culture. Culture is learnt: It is not biological feature or natural. The process of learning cultural values begin early in life largely through social interactions among families, friends etc. Culture is Shared: Culture by at large is shared by huge group of human beings, generally religion, language, etc. Culture satisfies needs: Culture offers order, direction and guides societies in all phases of life by providing tried and trusted ways of meeting physiological, personal and social needs.

Cultures are similar but different : There are certain similarities among all cultures and many elements are present in all societies such as cooking, 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)

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 overall culture. Sub culture analysis enables the marketing manager to focus on beliefs, values, and customs shared by member of a specific sub group make them desirable candidates for special marketing attention. Sub culture therefore can be defined as a distinct culture group that exists within a layer, complex society as an identifiable segments in terms of its beliefs customs and values. Therefore sub culture are relevant units of analysis for marketing research. Sub culture tend to transfer their beliefs and values from generation to generation. Example: Youths

Category Geography Regional

Sub- Culture North Indian, South Indian, East Indian Gujarati, Marathi, Punjabi, Tamilians, Malayalees, etc. Children, Teenagers, Youth, Working professional, etc. 50 Plus.

Age

Elderly People

Women
Caste

Children, Teenagers, Youth, Married women, etc.

Muslims, Christians, Hindu, etc.

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 influencing his/her buying behaviour. Family consists of Parent, Siblings, Spouse, Grandparents, Relatives, etc. What an individual imbibes from his parents becomes his/her culture. What he sees 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 basic consumption unit for most consumer goods.

Economic Well Being

Interpersonal Skills

Provides Emotional Support Morals and Ethical Values Religious Values

Suitable Life Style

Social Relationships

Bachelor stage Newly married Full Nest I Full Nest II Full Nest III

Young, single person <35 Young couples no children Young couples with <6 yrs children Young couples with 6-12 yrs children Old married couples with dependent teenage

Empty Nest I
Solitary Survivor

Old married couples with no children living

Older single person

Influencer (Children)

Communication targeted at Children Decision Maker (Parents, Children)

Initiator (Parents, Children)

Purchaser (Parents)

Communication targeted at Parents User (Parents, Children)

Information Gathering

Some form of class structure or social stratification has existed in all societies throughout human history.
A consumer's social class refers to his or her standing in society. It is determined by a number of factors, including education, occupation and income. While income is an important indicator of social class, the relationship is far from perfect since social class is also determined by such factors as place of residence, cultural interests and world-view.

Social Class is defined as the division of members of a society into hierarchy of distinct status classes, so that members of each class have relatively the same status and members of all other classes have either more or less status. Social Class is often measured on the bases of: relative wealth, Power, prestige.

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

Social Class
Upper Class

Life-style Orientation
Good taste Graceful living Good Things in life Individual expression Interest in arts and culture Respectability Conformity social esteem Fun oriented Focus on Possessions Work related life

Purchasing Tendencies
Quality merchandise Expensive hobby and recreation equipment Travel Art Items in fashion Items related to self presentation Nice clothing, and home items. Newest appliances Sporting events Food items

Middle Class

Working Class

Lower Class

Close family relationships Not interested in world affairs Neighborhood oriented

Readily available products Status symbols

Aspirations Middle Class To belong to uppermiddle class

Prefer Products consumed by uppermiddle class

Positioning Upper class symbolism for middle class products

 Opinion leaders are those people who, in a given situation, are able to exert

personal influence. They are the ones most likely to influence others through word-of-mouth communication because others seek advice and information from them. Opinion leaders can influence the behavior of consumers positive and negative towards to 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 there purchase. Opinion leadership is category specific an opinion leader in one product category is often an opinion seeker in others.

Innovation:
Is an idea, practice or a product perceived to be new by the relevant individual

or 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

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

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

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

Early Majority 34.0%

Late Majority 34%

Early Adopters 13.5%

Laggards 16.0%

Innovators 2.5%

Innovators:
Are venturesome risk takers Capable of absorbing the financial and social cost of adopting an unsuccessful

product 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

Late Majority:
Are skeptical about innovations Adoption is a response to social pressures or decreased availability of previously

used 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

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

Assignment
Exercise 1 Use the Internet to find one advertisement which show atleast three class

of reference group and one advertisement on opinion leader

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 process