The Impact of Reference Groups and Product Familiarity on Indian Consumers' Product Purchases

Less than 3% of India's food basket, consists of processed food, therefore processed food can be viewed as an innovation or new product to Indian consumers. This research investigates the effects of product familiarity and reference groups on Indian consumers' attitudes and purchase behavior of new processed food products. For the study, the model is developed by modifying Cambel and Goodstein's (2001) "Moderate Incongruity Effect" to include important cross-cultural influences on attitudes and purchase decisions among Indian consumers. Empirical analysis was conducted through structural equation modeling (SEM). SEM results indicated that reference group influence has a stronger positive effect on consumers' attitudes and actual purchase behavior of more familiar processed foods than of less familiar processed food. In addition, attitudes have a stronger positive effect on consumers' actual purchase of more familiar than of less familiar processed foods.