The Impact of Reference Group on New Product Adoption

Abstract

The purpose of this study is to determine what the reference groups are, what the new product adoption is and what the social factors that can affect it are. To determine whether there is a direct relationship between formal and informal reference groups and new product adoption. Then, the two major types of reference groups, formal and informal, are identified. Finally, the theoretical framework will make its way toward investigating the variant reference group sub types and how they can influence new product adoption. A survey-based research strategy was adopted for a survey of 411 respondents. The sample’s majority were aged less than 40 years with postgraduate education and worked in private organizations. The findings of this study supported the hypotheses of a relationship between opinion leaders, celebrities (formal reference groups) and family members and friends (informal reference groups) on new product adoption. Finally, it was concluded that opinion leaders had the highest significant influence in regard to product adoption. Celebrities as well as friends also had a significant impact on product adoption. Family, on the other hand, had an insignificant impact on product adoption. This study was performed to understand the impact of reference group influence on product adoption. The effect of reference group influence improves the adoption of new products.