Reference Groups in Consumer Behavior | Meaning & Definition | Types

Every consumer prefers to evaluate his opinion based on the comparison of opinions of others. Moreover, consumers are influenced by people that they come in contact with or what they observe.

Reference Groups - Meaning, Types

Reference Groups – Meaning, Types

What is a reference group?

In the words of Schiffman and Kanuk

consumer reference groups are groups that serve as frames of reference for individuals in their purchase decisions.

Herbert Hyman defines a reference group as

the type of group that an individual uses as a point of reference in determining his own judgement, preferences, beliefs and behavior.

Thus, it can be said that a consumer’s reference groups are those groups, which may have a direct or indirect influence on one’s attitude or behavior. It provides points of comparison by which to evaluate attitudes and behavior. A consumer can either be a member of reference group or aspire to belong to a group.

Types of Reference Groups

Schiffman and Kanuk have specified the following specific reference groups

  1. Friendship groups
  2. Shopping groups
  3. Work groups
  4. Virtual groups or communities; and
  5. Consumer action groups.

1. Friendship groups

Friendship groups are classified as informal groups. They are usually unstructured and lack specific authority levels. Friends are more likely to influence an individual’s purchase decisions. Friends influence the consumption pattern of individuals in certain category of products (choice of food habits, drinks etc.)

The Influence of friendship groups is important to the marketer. The opinions and preferences of friends greatly influence a consumer while selecting brands. Marketers of products such as clothing, fine jewellery, watches, snack, foods beverages etc., have recognized the importance of peer group. So, they frequently depict friendship situations in their advertisements.

2. Shopping groups

Shopping group comprises of two or more people who shop together. These groups are sometimes the off shoots of family or friendship groups. Generally, the shopping group has a social motive to share time together and enjoy lunch after shopping. It reduces the chances of making an incorrect purchase. The group may feel more confident with collective decisions. The shopping group prefers to shop around and select goods after comparing the quality, terms, style, customer services, price, etc. The buyer is influenced by group pressure and group’s brand preference. He has lot of confidence in the views expressed by his shopping group.

A special type of shopping group is the in-home shopping party. It typically consists of a group that gathers together in the home of a friend. The marketer demonstrates the features of his products simultaneously to a group of potential customers. Thus, the in-home shopping party is devoted to demonstrating and evaluating a specific line of products. Undecided persons overcome a reluctance to buy as their friends make positive purchase decisions.

3. Work groups

People spend considerable time at their jobs. So, it provides ample opportunity for work groups to serve as a major influence on the consumption behavior of members.

The work group may be a formal group or informal group. Formal work groups are deliberately created by companies in order to perform specific work. The formal work group may again be divided into

  1. Permanent formal work group and
  2. Temporary formal work group.

a. Permanent formal work groups

They are part of the top management team, various departments of the organization and staff groups rendering specialized services to the line staff in the organization.

b. Temporary formal work groups

They are formed for a particular purpose. They review salary policies to suggest measures to maintain a smooth relationship between the union and management. They also contemplate new products and services. Temporary formal work groups come to an end after the accomplishment of the mission assigned to them. The members of the group are permanent employees of the company.

Informal work groups

Members of informal work groups consist of people who have become friends as a result of working for the same company. They may or may not work together as a team. Informal work groups may influence the consumption behavior of members during coffee or lunch breaks or after-work meetings.

Work groups are important to the marketer. In the past, firms sold their products exclusively by directly calling on housewives in their houses. But nowadays many women go to work. So, marketers direct their sales efforts to offices during lunch break. Sales representatives reach working women at their places of employment.

4. Virtual groups or communities

The term virtual groups refers to web-based consumer groups. Use of computers and Internets has paved the way for the emergence of a new type of group — virtual groups or communities. Adults and children log on to the web. They visit special interest websites often with chat rooms. A person can chat online with others who share his interest. He can send or receive instant messages. Thus, an exchange of knowledgy takes place within a virtual community on a wide range of topics and interests (vegetarianism, cooking, collecting, trading, finance, film making, romance, politics, technology, art, hobbies, spiritualism, age grouping, online game, voice-video chats, See e-mail, travel and vacations, educational opportunities and a host of life style options. On the internet, people are free to express their thoughts. The anonymity of web gives its users the freedom to express their views freely.

5. Consumer action groups

Consumer action groups have emerged in response to consumer movement. Consumer movement provides consumers with assistance in their effort to make the right purchase decisions. Consumer action groups are organized to correct a specific consumer abuse. Women action groups are opposed to any advertising that may have a negative impact on them.