SOCIAL INFLUENCE ON CONSUMERS’ PURCHASING BEHAVIOR AND RELATED MARKETING STRATEGY -- A CROSS – NATION COMPARATIVE STUDY

He Xihao (Stephen) Georgia College & State University Jiaqin Yang Georgia College & State University

Abstract This paper describes an empirical study investigating the difference of reference group influences on consumer behavior in cell phone purchasing decisions between the cell phone users in the U.S. and China. Specifically, three types of reference group influence (informational influence, utilitarian influence, and value-expressive influence) are examined in this study. The data for this study are collected from a web-based questionnaire survey with over 200 participants in each country. The preliminary results indicate that there are significant differences in the cell phone consumer purchasing patterns in terms of those social reference group influences, due to differences in some fundamental cultural and social traditions between the U.S. and China. Based on the results of this study, managerial insights and practical implications for marketing strategies in the cell phone market are recommended accordingly.

Introduction “They are such a big part of our daily lives that it is highly likely you will have a mobile phone in your pocket right now. If you don't, it's probably because you left it somewhere accidentally” (Aldridge 2004). The cellular phone industry is one of the rare bright spots in Asian business (Roberts, 1998). China’s cell phone market has increased at an annual growth rate of 80% since 1990 (Statistics of CMII, 2005). In 2001, China’s cell phone market grew into 130 million users, exceeding the U.S.’s market for the first time (Robertson, 2001). And in 2004, Chinese cell phone user population reached 335 million (25% of the total Chinese population), 65 million more than 2003 (Statistics of CMII, 2005). Advanced Micro Devices, Inc. (AMD) listed China as its top priority in the SWOT analysis. The country’s growing population and huge demand potential have always been an attraction for many high-tech multinational companies. Along with the increase of cell phone usage, the worldwide competition for the cell phone market has been extremely intensified and should never be underestimated. In Hong Kong, the competition is so fierce that the industry is in a game of “advertise or die”--with an unsurprising $9 million monthly marketing budget (Madden, 1999). There are already too many manufacturers selling too many models on China’s cell phone market. More than 600 cell phone models, brought by 110 manufacturers, are on sale at any one time, from small shops to giant electronics supermarkets (Motsay, 2004). Both domestic and international cell phone manufacturers are competing in China with a variety of different marketing strategies and competitive advantages. For instance, some companies are competing by promoting their high tech features. Others compete by using the so-called “star power” of celebrity endorsement (i.e., movie stars) of their products. Companies competing with unique aesthetical features such as attractive appearance, speed, color, shape, and the possibility of customization is not unusual. These marketing strategies have been widely used in many different industries based on the related market analysis about consumers purchasing behavior, especially the influence of these so-called social influence groups. 1332 1332

The objective of this article is to make marketing managers aware of the reference group influence in consumer decision-making when purchasing cellular phones and to find out innovative ways to advertise and promote their products. Historically, the cell phone (also known as wireless phone, cellular phone, cordless phone) has been priced expensively with the market dominated by business users (Kendall, 1997). All over the world cell phones were considered a status symbol for the rich and famous during the early 1990s. In China, people still remember a common scenario in which cell phone owners talked on their heavy and clumsy handsets (called “big-brother”), anywhere and everywhere, with such a proud look on their face and speaking so loudly- even in public places (on the train, on the streets, in a hotel, or at bus stops). At that time, the famous marketing slogan for promoting the use of the cell phone was: “One phone in hand, everything in your control.” This statement sent a strong message to the society that the ownership of a cell phone represented power, prestige, success, and wealth – given the fact that the average price of a cell phone was close to two years’ salary of an average Chinese worker at that time. In contrast, American cell phone consumers believed that when they signed up with a cellular telephone service, a free phone was included. At that time, it was the ownership of a cell phone, neither its technology nor its appearance, that distinguished the owner from others. U.S. Electronic Industries Association’s (EIA) Consumer Electronics Group predicted in 1994 that cellular phones would become a necessity for consumers. It was believed that the flexibility and convenience offered by cellular phones ensured their continued growth in this age of the information superhighway and advanced telecommunications (Shapiro, 1994). The U.S. market was expected to reach a penetration of 50% in 2005 (Scouras, 1995), but the real market growth has been better than expected. Today, strong new-subscriber growth and the replacement market keep raising the handset sales in the U.S. cell phone market, with 74 percent of Americans viewed as cell phone users (Palenchar, 2004). In terms of affordability, during the past 10 years the advancement of technology and competition has led the decline in cell phone prices (Kendall, 1997). In China, the cell phone being viewed as an expensive luxury only affordable to the power and the rich is long gone. Not only in all urban areas, but also in most smaller towns and remote rural farms, the cell phone has already become a common, affordable, and convenient communication device–-almost a necessity in many rural areas. For users in China’s income–constrained agricultural sector, sellers promote a “frugal” handset that eliminates features such as displays and reduces service fees by offering prepaid pay-per-call phone cards (Robertson, 2001). Today, one can easily find many advanced, newly emerging generations of cell phones, that are much smaller, lighter, better designed, and multi-functional-- anywhere and everywhere these cell phones are always on sale, with a much more affordable price--ranging from a basic model priced at a few hundred Chinese Yuan (half of the average monthly salary), to an advanced model priced over two thousand Chinese Yuan. The cell phone is now called “Shou-Ji,” meaning “phone-in-hand,” and there is even a popular movie made to describe the Shou-ji users’ popular sub-culture in 2004. Based on modern marketing theory and practice, it is believed that consumers’ purchase decisions are influenced by effective advertising and are more likely to conform to reference groups’ influences. The purchase of products such as cellular phones, which are used publicly, is strongly influenced by the consumer’s reference groups (Bearden and Etzel, 1982; Bourne, 1957). Cell phone manufacturers have already been practicing the different applications of this type of interpersonal influence since its early years. For example, handset makers mostly try to appeal female consumers via colorful faceplates and shiny monochrome finishes. When Siemens launched a series of GSM phones in the U.S. during fall 2002, it stressed personalization through color faceplates and the tagline: “What does your phone say about you?” Samsung launched phones that look like compact cases, complete with mirrors inside. Some of the phones may even have gemstones accentuated on the faceplates (Luna, 2002). 1333 1333

The goal of this study is to investigate the strength of such social reference groups’ influence on the cell phone customers in both the U.S. and China, and to reveal any significant differences between the two nations in terms of the actual influences of those social reference groups on the cell phone purchase behavior. As such, the result of this research can provide meaningful managerial guidelines for cell phone manufacturers of both countries in their marketing practices. For example, the stereotyped collectivism of Chinese culture’s emphasis of conformity to group norms, social acceptance, and hierarchical interpersonal relationships are expected to indicate higher reference group influence about the same product compared to those consumers in the U.S. (Zhou and Hui, 2003). In addition, this paper is also an attempt to test certain theoretical implications and to provide empirical evidence for the future study about the reference group influence research literature.

Literature Review While traditional marketing and economic theories claim that a consumer’s purchasing motivation is basically in relation to how a product (or a service) can satisfy one’s needs, consumer behavior research on consumers’ social and interpersonal environment has indicated that the consumers’ final decision on whether to buy a specific product and which brand or model to choose among competing alternatives can be influenced by reference groups (such as friends, family, work associates and so forth). Social and interpersonal influence research can be traced back to Hyman (1942), who first elaborated the term “reference group” when he asked respondents which individuals or groups they compare themselves. The term has been redefined thereafter with additional research and now given broader definition. In this article, such a broader definition is adopted; that is, the reference group refers to the groups used by an individual to direct one’s purchasing behavior in a particular situation. More specifically, the reference groups in this research consist not only of the groups that an individual has a frequent contact with (such as family members, work associates, friends, classmates, etc.), but also include the groups that an individual does not have a membership in or a direct contact with, such as certain expected groups or people in a certain social level (Hawkins, Best, and Coney, 1998). Bourne (1957) studied group influence in marketing and behavioral research and concluded the concept of the reference group has a pervasive influence on marketing studies. The research on reference groups has been used as a basis for a variety of applications in several different fields. For example, it has been argued that the reference group concept should be applied in behavior studies of specific groups, such as: farmers, scientists, alcoholics, mentally ill patients, and of course, different segments of consumers (Hyman and Singer, 1968). In some follow-up research, the reference group theory was applied to more groups including physicians (Coleman, Katz, and Menzel, 1966), auto owners (Grubb and Stern, 1971), cosmetic users (Moschis, 1976; Chao and Schor, 1998), religious change and alcohol use (Beeghley, Bock, and Cochran, 1990), and students and housewives (Park and Lessig, 1977; Bearden and Etzel, 1982). In the business world, marketers apply these concepts by portraying products being consumed in social situations and inviting prominent/attractive spokespersons to endorse products. There are published reports on the consumer behavior from the perspective of reference group influence using the broadly defined concept. Witt and Bruce (1972) suggested seven influence determinants including perceived risk, expertise of the referent, and the individual’s need for social approval. One study found that consumers used both reflective and comparative appraisal to choose their products (Morchis, 1976). Another revealed that consumers would not only apply direct and verbal interaction to obtain the evaluations from reference group, but also observe reference group members’ behavior to make a decision. This study suggested that the individual’s choice of different brands might also be influenced by one’s reference groups (Bearden and Etzel, 1982). Comparing young students with generally more conservative housewives, Park and Lessig (1977) concluded that American students were more likely to be influenced 1334 1334

by reference groups than general American housewives were when making their purchasing decisions, and that the advertisements and promotions utilizing reference group had more a direct and significant influence over consumers’ final purchases. In their research, Park and Lessig (1977) developed the first set of scales for measuring reference group influence functions, concluding that reference group influence varied across products. Bearden, Netemeyer, and Teel (1989) believed that consumer susceptibility to interpersonal influence is a general trait that varies across individuals and developed a scale to measure it. Becker (1991) found that the demand of a typical consumer is positively related to quantities demanded by other consumers by exploring restaurant pricing. Wooten and Reed (2004) suggested that consumers with high susceptibility to normative influence tend to use protective self-presentation to avoid undesirable disapproval. Researchers also believe that interdependent cultures such as China, Japan, Korea, and most East Asian countries, emphasize conformity to group norms and social acceptance (Zhou and Hui, 2003; Gürhan-Canli and Maheswaran, 2000; Han and Schmitt, 1997; Triandis, 1995; Triandis and Gelfand, 1998). Wong and Ahuvia (1998) also noted that there is a strong tendency for East Asians to consume luxuries conspicuously to show their social status and wealth. McGuire (1968) concluded by reviewing studies on American subjects that susceptibility to interpersonal influence is a general trait that varies across different groups and individuals. In summary, the existing literature has demonstrated that reference groups have significant influence on consumers, purchasing behaviors. While a consumer may consider whether to follow the group consciously, in most cases, one will agree with the group subconsciously. An individual who is more susceptible to interpersonal influence will try to satisfy the reference groups’ expectation by complying with the groups’ norms. In terms of different consumer groups and their purchasing behaviors, those norms will function without any verbal interaction or thinking (Lessig and Park, 1978). Previous research has identified three major types of reference group influences: informational influence, utilitarian influence, and value-expressive influence (Park and Lessig, 1977; Bearden and Etzel, 1982), which are briefly described below. Informational Influence The informational influence is based on the desire to make informed decisions and optimize the choice. Kelman (1961) suggested that an individual would accept an influence that improves one’s knowledge and ability to cope with the environment. The informational influence only functions when the individual regards the behavior and value of reference group members as potentially useful information and takes them into consideration. When a consumer lacks the knowledge of a certain product and the experience of purchasing this item, one may perceive the information and recommendation from his/her reference group as credible and thus accept them with certain confidence. Marketing practical applications can be seen from the use of expert power and internalization in advertising with the ads that feature doctors (or actors) impersonating doctors as spokespersons for over-the-counter medicines. A recent TV advertisement tells viewers to: “Join the millions, switch to Netzero” (internet service provider). When considering purchasing a cell phone, one may ask his/her friends and family members for information about different brands and models in the purchasing consideration, or one may also search online group discussions about cell phones in comparing different brands and models. Utilitarian Influence This influence can be explained by the so-called “compliance process” in which an individual is willing to satisfy a certain group’s expectation in order to obtain the praise or to avoid the punishment from the group (Kelman, 1961). The best demonstration for the utilitarian influence may be the famous Asch 1335 1335

Experiment in which participants were found to willingly conform to the group answers, even changing their original right answers (Rock, 1990). Suggesting in the advertisements that one may obtain social approval and acceptance by just using a certain commodity, will have an influence on certain groups of consumers. Advertisements for personal care products in which consumers are punished by co-workers or friends for not using anti-dandruff shampoo, deodorant, or mouthwash, in fact, take advantage of the reference group’s utilitarian influence. Recent TV advertisement examples include: “Watch the show everybody's talking about” (Nancy Grace's Show); and “I want people looking at my clothes and say: ‘WOW, you look great’” (Some retail store). A good example in the cell phone market may be the fact that so many Chinese parents have complained about their children’s falling grades in school because their kids had played too many video games in their after school hours. As a result, those complaints might lower the student’s motivation to purchase the N-Gage, a cell phone famous for its video game function. Value-Expressive Influence This influence may be best explained by the “identification process” in which people are willing to better express themselves to the society by making themselves similar to the group that they want to belong to (Kelman, 1961). Under this influence, one may actively follow the groups’ beliefs and rules while neglecting the praises or punishments and decide to completely accept and internalize the value of that reference group. One good example of using this influence in marketing practice was used by soft drink giant Pepsi; the company has aired its Young Generation brand image extensively so that its targeted consumers have accepted the value of this specific group. Recent TV advertisement example include, “See other women's success and learn more” (Yogurt advertisement); “Dad: Life insurance is something parents buy and benefit their children. Child: Do you have life insurance? Dad: Yes, of course.” (Prudential Finance); “I'm protecting my family by Garden State Life Insurance; I do the same, why don't you do the same with us?” (Garden State Life Insurance). Sony has a famous celebrity playing a successful manager’s role in its Sony cell phone advertisement implying that people who use the same cell phone will have the same characteristics with that expected group. The Motorola’s i836 is a cell phone packed with business-related features and applications. The clamshell-style phone has a sleek design and color with no bright color faceplates, which is referred as the executive gray (Shaw, 2005). This research is developed based on the well-recognized belief that the trait of susceptibility to interpersonal influence not only varies across individual consumers, but also varies across cultures at a larger degree. However, the literature of East Asian consumers’ susceptibility to social influence is very limited. In fact, there is no published research addressing the issue of comparing the susceptibility of the reference group influence on the consumers’ purchasing behavior under two totally different cultures. In order to be a successful competitor in a global marketplace, companies need to apply effective marketing strategies that are sensitive to cultural differences across different regions and countries. As such, this paper is an attempt to address the above issue through an empirical study with the cell-phone industry.

Research Methodology The primary data for this study were collected through a web-based questionnaire survey. The requests for participation in this research were sent to several universities, companies, and email list servers. The email list servers were selected based on proposed research objective--to target a large population of active cell phone users. The participation in this research is therefore totally random and voluntary to ensure the relative randomness of the sample selection. The survey was conducted both in China and the United States in September 2005 with a sample size of 232 U.S.-validated responses and 34 Chinese-validated responses. Participants were invited by email to join the survey and asked to fill in and submit the survey online. The survey was worded in English across the two countries. As the survey was conducted among higher educated people, the authors believe there was no difficulty for Chinese participants to understand 1336 1336

the survey. At the same time, the results collected from one of the author’s earlier study, a similar questionnaire survey worded in Chinese with 140 validated responses, was used to compare and screen out the translation bias. The questionnaire has three sections. The first part is a scale of interpersonal influence. Fourteen statements are carefully worded (Table 1) based on the reference group influence scale developed by Park and Lessig (1977). Those statements cover the majority of key questions and decisions in a cell phone purchasing process so that the information collected can reflect and capture the three manifestations of interpersonal influences summarized early in this section--informational influence, utilitarian influence, and value-expressive influence (as shown in Table 1). Following the suggestion from the early research, “These statements were designed to be general enough to encompass different forms of behavior underlying a given type of reference group influence, yet specific enough to reflect only one motivational function” (Park and Lessig, 1977). The 14-item reference group influence scale was recorded on a 5-place scale that ranged from 5 = Strongly Agree, 4 = Agree, 3 = Neutral, 2 = Disagree, to 1 = Strongly Disagree. The scores were computed by assigning the highest score obtained on any one of the items representing a given dimension of the three manifestations of interpersonal influence. The low scores were then averaged across the participants for each component of interpersonal influence. The second part of the questionnaire is the demographic profile. It is designed to collect information about the participants’ gender, age, ethnicity, profession, and economic status. Those demographic features are important factors that may affect the consumers’ susceptibility to interpersonal influence and are later used in the proposed statistical analysis. The last part of the questionnaire asks the participants how they rank the interpersonal influence (worded as peer influence in the questionnaire) as compared to other important factors such as technology, design and appearance, price, and call plan package in their cell phone purchasing decision. Based on the information collected, statistical analysis and comparative studies are conducted to examine the consumer’s susceptibility to interpersonal influence during their cell phone purchasing decision. The results are presented along with managerial discussions in the next section.

Results and Analysis Several research hypotheses are constructed and empirically tested in this research to compare the influence of reference groups on the cell phone consumers in U.S with their Chinese counterparts. Lessig and Park’s study (1978) suggested there are three sets of products (among which products such as color televisions, automobiles, insurance, and furniture belong) that have strongly relevant reference group influence. This set of products is highly visible and relatively luxurious (Bearden and Etzel, 1982; Bourne, 1957) and promotions for these products that incorporate a reference group appeal would be effective. In this paper it is assumed that cell phones also fall into this set of products because (a) the visibility of consumption of cell phones has been well established during the last decade, and (b) the cell phone and its service are still arguably luxury items to most people in both the U.S. and China. Based on the assumption, two hypotheses are tested in the study. Hypothesis 1: Reference groups have a significant influence on U.S. cell phone consumers in their purchasing behavior. Hypothesis 2: Reference groups have a significant influence on Chinese cell phone consumers in their purchasing behavior. 1337 1337

Table 1

Reference Group Influence Manifestation Statements Designed for the Survey Reference Group Influence Manifestation Statements

Informational influence I would search information about various cell phones' brands and models from an association of professionals or independent group of experts. I seek information from those who work in the cell phone industry. I will collect cell phone information from those friends, neighbors, relatives, or work associates (such as how Brand A cell phone's performance compares to Brand B). If I see the cell phones' brand or model which are used by cell phone R&D people or cell phone retailers, I may change my mind. My choice of cell phone is influenced by other consumers' word of mouth or some evaluation reports from an independent testing agency (e.g., online cell phone reviews). Utilitarian Influence My friends' evaluation and preference will influence my choice. Other people's recommendation may influence my final decision. The preferences of family members can influence my choice of cell phones. To satisfy the expectations of classmates or fellow work associates, my decision to purchase a cell phone is influenced by their preferences. Value-expressive Influence I tend to choose those brands or models that will enhance my image in others' eye. I feel that those who purchase or use the cell phone of a particular brand or model possess the characteristics which I would like to have. I feel that it would be nice to act like the type of person whom advertisements show using the cell phone of a particular brand or model. I think that the people who purchase the cell phone of particular brand or model (e.g., palmOne Treo 650, Motorola A1000) are sometimes admired or respected by others. Using the cell phone of a particular brand or model helps me show others who I am, or who I would like to be (such as a successful businessman, a female professional, etc).

Order

1 5 7 10 13

3 6 9 11

2 4 8 12 14

As shown in Table 1, given the scale of 1 to 5, all three reference group influences are validated by both the U.S. and Chinese participants in this research, with the U.S. sample scoring 4.44 (informational influence), 4.23 (utilitarian influence), 3.13 (value-expressive influence); and the Chinese sample scoring 4.26 (informational influence), 3.85 (utilitarian influence), and 4.18 (value-expressive influence), respectively (with a total of 5.0, a mean more than 3 will be recognized as a strong influence). These scores were compared to 3, and all of them have significant p values less than 0.05. The significance of the reference group’s influence of the U.S. sample is consistent with the reference group’s influence over a relevant set of products found by Lessig and Park (1978). The results in Table 2 reveal that among the three influence functions, the value-expressive influence may have the weakest and most diversified impact on U.S. cell phone consumers. It has the lowest mean (of the three) of 3.13 (over 5.00), larger p value of 0.025, and the highest standard deviation of 1.04, respectively. This result is consistent with early research that focused on the need for uniqueness in the U.S. consumer decision-making process (Simonson and Nowlis, 2005).

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Table 2

Reference Group Influence Functions of U.S. and Chinese Samples U.S. Sample (n=232) No. of Reference group Range SD p* items function score

Informational Influence

5

1-5

4.44

0.56

0.00

Utilitarian Influence

4

1-5

4.23

0.63

0.00

Chinese Sample (n=34) Reference group SD p function score 0.83 4.26 (4.37**) 0.00 (0.77) 3.85 (3.93)

0.82 (0.87)

0.00

Value-expressive 0.72 5 1-5 3.13 1.04 0.025 4.18 (3.94) 0.00 influence (0.88) *p value shows the significance of reference group function score compared to value 3. ** The number in bracket “()” is the result collected from previous research that used a 4-place scale. It was adjusted by replacing 1 with 1, replacing 2 with 2.33, replacing 3 with 3.67, replacing 4 with 5 to compare with this research.

The three manifestations of reference group influences scores very differently between U.S. and Chinese samples (as shown in Table 2). These differences could be explained by the cultural differences between the U.S. and China, which is worth noting by multi-national cell phone marketers. Traditional Chinese culture rests on kinship, and people rely on word-of-mouth communication to obtain credible product information with the belief that only bad products needs advertising (Gong et al., 2004). Compared to U.S. consumers, who are brought up exposed to heavy advertisements, it is assumed that the Chinese sample should score higher than its U.S. counterparts on the informational influence. Collectivism has long been recognized as a distinguishable trait of Chinese culture as compared to the U.S. The high tendency to conform to social norms makes Chinese people consume similar brands or products. Tracing back to the days during the hard economic period, everyone was wearing military greens no matter the season. During the 1990s, a VCD player (an earlier version of DVD player) boomed in the market and appeared in every household very soon. Today, KFCs and McDonalds are filled with loyal customers most of the time the U.S.’s individualism trait shows that most people focus on their personal wants, needs, and rights while less concerned about the difference with others’. Thus, utilitarian influence and value-expressive influence on cell phone purchasing behavior are believed to be higher in China than in the U.S. Upon the above discussion, three more hypotheses are proposed for testing. Hypothesis 3: Reference groups have a higher informational influence on Chinese cell phone consumers in their purchasing behavior than their U.S. counterparts. Hypothesis 4: Reference groups have a higher utilitarian influence on Chinese cell phone consumers in their purchasing behavior than their U.S. counterparts. Hypothesis 5: Reference groups have a higher value-expressive influence on Chinese cell phone consumers in their purchasing behavior than their U.S. counterparts. As shown in Table 3 for the two survey participant groups, there are significant differences in terms of responses to the three reference group influence functions. Contradictory to common belief, the sample of

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Chinese consumers is less influenced by two out of the three reference group influence functions: informational influence and utilitarian influence, as compared to its U.S. counterparts. Hypothesis 3 and Hypothesis 4 have negative significant results. For the value-expressive influence, the Chinese sample scores much higher (4.18 compared to U.S.’s 3.13). Hypothesis 5 is thus clearly supported. Table 3

Reference Group Influence Comparison Between U.S. and Chinese Samples

U.S. Sample (n=232) Chinese Sample (n=34) p (U.S. vs. Chinese) Reference group Reference group function function score score Informational 0.053 5 1-5 4.44 4.26 (4.37**) influence (U.S. > Chinese) 0.001 Utilitarian 4 1-5 4.23 3.85 (3.93) influence (U.S. > Chinese) Value-expressive 0.000 5 1-5 3.13 4.18 (3.94) influence (U.S. < Chinese) ** The number in bracket “()” is the result collected from previous research that used a 4-place scale. It was adjusted by replacing 1 with 1, replacing 2 with 2.33, replacing 3 with 3.67, replacing 4 with 5 to compare with this research. No. of Range items

When the survey directly asks the participants to rank what they consider most important and least important when choosing a cell phone, the U.S. sample regards call plan and cell phone’s retailing price the most important, while the Chinese sample ranks appearance/design and price the most important (Table 4). Reference group influence (worded as peer influence here for survey participants’ easy understanding) ranks among the least important factors between both the U.S. and Chinese sample. Thus, reference groups do not have direct influence on U.S. and Chinese consumers’ cell phone purchasing decision, although indirect influences are significant in Hypothesis 1 and 2. From Table 4, it is also worth noticing that price and call plan play the most important factors in U.S. consumers’ decision while design/appearance is the only unarguable factor considered most important among Chinese consumers. It appears that U.S. consumers rely more on economic rationale when purchasing a cell phone, but their Chinese counterparts intend to impress themselves and others with their cell phones’ fancy design/appearance. This result combined with Hypothesis 5 may conclude that Chinese consumers try to build their own images similar to their intended groups, and the cell phone is a tool in terms of its design and appearance. For example, a cheap, decent looking cell phone in China could be a market star, while a high-tech, but malformed one, may not sell well. On the contrary, nothing would be more persuasive than a price comparison together with attractive call plan in the U.S. It is also worth mentioning here that many different call service providers such as Cingular, Verizon, and Sprint compete in the U.S. market. People pay more attention in choosing the service and are used to getting almost any cell phone model that is available at the service provider. Those service providers have limited cell phone brands and models on their shelves, and consumers have very few choices. However, there are only two companies, China Unicom and China Mobile, providing mobile phone services in China; and according to most cell phone consumers, the cell phone’s model and brand choice are more important and worth more attention than choosing between the two companies.

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Table 4 Important Decision Factors Comparison Between U.S. and Chinese Samples U.S. sample Factors which may be considered during a cell phone’s final purchasing consideration Newest technology (i.e., newest functions such as blue tooth, camera) The best design and appearance (i.e., color, size, weight, etc.) The lowest price among relatively similar products (i.e., have similar functions) Most attractive call plan package associated (i.e., free or discounted phone with the enrollment of a specific calling plan) The peer influences (i.e., close friend or family member recommendation, celebrity role in a TV ad., etc.)

Chinese sample

Most important %

Most important rank

Least Important %

Least Important rank

Most important %

Most important rank

Least Important %

Least important rank

0.13

4

0.26

2

0.18

3

0.29

1

0.16

3

0.19

3

0.41

1

0.06

5

0.34

2

0.08

4

0.24

2

0.24

3

0.36

1

0.06

5

0.09

4

0.15

4

0.01

5

0.41

1

0.09

4

0.26

2

Summary and Future Research Based on the existing literature about the influence of reference groups, several hypotheses regarding the influence of the reference group on the purchasing behavior between the cell phone consumers of China and U.S. are proposed in this research. A web-based questionnaire survey was conducted to collect the data, which then was used to empirically test the proposed hypotheses. Among the hypotheses proposed, the test result validates Hypothesis 1 and Hypothesis 2 with strong statistical evidence, providing the conclusion that there is a strong influence of reference group on cell phone consumers in their purchasing decisions. The results further indicate that among three influences tested, the informational influence has the strongest impact on cell phone consumers. Therefore, cell phone manufacturers and firms should continuously use the reference groups to target cell phone consumers in their future promotional efforts. This paper describes some preliminary results of an on-going research project focusing on the successful marketing strategies for multinational cell phone corporations. A complete paper with more detailed and specific analyses will be ready and presented in the conference. Based on these preliminary results, further follow-up studies will expand in the following directions: (a) more statements, specific and general, regarding the influence of reference groups on cell phone consumers will be developed and tested;

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(b) the population to be sampled will be extended to cover a more diverse consumer population; and (c) more consumer segments will be added and included with more related research hypotheses and empirical testing.

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