Reference Group in Consumer Behaviour

Table of Contents:-

Reference Group Meaning
What is reference group in consumer behaviour?
Nature of reference group in consumer behaviour
Sources/Types of reference group in consumer behaviour
Reference Group Powers

A reference group in consumer behaviour is a group of people whom a consumer admires, seeks approval from, or looks up to when making decisions about purchasing products or services. This reference group in consumer behaviour can consist of family members, friends, colleagues, or even celebrities and public figures.

Reference Group Meaning

A Reference group refers to a group of people that an individual refers to while making buying decisions. It is a group that serves as a reference point for an individual for his or her beliefs, values, attitude and behaviour.

A reference group in consumer behaviour generally consists of two or more people who share a common set of norms, attitudes, values, or beliefs, and have a defined relationship that leads to interdependent behaviour. A reference group is an important aspect of the decision making process when it comes to the purchase of goods or services.

These types of groups may vary in size and composition, as they are unique to each individual. They may include family members, relatives, friends, colleagues, and other close acquaintances. Furthermore, reference groups can include organizations like colleges, schools, police academies, and membership corporations.

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What is reference group in consumer behaviour?

A reference group is an individual, group, or institution, whether real or imagined, that has the power to impact consumer behaviour. It is also not important that the consumer has to be a member of a reference group.

Eg: Friends, family, and sports clubs like Manchester United, Liverpool etc.

An individual’s reference group comprises fictional or real institutions, groups or individuals who influence his/her perception, behaviour or evaluations. The characterising aspect of a reference group is that the individual is not necessarily a member of that group.

For example, Changes in behaviour may occur in children as they aim to imitate the lifestyle of the group they aspire to join.

In another example, A person who rarely goes jogging may aspire to become a regular athlete like others and may value owning Nike sports shoes. Famous athletes like Michael Jordan and Bo Jackson frequently endorse these shoes.

Even marketers admit the importance of the reference group, affecting the information processing and purchase decisions of the consumers. Reference groups or persons, whom people regard as highly credible due to their expertise in a specific field, always help in spreading information to consumers who are uninformed or unaware of the product or service. The impact of reference groups is evident in the choice of goods and brands by the people. This is why advertisers extensively utilize the reference group in promoting products.

Nature of reference group in consumer behaviour

The following points highlight the nature of reference group in consumer behaviour:

1) Reference groups are conceptual groups rather than actual groups because they do not require membership. These groups serve as points of reference for individuals which influences their attitudes, behaviours, and decision making processes.

2) Relative deprivation is the core of reference group behaviour. For example, an Indian scientist who upon comparing his circumstances with that of another Indian scientist settled in Canada, experiences a sense of deprivation due to the lack of numerous research-friendly infrastructural facilities.

3) Anticipatory socialisation is a fundamental aspect of the reference group. Individuals seeking membership in the reference group must undergo the process of socialisation that is, take on the values and lifestyles of the group to which they would like to join in future.

4) Reference groups need not remain the same forever. An individual may change his reference groups as he takes on different statuses in life such as transitioning from student to professional or from single to married, the need for new reference groups arises.

5) Reference groups are not as important in simple societies as they are in modern societies. In modern complex societies, reference groups are abundant.

6) When considering group behaviour, individuals often associate themselves with others or groups and try to adopt their values and standards.

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Sources/Types of reference group in consumer behaviour

Given below are the particular categories of reference groups which influence the behaviour and attitudes of the consumers:

Friendship Groups
Work Groups
Shopping Group
Virtual Groups or Communities
Consumer-Action Groups
Brand Communities
Aspirational and Dissociative Groups

1) Shopping Group

Shopping groups consist of individuals or groups who accompany the consumer during their shopping trips. Friends, relatives or family members come under the category of this group. These buddies not only give company to the shoppers but also help them with their purchasing decisions regarding brands and products. Whenever a consumer goes to buy a particular product, he/she prefers to have the company of a person who knows much about that product.

2) Work Groups

The individuals or groups present in the workplace of a consumer (if he/she is employed) who are capable of influencing the behaviour of that particular consumer are called ‘work groups’. It may involve colleagues, juniors and seniors.

3) Friendship Groups

Consumers love shopping with friends as they enjoy each other’s company. Friendship groups foster a sense of togetherness and independence among their members. Outside the family, friendship groups are the first social groups of which individuals become members. As no particular structure or hierarchy is there in the friendship group, it is placed under informal groups. Friends play a major role in influencing the purchasing decision of an individual, especially in the areas of fashion clothing, jewellery, makeup items, health and hygiene items, edibles, etc. That is why, friendship, freedom and the fun theme are used by most marketers for marketing to children and youth. For example, Tic Tac uses friendship as a theme to target youth.

4) Brand Groups or Communities

The brand group plays a role in shaping an individual’s preferences. Users of a particular brand form a group or community to share their views and feedback about the brand and its products. Geographical confinement is a feature of certain brand communities. Members of such brand groups may easily influence an individual’s buying behaviour. Marketers pay special attention to such groups as they work as a promoting media for the brand.

5) Virtual Groups or Communities

People on the internet play a role in shaping the decisions of modern consumers. People use the internet for sending and receiving mail, exploring and exchanging facts for socialising and virtual shopping, thereby making it a very significant part of their lives. There is a trend of virtual communities or groups where people share their ideas and views. This platform influences the buying behaviour of the consumers. The idea of virtual community is getting popularised among people due to various changes taking place in the social-cultural spheres of life, like the rising number of working parents, increasing nuclear families, the concept of the one-child family and a higher rate of mobility among people because of job-hopping and transfers.

6) Aspirational Groups and Dissociative Groups

Aspirational Groups are the groups the consumer wants to join. Sometimes consumers purchase a particular product just to join a particular aspirational group. Marketers very frequently use this strategy to attract customers. On the contrary, Dissociative Groups are the groups with which the consumers do not want to relate themselves. Therefore, they avoid such buying behaviours which might link them to such groups.

7) Consumer-Action Groups

Consumer-action groups may also be categorised under reference groups as they influence the buying behaviour of individuals. These groups make a joint effort to support a shared cause or causes that make an impact on general people. For example, spreading awareness about AIDS in red light areas, anti-drugs drive, public health, disaster management, etc. The people who join hands for these ventures are generally volunteers, who team up for identity or to fulfil the collective need of the group.

Reference Group Powers

The following points describe the different powers of a reference group through which it influences the buying behaviour of an individual:

1) Expert Power

Reference groups also have expert power to influence individuals. Any kind of specialisation or competency in a particular field makes the individuals or groups expert in that particular field. For example, an interior designer may affect the house-buying decision of an individual due to his/her expertise. In another example, a health expert may advise the consumption of certain types of food items to a person. It comes under his/her expert powers.

2) Referent Power

Reference groups have referent power. They can influence the behaviour of the individuals. When a consumer likes the qualities of other persons or groups and tries to emulate their actions and behaviour by following their lifestyle and indulging in their kind of activities, it expresses the referent power of the reference groups. People are generally affected by the lifestyles and behaviours of the celebrities. For example, Bollywood actress Shilpa Shetty creates a fitness-oriented image in the eyes of most of the women in India. Likewise, actress Sonam Kapoor is known for her fashion sense.

3) Information Power

Reference groups have information power also. Individuals or groups possess the power of knowing a specific subject which other people would want to know about; it expresses their information power. For example, consumers rely on IMDb ratings of movies for their level of uniqueness and quality. This rating influences the movie-watching behaviour of the individuals.

4) Coercive Power

Coercive power refers to influencing the behaviour of others by showing them terror or refusing to give some rewards. It is rarely a corporeal punishment; however, it holds the intention to harm the emotions of the person. Here, the attempt is to scare the consumer by presenting them with the potential harm that would result if a particular product is not purchased. For example, being avoided for dandruff and foul breath. Conversely, it is reward power, if the potential harms can be made to go away by purchasing certain products. Coercion is always nasty and people like to avoid the unpleasant experience or things. It is quite challenging to formulate a coercive advertisement without alienating the consumers, but those that can attain the objectives have proved to be very successful.

5) Legitimate Power

Reference groups also express legitimate power. Due to social agreements, few individuals are given special authority or recognition in society, which they use to influence others. For example, medical interns wear a white coat during practice so that patients recognise their legitimate position. In another example, a chief medical officer of a district may restrict the use of a particular drug in the district. It expresses his/her legitimate power.

6) Reward Power

Reference groups also exhibit reward power. They offer incentives to individuals showing a particular behaviour. For example, the Government of India announced to award of monetary benefits to the citizens who use digital transactions.