Chapter 11 - Groups, Families and Households

Chapter 11 Groups, Families and Households

LEARNING OBJECTIVES
After reading this chapter, students should be able to: Describe the roles of families and households as consumers Explain the influence of different family life cycle stages and family decision-making processes on consumer behaviour Discuss the marketing implications of changing household composition and consumption behaviour Describe the characteristics of groups and their influence on consumer behaviour Discuss the role of opinion leaders in influencing consumer behaviour Discuss the influence of different social styles on consumer behaviour.

CHAPTER TOPICS
1. 2. Families and households The family lifecycle Case in point 11.1Marketers plug into pester power to target parents Young independent singles Young married couples/partners Full nest I Full nest II Empty nest I Empty nest II Family purchasing decision roles Changing family structures Case in point 11.2Pestering tweens drive purchases unlicensed Households Social influences on consumer behaviour Case in point 11.3Chasing the singles dollar The nature of groups Reference groups Opinion leaders Opinion leaders and power Case in point 11.4How and why to research word of mouth Characteristics of opinion leaders Teenagers and the youth market Case in point 11.5The use of opinion leaders by the Australian Dairy Corporation Case in point 11.6Reinventing Bonds Case in point 11.7Youth of today just doesnt watch enough TV

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Families and households

Family can have many different meanings. The ABS describes a family as the basic unit of social organisation. Refer to the Interactive Exercise below. How families are structured has changed over the years, but regardless of their makeup, all members of a family play a role in the purchase decision process.

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Expenditure patterns have changed as a result of more working women, allowing double incomes. Also, greater divorce rates and spilt families, means more pressure on the main income provider, emphasising the importance of value. Research has shown that children have more influence on purchasing decisions when they will be the primary user of the product or service. Understanding the roles different family members play in the purchase decision process allows marketers to better target their efforts. Case in point 11.1Marketers plug into pester power to target parents If you have ever taken a young child shopping, you will know what is meant by pester power. But marketers believe that it is worth targeting children for certain product categories, since children learn from a young age how to shop. Children develop shopping habits by observing and co-shopping with their parents. Marketers believe that for products to be enjoyed when they are consumed, children need to be shown the magic of the brand. They also need to be excited about that product. With constant use of a toy, or enjoyment of a snack product, comes brand loyalty. Brand loyalty is what results in the longevity of a brand. However, it is important to not ignore the parents needs in advertising as well. Encourage discussion on famous brands targeted toward children. If the ads discussed rational educational or health benefits for adults, would they be as popular once purchased? 2. The family lifecycle

The family lifecycle concept is based on the idea that families move and evolve through stages over time (text, p. 317). Classifying families by stages in the family lifecycle can explain how consumption changes. Figure 11.1 (text, p. 320) illustrates the different stages of the family lifecycle. This model is considered more relevant than traditional models that did not allow for divorce, couples living together, etc. Clearly, not everyone goes through every stage. Refer to Interactive Exercise below. The model works on the premise that when households undergo change like divorce, unemployment, additions, or death, they often experience immediate changes in their needs and brand preferences. At each stage there are different needs and demands on the familys resources. Before people have children, they will probably work, giving the phenomena called dinksdouble income, no kids. With money to only spend on them, and perhaps even before a mortgage, this group will have a greater disposable income to live it up. This group is a marketers dreambefore financial commitments force people to restrict their lifestyle and their spending. Once people are mortgaged, and children are born, spending power is reduced. Greater financial commitments, changing lifestyle, often less than a double income, and more than two people using the available resources changes the way purchases are viewed, and the type of products and services used. Once children leave home or at least are old enough to work, lifestyle will change again. Although the adults are older, and may have more health problems, there is more opportunity to spend the bulk of the income on two people again. However, the types of products and services demanded are different to when they were younger through life experience and also because of age. Once people are older and perhaps even widowed, and no longer working, spending power is again reduced. Value is critical, and the type of products and services demanded will be different. Refer to the Interactive and Discussion Exercises below to encourage student input. Young independent singles This group is the one marketers find most lucrative. This group of 18 34-year-olds have just started working and have no major financial commitments. They have money to spend on holidays, cars, mobile phones, computers and other luxury items. Premium brands or popular brands will be demanded by this group. However, the quality brands in some categories like wine might be less appreciated. Young married couples/partners Consumer Behaviour by Karen Webb Page 2

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This group refers to all couplesany genderliving together. Building a home-life will be important hereso furnishings, home renovations and associated services, including financial services, will be more highly sought after here. Full nest I Younger children enter the picture here. The family income may halve, as one parent stops working full-time. In addition, family expenditure will increase in many areas, from basic services like water and electricity to products and services like baby needs, schooling and child care, as well as extra-curricular activities like swimming lessons and Little Athletics. Families may trade up to a bigger home, but typically expenditure on luxury items will be minimal. Full nest II Children are older and nearing the age of independence. However, their awareness of quality brands and the latest gadgets has increased, which in turn increases expenditure in areas like clothing, leisure items like bikes, and music. However, other types of expenditure will be reduced as this group reduce their extra-curricular activities and start working part-time. This group is spending longer at home now, to save money and place less pressure on themselves. Empty nest I Children leave the family home and start independent life. Parents are planning retirement and enjoying the freedom of not having dependants at home. The products and services here can include holidays (outside of school holidays), caravans, and leisure gear like golf clubs, gardening, and maybe even some community work. In most cases, income is still coming in and there is less expenditure on essentials. Empty nest II This is the retirement or semi-retirement phase which can allow even greater freedom from duties. People may trade down to smaller homes and have a major shift in their lifestyle. Health is an important concern as well. Longer holidays and recreational lifestyles will be pursued. However, they may also be involved in caring for grandchildren on a regular basis. 3. Family purchasing decision roles

Members of families often play different roles in the purchase decision-making process. These roles are most clearly defined for high involvement decisions, although high involvement is perceived differently for certain purchases by each member. In addition, a members influence will change over time. For example, a young child will be devastated if they dont have that packet of chips, whereas clothing brands will be more important as they become older. Also, furnishings for a new house will be influenced mainly by the parents. Young children will have little influence, if any interest at all, in the purchase. There are a number of distinctive roles in the family decision-making process, including: a) b) c) d) Information gatherers and holders (also known as gatekeepers)control the flow of information about a product into the family or seek the information out that will be used in a purchase decision. Influencersprovide information to other members about products, based on their desires. Decidershave the authority to determine whether or not to shop for product, and which brand to buy. Purchasermakes the actual purchase and may change the final decision made by the decider based on situational factors like price specials, stock availability or salesperson factors.

One family member can clearly play a number of roles in the purchase decision process. Refer to the Interactive and Discussion Exercises for examples. Case in point 11.2Pestering tweens drive purchases unlicensed Tweens are aged between 8 and 14 years, and can have significant influence over big-ticket purchases like cars. The influences tend to be based around model, colour and extra accessories. Marketers in Australia are slow to catch onto the influence children can have on family purchases.

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Encourage discussion on why marketers may not target children for adult purchases. Raise the issue of media watchdogs and the publicised unethical practices of targeting children. 4. Changing family structures

Family structures have changed significantly over the last 100 years. The nuclear family comprising a husband and wife and one or more children is now more prevalent than an extended family which is made up of a husband, wife, one or more children, and at least one grandparent. Even the nuclear family is less common today than it was 50 years ago. Between 1986 and 2001 the number of single-parent families increased by 53 per cent. In contrast the number of twoparent families increased by only per cent. These figures should be translated bearing in mind that there was a greater number of two-parent households initially, and fewer single-parent households. Figure 11.2 (text, p. 325) illustrates a growing trend in couples without children. This can be a result of a combination of factorsincluding both adults pursuing careers, less maternal instincts and growing infertility rates.

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Households A household is a group of people that live together and form a purchasing unit. Seventy per cent of households are families. But other types of households include friends sharing together and single people living on their own. The latter has grown by 64 per cent between 1986 and 2001. This equates to 1.6 million households. In Australia in 2002, there were an estimated 7.2 million households, and this increases on average by 2.4 per cent every year. However, this does not equate to a population growth of 2.4 per cent every year. The major trend in households is shrinking household size and a large projected growth of single person households. A key marketing implication here is the sizes of products, particularly in the grocery (FMCG) industry. Single and smaller serving sizes are readily available. Encourage examples from students. Case in point 11.3Chasing the singles dollar Thirty-seven per cent of the adult population in Australia now lives alone. But some researchers believe that marketers have failed to identify this trend and respond accordingly. And those that have tend to focus more on the young singles. But what about the widower? Or the middle-aged divorcee? Since living alone isnt singled out to any particular age group, the challenge of marketing to singles is even greater. Disposable income also differs widely. This does not mean that older singles are necessarily poorer. Singles tend to have greater spending power than couples, but are less inclined to spend it just on themselves. Some marketers believe that when you are targeting niches, the communications strategy should be based around lifestylein this case marital status. This type of statement is particularly relevant for products like cars, but can easily extend to grocery items as well. Banking seems to be about life stagesbut when banks say this, they are probably meaning age. So older people no longer working or only working part-time are less likely to want a loan of any sort. In fact most banks offer products with broad appeal. Ask students what type of products would be best aimed at older singles? Consider parents or grandparents living alone. How would their needs differ to that of older couples? Remember the segmentation rule that a segment must be substantial and profitable enough to be worth targeting in the first place. 5. Social influences on consumer behaviour

Social pressure and power can have an enormous influence over an individuals behaviour. Social pressure and acceptance comes from families, households and peer groups and has important implications for marketers. Marketers need to understand the role of individuals in terms of the different groups to which they belong or to which they aspire. It is also important to understand the importance of that group to the consumer, because the greater the importance, the greater the influence. To introduce groups, refer to the Interactive Exercises below. 6. The nature of groups

Consider the number of ads that show groupsfamilies eating dinner, friends having a drink together, and fragrance is usually shared with someone. Even those relaxing soaks full of lavender and ylang ylang that are intended to be enjoyed alone, make us want to aspire to the feeling that woman in the ad is experiencing. We want to be just like her! Everyone is a member of a range of groups. Members of groups share common goals and needs (text, p. 331). A groups goals are formed by shared values and beliefs. Each group has its own normsso in essence it could be considered a sub-culture (depending on the size of the group). These norms represent the expected behaviour of that group. Failure to behave appropriate ly will result in punishment, ridicule or even isolation from the group. In group situations the norms may be observed and unspoken.

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The role of a person in a group is the set of expectations other people have of the behaviours and attributes appropriate to that position. Failure to comply will result in social disapproval. Everyone has a different role for each group they are a member of. A persons actual or perceived position in a group is referred to as status. This position may not necessarily be clearly defined. Group norms and role definitions are learned through a process called socialisation (text, p. 331). How did we learn to talk? Try to explain the colour blue to someone who cant see. We learnt colours and how to speak by observing others and having others demonstrate these concepts to us. Refer to the class at the beginning of session. They were probably quieter and less willing to participate until they established what the group was like. Primary groups are those with which we have frequent interpersonal contact, such as family and work colleagues. Secondary groups are those with which we have limited interpersonal contact, if any (text, p. 332). Formal groups have a defined structure, and it is easy to determine the members. Informal groups are based on loose structures, such as a group of Aussie supporters. Primary and informal groups tend to have the most influence over our attitudes, opinions and behaviour. Our role can also have an influence over our behaviour.

Reference groups A reference group is a group individuals look to as a reference point for evaluating their own situation. Reference groups influence attitudes and behaviour for individuals who consider it a reference point for their own situation. Reference groups have their greatest influence when the product is a luxury item and where the product is highly visible to others. In other words, the brand of singlet that you wear is less likely to be a reference point than the t-shirt you wear over the top of it. Reference groups can be classified as: groups we actually belong to associative reference groups or to which we aspireaspirational reference groups.

Associative reference groups are closer to consumers and include the types of groups addressed in the previous Interactive Exercise, such as family, friends, sports team-mates and the like. Inspirational reference groups are groups of individuals we look up to, but are unlikely to ever be a part of. A good example to consider here is the Australian Olympic team. We compensate for never belonging, by buying the same products and services they do. This is the reason behind many sporting brands sponsoring sportspeople and using sportspeople in their marketing communications. Reference groups can be normative or informational: Normative is based on someone perceiving what is expected of them. The bonds of social relationships form the foundation for normative social influence. Individuals conform to group ideas because they want acceptance from others. You wouldnt wear stretch denim if all your friends wore baggy hipsters! Normative groups have two functions: utilitarian and value-expressive: The utilitarian function causes individuals to conform to a groups influence to receive a reward or avoid a punishment. Consider examples like clothing and even language. The value-expressive function is when an individual conforms to enhance and reflect their own selfconcept. Joining a particular group may help you travel further up Maslows hierarchy to self -esteem and self-actualisation.

Informational groups provide guidance on brand preferences and product knowledge. Individuals conform to accepted behaviour standards based on social influences, because we see others as a source of information to guide behaviour. Celebrities are used in advertisements as a credible and aspirational information source. Group membership gives individuals a sense of identitysuch as sporting jackets and emblems or certain types of dress. It also reduces the conflict the person may experience by not knowing how to conform or what to wear.

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Conformity is when an individual adjusts their behaviour to reflect the norms of a group. Conformity is most prevalent when it occurs only because of the influence of the group (and the behaviour would not have occurred on its own).

Opinion leaders Opinion leaders are individuals who receive information from the media and pass it along to their peers. Opinion leaders are perceived to be more knowledgeable about various topics and their advice is taken seriously by others. An opinion leader cannot be a wealth of knowledge across more than one or two product categories. For example, a doctor might give good advice on pain relief, but their opinion may be less valued on which brand of pet food to buy. Opinion leaders do not have to be famous, just respected in their particular field. Opinion leaders are usually in an individuals reference group. Opinion leadership is not really a personality traitbut a role taken by some individuals under certain circumstances. The people chosen as opinion leaders change across different situations. Opinion leaders can be classified into two types: Monomorphic have an influence in one area, such as doctors and dentists are experts in their field. Polymorphichave an influence in a number of areas. For example, friends may not be experts on everything but may have some life experience in a required area of need. Opinion leaders are particularly useful in the information search and evaluation stages of the purchase decision process. Opinion leaders are referred to (1) for their advice to reduce perceived risk; (2) to help the individual gain social acceptance, (3) to provide information to help with decision making.

Opinion leaders and the diffusion of innovation Diffusion of innovation is best compared to a teabag that diffuses tea throughout a cup of water. At first it is slow, and then it speeds up until the whole cup is taken up with the tea flavour. The longer the teabag is immersed, the stronger the flavour. If milk is added, the effectiveness of the teabag is diminished. Diffusion of an innovative product follows the same natural laws. Diffusion of innovation refers to how quickly and widely new ideas are accepted by markets (text, p. 336). At first it is slow, and reliant on the strength of the opinion leaders who help to encourage acceptance of the new product. The longer the product is in the market the more widely accepted it will be. Consider mobile phones as an example here. If milk is added, such as a better innovation or worse still, poor publicity, the rate of diffusion will diminish. Marketers are interested in how innovations are adopted and spread through a market. Opinion leaders are powerful influencers in the innovation process. Consider how fast mobile phone technology and SMS messaging have been adopted. Opinion leaders can provide positive word-of-mouth and encourage trial. It is important that opinion leaders can be identified and provided with all the relevant and correct information. Sometimes marketers use spokespeople such as celebrities that have some relevance or credibility to the product category. The effectiveness of public relations is highlighted when opinion leaders or experts in their field, such as Don Burke, recommend a product on their television shows. Consumers and buyers trust opinion leaders because they provide both positive and negative information about a product. This makes opinion leaders more believable than advertising used alone, since advertising will only ever highlight the positive aspects. Quite an investment in market research is required to identify your innovative consumers, who are most likely to adopt new products early and act as opinion leaders. Case in point 11.4How and why to research word of mouth Word of mouth can be an extremely effective marketing tool, if used correctly. Research on attitudes and opinions doesnt necessarily reflect what someone would say about a product. A private opinion, not willingly shared with

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researchers, is what really drives behaviour. What people say to friends and family about a product can influence the behaviour of others, spreading throughout the market. Word of mouth has to be researched directly. You need to determine not just what someone would say to someone else, but what questions arise and what non-users have heard. Focus groups using exploratory techniques are probably the best research method to consider. Opinion leaders and power The opinion leaders power comes from their willingness to share both positi ve and negative information about a product. Opinion leaders are often perceived as having particular specialist knowledge or power. The types of power are as follows: Reward power gives physical or psychological rewards to people. For example cash back promotions, special airline check-in lounges, someone telling you that you look great, or a free donut with a cup of coffee. The reward needs to be relevant to the target consumer. Legitimate power is based on an official capacity, such as a recognised position of power or authority. For example a lecturer might recommend a student buy a particular textbook for their studies. The perception of legitimate power is linked to our system of cultural norms and values. In some societies, religious leaders views are respected, whilst in other societies they are not. Expert power refers to the influence and credibility a person has in their particular field of expertise. Expertise is based on the perception of the receiver. People often believe a person in a white coat is knowledgeable, so marketers may use white coat actors to get their message across. Coercive power is the use of messages that warn of bad or unpleasant consequences of behaviour. This power is closely linked with operant conditioning and negative reinforcement. Examples of coercive power include campaigns linked to changing attitudes like community announcements associated with stop smoking and drug use. Referent power is the influence some people have because they are popular. They may not have any knowledge or expertise in the area, but are credible because they are well-liked. Consider examples like Delta Goodrem and Pepsi.

Characteristics of opinion leaders Different opinion leaders will be identified for different situations. Give examples to illustrate this point. For example a sportsperson might be considered a good opinion leader for equipment in their chosen sport, but not for purchasing a plasma TV. Spokespersons of your brand must be trustworthy, credible and likeable. 7. Credible means they are seen as telling the truth. Shane Warne did himself no favours promoting Nicorette (to help smokers quit), only to be caught smoking himself! Trustworthy means regarded as honest and truthful. Likeable refers to being attractive and connecting emotionally with the target audience. Teenagers and the youth market

To many marketers, teenagers and the youth market present a large, distinct and attractive segment, especially for products associated with mobile phones, fashion and computing and electronic technologies. Lifestyles of generations X and Y were discussed in Chapter 10. This group is heavily influenced by social forcespeers and other reference groups. They are not necessarily predisposed to mass media advertising. This group is also harder to convince of advertising claims. Marketers need to be creative by identifying appropriate opinion leaders and undertaking effective public relations activities like sponsorship. Teenagers have an enormous influence over purchasing decisions for the family and themselves. They are also considered to be early adopters of innovations, thus presenting a stage for diffusion of innovations across the whole market.

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Case in point 11.5The use of opinion leaders by the Australian Dairy Corporation The ADC used opinion leaders who are experts in health to spread the word about the importance of dairy in our diets. Doctors and nutritionists were targeted through business-to-business techniques, using scientific research to justify their claims about the importance of dairy foods. This approach has been relatively successful in achieving the campaigns objectives. Can students think of other instances where those who have expert knowledge have been used as opinion leaders to change attitudes and behaviour? Case in point 11.6Reinventing Bonds Bonds have repositioned themselves through the use of likeable opinion leaders or role models: Sarah OHare and Pat Rafter. This is a good example of the use of referent power, as prospects aspire to be like the role models presented in all of the marketing communications. Encourage examples from students on other uses of referent power, where celebrities are used because they are attractive and likeable. Case in point 11.7Youth of today just doesnt watch enough TV The youth of today have less brand loyalty and are less reliant on traditional media such as television for entertainment. They are different from past generations because of instant gratification through credit options and so many brand choices. Yet more than half live at home with their parents and see their parents as role models (for some decisions). Several other statistics were also presented in the case study to unravel the mysteries behind marketing to this lucrative market. Ask students how they would market a product or service to the youth market of today.

DISCUSSION EXERCISES 1. Consider which stages of the family lifecycle, presented in Figure 11.1 (text, p. 320) would be the most likely targets for the following products and services: a) b) c) d) e) 2. Mobile phone camera Adventure holiday to the Antarctic continental shelf Tour group holiday to Europe Good wine Government subsidies/payments

Interview a family with at least one child over five years old. Interview one of the parents and one child separately. Determine the influence each member has on the purchase (and involvement) of the following products and services and where they got information from to have some influence: a) Childs leisure activitieslike dancing, soccer, etc.

b) Laundry detergent c) Weekend getaway

d) Breakfast cereals e) 3. 4. New TV

Visit a supermarket and choose a particular product category. This can include fresh food and meat. What sizes are available in each brand? What reasons do you think are behind the range available? Spend an hour watching television and record the ads that are presented in that time. Which ads portray a group setting (which is really more than one person)? What type of group was featured? How successful is the ad in portraying the group norms and perceived status of that group if the product that is being advertised is purchased?

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5.

Jeanie is leaving home and needs to set up her pad with some furnishings. She has been lucky enough to be given some pre-loved furniture from family. She knows it will l ook a lot better with some trendy furnishings that reflect her self-image. What reference groups could Jeanie consider when trying to decide on furnishings? In your answer consider the following theoretical concepts: Associative reference groups Aspirational reference groups Normative influenceutilitarian and value-expressive Informational influence Group membership Conformity. Interview two salespeople in a fitness centre or specialist outlet (e.g. boats). Determine the role that opinion leaders play in the purchase of their product or service. To what extent does the salesperson use opinion leaders (such as testimonials, etc.)?

6.

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