The main purpose of this report is to investigate how the reference group reflect the personal consumer behavior.
2.0 Explanation of Consumer Behavior Theory
Reference group has a vital role in the Consumer Behavior study. Reference group refers to those groups that usually have a direct or an indirect effect on consumer’s attitude and decision. Also, individuals are affected by reference group through consumer’s evaluation, aspiration and behavior.
Primary, secondary, formal, informal, aspirational and dissociative are types of reference group. In a primary reference group, members are likely to have more face to face meetings as well as frequently contact with each other. On the other hand, a secondary group have less face to face meeting and the members in the groups also infrequently contact. Professional organization and Alumni group are examples which demonstrate for the secondary reference group. A formal group has a clear structure for members, in some special situations, people may need a requirement to join the group. For example, in order to join an academic club, members need to reach the educational requirement. Contrastingly, for an informal club, members do not need to meet any requirement to enter group. The typical examples for informal group are badminton club, football club and golf club. Additionally, an aspirational group can refer to a consumer who wishes to join the club. A consumer typically tries to avoid or does not want to be a part of that group can be considered as dissociative reference group.
Besides the types of reference group, in Consumer Behavior Theory also have types of social power which are referent, legitimate, expert, reward and coercive power. To begin with, the consumer’s identification becomes stronger when he or she actively associates with the group can be seen as the referent power. Besides, for the legitimate power, there are some agreements as well as some penalties between member and member in reference group. A group has the knowledge or experience which customers seek for is expert power. To demonstrate, customers who want to find remedies to cure for cancer, they are likely to join Singapore Cancer Society. In reference group, members can get a prize based on the behavior is known as reward power. Coercive power
Furthermore, informational source, utilitarian and value – expressive also have an impact on reference group. Typically, members in reference group tend to utilize group information to obtain their decision. The information can be illustrated through writing, instruction or observation.