The Role of Reference Groups on
Consumers’ Private Label versus National
Brand Buying Behavior in Different Public
Consumption Situations
Ronald Dean Smit
The Role of Reference Groups on
Consumers’ Private Label versus National
Brand Buying Behavior in Different Public
Consumption Situations
Author:
Ronald Dean Smit Ossengang 11 9967 RN Eenrum ronalddeansmit@gmail.com +31(0) – 624963875 Student number: 1778005
University of Groningen:
Faculty of Economics and Business
MSc Business Administration, Marketing Management Master thesis
Date: 06/11/2012
1st supervisor: Prof. dr. L. M. Sloot
2nd supervisor: Y.C. Ou
Management Summary
The lower prices of private label products may have once been the key in understanding the growing consumer preference towards private labels, but since price gaps are declining, and private labels have increased in quality, this may suggest that nowadays also other drivers may play a role in why more and more consumers buy private labels. As the growth of private labels is of real concern to many national brand manufacturers, it could be therefore beneficial for marketers to understand other drivers that may play a role in why consumers choose and prefer private label versus national brand products.
Many marketing scholars agree on that social influence, and the related concept of reference group influence, is an important driving force of consumers’ decision-‐making process. However, little research is done so far on this concept with regard to consumers’ decision-‐ making between private label and national brands in terms of reference groups. Therefore, based on theoretical and empirical research, the main objective of this study is to provide an understanding of how consumers in public consumption situations are influenced by reference groups when they have to choose between private label and national brand products. Additionally, the direct influence of purchase-‐decision involvement levels of different products on consumers’ private label versus national brand buying behavior is examined. Furthermore, the moderating effects of susceptibility to interpersonal influence, and public self-‐consciousness have been examined.
Accordingly, based on the results, in order to increase consumers’ private label buying behavior, private label marketers are recommended to focus on more utilitarian and low purchase-‐decision involvement product categories, when introducing new private label products. Moreover, when developing advertising campaigns, they can increase private label sales by making more use of informal and/or member reference groups in a public consumption. On the other hand, to increase consumers’ national brand buying behavior, national brand marketers are recommended to make more use of formal and/or aspirational reference groups in a public consumption situation when developing advertising campaigns, in order to communicate the superior image of the national brand. Furthermore, they should target high susceptibility to interpersonal influence and high public self-‐consciousness consumers with these advertising campaigns.
Preface
This Master thesis is the result of my last semester hard working as a student at the University of Groningen, as it was written as the final assignment to graduate for my Master in Business Administration with a specialization in Marketing Management. After I completed my Bachelor in International Business and Management, I decided to specialize more in the field of marketing, since I think it is very interesting how consumers make purchasing decisions and how marketers can influence this process, which I started to discover during my study abroad at the Ege University in Izmir, Turkey, where I had the opportunity to follow different marketing related courses, and in my job as an outbound call center employee.
As I wrote my Bachelor thesis about the impact of social influences on consumers’ purchasing behavior, during my Master program, I also always have been fascinated by the role of social influences. This thesis has given me the opportunity to deepen my understanding of the impact of social influences in relation to consumers’ preference for either private labels or national brands.
I would like to thank everyone who contributed to this research. Especially, I would like to thank my first supervisor from the University of Groningen, Prof. dr. Laurens M. Sloot, who guided me throughout the research process with useful feedback and support. Furthermore, I would like to thank my second supervisor, Yi-‐Chun Ou, as her feedback in the final stages of the process helped me to refine and finish my Master thesis. Lastly, I would like to thank all my close friends and family for their great support during the last months.
Table of Contents
Management Summary ... i
Preface ... iii
1. Introduction ... 1
1.1 Background Problem ... 1
1.2 Research Questions ... 2
1.3 Theoretical and Managerial Relevance ... 3
1.4 Structure of the Thesis ... 3
2. Theoretical Framework ... 4
2.1 Private Label versus National Brands ... 4
2.2 Conceptual Model ... 6
2.3 Private Label versus National Brand Buying Behavior ... 7
2.3.1 Earlier Investigated Consumer-‐Related Variables ... 7
2.3.1.1 Demographic Factors ... 7
2.3.1.2 Perceptual Factors ... 8
2.3.1.3 Behavioral Characteristics ... 10
2.4 Reference Groups ... 10
2.4.1 Determinants of Reference Group Influence ... 10
2.4.1.1 Purchase-‐Decision Involvement – Independent Variable ... 11
2.4.2 Classification of Reference Groups ... 12
2.4.2.1 Formality and Aspirationality of Reference Groups – Independent Variable ... 13
2.4.3 Types of Reference Group Influences ... 15
2.4.3.1 Susceptibility to Interpersonal Influences – Moderator ... 16
2.4.3.2 Public Self-‐Consciousness -‐ Moderator ... 16
3. Research Methodology ... 18
3.1 Research Design and Data Collection ... 18
3.2 Pre-‐Test ... 19
3.3 Variables ... 20
3.3.1 Independent Variables ... 20
3.3.2 Dependent Variables ... 21
3.3.3 Moderators ... 21
3.3.4 Demographics and Control Variables ... 21
3.4 Analysis ... 22
4. Data Analysis and Results ... 23
4.1. Descriptive Statistics ... 23
4.1.1 Socio-‐Demographic Characteristics ... 23
4.1.3 Purchase-‐Decision Involvement per Product ... 26
4.1.4 Distribution of Brand Choice ... 26
4.2 Reliability of Scales ... 28
4.2.1 Cronbach’s Alpha ... 28
4.3 Assessing Normality ... 29
4.4 Multiple Regression Analysis – Testing Hypotheses ... 29
4.4.1 Multicollinearity Check ... 29
4.4.2 Model 1: Private Label Buying Preference ... 30
4.4.2.1 Influence of Purchase-‐Decision Involvement on Private Label Buying Behavior ... 31
4.4.2.2 Influence of Formality and Aspirationality on Private Label Buying Behavior ... 32
4.4.2.3 Moderator Susceptibility to Interpersonal Influence ... 32
4.4.2.4 Moderator Public Self-‐Consciousness ... 33
4.4.2.4 Other Consumers-‐Related Variables on Private Label Buying Behavior ... 34
4.4.3 Model 2: National Brand Buying Preference ... 34
4.4.3.1 Influence of Purchase-‐Decision Involvement on National Brand Buying Behavior ... 35
4.4.3.2 Influence of Formality and Aspirationality on National Brand Buying Behavior ... 36
4.4.3.3 Moderator Susceptibility to Interpersonal Influence ... 36
4.4.3.4 Moderator Public Self-‐Consciousness ... 37
4.4.3.5 Other Consumers-‐Related Variables on National Brand Buying Behavior ... 38
5. Conclusion and Recommendations ... 39
5.1 Discussion ... 39
5.1.1 Effect of Purchase-‐Decision Involvement ... 39
5.1.2 Effect of Reference Group Influences ... 40
5.1.3 Effect of Moderators ... 40
5.1.4 Effect of Other Independent Variables ... 42
5.2 Managerial Implications ... 42
5.2.1 Implications for Private Label Marketing Managers ... 42
5.2.2 Implications for National Brand Marketing Managers ... 43
5.3 Limitations and Further Research ... 43
References ... 45
Appendices ... 51
Appendix 1 – Online Questionnaire ... 51
Appendix 2 – Mean Characteristics Per Situation ... 63
Appendix 3 – Assessing Normality ... 63
Appendix 4 – Private Label Products per Condition ... 64
Appendix 5 – Multiple Regression Results Model 1 ... 64
Appendix 6 – National Brand Products per Condition ... 65
1. Introduction
1.1 Background Problem
Nowadays, competition between brand manufactures in the fast moving consumer goods industry is fierce. Especially national brands are facing a big challenge in competing with private label brands, since private label share and sales in grocery retail stores has grown enormously over the past decades, while that of national brands have been relatively stagnant (Alawaidi and Keller, 2004; Alawaida et al., 2008). According to the 2011 Nielsen Global Private Label Report, in the Netherlands private label brand share is 25 percent, and in Europe this is even about 35 percent.
The private label phenomenon started in the 1980s when national brands were steadily increasing profits by raising their prices at a faster rate than the costs of raw materials (Kahn and McAlister, 1997), and when private labels responded to this by improvements in packaging, features and quality (Wellman, 1997; Choi and Coughlan, 2006). Today, when considered as a whole, private labels can be seen as the biggest brand in the world (Lincoln and Thomassen, 2008), as its growth is outperforming that of national brands. In countries with established private label markets, like in the Netherlands, private labels are no longer competing on prices alone, as there is a growing acceptance that they are of comparable or even better quality than that of national branded counterparts (McNeill and Wyeth, 2011), due to both increased actual quality and consumer quality perceptions of private label products (Dunne and Narasimhan, 1999; Delvecchio, 2001).
In other words, grocery retailers are nowadays offering private labels that are taking the shape of true brands, instead of like in the past when these were more seen as basic goods that were functional, low cost and falling behind in technology and quality. In earlier years, the lower prices of private label products may have once been the key in understanding the growing consumer preference towards private labels, but as price gaps are declining, and private labels have increased in quality and are like national brands increasingly making use of marketing programs, may suggest that nowadays also other drivers may play a role in why more and more consumers buy private labels. As the growth of private labels is of real concern to many national brand manufacturers, it could be therefore beneficial to understand other drivers that may play a role in why consumers choose and prefer private label products.
humans, social animals, that all belong to groups, try to please others, and take cues about how to behave by observing the actions of others around them. Also consumer behavior theories like the theory of reasoned action (Fishbein and Ajzen, 1975; Ajzen and Fishbein, 1980), stresses on the important role of subjective norms – i.e. how other people in the social environment influence consumer behavior. The impact of social influence on consumer buying behavior can be related to the concept of reference group influence, which was originally used and defined by Hyman (1942), as “a group that influences the attitudes of those individuals, who use it as a reference point for evaluating their own situation”. After Hyman, the reference group concept has been significantly clarified and expanded, as many other marketing scholars recognized the importance of this concept, specifically related to issues like brand and product selection and evaluation (e.g. Stafford, 1966; Witt and Bruce 1970, 1972; Bearden and Etzel, 1982), brand loyalty (Stafford, 1971), and perceptions of product and brand quality (Pincus and Waters, 1977).
Even though, as many scholars have embraced the concept of reference groups as an important driving force of the consumers’ decision-‐making process, little research is done so far on this concept with regard to consumers’ decision-‐making between private label and national brands. Therefore, based on theoretical and empirical research, the objective of the present study is to provide an understanding of how consumers in public consumption situations (i.e. a setting in which consumers do not consume a product in private, but with other people in the direct environment) are influenced by reference groups when they have to choose between private label and national brand products.
1.2 Research Questions
• What is the role of different reference groups (i.e. in different public consumption
situations) on consumers’ private label versus national brand buying behavior?
In order to provide an answer to main this main research question, the following two sub questions are formulated:
• Why and how are reference groups influencing the buying behavior of others, in terms of
their preference for private labels or national brands?
• How can consumer be classified based on reference group influence and their preference
for private labels or national brands?
1.3 Theoretical and Managerial Relevance
This study contributes both to private label and national brands, as well as social influence literature by examining how these concepts are related to each other. Brand preference and social influence theory did not consider private label brands, but today private labels are increasingly more seen as real brands, and are when taken holistically the biggest competitors for national brand manufacturers.
Based on theoretical and empirical research it will become clear what the role is of different reference groups in different public consumption situation on consumers’ brand preference and purchasing intentions between private label and national brands. With this information both private label as well as national brand manufactures can for example gain more knowledge about how consumers’ private label and national brand buying behavior is influenced when they have to buy and consume products with other people (e.g. the degree of formality and aspirationality of different guests, reference groups) in a public consumption situation. This would be especially valuable for national brand manufacturers, as it helps them in optimizing their marketing messages they want to send out with their brands, and enables them to target consumers more specifically.
1.4 Structure of the Thesis
2. Theoretical Framework
Before presenting the conceptual model and the related hypotheses of this study, we will first start with briefly discussing some general national brand versus private label literature.
2.1 Private Label versus National Brands
Nowadays, consumers are every day over-‐loaded with information, and therefore in regard to making purchasing decisions, branding helps consumers to structure and create clarity in their minds, as it helps them to distinguish the goods produced by one producer from those of another (Aaker, 1991; 1996). According to the American Marketing Association (AMA) a brand can be defined as “a name, a term, sign, symbol, or design, or a combination of them, intended to identify the goods or services of one seller or group of sellers, and to differentiate them from those of competition” (Keller, 2008).
Products are branded with either a national brand or a private label brand (Fitzell, 1982). A national brand, also known as manufacturer’s brand, is a product or service designed, produced, and marketed by manufacturers and sold to many different retailers (Levy and Weitz, 2011). Over the last century, national brands have been the leaders on the market, but when they were steadily increasing profit by raising their prices at a faster rate than the costs of raw materials (Kahn and McAlister, 1997), private labels were as a result gaining popularity in the 1980s. Private labels, also known as store brands, retailer brands, house brands, bargain brands, and own brands, are products and services developed, controlled and sold exclusively by retailers (Lincoln and Thomassen, 2008). In many cases, retailers develop the design and specifications for their private label products and then contract with manufacturers to produce those products (Beneke, 2009).
processes and image building of national brand manufacturers. The goal of value innovator brands is to offer good-‐quality products at unconquerable prices. Both product-‐related and process-‐related savings contributes to the significantly lower prices. While there are some innovations introduced, cost efficiency remains the main objective of value innovator brands. The fourth private label category Kumar and Steenkamp (2007) are discussing are the recently upcoming premium private labels, which offer consumers a product that is comparable or of even better quality than that of national brands. They are generally marketed in such a way that it supports a superior image that implies that they are not competing on price, but mainly on quality.
As earlier discussed, private labels are the only brands where retailers take full responsibility on. Consequently, retailers play an important role in if their own private label will be a success or failure (Dhar and Hoch, 1997). According to Pauwels and Srinivasan (2004), when retailers start introducing a private label, the relationship between a retailer and national brand managers will change from cooperation to a more competition interaction. Besides of bringing many changes and risks, there are several benefits for retailers to introduce a private label. The most obvious one is that compared to national brands, private labels offer a higher gross margin for retailers (Richardson, et al., 1996). According to Hoch and Banerji (1993) gross margins for private labels are about 30 percent higher than of national brands, and can be achieved because of several reasons (e.g. lower variable costs via more efficient research and development, marketing, and quality variation costs (Baltas, 1997; Liu and Wang, 2008).
A second benefit for retailers to start offering a private label is the overall category profit expansion. When a new private label product is introduced within a certain product category, competitors like national brand manufacturers start to react by reducing the prices of their national brands or pushing promotional activities (Ailawadi et al., 2006). Consequently, this leads to a higher primary consumer demand, and therefore will boost the overall profit of the of the overall product category (Pauwels and Srinivasan, 2004).
A fourth benefit for retailers is that a private label can be a great tool for retailers to differentiate from competition of other retail chains, as they help retailers in differentiating their store-‐image (Hyman et al., 2009). Especially today, in times of fierce competition, large private label programs enable retailers to increase trust and loyalty to their supermarket chain. Branding the retailers name notably on more than thousand high or acceptable quality private label products, the retailer is able to differentiate from other chains, as this helps retailers to create an image of commitment and trustworthiness to its consumers, which as a result reduces consumers’ risk in trying their private label products and increases consumers store loyalty (Dhar and Hoch, 1997; Hyman, et al., 2009).
2.2 Conceptual Model
Figure 1 exhibits the conceptual model of this study. As can be seen the dependent variable is consumers’ private label versus national brand buying behavior. The main independent is based on a combination of the degree of formality and aspirationality of a reference group in a public consumption situation. Besides that, a second independent variable, purchase-‐ decision involvement, and two moderators are expected to have an influence on the direction or strength on the relationship between the public consumption situations and a consumers’ preference for private label or national brand products.
Figure 1: Conceptual Model
2.3 Private Label versus National Brand Buying Behavior
As the conceptual model in figure 1 shows, the dependent variable of this research is consumers’ buying behavior in terms of number of private label or national brand products. We can relate this to consumers’ buying preference for either private labels or national brands, and to what Richardson et al. (1996) described as consumers’ private label proneness – i.e. “the degree to which consumers are persuaded to actually purchase private label grocery items”. For national brands, we can accordingly define this as the degree to which consumers are persuaded to actually purchase national branded grocery items.2.3.1 Earlier Investigated Consumer-‐Related Variables
The variables being investigated, as displayed in the conceptual model in figure 1, is limited and mainly focused on the impact of reference groups. Therefore, before discussing the variables that will be the focus in this study, we will briefly discuss relevant factors that have been studied by earlier researchers that are influencing consumers’ private label proneness. Having knowledge about what earlier researchers have found on this topic may help us with the reasoning of the directions of the relationships of our own selected variables. According to earlier studies, factors influencing consumers’ private label proneness can generally be categorized by demographic characteristics, perceptional factors, and behavioral factors.
2.3.1.1 Demographic Factors
prone. Other demographic variables like gender and age have according to the earlier as well more recent studies generally no significant impact on consumers’ private label proneness.
2.3.1.2 Perceptual Factors
Because of the rather poor explanatory power of the previous discussed demographic factors, researchers generally agree on that perceptual factors are better able to explain differences in consumers’ private label proneness.
According to Richardson et al. (1996), perceived value for money is identified as a variable that directly influences consumers’ private label proneness. This because it involves the relative quality assessment of a product in terms of price, and consumers are therefore more willing to buy a private label when the product’s quality is fairly priced. About two decades ago consumers perceived private labels as having an average price advantage of 21% compared to national brands, while the value for money perception was only 7% higher (Richardson et al., 1994). However, what is interesting is that even though private label manufacturers have improved the actual quality of private labels (Dunne and Narasimhan, 1999; Delvecchio, 2001), Centraal Bureau Levensmiddelenhandel – CBL (2009), found no significant differences between the amount of Dutch consumers who agree on that private labels and national brands offer value for money (54% and 53%, respectively). Moreover, they found that consumers in the Netherlands perceive private labels as 25% cheaper on average compared to the national branded counterpart.
% of consumers who (totally) agree
National brands Private labels
Price perception
… are cheap 5 49
… are expensive 68 6
Quality and trust
… offer value for money 53 54 … are brands that I can trust 64 46
… offer good quality 76 55
Choice perception
… regularly come with new innovated products and variations 55 26
… offer enough choice 68 32
Visibility in the store
… are good visible in the store 63 54 … have a good position in the shelves 76 45
Table 1: Source -‐ ConsumentenTrends 2009, CBL and EFMI Business School
concept (Sethuraman, 2003). Keller (1993) defined brand equity “as the set of associations and behaviors on the part of the consumer that permits a brand to earn greater volume or margin”. In relation to this, Kerin and Sethuraman (1998), added that as brand equity is positively related to market share, stock market value, and return on investment, national brand manufacturers with a positive brand equity are able to ask higher price premiums than private label manufacturers. Also Hoch (1996) suggested that building a sustainable brand image and brand equity would be a more viable and profitable approach than just cutting prices (e.g. price promotions) to compete with private labels. According to Sethuraman (2003), overall, 37% of the consumers are willing to pay a price premium for national brands over private labels, and 30% of this is attributable to brand equity. Another interesting finding from this research by Sethuraman (2003), is that consumers are willing to pay a 26% higher premium for national brands even when there is no perceived quality difference between national brand and private labels.
Another perceptual factor that can be defined of consumers’ private label proneness is perceived store image (Liu and Wang, 2008), and can be defined as “the complex of a consumer’s perceptions of a store on different (salient) attributes” (Bloemer and de Ruyter, 1998). These salient attributes can be related to the eight different salient elements of the retail marketing mix as introduced by Ghosh (1990), and are location, merchandise, store atmosphere, customer service, price, advertising, personal selling and sales incentive programs. Based on these salient elements of the retail marketing mix, every retail store may have a distinct image in consumers’ minds. According to Liu and Wang (2008) it is beneficial for retailers to invest in building a good store image, as it simultaneously increases the attractiveness of every single private label product, as the store name of a specific retailer is usually written on every private label product.
1993; Richardson et al., 1996; Batra and Sinha, 2000). The third perceived risk type is psychological risk or also called social risk, and is most relevant for this study. According to Gómez and Fernández (2009), psychological risk of a brand is associated with the consumption of the product and its symbolic aspects, and exists to the extent that consumers believe that they will be negatively evaluated because of their brand choice. In relation to this, Baltas (1997), who called this risk as psychological proximity, stresses on that consumers buy brands with a certain brand profile that they think matches with their own self-‐perception and self-‐image.
2.3.1.3 Behavioral Characteristics
Besides demographic and perceptual factors, behavioral characteristics of consumers also have an impact on their private label proneness. According to Baltas (1997), shopping frequency is one of the most important behavioral characteristics, and refers to heavy shoppers with high quantity needs like larger households. Generally, as those consumers are more price consciousness they are more likely to shop an economical alternative like private labels, as this results in significant price savings (Baltas, 1997; Ailawadi et al., 2001).
2.4 Reference Groups
When buying a certain product or choosing a particular brand, consumer are influenced in several ways. One of the most profound determinants affecting consumers’ purchasing behavior in addition to traditional marketing stimuli, is the impact of social influences of other people around them such as family, friends and other reference groups (e.g. via word of mouth). As already mentioned in the introductory chapter, the concept of reference groups was originally used and defined by Hyman (1942) as “a group that influences the attitudes of those individuals, who use it as a reference point for evaluating their own situation”. After Hyman, the reference group concept has been significantly clarified and expanded by many other researchers. Park and Lessig (1977) for example, updated the definition of a reference group to “an actual or imaginary individual or group conceived of having significant relevance upon an individual’s evaluations, aspirations, or behavior”, and will be used in this study.
2.4.1 Determinants of Reference Group Influence
will be consumed privately or publicly, and whether a product to be purchased is more a luxury or a necessity.
Both studies agree on that purchases that will be consumed in public (i.e. where the consumption of a product is visible to social others), reference group influence will be more influential compared to when the consumption of a product will be in private. In other words, when people consume a product in private, they do not tend to be influenced as much by the opinions of others as their purchases will not be observed by anyone else. In relation to someone’s preference for national brands or private labels, this finding can be linked to a research of Livesey and Lennon (1978) who shows that social risk reduces the selection of private label brands. In their study they find that English consumers have a higher preference to consume private label products in a private setting, while serving more national brand products to their guests. Accordingly, in this study we will therefore only focus on the role of reference groups on consumers’ private label versus national brand buying behavior in different public consumption situations.
Furthermore, these two studies (Bourne, 1957; Bearden and Etzel, 1982) also both state that the degree of reference group influence is more important for purchases that are luxuries rather than necessities, since products that are purchased with income available for spending after that there have been taken care of essentials such as housing, food and clothing, are more subject to individual tastes and preferences. Some other researchers have used the terms luxury and necessity more broadly, by implying that luxuries are more consumed primarily for hedonic pleasure and that these goods are multisensory and provide for experiential consumption, fun, pleasure, and excitement, while on the other hand necessities are required to meet more utilitarian objectives, and are primarily instrumental and functional product features (Strahilevitz and Myers, 1998; Dubois et al., 2004; Dahr and Wertenbroch, 2000, 2004).
2.4.1.1 Purchase-‐Decision Involvement – Independent Variable
accordingly related to the hedonic versus utilitarian level of products, as the author stresses on that a consumer is more involved in the purchase-‐decision of a product that is hedonic or self-‐expressive, and in contrast, is less involved in the purchase-‐decision of a product that is purely or largely functional or utilitarian.
Based on that we already discussed that reference group influence is more important for luxury and hedonic products compared to necessity and utilitarian products (Bourne, 1957; Bearden and Etzel, 1982), and that earlier researchers already found that private labels perform better in utilitarian than hedonic product categories, since consumers are willing to pay a higher premium for national brands in product categories consumed for hedonistic reasons (Sethuraman and Cole, 1999), we expect that the same holds for the related purchase-‐decision involvement concept. Thus, we assume that when a product generally has a low purchase-‐decision involvement, consumers’ private label buying behavior tends to be higher, and when a product generally has a high purchase-‐decision involvement, consumers’ national brand buying behavior tends to be higher. This reasoning leads us to the following hypotheses:
• H1a: For generally perceived high purchase decision-‐involvement products, consumers’ private label buying behavior is lower, compared to low purchase decision-‐involvement products.
• H1b: For generally perceived high purchase decision-‐involvement products, consumers’ national brand buying behavior is higher, compared to low purchase decision-‐involvement products.
2.4.2 Classification of Reference Groups
When thinking about reference groups that are influencing consumers’ purchasing behavior, we can think about several different types of sources of influence – i.e. different kind of reference groups. One can for example think of friends, family like someone’s parents or siblings, employer and colleagues, celebrities, experts, virtual communities and so on. As we can think of many different kinds of reference groups, it is therefore useful to look to a more efficient classification. Escalas and Bettman (2003, 2005) categorize in their studies reference groups from a perspective that is looking to which an individuals turns as a standard for behaviors. As a result, they split reference groups up into member groups and aspiration groups.
often have the knowledge of what others who are also part of a particular member group are doing and buying, this can influence their own preferences. Therefore, for example many marketing programs are also making use of models that matches with their target audience.
On the other hand, Escalas and Bettman (2003), define an aspiration group as “a reference group to which an individual aspires to belong”. These groups are composed of people the consumer generally is not so close with, admires and desires to be like. Examples are for instance famous celebrities, models, athletes, or very successful business people. For this reason, many marketers are nowadays making use of celebrity endorsers – i.e. any individual who enjoys public recognition and who uses this recognition on behalf of a consumer good by appearing with it in an advertisement (McCracken, 1989).
Additionally, White and Dahl (2006), expanded this with a relatively new type of reference group, which they categorize as dissociative reference groups. In their research they are stressing on that consumers are besides of being motivated to attain positive outcomes (as might be attained by aligning to one of the previous two discussed groups: membership and aspirational reference groups), are also motivated to avoid negative outcomes. Accordingly, this are groups whose attitudes, values, and behaviors, consumers disapprove and wish to avoid being associated with. Consumers are therefore avoiding the usage of certain products and brands a particular dissociative reference group is using.
Besides classifying reference groups into dissociative, member, and aspirational groups, reference groups also vary in their degree of formality (Hoyer and Macinnis, 2008). A group of colleagues and employers are generally more formally structured, with rules outlining the criteria for group membership and the expected behavior of members. For example, one must satisfy certain requirements, like being on time, and fulfilling tasks or accomplishing a specific target within a certain time period in order to avoid being fired or to get extra bonuses. Other groups are on the other hand, more ad hoc, informal, less organized and less structured. For instance, a group of friends probably have no strict set of rules, specific roles, authority positions and specific goals.
2.4.2.1 Formality and Aspirationality of Reference Groups – Independent Variable
and Bettman, 2003). Accordingly, as an aspirational reference group can be seen as a superior group to which consumers desire to belong to, consumers therefore also want to buy brands that better matches a superior brand image.
Additionally, based on earlier studies we think that the brand image of national brands generally better matches with the desirable self-‐image consumers want to express towards an aspirational reference group (Grubb and Stern, 1971; Solomon, 1983), as national brands still today are receiving more trust and are perceived as of being better quality compared to private labels, as the public generally considers these as to be cheap and inferior (Bushman, 1993; Centraal Bureau Levensmiddelenhandel, 2009). In contrast, when consumers have to deal with a low aspirational reference group (i.e. a member reference group), consumers experience less social risk and pressure to put extra effort in expressing a superior or aspirational self-‐image towards the member reference group, as they already are part of the reference group (Escallas and Bettman, 2003; Gómez and Fernández, 2009). Because in this situation consumers are already part of the group, and are in close contact with the members of the reference group, they will perceive less social risk (Escallas and Bettman, 2003; Livesey and Lennon, 1978). As Livesey and Lennon (1978) found that social risk reduces the selection of private label brands, we therefore expect that consumers confronted with a member reference group, have a higher preference for private labels than consumers confronted with an aspirational reference group.
With regard to the degree of formality, when consumers have to deal with a formal reference group, consumers have to and want to comply more with certain rules and requirements compared to when they have to deal with an informal reference group (Hoyer and Macinnis, 2008). Consequently, based on earlier discussed studies (Escallas and Bettman, 2003; Gómez and Fernández, 2009), we think that consumers feel more social pressure and risk in a formal situation to comply with the group, and that they as a result put extra effort in expressing a desirable self-‐image towards a formal reference group compared to an informal reference group. Therefore, based on Grubb and Stern (1971) and Solomon (1983), we believe that consumers perceive that the brand image of national brands generally better matches in a public consumption situation with a formal reference group. On the other hand, accordingly we therefore think that consumers perceive and experience less social risk in a public consumption situation with an informal reference group. Because members in these informal groups are in more close and intimate direct contact, have no strict set of rules, specific roles, authority positions and specific goals (Hoyer and Macinnis, 2008), we expect that consumers confronted with an informal reference group have a higher preference for private labels than consumers confronted with a formal reference group.
To summarize, based on earlier discussed literature, we expect that formality as well as aspirationality both are negatively related to consumers’ private label buying behavior, and positively related to consumers’ national brand buying behavior. This leads us to the following hypotheses:
• H2a: The degree of formality of a reference group in a public consumption situation is negatively related to consumers’ private label buying behavior.
• H2b: The degree of formality of a reference group in a public consumption situation is positively related to consumers’ national brand buying behavior.
• H2b: The degree of aspirationality of a reference group in a public consumption situation is negatively related to consumers’ private label buying behavior.
• H2a: The degree of aspirationality of a reference group in a public consumption situation is
positively related to consumers’ national brand buying behavior.
2.4.3 Types of Reference Group Influences
Deutsch and Gerard (1955) were the first who distinguished social influence into normative and informational social influences. Earlier experimental studies have also identified these two influences (e.g. Sherif, 1935; Asch, 1951; Bovard, 1951), but were never studied together. Deutsch and Gerard (1955) defined normative social influence as an influence to conform to the positive expectations of another. In other words, i.e. when consumers have the desire to conform to the expectations of another person or group in order to be liked and accepted, even when consumers are in a group of complete strangers. A famous example of this is the experiment by Asch (1951), in which a group of people were shown a line on a card and asked them to find the matching line, in terms of length, from three lines on a second card. Only one of the lines on the second card was noticeably the right choice. All except one person in the group were collaborators of the experiment and all chose intentionally the wrong line. When it was the turn of the only real participant to choose which of the three lines on the second card matches with the length of the line on the first card, in a range of experiments, 75% of the participants followed the group by also giving an incorrect answer.
sure about how to behave, and in order to avoid negative reactions of others in their environment, they are following a safe course of action by imitating the behavior of others by assuming that they are more knowledgeable about a specific activity or branding choice.
2.4.3.1 Susceptibility to Interpersonal Influences – Moderator
While all consumers are influenced by informational and normative social influences, they differ in the extent to which other people in the environment influence them, as some people are more sensitive for this than others. Therefore, in relation to this, as can be found in the conceptual model (figure 1) we included the moderator susceptibility to interpersonal influences, which is developed by Bearden et al. (1989) and also makes a distinction between susceptibility to normative and informational social influences. They defined this widely used construct as “the need to identify with or enhance one's image in the opinion of significant others through the acquisition and use of products and brands, the willingness to conform to the expectations of others regarding purchase decisions, and/or the tendency to learn about products and services by observing others or seeking information from others”. According to Netemeyer et al. (1992), consumer susceptibility to interpersonal influence can be enhanced when individuals are highly sensitive to the judgments others make about them. That means that people high in susceptibility to interpersonal influence are more likely to purchase products and brands that they perceive will lead others to have a positive judgment about them and less likely to buy products and brands that they perceive will lead others to make a negative judgment of them. Assuming that consumers think that national brands will lead to more positive judgments compared to private labels (based on earlier discussed private label and national brand literature (e.g. Solomon, 1983; Bushman, 1993)), we came up with the following hypothesis:
• H3a: Susceptibility to interpersonal weakens the influence of the relationship between the independent variable (one of the four public consumption situations in which reference groups differ in member group versus aspiration group, and informal group versus formal group) and the dependent variable (consumers’ private label buying behavior).
• H3b: Susceptibility to interpersonal strengthens the influence of the relationship between the independent variable (one of the four public consumption situations in which reference groups differ in member group versus aspiration group, and informal group versus formal group) and the dependent variable (consumers’ national brand buying behavior).
2.4.3.2 Public Self-‐Consciousness -‐ Moderator
