CONSUMER BEHAVIOR AND MARKETING STRATEGY
by
J. Paul Peter & Jerry C. Olson
Fifth Edition
Irwin McGrawhill Companies
Copyright 1999
United States
Spending
on Kids
Marketing to young
children under the age 5 (infants, toddlers, and preschoolers) was a big
business in the mid 1990s. In 1995 there were about 24 million kids under the
age of 5, up from 20 million in 1980. This increase in the number of young children
was a second baby boom created as the massive group of baby boomers had babies
later in life.
Spending on children
was a rapidly growing sector of the American economy, of course, not all
families could afford to spend Livishly on kids, but many could and did. Many
kids were born to dual career families with both money to spend and guilt to
motivate those purchases. Many parents were older with larger incomes (the
number of children born to women over age of 30 quadrupled since 1970). In
addition, many families were smaller, making it easier for parents to indulge
fewer children. Grandparents were a factor, too. People over 65 had the highest
level of discretionary income of any age group, and with fewer grandkids than
other generations, they could afford to indulge. One retailer estimated that
grandparents generated 25 percent of its baby business.
For parents with the
funds and motivation to buy, there were lots of choices. One New York mother
spent over $5,000 in one year on clothes for her two children under age 5.
Another mother said, “The girls’ clothes just melt your heart. Since she’s been
born, I’ve hardly bought anything for my self. I’d rather spend on her. “A
mother who had her first child at 32 explained, “By the time they have that
first child, people like me are so caught up. These babies are so coveted that
nothing is good enough. “Such sentiments are enough to fuel $25 billion per
year in spending on clothing and other items for kids under 5.
To meet this growing
need, many new merchants entered the kids market. Once children’s wear was
handled nearly exclusively by the large department stores such as Macy’s, Sears
and Saks, but many such stores reduced their children’s offering in the face of
strong competition. Gap identified the trend early with their GapKids stores,
the fastest-growing segment of the $3.7 billion Gap company. In 1995 Gap
operated over 300 BabyGaps special departments within GapKids stores that sold
miniaturized versions of denim jackets, T-shirts, and leggings for little kids.
Even Ralph Lauren got into the business with a clothing line for infants and
toddlers, including a $62 cotton cardigan and a linen dress for $275.
The latest trend, seen
in some wealthy families, is to dress toddleraged kids in clothing from big name designers of
adult clothing. Consider a $250 black motorcycle jacket from Versace, or $99
designer jeans by Moschino, or Nicole Miller’s $150 cocktail dress, all
designed for children aged three to five years old. Where do kids wear such
clothing? Parents say they buy the clothes for special occasions, such as
parties, church, bar and bas mitzvals, but some kids wear these clothes to
school. Comments made by some mothers include: “It’s a parent’s way of wanting
to do better for their children, “or” I can afford it, so why no?” As this
market grows, other big name designers are scrambling to get in Hermes of
France and Armani of Italy among them.
Others businesses such
as toys and travel developed to serve the growing kids market. A California
claim of toy stores called Imaginarium sold educational toys in stores that
were more like playgrounds than retail outlets. Imaginarium stores had two
entrances, one for grown ups and the other (4 feet high) for children. A
company called Discovery Zone created playgrounds in malls with chutes and
ladders for small kids to climb on, balls to throw or fall into, and ropewalks
to hang on. Parents could drop their kids off at Discovery Zone to burn up
excess energy while they lead a quiet cup of coffee.
Source:
Lisa
Gubernick and Maria Matzer, “Babies as Dolls, “Forbes, February 27, 1995, pp. 78-82; Robert Berner, “Now Even
Toddlers Are Dressing to the Nines, “The
Wall Street Journal, May 27, 1997, pp. B1, B10.
This example shows how
changes in the America family can affect marketing strategies targeted at kids
or adults who buy for kids. In making these purchasing decisions, husbands and
wives (mothers and fathers) influence each other’s affective responses,
cognitions and behaviors. These decisions are also influenced by other people
in the social environment, including relatives, friends and peers (both kids
and adults are highly influenced by peer groups). In this chapter we discuss
two types of social influences refrence groups and family.
Refrence groups and
family are aspects of the micro social environment for consumers. Social
interactions with refrence groups and family are often direct and face to face,
which can have immediate influences on consumers cognitive, affective and behavioral
responses to marketing strategies. For instance, the social environment created
when two friends shop together can influence each person’s shopping experience,
decision processes, and overall satisfaction with a purchase. As you learned in
chapter 11 (see Exhibit 11.2), refrence groups and family are important in
transmitting (moving) cultural meanings in the overall society, subcultures and
social class to individual consumers. For all these reasons, refrence groups and family have significant
implications for marketing strategies.
Reference Group Influence on Products and Brands
Reference group do not influence all product and brand purchases to the same degree. Based on research, reference group influence on product and brand decisions is thought to vary on at least two dimensions. The first dimension concerns the degree to which the product or brand is a necessity or a luxury. A necessity is owned by virtually everyone (a flashlight), whereas a luxury is owned only by consumers in particular groups (a sailboat). The second dimension is conspicuous or known by other people. A public good is one that other people are aware an individual owns and uses, one for which day can identify the brand with little or no difficulty a (car ). A private good is used at home or in so that other people (outside the immediate family) would be unaware of its position or use (a hair blower).
Combine these two dimensions produces the matrix shown in Exhibit 14.2. This exhibit suggests that reference group influence will vary depending on whether the products and brands are public necessities, private necessities, public luxuries, or private luxuries. Consider wristwatches, which are public necessities. Because everyone can see whether a person is wearing a wristwatch, the brand my be susceptible to reference group influence. However is likely to be little reference group influence on whether one should purchase a watch.
Refrence
Groups
Individuals may be
involved in many different types of groups. A group consists of two or more people who interact with each
other to accomplish some goal. Important
groups include families, close personal friends, co-workers, formal social
groups (Kiwans, professional associations), leisure or hobby groups (a bowling
team), and neighbors. Some of these groups may become refrence groups.
A refrence group
involves one or more people that someone
uses as a basis for comparison or point refrence in forming affective and
cognitive responses and performing behaviors. Refrence groups can be of any
size (from one person to hundreds of people) and may be tangible (actual
people) or intangible and symbolic (successful business executive or sports
heroes). People’s refrence groups (and single referent persons) may be from the
same or other social classes, subcultures, and even cultures. Exhibit 14.1
lists several types of refrence groups and their key distinguishes
characteristics. These distinctions can be combined to better describe specific groups. For example,
your immadiate co workers constitute a formal, primary, membership group.
Although these distinctions can be useful, most consumer research has focused
on two primary, informal groups peers and family. Issues of major importance to
marketing concerning reference group influence include the following:
1.
What types of influence do refrence
groups exert on individuals?
2.
How does refrence group influence vary
across products and brands?
3.
How can marketers use the concept of
refrence groups to develop effective marketing strategies?
Analyzing
Reference Groups
Refrence groups are
cultural groups in that members share certain common cultural meanings. For
instance, peer groups of college students tend to develop specific meanings and
behavior norms about appropriate clothing and peer groups of teenage boys share
certain meanings about what types of athletic shoes are hot. These refrence
groups can influence the affective and cognitive responses of consumers as well
as their purchase and consumption behavior (“What should I wear today?”).
Exhibit
14.1
Types
of Refrence Groups
Marketers try to determine the content of the shared meanings of various reference groups (the common values, beliefs, behavioral norms, and so on). Then they select certain reference groups to associates with or promote their products. But marketers seldom examine the social processes by which reference groups move cultural meanings to products and from products to the consumer.
Reference groups can have both positive and negative effects on consumers. Many social groups incorporate desirable, positive cultural meanings and become associative reference groups that consumers want to emulate or be affiliated with. Other social groups and embody unfavorable or distasteful meanings and serve as a negative point of reference that people want to avoid; they become dissociative reference groups.
Types of Reference Group Influence
Most people are members of several primary informed groups and a few formal, membership groups (church, civic, and professional associations). In addition, people are aware of many secondary groups both formal and informal. Why do people use some of these groups as a reference group and not others? and How do these reference groups influence consumers affect, cognitions, and behaviors? Basically people identify and affiliate with particular reference groups for three reason: to gain useful knowledge, to obtain rewards or avoid the punishments, and to acquire meanings for constructing, modifying, or maintaining their self-concepts. These goals reflect three types of reference group influence informational, utilitarian, and value expressive.
Informational reference group influence transmits useful information to consumers about themselves, other people, or aspects of the physical environment such as products, services, and stores. This information may be conveyed directly either verbally or by direct demonstrations. For Instance, a consumer trying to decide on a purchase of running shoes or stereo equipment might seek the advice of friends who are knowledgeable about those categories. A person who is trying to learn to play tennis might ask friends to demonstrate how to serve or hit a backband shot.
Consumer tend to be more influence by reference groups if the information is perceived as reliable and relevant to the problem at hand and the information source is perceived to be trustworthy. Reference sources can be a single person as when Dave Thomas and Friends or Frank Perdue expound on the merits of Wendy's hamburgers or perdue chickens. Highly credible reference group are more likely to have informational influence on consumers. Thus some marketers hire recognized experts to endorse a product and tell consumers why it is good.
Information can also be obtained indirectly through vicarious observation. For Instance, an avid fisher may carefully note the types of equipment famous bass fishers are you sing in fishing tournament or on TV fishing shows. This is common behavior many golfers, skiers, mountain climbers and other sports enthusiasts engage in similar vicarious observations of products used by their reference groups. This is why Nike hired basketball star Michael Jordan (obviously an expert) to wear Air Jordan basketball shoes.
Information can be transmitted from reference groups to consumers in three ways. Sometimes informational influence is intentionally sought by consumers to reduce the perceived risk of making a decision or to help them learn how to perform certain behaviors. Thus most beginning sky divers listen very carefully to their new reference group of experienced skydiving instructors as they present information about how to pack a parachute or how to land correctly. Consumers who buy a new computer may seek information provided by a reference group of more experienced users who can help them learn how to use the product effectively.
In other cases information is accidentally transmitted, as when someone overhears reference group members talking about a product or observes members of a reference group using the product. A third way that information may be transferred to the consumer is when reference group members initiate the process. This can occur with enthusiastic reference group members who seek to proselytize for an activity and gain new members. For example, Rollerbladers might try to persuade others to take up the sport. Marketers might use a strategy of getting current customers to create new customers (bring along a friend for dinner and get your meal for half the price).
Utilitarian reference group influence on consumer behaviors (and affect and cognitions) occurs when the reference group controls important rewards and punishments. Consumers usually will comply with the desires of a reference group If (1) they believe the group can control rewards and punishments, (2) the behavior is visible or known to the group and, (3) they are motivated to obtain rewards or avoid punishments.
In some work groups (a formal, membership dan reference group), people are expected to wear formal business suits, Whereas other work groups encourage very casual dress (jeans and T-shirts in some Silicon Valley, California, companies). Rewards and punishments my be tangible (raises, bonuses, being fired) or psychological and social consequences may occur (admiring looks or snide remarks behind your back). Peer groups often administer such psychosocial rewards and punishments for adherence to and violation of the reference group code. Consider how your own peer reference group in college influences your dress behavior. Marketers use these factors by showing such sanctions in TV commercials (people recoiling from offensive body odor, bad breath, or the dandruff flakes on someone’s shoulder).
Value expressive reference group influence can affect people’s self-concepts as cultural units, reference groups both contain and create cultural meanings (beliefs, goals, behavioral norms, lifestyles). As you learned in chapter 12, people are constantly seeking desirable cultural meanings to use in constructing, enhancing, or maintaining their self concept. By identifying and affiliating with certain reference groups that express these desired meanings, consumers can draw out some of these desired meanings, consumers can draw out some of these meanings and use them in their own self-construction projects.
One group of people who buy Harley-Davidson motorcycles and associated product consists of middle and upper middle class professional people (including doctors, dentists, lawyers, and professors). Derisively called RUBS (rich urban bikers) or weekend warriors by the hard-core Harley owners (the tattooed and bearded outlaws or pseudo outlaws), many of these consumers treat the radical, hard-core hardcore Harley owners as aspiration reference group (very few RUBS will ever become hard-core bikers).
The hard-core Harley Bikers express several desirable meanings and values for the RUBS (and probably convey negative meanings to nonbikers). By identifying to some extent with the hard-core biker as an aspiration reference group, RUBS can gain some of these important meanings, including feeling of freedom (from work and family), freedom of spirit, radical independence, patriotism (Harley’s are built in the United States), and a feeling of belonging to a special, unique group. Perhaps some RUBS are also able to inspire a bit of the fear and awe (among nonbikers or owners of other brand) that the hard-core bikers relish.
These reference group meanings can influence affect, cognitions, and behaviors, including purchases of biker clothing and bike accessories. Harley Davidson recognizes these value-expressive desires and needs and markets (often through licensing) a variety of products to satisfy them, including black leather jackets “colors” (clothing with insignias and biker logos), many biking accessories and even a Harley Davidson brand of beer.
In summary, all three types of reference group influence can be accomplished by a single reference group. For instance, as a reference group for the weekend biker, the hard-core Harley Davidson bikers can be a source of information (through magazines and observation), rewards and punishments (waving back or haughtily ignoring the RUBS on the road), and subculture meanings that express one’s values.
Type of Refrence Group
|
Key Distinctions and Characteristics
|
Formal
Primary
Membership
Aspirational
Dissociative
|
Formal
refrence groups have a clearly specified structure, informal group do not.
Primary
refrence group involve direct, face to face interactions; secondary groups do
not.
People
become formal members of membership reference groups.
People aspire to join or emulate
aspirational reference groups.
People
seek to avoid or reject dissociative reference groups.
|
Marketers try to determine the content of the shared meanings of various reference groups (the common values, beliefs, behavioral norms, and so on). Then they select certain reference groups to associates with or promote their products. But marketers seldom examine the social processes by which reference groups move cultural meanings to products and from products to the consumer.
Reference groups can have both positive and negative effects on consumers. Many social groups incorporate desirable, positive cultural meanings and become associative reference groups that consumers want to emulate or be affiliated with. Other social groups and embody unfavorable or distasteful meanings and serve as a negative point of reference that people want to avoid; they become dissociative reference groups.
Types of Reference Group Influence
Most people are members of several primary informed groups and a few formal, membership groups (church, civic, and professional associations). In addition, people are aware of many secondary groups both formal and informal. Why do people use some of these groups as a reference group and not others? and How do these reference groups influence consumers affect, cognitions, and behaviors? Basically people identify and affiliate with particular reference groups for three reason: to gain useful knowledge, to obtain rewards or avoid the punishments, and to acquire meanings for constructing, modifying, or maintaining their self-concepts. These goals reflect three types of reference group influence informational, utilitarian, and value expressive.
Informational reference group influence transmits useful information to consumers about themselves, other people, or aspects of the physical environment such as products, services, and stores. This information may be conveyed directly either verbally or by direct demonstrations. For Instance, a consumer trying to decide on a purchase of running shoes or stereo equipment might seek the advice of friends who are knowledgeable about those categories. A person who is trying to learn to play tennis might ask friends to demonstrate how to serve or hit a backband shot.
Consumer tend to be more influence by reference groups if the information is perceived as reliable and relevant to the problem at hand and the information source is perceived to be trustworthy. Reference sources can be a single person as when Dave Thomas and Friends or Frank Perdue expound on the merits of Wendy's hamburgers or perdue chickens. Highly credible reference group are more likely to have informational influence on consumers. Thus some marketers hire recognized experts to endorse a product and tell consumers why it is good.
Information can also be obtained indirectly through vicarious observation. For Instance, an avid fisher may carefully note the types of equipment famous bass fishers are you sing in fishing tournament or on TV fishing shows. This is common behavior many golfers, skiers, mountain climbers and other sports enthusiasts engage in similar vicarious observations of products used by their reference groups. This is why Nike hired basketball star Michael Jordan (obviously an expert) to wear Air Jordan basketball shoes.
Information can be transmitted from reference groups to consumers in three ways. Sometimes informational influence is intentionally sought by consumers to reduce the perceived risk of making a decision or to help them learn how to perform certain behaviors. Thus most beginning sky divers listen very carefully to their new reference group of experienced skydiving instructors as they present information about how to pack a parachute or how to land correctly. Consumers who buy a new computer may seek information provided by a reference group of more experienced users who can help them learn how to use the product effectively.
In other cases information is accidentally transmitted, as when someone overhears reference group members talking about a product or observes members of a reference group using the product. A third way that information may be transferred to the consumer is when reference group members initiate the process. This can occur with enthusiastic reference group members who seek to proselytize for an activity and gain new members. For example, Rollerbladers might try to persuade others to take up the sport. Marketers might use a strategy of getting current customers to create new customers (bring along a friend for dinner and get your meal for half the price).
Utilitarian reference group influence on consumer behaviors (and affect and cognitions) occurs when the reference group controls important rewards and punishments. Consumers usually will comply with the desires of a reference group If (1) they believe the group can control rewards and punishments, (2) the behavior is visible or known to the group and, (3) they are motivated to obtain rewards or avoid punishments.
In some work groups (a formal, membership dan reference group), people are expected to wear formal business suits, Whereas other work groups encourage very casual dress (jeans and T-shirts in some Silicon Valley, California, companies). Rewards and punishments my be tangible (raises, bonuses, being fired) or psychological and social consequences may occur (admiring looks or snide remarks behind your back). Peer groups often administer such psychosocial rewards and punishments for adherence to and violation of the reference group code. Consider how your own peer reference group in college influences your dress behavior. Marketers use these factors by showing such sanctions in TV commercials (people recoiling from offensive body odor, bad breath, or the dandruff flakes on someone’s shoulder).
Value expressive reference group influence can affect people’s self-concepts as cultural units, reference groups both contain and create cultural meanings (beliefs, goals, behavioral norms, lifestyles). As you learned in chapter 12, people are constantly seeking desirable cultural meanings to use in constructing, enhancing, or maintaining their self concept. By identifying and affiliating with certain reference groups that express these desired meanings, consumers can draw out some of these desired meanings, consumers can draw out some of these meanings and use them in their own self-construction projects.
One group of people who buy Harley-Davidson motorcycles and associated product consists of middle and upper middle class professional people (including doctors, dentists, lawyers, and professors). Derisively called RUBS (rich urban bikers) or weekend warriors by the hard-core Harley owners (the tattooed and bearded outlaws or pseudo outlaws), many of these consumers treat the radical, hard-core hardcore Harley owners as aspiration reference group (very few RUBS will ever become hard-core bikers).
The hard-core Harley Bikers express several desirable meanings and values for the RUBS (and probably convey negative meanings to nonbikers). By identifying to some extent with the hard-core biker as an aspiration reference group, RUBS can gain some of these important meanings, including feeling of freedom (from work and family), freedom of spirit, radical independence, patriotism (Harley’s are built in the United States), and a feeling of belonging to a special, unique group. Perhaps some RUBS are also able to inspire a bit of the fear and awe (among nonbikers or owners of other brand) that the hard-core bikers relish.
These reference group meanings can influence affect, cognitions, and behaviors, including purchases of biker clothing and bike accessories. Harley Davidson recognizes these value-expressive desires and needs and markets (often through licensing) a variety of products to satisfy them, including black leather jackets “colors” (clothing with insignias and biker logos), many biking accessories and even a Harley Davidson brand of beer.
In summary, all three types of reference group influence can be accomplished by a single reference group. For instance, as a reference group for the weekend biker, the hard-core Harley Davidson bikers can be a source of information (through magazines and observation), rewards and punishments (waving back or haughtily ignoring the RUBS on the road), and subculture meanings that express one’s values.
Reference Group Influence on Products and Brands
Reference group do not influence all product and brand purchases to the same degree. Based on research, reference group influence on product and brand decisions is thought to vary on at least two dimensions. The first dimension concerns the degree to which the product or brand is a necessity or a luxury. A necessity is owned by virtually everyone (a flashlight), whereas a luxury is owned only by consumers in particular groups (a sailboat). The second dimension is conspicuous or known by other people. A public good is one that other people are aware an individual owns and uses, one for which day can identify the brand with little or no difficulty a (car ). A private good is used at home or in so that other people (outside the immediate family) would be unaware of its position or use (a hair blower).
Combine these two dimensions produces the matrix shown in Exhibit 14.2. This exhibit suggests that reference group influence will vary depending on whether the products and brands are public necessities, private necessities, public luxuries, or private luxuries. Consider wristwatches, which are public necessities. Because everyone can see whether a person is wearing a wristwatch, the brand my be susceptible to reference group influence. However is likely to be little reference group influence on whether one should purchase a watch.
Reference Groups and Marketing Strategy
We have seen that reference groups are an important
influence on consumers. Not only do members of primary informal groups affect
consumer knowledge, attitudes, and values, but they also affect the purchase of
specific products and brands and even the selection of stores in which
purchases are made. In some cases an analysis of primary informal group
influences can be used to develop marketing strategies. For example, in
industrial marketing a careful analysis of the group influence dynamics among
the various people who have a role in a purchase decision may be useful for
determining appropriate marketing approach. Similarly, peer group influence is
a major asset of firms that sell in home to groups, as in the case of
Tupperware parties. In such Instances many individuals conform to the norms of
the group by purchasing a few items. Occasionally marketers my try to stimulate
reference group influence – a health club might offer you two months’ service
free if you get a friend to sign up for a one year membership.
Exhibit 14.2
Effects of Public
Private and Luxury Necessity Dimensions on Reference Group Influence for
Product and Brand Choice
Necessity
|
Luxury
|
|
Public
|
Public necessities
Reference group
influence
Product Weak
Brand Strong
Examples: Wristwatch,
Automobile, man’s suit
|
Public luxuries
Reference group
influence
Product Strong
Brand Strong
Examples: Golf clubs,
snow skies, sailboat
|
Private
|
Private necessities
Reference group
influence
Product Weak
Brand Weak
Examples: Mattress,
floor lamp, refrigerator
|
Private luxuries
Reference group
influence
Product strong
Brand Weak
Examples: TV game,
trash compactor, ice maker
|
Source: Adapted from “Reference Group Influences on
Product and Brand Purchase Decisions, “William O. Bearden and Michael J.
Etzel, Journal of Consumer Research, September 1982, p.185.
Salespeople
my attempt to create a reference group influence by describing how a customer
is similar to previous purchasers of the product. There was a couple in her
last week much like you. They bought the JVC speakers. Salespeople could
describe themselves as a reference group. Oh your two children go to East High
School? My Kids got there, too. We
bought them an IBM PC to help them with their science projects.”
