Research Paper IC Value : 61.33| SJIF Impact Factor(2018) : 8.003| ISI Impact Factor (2017):1.

365 (Dubai)

Volume - 7, Issue- 7, July 2019 | e-ISSN : 2347 - 9671| p- ISSN : 2349 - 0187
EPRA International Journal of Economic and Business Review -Peer Reviewed Journal

IMPACT OF COMPONENTS OF
REFERENCE GROUPS IN BUYING
DECISIONS

Dr. Anjali Gupta

Assistant Professor, A.R.S.D College, University of Delhi, Delhi-110021, India

Dr. Purushottam Kumar Arya

Assistant Professor, A.R.S.D College, University of Delhi, Delhi--110021, India

ABSTRACT
The study of reference groups shows that awareness and reference group is interconnected. The terms of
susceptibility change in relation to different types of products. The reference group concept has established its
relevance among professional marketers as a means to have the edge over the competitors. Marketers have used
different reference group to attract different targeted consumers. Also, marketers have communicated their messages
not directly but through people who have influences over the targeted customers. The discussion below focuses on
the concept of Reference group. Also we discuss in detail the power and types of reference groups. Marketers have
used different reference group to attract different targeted consumers. Also, marketers have communicated their
messages not directly but through people who have influences over the targeted customers. The discussion below
focuses on the concept of Reference group. Also we discuss in detail the components and forces of reference groups.
KEY WORDS: Consumer behaviour, Brands, Interpersonal Influence, Reference Group, Purchasing
Decision

INTRODUCTION appraisals and form their attitudes. The adept, who belongs
A reference group is defined as an actual or imaginary to a reference group, and to whom the individual refers, is
individual or group conceived of having significant relevance called a “reference individual” similar to a “role model.”
upon an individual’s evaluations, aspirations, or behavior. Reference groups are of two types: membership group
(Park & Less, 1977).Consumer behavior is highly influenced and non-membership group. The membership group is the
by reference groups mainly for branded products like one with which individuals share their primary membership,
fragrances (Chow, Celsi & Abel, 1990), snack foods such as family, neighborhood and peer group. It acts as the
(Ratneshwar & Shocker, 1991), mineral water and sodas (Van normative group to which individuals hold their attitudes in
Trijp, 1994), clothing (Batra, Homer & Kale, 2001) and candy conformity with what they perceive to be the group consensus.
(Ratner & Kahn, 2002). Non-membership group is the group with which an individual
Reference groups deviate an individual to new behaviors share either secondary or tertiary relationships, or to which
and lifestyle, they also influence attitudes and self-concept; the individual is an outsider. These can be social organizations,
they create pressures for conformity that may affect actual administrative offices, and political parties. It acts as a
product and brand choices. The basic understanding of comparative group that the individual makes comparisons
reference groups for marketing strategists lies in mainly with, and against which they conduct self-evaluations, thus
understanding of what behavior develops by influence rather socializing themselves to what they perceive to be the group’s
than the generic behavior of consumers. norms.
The reference group concept was, in fact, originally The reference group concept has established its relevance
developed in connection with small groups. These include among professional marketers as a means to have the edge
the family, close friends, neighbors, religious groups, work over the competitors. Marketers have used different celebrities
groups and also, athletic groups. (reference group) to attract different targeted consumers. Also,
The reference group, according to Merton (1949), is a marketers have communicated their messages not directly but
group referred to by people to evaluate their qualities, through people who have influences over the focused
attitudes, values, behaviors, roles, performances, aspirations customers. (Yang et al., 2007). It can be inferred that to have
and ambitions. It acts as a psychological frame of reference more efficient marketing strategy the marketers must know
for the individuals to shape their behaviors, conduct self- about reference group knowledge. There are many studies
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 EPRA International Journal of Economic and Business Review|SJIF Impact Factor(2018) : 8.003 e-ISSN : 2347 - 9671| p- ISSN : 2349 - 0187
which focus on the relationship between the reference group 3. Disclaimer Group: It is a group in which an
and consumer behavior. individual is a regular member but disapproves
By the studies of Herr et al., 1991, researchers have group’s values and attitudes.
suggested that these communications have more influence on 4. Avoidance Group: It is one in which an individual
product judgments than printed information. Consumer is not a regular member and dislikes their values,
susceptibility to interpersonal control or group influence is beliefs, and behaviors.
assumed to be a general trait that varies across individuals and According to Blackwell, Miniard and Enquel (2005) reference
is related to other individual traits and characteristics. The group consists of:
construct is defined as the need to identify with or enhance 1. Primary and secondary groups
one’s image in the opinion of significant others. This can be 2. Formal and informal groups
done through the acquisition and use of products or brands. It 3. Aspirational and dissociative groups
can also be done through the willingness to conform the 4. Virtual groups
expectations of others regarding purchase decisions, and the The primary groups are the most influential. They share
tendency to learn about products and services by observing same values, beliefs, and behavior. The family is the main
others or seeking information from others (Bearden et al., example and close friends. Secondary groups have less
1989). interaction. Examples are relatives, professionals, etc.
Majority of the reference group studies in past relate to Reference Groups can further be divided into two
impact of reference group in the process of consumers’ categories, Normative and Comparative. Normative Reference
decision making (Bourne, 1957; Witt, 1969; Bearden & Etzel, Groups include individuals with norms and values, who
1982; Brinberg & Plimpton, 1986; Childers & Rao, 1992; provide information through direct interaction. These include
Mascarenhas & Higby, 1993; Martin & Bush, 2000; Yang et parents, teachers, co-workers, peers, etc. Comparative
al., 2007). Reference Groups provide with the level of achievement,
Some studies want to investigate susceptibility to setting it as the standard and one aspires to achieve that. A
reference group influence to establish that these consumers’ major example is celebrities.
awareness is different due to their diverse demographic For young consumers reference groups can be grouped
factors. Nationality and age are the two most important as:
demographic factors that have been studied. (Yang et al., 2007; (1) Friendship Peer Group: The friends are an
Khan & Khan, 2008). informal group, an unstructured organization which
Some have attempted to find the differences in influences fulfills aspects like companionship, security and
due to the difference in different kinds of reference groups given an opportunity to an individual to discuss
(Deutsch & Gerard, 1955; Burnkrant & Cousineau, 1975; problems which they are reluctant to discuss with
Childers & Rao, 1992; Mascarenhas & Higby, 1993; Yang et family members. Peer group influence is defined
al., 2007). The researchers like Park & Lessig, 1977; Bearden the as the extent to which peers exert influence on
& Etzel, 1982; Makgosa & Mohube, 2007, have stressed that attitudes, thoughts of an individual. (Brestol and
different types of products lead to the distinct influence of Mangleburg, 2005). Peers are most important
reference group). Many studies focus on the effect of reference reference group influencing the buying decision
group towards consumers’ purchase decision-making process. other than his/her family.
However, they do not relate to identifying the possible factors The reference group’s impact on the buying decisions of a
from the perspective of reference groups. consumer is described as in two ways:
The study of reference groups shows that awareness (i) Reference group set levels of aspiration,
and reference group is interconnected. The terms of (ii) Reference group identifies the actual items
susceptibility change about different types of products. The considered acceptable at different levels of
same was emphasized by Bearden and Etzel (1982).According acceptance.
to them; the consumers tend to have different susceptibility (2) Formal Social Groups: joined by a person
from reference group influence according to a separate product to fulfill a specific goal like school is joined by
that they intend to buy. students to enhance their learning. Students of the
TYPES OF REFERENCE GROUPS same school are required to buy the same uniform.
Kotler and Keller (2006) defined reference groups as (3) Shopping Groups: People of the same
primary and secondary reference groups. Primary group personality or who they feel have more experience
comprises of the family, neighbors and workmates. There are or knowledge about the desired product shop
personal, continuous and informal interactions with members together.
of the group. The secondary group is more formalized and (4) Working Group: The groups can be formal or
there is less continuous interactions and consists of religion, informal. The formal working group effect product
professional and trade unions. decision while working together. While informal
As per Schiffman & Kanuk, 2000 reference group can be groups may effect a person while an individual is
classified as: having coffee, at lunch time or after hours meetings.
1. Contractual Group: It refers to the group in which (5) Group Norms and Conformity: A norm
a person has regular face to face contact or holds in a group is established to meet social expectations.
membership, and whose beliefs, attitudes and All members of a group are forced to confirm to
standards he approves. those norms. School uniform is an example of
2. Aspirational Groups: It is a group in which an conformity with group norms.
individual do not have face to face contact but aspires
to be a member of that group.
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 Dr. Anjali Gupta & Dr. Purushottam Kumar Arya
According to H.Hymen some particular individuals in POWER OF REFERENCE GROUPS
society standards or values become the ideal for the other The influences of social class as well as of reference groups
people and are imitated by them. In general, a reference group on consumer behavior can be identified through the impact of
is one which an individual perceives as holding interests, social power. The nature of the social power of these groups
attitudes and valves in common. He takes that group as a on consumer behavior can analyze by examining the various
basis for self-evaluation. bases of power. There are five bases of social power which
Components of Reference Group are as follows: are as follows:
Psychological attachment  Reward Power: This is the ability to give rewards.
Certain norms, rules & regulations – we follow these Rewards may take several forms: money, gifts,
of our group and also that of the reference group. psychological rewards such as recognition and
This gives emotional satisfaction. Sanskritisation praise. The magnitude of the compensation also
is an example (the lower castes follow the rules and increased the amount of power. In some situations,
regulations of higher casters). the use of products offers the rewards of group
Ideal Person – Example of Mahatma Gandhi – when acceptance, for example, clothing.
you read about the Mahatma you want to be like  Coercive Power: This is the ability to give threats,
him. He is the perfect person in your view. or withhold rewards. An individual can thus be
 Every person or group may have different reference threatened or coerced to behave in a particular
group. One may like or dislike a particular group. manner, for example in purchasing accepted clothing.
Reference group changes with time, situation, etc. Deodorants, mouthwash, life insurance, are also sold
For a particular time you may have one reference frequently by using coercive power.
group, and at another time you may not like that  Legitimate Power: it is closely related to cultural or
group and do n’t make it your reference group. group values. It involves the sanction of what ought
When he is not satisfied with the group to which he or should be done since the group has a legal right to
belongs he wants to join another group. influence persons because they belong to it.
    Mahatma Gandhi and reference group may vary  Referent Power: The basis of referent power is the
from time to time therefore sometimes the reference identification and feeling of oneness of the person
group could become your Mahatma Gandhi. with the group. It arose since a person admires or
Social adjustment – when we follow the norms etc. would like to be associated with the group. This
of the reference group we are adjusting to that group power is often working on a purchase of status-
and this leads to us adjust more easily to our society. oriented products. Consumers strive to obtain a
FUNCTIONS OF REFERENCE GROUPS similar status by purchasing the item recommended.
1) To inform or make individuals aware of specific  Expert Power: Consumers accept information from
product or brand. members of a group they consider being experts.
2) They provide individuals with an opportunity to From these various bases of power, it appears that a
compare his or her thinking with the attitude of the person may be attracted to conform to group norms either, to
group. gain praise or recognition or in response to coercive power.
3) They influence the individual to adopt attitudes and There exists different views as to the forces which govern
behavior that are consistent with the norms of the the impact of reference group on the buying behavior of the
group. consumers. According to Blackwell, Miniard, and Enquel
4) They legitimise the individual to use the same (2005), the influences can be grouped as:
product.      Utilitarian influence: this influence types occur
THE IMPACT OF REFERENCE GROUPS when individual works according to the expectations
ON CONSUMER BEHAVIOR of others. They try to avoid punishments or try to
1) They influence attitudes and self-concept. obtain rewards. Factors may be cultural pressure,
2) They create pressure for conformity and product the fear of deviation, commitments, etc.
choice. Value-expressive influence: under value expressive,
3) They help to identify permanent characteristics and individual accepts the influence of others with whom
facts. they tend to keep relation with. This relation is
4) They become role models that influence consumer one-way; therefore acceptance doesn’t depend on
actions. an imposition of the group. Value-expressive
5) They have both positive and negative influence on influence comprises of informational influence and
buying decision. normative influence. Reflective and comparative
6) They act as a point of comparison. appraisals are the two types of normative influence.
7) They work as a basis for forming values, attitudes By reflective appraisal, people will evaluate other’s
and consumption behaviors. values and by comparative appraisal people evaluate
8) Reference groups provide an understanding of other attitude, beliefs, ability or emotions.
interrelations between consumers. Conceptually utilitarian and value-expressive can
9) Marketers can use reference groups to influence be separated but their measures cannot be separated.
positive attitudes towards a brand. Informational influence. informational and individual
10) Symbolic reference groups are used when advertising accepts the critique, recommendation or experience
a brand. from others, about products, services, and brands.
The individual believes that person has got some
knowledge about the product, service or brand.
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EPRA International Journal of Economic and Business Review|SJIF Impact Factor(2018) : 8.003 e-ISSN : 2347 - 9671| p- ISSN : 2349 - 0187
Research shows that there is a need to study culture and (3) Education young consumers and more educated
social influences which vary according to the culture. It now and have more information on trends. They
comprises of Informational, Value-expressive and utilitarian are more demanding and particular about quality
influence. Informational influence deals with enhancing one’s products.
ability to cope with the environment. It observes the behavior (4) Occupation decides the product choice.
of others and gains information from them. Utilitarian (5) Income amount of money spent by consumers on
influence is applied when one works according to the different products depends on their income.
expectations and requirement of others to avoid punishments (6) Quality and durability are an essential consideration
and to gain the award. for many consumers.
FACTORS AFFECTING POWER OF (7) Family members is a reference group which has an
REFERENCE GROUPS impact on product choice of consumers. They have
1) Knowledge and experience effects like- joint decision making, consumer
Those without knowledge and experience will need socialization with family classmates friends and
influence from RGs and those with full information neighbors and family life cycle.
do not need influence. Those enlightened make (8) Social factors- factors like cultural pressure, fear of
independent decisions. device, group ungainly size, etc. have a significant
2) Credibility impact on product choice.
Those with accurate information have greater (9) Susceptibility to Interpersonal Influence- it refers
influence. Acceptability of information is to an individual’s need to identify or enhance his/
circumstantial. Those with appealing lifestyles have her image in an opinion of his/her significant others.
greater influence and power. Permanent attitudes For his consumers buy products often believed will
are difficult to change. impress his/her and me.
3) Communication skills (10) Word of mouth- it is persuasive means where
The acceptance of advice depends on the verbal or information about a product is transmitted from a
pictorial presentation of the product. Good person to other.
communication has greater influence. The same (11) Impact on opinion leaders- opinion leaders are the
reference group may give different advice depending persons who are frequently able to influence other’s
on the context. The communicator must understand attitudes and behavior. They may be influential
the message recipient. celebrities or fashion leaders or leading fashion
4) Product conspicuousness (easily seen or imagines. They are competent, credits and socially
described) culture.
The impression a product gives in relation to the (12) Mass media and advertising- they are essential
reference. The buyer purchases a product with the sources of information that influence the foundation
reference in mind. of consumer attitudes.
According to Schiffman and Kunuk (2000), there are four (13) Cultural factors- have an impact on product choice.
ways of influencing buying decisions. It consists of elements like socio-economic needs,
a ) Making prospective buyers aware of the existence modestly expected, marital status, political beliefs,
and quality of the brand religious habits.
b) Giving individuals the opportunity to compare their CONCLUSION
thoughts with those of the group. A reference group has been introduced and considered as
c) Influencing the individual to adapt attitudes and a factor which also has influences on target consumers’
behaviour consistent with the group. purchasing decision making. It is called “reference group
d) Legitimising the buying and use of the same product influences.” Due to its importance established in studies, it
as the group. might be accepted by most consumer behavior models.
REFERENCE GROUPS IMPACT ON However, a reference group is important as it informs and
CONSUMER BEHAVIOR makes individuals aware of products and brands. They
Past studies have shown that the product choices of the influence selection choice behavior of an individual.
consumer’s changes with variation in factors like: According to the different researches being made in the
(1) Age- for children the decision of product choice is past, the reference group is always considered as an important
taken by parents whose primary concern is a element in the consumer buying decision. People’s buying
comfort, practicality, and safety. For teenagers, the behavior is strongly influenced by the social class to which
product choice is affected by peers, celebrities, and they belong, or, aspire to belong, rather than by income alone.
brand conscious. For adults, product choice Social class measures have also been linked to demographic
depended on factors like spouse choice, economic and geographic data using the principle that people of similar
factors, present of their look, brand name, lifestyle social classes live in geographic clusters. Thus we can conclude
and changed body shaped. For adults, the product there is a mixed opinion of the researchers as to the extent to
choice is greatly influenced by functionality. which the consumer behavior is affected by reference group.
(2) Gender differentiation has a great impact on the Studies found that peer influence is strong for publically
product choice of the consumers. The product choice consumed luxuries than for privately consumed necessities.
is affected by different social expectations on men A strong peer influence was also found to impact the purchase
and women. of publically consumed necessities than personally consumed
needs. It is also concluded that there is equal peer influence

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 Dr. Anjali Gupta & Dr. Purushottam Kumar Arya
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