Authors' Overview of the Chapter

Chapter 14

REFERENCE GROUPS AND FAMILY

AUTHORS' OVERVIEW OF THE CHAPTER

This chapter concerns two types of micro social influences--reference groups and family. In contrast to the broad, pervasive macro social influences discussed in Chapters 12 and 13, reference groups and family are tangible social aspects of consumers' immediate environment. Therefore, they have direct and substantial effects on consumers' cognitions, affect, and behaviors.

Reference Groups. We begin by discussing reference groups--other people who influence a consumer's cognitive, affective, and behavioral responses. Consumers use reference groups as a basis for comparison or a "point of reference" in evaluating and judging their own behaviors, beliefs, and attitudes. By serving this comparison function, reference groups can exert significant influence on a person's cognitive and behavioral responses.

We make several distinctions between types of reference groups, such as formal and informal groups. Then we describe three types of influences that reference groups can have on consumers' behaviors, knowledge, meanings, and beliefs--informational, utilitarian, and value expressive.

¨ Informational influence refers to information about products, services, stores, etc. that reference groups communicate to a consumer. Such information has greater impact on consumers' beliefs and attitudes if it is relevant to an important goal.

¨ Utilitarian influence occurs when consumers comply with the desires of the reference group in order to receive rewards or avoid punishments. Reference groups can dispense reinforcers (and sanctions) when consumers conform (or fail to conform) to the group's expectations and norms.

¨ Value-expressive influence occurs when consumers emulate (imitate) a reference group in order to enhance their self-concept or express their basic values.

Next, we consider reference group influences on consumers' product and brand choices. We discuss the differences between necessity goods that nearly everyone owns and luxury goods that only certain groups buy. We also describe the differences between public and private goods that are either known to other people or not. We discuss research by Bearden and Etzel showing that reference group influence on product choice and brand choice varied according to the type of product. For instance, reference group influence is likely to have a strong influence on consumers' choice of both product and brand for public luxury products like snow skis, but not for private necessity goods like toothpaste.

Then, we discuss how marketing strategies can use reference group influence. For instance, sales persons often refer to reference groups in their sales strategies ("I sold _____ to some people just like you folks. They thought it was perfect for them."). As another example, advertisements frequently portray certain types of reference groups using the product and/or use models that personify (symbolically represent) a reference group.

Families. In the second half of the chapter, we turn our attention to the family and how the family influences consumer behavior. We note that most marketing research has taken the individual as the focus of attention, even though the family is a more relevant unit of analysis for many purposes.

We discuss three reasons why marketers should analyze family decision-making. For one, families are the relevant decision-making unit for many types of purchase decisions (home furnishings, cars, appliances, vacations). In fact, families make purchase decisions for a great many products and services, including some low-priced items such as food products and beverages. In these cases, rather than studying how a single consumer makes a decision, marketers should examine the cognitions, behaviors, and environments of several family members at once. In addition, marketers should study how these people interact with each other in making the decision. The complex social interactions involved in such decisions makes analyzing family decision-making difficult.

We distinguish between families and households--both terms are used in analyses of markets. A household consists of the people who live in a housing unit (which could be a home, an apartment, a dorm room, a nursing home). Marketers are interested in two types of households--families and nonfamilies. A nonfamily household consists of unrelated people living together. Families contain at least two people living together who are related by blood, marriage, or adoption.

Family Decision Making. We then distinguish several roles that members of a household might undertake during decision making, including influences, gatekeepers, deciders, buyers, users, and disposers (pages 455-456). We briefly discuss the relative influences of husbands, wives, and children in family decision-making. A major reason for studying families is that children increasingly influence purchase choices and budget allocations in the family. Also, many children have considerable money of their own to spend. This importance is reflected in the family life cycle discussed later in the chapter. Then we discuss conflict in family decision-making, including disagreements over the appropriate end goals or the means to achieve an agreed-upon goal.

We continue the discussion of family decision making, with a focus on interpersonal influences within the family. We point out that despite research on the subject, we know relatively little about how husbands, wives, and children interact when making decisions as a family. We discuss the conflicts that might occur during family decision-making and how family members might resolve the conflicts. We end with a discussion of different family influence strategies such as expertise, bargaining, and emotional (Exhibit 14.3) and patterns or styles of influence behavior (Exhibit 14.4).

We discuss the consumer socialization process by which children (and other newcomers to a culture) acquire knowledge about products and services and the behavioral skills to search for and select products to buy.

Next, we identify some of the major cultural and demographic changes in the American family and discuss their implications for marketing strategy. Included are changes in the employment status of women, changes in patterns of marriage and divorce, and changes in childbirth patterns and child rearing practices.

Family Life Cycle. Then, we discuss the family life cycle, which identifies the key social changes that occur in a family over time as a function of major life events (marriage, birth, divorce, death). We present a model of the modern family life cycle that reflects recent changes in family composition caused by changes in marriage, birth, and divorce patterns (see Exhibit 14.5).

We discuss several types of households and families in modern society that have significant implications for marketing strategies--including single person households, adult children living with parents, and divorced persons. We conclude with some marketing implications of the family life cycle including a discussion of the time-stressed consumer.

Finally, we discuss marketing implications of the family life cycle, especially those directed at the time stressed shopper.

KEY CONCEPTS AND ISSUES

· Types of reference groups

· Three forms of reference group influence--informational, utilitarian, and value-expressive

· Effects of product and brand characteristics on the relative reference group influence on purchase choice decisions

· Differences between households and families and nonfamilies

· Family decision making process

· Conflict in family decision making

· Influence strategies used by family members

· Consumer socialization

· Implications of current demographic patterns of family composition

· Family life cycle

CHAPTER OUTLINE

Chapter 14. REFERENCE GROUPS AND FAMILY

A. Chuck E. Cheese

B. Reference groups

1. Analyzing Reference Groups

2. Types of Reference Group Influence

3. Reference Group Influence on Products and Brands

4. Reference Groups and Marketing Strategy

C. Family

1. Family Decision Making

a. Influences on family decision-making

b. Children and family decision-making

c. Conflict in family decision-making

2. Consumer Socialization

3. Factors Influencing American families

a. Changes in female employment

b. Changes in marriage and divorce

c. Changes in childbirths and rearing practices

4. Demographic Changes in Household Composition

5. Family Life Cycle

a. Marketing analysis

b. Marketing implications

D. Back to ... "Chuck E. Cheese"

E. Marketing Strategy in Action: Saturn

TEACHING OBJECTIVES

After completing this chapter, students should be able to:

· define reference groups and describe their general importance for marketers.

· explain the three main types of reference group influence.

· describe the varying influences of reference groups on product and brand choice decisions.

· identify marketing strategies that make use of reference group factors.

· describe several reasons why family behavior and decision making is important to marketers.

· describe various roles that family members can take on during decision-making.

· discuss how conflict can arise in family decision making.

· discuss types of social influence between family members in family decision-making.

· define the family life cycle and discuss its relevance to developing marketing strategies.

TEACHING IDEAS AND SUGGESTIONS

Overview. This chapter presents several general theoretical ideas about two small-scale, micro aspects of the social environment--reference groups and family. None of the concepts presented here is difficult. Basically, students need to grasp two fundamental ideas. First, reference groups and families can have powerful effects on people's behaviors as well as their affective and cognitive responses. Second, marketers usually have little direct control over these factors. There is little marketers can do to change a person's reference group(s) or their family circumstances. The key implication for developing marketing strategies is to carefully analyze and understand reference group and family factors so that marketers can adapt their strategies to the micro social environment.

Possible Mini-Lecture: Types of Reference Group Influence. Students should understand the three types of reference group influence--informational, utilitarian, and value-expressive. You might briefly lecture on the following points.

There are many types of reference groups. Reference groups include close friends, co-workers, people who live in the same household, relatives, membership groups (the school band, business clubs, church groups), and symbolic or aspirational groups (rock stars, college graduates, business executives, rich people, politicians).

Some reference groups are actual groups in which people interact directly, in face-to-face encounters. Other groups (aspirational) do not involve direct interaction. Symbolic reference groups may not even be real, but just symbolic or imaginary ("movie stars").

There are three types of reference group influence--informational, utilitarian and value-expressive.

Informational influences occur when other people provide information that changes consumer's knowledge, meanings and beliefs about the product.

Consumers with expertise in a given area may exert considerable influence on others who look to them as a reference point or expert. Consider how the person who is an expert on computers, stereo equipment, or fashion clothing can provide useful information to their friends and acquaintances.

Utilitarian and value-expressive influences operate more in terms of interpersonal or social factors. Factors such as desire for social interaction, pressures for conformity in order to maintain group membership and support, and modeling or vicarious learning are relevant here.

Utilitarian influence operates by rewarding people for conforming to the values, beliefs, and norms of the reference group. A basic reinforcer is continued "membership" in the group and social interaction with its members. This gives people an important "sense of belonging" and close personal contacts. Utilitarian influence has a normative effect, tending to make the people in the reference group comply with the norms of the group.

Value-expressive influence operates by enhancing people's sense of self through identifying with groups that represent one's personal values.

n Ask students to identify reference groups in their college experience and discuss how they were influenced by these groups.

Reference group influences of all types are especially obvious on a college campus. Students should be able to give numerous examples from their personal experiences.

Students should recognize that reference groups can influence consumers' affective responses (what is valued; what emotional responses are appropriate), their cognitions (knowledge, meanings and beliefs about products, stores, or behaviors), and overt behaviors (how to shop, purchase, use and dispose of products).

n Encourage students to identify the basis for each reference group influence (expertise, reward power, etc.).

n You could show a few advertisements that use a reference group appeal and/or portray reference groups. Alternatively, ask students to bring such examples to class for discussion (see the Project below).

Students can easily find print ads that illustrate one of the reference group appeals. These are available in virtually any magazine. Students may be able to describe other marketing strategies that use reference group appeals, such as personal selling strategies.

n For each ad/example, ask the class to identify (a) the type of reference group influence being used, (b) the types of consumers most likely to be influenced (target segment), and (c) the likely effects of the reference group appeal on those consumers.

Example: Reference Group Image Advertising. Sometimes the reference group is a single person—a referent other. Thus, movie stars such as Meryl Streep or Mickey Rourke (highly popular in France) or entertainers such as Madonna or Will Smith can serve as a reference group for some people.

American express has based its advertising on single-person reference group appeals since the early 1970s. It launched the classic campaign “Do You Know Me?” in 1974. Each ad featured someone who was famous for his or her achievements, but whose face was not familiar to the public. In 1987 American Express produced the highly praised “Portraits” campaign with photographs of famous people who have held American Express credit cards for varying periods of time, including John Elway, Willie Shoemaker, and Wilt Chamberlain. The ads were intended to establish the American Express card as the prestige card to own because these successful people used one. The reference group strategy worked for American Express; earnings grew at a 20 percent rate between 1970 and 1990.

But the early 1990s were a different story. Prestige and status no longer seemed so important. Visa has been using a different advertising approach since the middle 1980s. The ads are intended to convince consumers that Visa is a more practical card because it is accepted in more places than American Express. The ads show real places like Rosalie’s Restaurant or the ticket office for the Winter Olympics and have the same tag line: “If you go to (Rosalie’s), be sure to bring your Visa card, because they don’t take American Express.” Between 1986 and 1991, Visa’s worldwide share rose from 44.3 percent to 50.9, whereas American Express’ share fell from 21.7 percent to 16.4. Calculated in dollars, these are huge changes.

In the meantime, American Express has rethought its image approach based on reference group celebrities. The 1991 campaign from American Express for the corporate card was still based on an aspirational reference group appeal but was not oriented toward prestige and status. Their ads portrayed “real-life” situations in an executive’s busy life, such as opening a foreign branch office or starting a small company. The ads briefly describe how the Corporate Card and the accompanying good service from American Express gave these executives advantages in their businesses. The goal was to form a means-end chain linking the product to the customer. [“American Express Pulls Trigger with New Ads,” Marketing News, March 4, 1991, p. 6; Derrick Neiderman, “Image Can Be a Fickle Thing,” Investment Vision, October-November 1991, p. 30]