See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/292140147

Peer Influence on Service Purchase Decisions by Young Adults

Chapter · March 2015

CITATIONS READS
2 5,616

2 authors, including:

Nirupma Gupta
The Northcap University
6 PUBLICATIONS 89 CITATIONS

SEE PROFILE

All content following this page was uploaded by Nirupma Gupta on 28 January 2016.

The user has requested enhancement of the downloaded file.

 Authors:

Dr. Nirupma Gupta1, Mr. Bharat Gupta2

1
Assistant Professor, School of Management, ITM University, HUDA Sector-23-A,
Gurgaon-122017
Mobile. 09818712197, Email: nirupmagupta@itmindia.edu

2
Senior Manager- Project Management, Toshiba JSW Power Systems Pvt. Ltd.,

3rd Floor, Building No. 10, Tower B., Phase-II, DLF Cyber City,

Gurgaon-122002 (India)

Mobile: +91-8527692839, Email: bharat.gupta@toshiba-tjps.in

 Peer Influence on Service Purchase Decisions by Young Adults

Abstract

Consumer behavior occupies a crucial role in designing marketing strategies. Several internal
and external factors influence consumer purchase decisions for products. This study investigated
the effect of peer influence, more specifically; informational and normative influence on service
purchase decisions of college going young adults. A convenience sampling technique was used
to select 112 students enrolled in regular courses in a private university in National Capital
Region. A well structured self administered questionnaire comprising 36 statements, 9 each for
four service categories, was distributed to the select sample and data was analyzed using
descriptive statistics and t-test. Results indicated that affect of informational peer influence is
more than normative peer influence on the decision to purchase both privately and publicly
consumed necessity services as well as both privately and publicly consumed luxury services.
Key Words: Normative influence, informational influence, private necessity, public necessity,
private luxury, public luxury

1. Introduction

In any business organization, understanding consumers is the most important, complex and
challenging task. There are numerous underlying factors that shape intentions and behavior of
consumers during purchase decisions. In order to enjoy a profitable experience with consumers,
marketers need to develop an understanding for consumer perceptions, motivation and learning
experience. Consumers seek relevant information from various sources in their environment and
attempt to make informed decisions. The amount of information gathered for purchasing
products depends upon adequacy of past information available, urgency of the purchase decision
and the risk involved. Services, being intangible, are evaluated by consumers through
environmental cues and physical evidence. They generally rely more on personal rather than
commercial sources of information for selection of any service. One such influential, important
and valuable source of information is the peer group influence. This paper has researched two
types of peer influence -informational and normative influence for service purchase decisions by
young adults.

2. Literature Review
Researchers have made exemplary contribution to the vast literature embodying consumer
behavior. There are many dynamic but unidentified factors that make predicting consumer
behavior as one of the most mind numbing tasks for any marketing organization. One such
significant factor is the influence of reference group on purchase decisions.
Reference Group

Reference group, i.e. people who act as a reference point for a consumer and with whom the
consumer shares common values, plays a major role in influencing the final purchase decision of
the consumer. In the words of Rajput and Kanna (2014), reference groups are the external
influencers such as favourite stars, celebrities, peers and relatives who considerably influence
one’s purchase decisions and behaviour. It is the reference group that decides what is appropriate
and what is not (Bristol & Mangleburg, 2005; Mangleburg et al., 2004). Reference groups that
directly influence consumers are primary and secondary membership groups. Primary group
consists of those people with which an individual encounters informally or in-person but
regularly. Secondary membership groups are typically more formal, yet less frequent face-to-
face encounters. Reference groups that people would ideally like to become a part of, are
considered as aspirational reference groups while groups that people would never want to be
associated with, referred to as non-aspirational reference groups.

Peer Influence

People have a great desire to fit in and be accepted among social group that causes them to
give into peer pressure. Peer influence is generally defined as the extent to which attitudes,
beliefs, and actions of an individual are influenced by peers (Makgosa & Mohube, 2007).
It refers to the pressure wielded by a group of people of same age group, sharing similar interests
and/ or belonging to same socio-cultural category on a person to alter his/her behaviour, attitudes
and values to be in conformity with the group norms. Review of peer’s appearance and actions
play a significant role in nurturing the self concept of consumer. The consumer purchases most
of the products due to the peer influence (Ahmad et al., 2014) Consumers communicate with
their peers, observe their behavior, regard their opinion, seek information and approvals for
building their own attitudes and self concept. Researchers have identified three types of peer
influence namely informational, utilitarian and value expressive (Bearden & Etzel, 1982;
Childers & Rao, 1992; Lessig & Park, 1978; Makgosa & Mohube, 2007; Park & Lessig, 1977).
An individual is under informational influence if he seeks information from others and makes a
well thought of decision based upon peers’ knowledge. According to John and Christopher
(2013), an individual is assumed under informational influence if he observes the behaviour of
others and actively searches information from those whom he thinks as expert in relevant field.
Value expressive influence is related to an individual’s intention to develop his/her personality
by associating or disassociating with others (John & Christopher, 2013; Lessig & Park, 1978).
Utilitarian influence occurs when an individual conforms to the preferences, likings, approvals or
expectations of others because of his perception that his peers may reward or punish him for
specific behavior shown by him (Bearden & Etzel, 1982; Lessig & Park, 1978).

Other researchers have suggested only two main influences namely normative and informational
influence (Bearden et al., 1989; Brinberg & Plimpton, 1986). Normative influence is defined as
the propensity to meet the positive expectations of others (Bearden et al., 1989). People change
their behavior in accordance with peer group expectation due to fear of isolation. Informational
influence occurs when peers act as a credible source of information for an individual, thus
enabling him to make informed decision in a world of uncertainty. A peer group is influential as
informational reference group through its message and trustworthiness while it is influential as
normative reference group when its members exert influence through their appearances and
social status. Young adults are more prone to peer influence and tend to act in accordance with
the expectations of their peers (Mokhtaran & Assar, 2014; Gillani, 2012).
Peer Influence on Product Purchase Decision
Researchers have investigated the role of peer influence in consumer decisions for product
purchases. They have suggested that the peers influence differs with the type of product
purchased by the consumer (Bearden & Etzel, 1982; Childers & Rao, 1992; Mokhtaran & Assar,
2014).

They examined relationship between peer influence and product category purchased based on
product conspicuousness. Product conspicuousness is defined as the degree to which a product
stands out or is visible to consumers (Mokhtaran & Assar, 2014; Acharya & Gupta, 2014).
Product conspicuousness depends upon two dimensions. The first dimension is related to the
degree to which a product is considered as a luxury or a necessity. Luxuries are rarely owned and
consumed by everyone. Thus, they tend to be relatively more conspicuous (Acharya & Gupta,
2014; Childers & Rao, 1992; Makgosa & Mohube, 2007). The second dimension refers to the
degree to which products have public or private usage (Acharya & Gupta, 2014). Products that
are consumed in public are easily observed by consumers than privately consumed products
(Childers & Rao, 1992; Makgosa & Mohube, 2007). Hence, four different types of products have
been recognized on the basis of these two attributes of product conspicuousness- publicly
consumed luxuries, privately consumed luxuries, publicly consumed necessities and privately
consumed necessities (Makgosa & Mohube, 2007).

Table 1: Product Conspicuousness Dimensions

Product conspicuousness
Luxury Necessity
dimensions

Used in public view Used in public view

Public
Not owned/used by everyone Owned/used by everyone
Not used in public view Not used in public view
Private
Not owned/used by everyone Owned/used by everyone

Table 2: Product Types on the Basis of Product Conspicuousness

Public luxuries: Products that are publicly consumed and are not commonly used/ owned. Such
products are prone to more peer influence. Example- Golf club
Private luxuries: Products that are not consumed publicly and are not commonly used/ owned.
Such products are more influenced by peers because they are important and involve more
discretionary purchases. Example- Home theatre system
Public necessities: Products that are publicly consumed and are commonly used/ owned. The
decision to purchase such products attracts less peer influence because virtually everyone owns it.
Example-Shoes
Private necessities: Products that are not consumed publicly and are commonly used/ owned.
Such products are not publicly important and are therefore not likely to be influenced by peers.
Example - Mattresses
Source: Makgosa and Mohube (2007)
According to Childers & Rao (1992), the impact of peer influence is strong for public and private
luxury than for private necessity. Study undertaken by Bearden and Etzel (1982) further revealed
that public and private luxuries were under greater informational influence than public
necessities whereas the utilitarian and value expressive influences were not at all significant.

In a study conducted by Akpan et al. (2012) in Uyo, Nigeria on the role of peer in decision
making by female students for selected apparel, it was found that normative influence was
comparatively higher than informational peer influence for deciding the purchase of public
luxury products.

Results of a study contributed by Tuker (2011) on who influences young adults decisions to
adopt new technology such as mobile phone revealed that sixty-three percent of influencers felt
that as compared to family, friends were more influential with forty five percent stating that
friends were somewhat or most influential. The majority and laggards were overall more likely
to find friends and family more influential than salespeople and organizations that they belong to
in comparison to innovators and influencers. Innovators rely on the opinion of their friends when
looking for a new phone because friends are more likely to use their phones in the same way as
they do.

The reviewed literature suggests that peer influence plays an important role in product purchase
decision. This study is focused on developing an insight into normative and informational
influence of peers on college going young adults’ purchase behavior for services. Young adults,
which form a major part of the total customer base for any organization, have been taken as a
sample of study because they are more susceptible to peer influence as compared to general
population.

3. Research Objectives

The main purpose of this study was to investigate the peer influence on purchase behavior of
college going young adults for privately and publicly consumed services. The research was
conducted with the following specific objectives:

1. To examine the effect of informational and normative peer influence on the purchase
behavior of young adults for public and private necessity service.
2. To examine the effect of informational and normative peer influence on the purchase
behavior of young adults for public and private luxury service.

4. Research Hypothesis

Based on extensive review of the literature, following hypotheses were formulated:

H1a. There is greater informational influence for public luxury than for public necessity.
H1b. There is greater normative influence for public luxury than for public necessity.

H2a. There is greater informational influence for private luxury than for private necessity.
H2b. There is greater normative influence for private luxury than for private necessity.
H3a. There is greater informational influence for public luxury than for private necessity.
H3b. There is greater normative influence for public luxury than for private necessity.

H4a. There is greater informational influence for private luxury than for public necessity.
H4b. There is greater normative influence for private luxury than for public necessity.

H5a. There is equal informational influence for public luxury and private luxury
H5b. There is equal normative influence for public luxury and private luxury

H6a. There is equal informational influence for public necessity and private Necessity
H6b. There is equal normative influence for public necessity and private Necessity

5. Research Methodology
Population Sample
The sample for this study comprised young adults aged 18-24 years of age, enrolled as regular
student in various engineering, management and law courses in a private University in National
Capital Region.

Survey Instrument
The study was conducted by deploying a structured questionnaire measuring informational and
normative peer influence across 4 service categories. The questionnaire consisted of 4 questions
for 4 categories of services viz. private necessity (Mobile service provider), public necessity
(Educational institution), private luxury (Premium salon) and public luxury (Top class
restaurant). Each question had 9 statements adapted from Makgosa and Mohube (2007) which
measured peer influence on the decision to purchase a specific service. Out of these 9 statements,
3 statements were measuring informational peer influence while remaining 6 statements were
measuring normative peer influence. The response was recorded on a 5-point scale- Strongly
Agree (SA), Agree (A), Uncertain (U), Disagree (D) and Strongly Disagree (DA). Reliability of
the instrument was measured through Cronbach’s alpha which yielded a reliability coefficient of
0.902

Administration of the Instrument

Prior permission was taken from concerned authorities to distribute questionnaire to students in
University campus, classrooms, library and cafeteria. Objective of the questionnaire was clearly
explained to the respondents and their queries were duly addressed while getting the responses.
112 out of 140 filled questionnaires were considered valid for data analysis and interpretation.
The analysis was done using IBM SPSS Statistics Version 22.

6. Data Analysis and Interpretations

Mean values for normative and informational influence were computed for each service category
viz., Mobile service provider (private necessity), Educational institution (public necessity),
Premium salon (private luxury) and First class/Top quality restaurant (public luxury). Table 3
presents descriptive statistics for normative and informational peer influence for four service
categories.

Table 3: Descriptive Statistics for Peer Influence according to Product Type

Service Name Service Type Normative influence Informational influence

Mean SD Mean SD
Mobile service provider Private necessity
2.8244 .715 3.5506 .664
Educational institution Public
3.0253 .744 3.7262 .805
necessity
Premium salon Private luxury
3.0089 .810 3.3125 .920
First class restaurant Public luxury
3.1384 .745 3.4464 .867
N=112

To test formulated hypotheses H1a to H6b as discussed in section 4 above, paired comparison t-
test was used. Results are presented in Table 4.

Table 4: Paired Comparison Results

Hypotheses Informational influence Normative influence

Mean Mean t-value p-val Mean Mean t-value p-val
H1a,H1b Public luxury(4)>
3.44 3.72 -3.15** 0.002 3.13 3.02 1.47 0.14
Public necessity(2)
H2a,H2b Public luxury(4) >
3.44 3.55 -1.10 0.272 3.13 2.82 4.67*** 0.00
Private necessity (1)
H3a,H3b Private luxury(3) >
3.31 3.72 -4.76*** 0.00 3.00 3.02 -0.22 0.82
Public necessity(2)
H4a,H4b Private luxury(3) >
3.31 3.55 -2.40** 0.018 3.00 2.82 2.53** 0.01
Private necessity(1)
H5a,H5b Public luxury(4)=
3.44 3.31 1.65 0.102 3.13 3.00 1.94* 0.05
Private luxury(3)
H6a,H6b Public necessity(2) =
3.72 3.55 2.10** 0.038 3.02 2.82 2.65** 0.009
Private necessity(1)
N=112, ***p<0.001, **p<0.05, *p<0.1

Note: 1. Private necessity-Mobile service provider

2. Public necessity-Educational institution
3. Private luxury-Premium salon
4. Public luxury-First class restaurant

Results show that there is a significant difference in peer influence across four service types. The
detailed results and their interpretation are reported below:

H1a and H1b which state that there is greater informational and normative influence for public
luxury than for public necessity is not supported. It is found that there is a significant difference
in the informational influence for public luxury (First class restaurant) and public necessity
(Educational institution) (t=-3.15, p<0.05). Greater informational influence is reported for public
necessity (educational institution, m=3.7262) than for public luxury (First class restaurant,
m=3.4464). However, there is no significant difference in the normative influence for public
luxury (First class restaurant) and public necessity (Educational institution).

H2a and H2b which state that there is greater informational and normative influence for public
luxury than for private necessity is partly supported. It is found that there is a significant
difference in the normative influence for public luxury (First class restaurant) and private
necessity (Mobile service provider) (t=4.67, p<0.001). Greater normative influence is reported
for public luxury (First class restaurant, m=3.1384) than for private necessity (Mobile service
provider, m=2.8244). However, there is no significant difference in the informational influence
for public luxury (First class restaurant) and private necessity (Mobile service provider).

H3a and H3b which state that there is greater informational and normative influence for private
luxury and public necessity is not supported. It is found that there is a significant difference in
the informational influence for public necessity (Educational institution) and private luxury
(Premium salon) (t=4.767, p<0.001). Greater informational influence is reported for public
necessity (Educational institution, m=3.726) than for private luxury (Premium salon, m=3.312).
However, there is no significant difference in the normative influence for public necessity
(Educational institution) and private luxury (Premium salon).

H4a and H4b which state that there is greater informational and normative influence for private
luxury than for private necessity is partly supported. It is found that informational influence is
greater for private necessity (Mobile service provider) than for private luxury (Premium salon)
but normative influence is greater for private luxury (Premium salon) than for private necessity
(Mobile service provider) (Table 4) .

H5a and H5b which state that there is same informational and normative influence for public
luxury and private luxury is partly supported. It is found that there is a significant difference in
the normative influence for public luxury and private luxury (t=1.943, p<0.1). Greater normative
influence is reported for public luxury (First class restaurant, m=3.1384) than private luxury
(Premium salon, m=2.8244). However, there is no significant difference in the informational
influence for public luxury (First class restaurant) and private luxury (Premium salon).

H6a and H6b state that there is same low level of informational and normative influence for
public and private necessity. However, contrary to the hypotheses, it was observed that
difference between means of informational and normative influence was statistically significant.
It is found that both informational and normative influences are greater for public necessity
(Educational institution) than for private necessity (Mobile service provider) (Table 4). Thus,
overall H6a and H6b were not supported.

7. Discussion

In this study the influence of informational and normative peer influence has been investigated
across various service categories. It has been observed that informational influence is more than
normative influence for all 4 service categories. This might be because young adults seek
information from their peers in the form of mutual discussions in academic institutions and
connecting through chatting and social media. Young adults do not have any steady source of
self generated income. Resources and circumstances play a more important role than agreement,
approval and likeness of peers in decision making.
It has been observed that informational influence for public necessity service like an educational
institution has the highest mean value while it is lowest for a private luxury service such as
premium salon. This might be because taking admission in an educational institution has
irreversible repercussions in carrier in case of a wrong decision. Hence, young adults try to
consult all those whom they think has the previous experience or relevant and trustworthy
information.
Normative influence for public luxury service like visiting a Top class restaurant along with
friends has the highest mean value while it is lowest for a private necessity service like a mobile
service provider. This might be because young adults tend to comply with the liking, approvals
of peer group before selecting any premium service as compared to a privately consumed
necessity service for which adherence to peer expectation does not matter.
Overall findings reveal that services which are used in public view such as taking admission in
an educational institution and visit to a top class restaurant with friends are more likely to attract
peer influence than services which are used in private and are a necessity such as mobile service
provider.
However, some of the findings of this study are contrary to what has been reported in other
studies but are important for marketers. In this study, the normative influence was insignificant
between public luxury (Top class restaurant) and public necessity (Educational institution)
services but informational influence was significant between these two types of public services.
Similarly, normative influence was insignificant between private luxury (Premium salon) and
public necessity (Educational institution) services but informational influence was significant
between these two types of services. This could mean that for services that are observed by
public on consumption and which are commonly used, young adults tend to make informed
decisions by learning from others’ experiences.
Informational influence was insignificant between public luxury (Top class restaurant) and
private necessity (mobile service provider) but normative influence was significantly greater for
public luxury service (Top class restaurant) than for a private necessity service (mobile service
provider). This suggests that young adults tend to comply with the approval and expectation of
peer group for a service that is used in public and not used normally such as visiting a top class
restaurant with peer group but for a service which is used normally and in private, normative
influence has a minimal role.
Normative influence was slightly greater for public luxury (Top class restaurant) than for private
luxury (Premium salon) which is not as hypothesized. Since both the services are not frequently
used by young adults, they tend to behave in accordance with the expectations of peers for a
service that is used publicly than for a service that is used privately.
Similarly, both informational and normative influences were greater for public necessity
(Educational institution) than for private necessity (mobile service provider) which was not as
hypothesize. It suggests that young adults are make informed decisions and comply with peers’
expectations for purchasing services which are used by everyone and are important than when
services are used in private like selection of educational institution.

8. Conclusion and Suggestions

This study provides important insights on the role of peer influence on purchase decision by
college going young adults across various service categories. Based on the findings of this study,
it could be suggested that normative and informational peer influence have different implications
in the selection decision of services. For publicly and privately consumed necessities such as
educational institution and mobile service provider, marketers can showcase peers as a source of
information. For publicly and privately consumed luxuries such as high class restaurants and
salons, normative influence needs to be emphasized in advertisements. For such services,
marketers could design their promotional content featuring how availing a particular service
results in appreciation, praise and acceptance by peers and uplifts their status in the social class.

9. Limitations and Scope for Future Research

As this study was limited to college going young adults in a private university in NCR, results of
the study could not be generalized. More varied sample from different geographical areas would
refine the results. Further research in the field can be considered for significant contributions to
the literature. Future research could investigate effect of other influences such as Value
expressive peer influence besides normative and informational influence on purchase decisions.
A comparative study of familial and peer influence can be undertaken for goods or services.
Other services could be explored for study based on two dimensions of product conspicuousness.
Finally role of peer influence in brand switching behavior can contribute valuable results.

References
Acharaya, A., & Gupta,O.P. (2014). Influence of peer pressure on brand switching among Indian
college students. International Journal of Current Research, 6(2), 5164-5171.
Ahmad, N., Yousif, M., Shabeer, K., & Imran, M. (2014). A comprehensive model on
consumer’s purchase intention towards counterfeit mobiles in Pakistan. Journal of Basic and
Applied Scientific Research, 4(5), 131-140.
Akpan, I. D., Nkan, V. V. & Usoroh, C. (2012). Peer influence on selected clothing items
purchase decision of female students in University of Uyo. Journal of Home Economics
Research. 16,195-202.
Bearden, W.O., & Etzel, M.J. (1982). Reference group influence on product and brand purchase
decisions. Journal of Consumer Research, 9, 183-481.
Brinberg, D., & Plimpton, L. (1986). Self monitoring and product conspicuousness on reference
group influence. Advances in Consumer Research, 13, 297-300.
 Bristol, T., & Mangleburg, T.F. (2005). Not telling the whole story: Teen deception in
purchasing. Journal of Academy of Marketing Sciences, 33 (1), 79-95.
Childers, T.L., & Rao, A.R. (1992). The Influence of Familial and Peer Based Reference Group
Influence on Consumer Decisions. Journal of Consumer Research, 19, 198-211.
Gillani, F.(2012). Impact of peer pressure and store atmosphere on purchase intention: An
empirical study on the youngsters in Pakistan. International Journal of Academic Research in
Business and Social Sciences, 2 (7), 323-332.
John, S.F. & Christopher, J.A. (2013). Influence of peer in purchase decision making of two-
wheelers: A study conducted in Coimbatore. European Journal of Commerce and Management
Research, 2(1), 1-5.
Lessig, P.V. & Park, C.W. (1978). Promotional perspectives of reference group influence:
Advertising implications. Journal of Advertising, 7, 41-47.
Makgosa, R. & Mohube, K. (2007). Peer influence on young adults’ product purchase decisions.
African Journal of Business Management,1(3),64-71.
Mangleburg T.F., Doney P.M., & Bristol, T. (2004). Shopping with friends and teens
susceptibility to peer influence. Journal of Retailing, 80, 101-116.
Mokhtaran, M., & Assar, S.S. (2014). Peer influence and purchase of different products:
Evidence from Iran young adults. Advances in Environmental Biology, 8(4),1931-1937.
Park, W. C., & Lessig, P.V. (1977). Students and housewives: Difference in susceptibility to
reference group influence. Journal of Consumer Research, 4, 102-110.
Rajput, N., & Khanna, A. (2014). Dynamics of young Indian consumers’ buying behavior
towards branded apparels: Gender perspective. Archives of Business Research, 2(5), 84-106.
Tucker, T. (2011).What influences young adults’ decision to adopt new technology?. The Elon
Journal of Undergraduate Research in Communications, 2(2), 147-157.

View publication stats