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Exploring the Role of Homophily in Purchase Behaviour

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Exploring the Role of Homophily in Purchase Behaviour Exploring the role of homophily in purchase behaviour Lauren Elizabeth Haworth Student number: 17337144 A research project submitted to the Gordon Institute of Business Science, University of Pretoria, in partial fulfilment of the requirements for the degree of Master of Business Administration. Date: 7 November 2018 ABSTRACT Homophily is a well-researched phenomenon around the world contributing to the understanding of why certain people form social groups. Most of the dimensions including race and age homophily are often studied in isolation. However, since humanity is complex, so too is the study of human behaviour, and as such, requires an exploration of all the dimensions of homophily present in specific social groups to understand how these social groups interact and influence group behaviour and purchase decisions. This was an exploratory, qualitative study of 17 higher-income black South African women, the composition and nature of their social groups both offline and on social media, and the influence of the group on individual purchase behaviour. This study found the presence of multidimensional homophily in social groups which were formed offline, although homophily also exists on social media. In fact, groups interact over social media more than face-to-face, and while social comparison is a common behaviour both offline and online, it was not a predictor of purchase behaviour. It was also affirmed that groups are effective at nudging individuals and influencing their purchase behaviour. Group-based brand experiences are recommended for more effective brand engagement for advertisers. The implications and recommendations for further research have also been discussed. KEYWORDS Nudge, homophily, social media, social comparison, purchase behaviour i DECLARATION I declare that this research project is my own work. It is submitted in partial fulfilment of the requirements for the degree of Masters of Administration at the Gordon Institute of Business Science, University of Pretoria. It has not been submitted previously for any other university. I further declare that I have obtained the necessary authorisation and consent to conduct this research. Name: Lauren Elizabeth Haworth Signed: Date: 7 November 2018 ii TABLE OF CONTENTS ABSTRACT ..................................................................................................................... I DECLARATION ............................................................................................................. II LIST OF FIGURES ........................................................................................................ VI LIST OF TABLES ........................................................................................................ VII TABLE OF DIRECT RESPONSE TO THE RQ ........................................................... VIII CHAPTER 1: DEFINITION AND PURPOSE OF RESEARCH PROBLEM .............. 1 1.1 Introduction ....................................................................................................... 1 1.2 Research Problem ............................................................................................ 1 1.3 Current Knowledge of Homophily ................................................................... 2 1.4 Research Gaps .................................................................................................. 4 1.4.1 Multidimensionality of homophily ..................................................................................... 4 1.4.2 Homophily research in South Africa ................................................................................ 4 1.4.3 Composition of online content ......................................................................................... 4 1.5 Research Objectives ........................................................................................ 5 1.6 The Purpose of this Study ............................................................................... 5 1.7 Significance of the Research ........................................................................... 5 1.8 Scope of the Research ..................................................................................... 6 CHAPTER 2: LITERATURE REVIEW ...................................................................... 7 2.1 Introduction ....................................................................................................... 7 2.2 Homophily ......................................................................................................... 7 2.2.1 At the Core of Homophily ................................................................................................ 8 2.2.2 Types of Homophily ......................................................................................................... 9 2.2.3 Status Homophily Dimensions ....................................................................................... 12 2.2.4 Homophily and Social Media ......................................................................................... 14 2.3 Group Influence .............................................................................................. 15 2.4 Social Comparison ......................................................................................... 17 2.5 Nudging Towards Purchase BehaViour ........................................................ 22 2.6 Social Media .................................................................................................... 23 2.7 The Composition of the Shared Content ...................................................... 26 2.8 Conclusion ...................................................................................................... 26 CHAPTER 3: RESEARCH QUESTIONS ................................................................ 27 CHAPTER 4: RESEARCH METHODOLOGY AND DESIGN ................................. 29 4.1 Research Methodology and Design .............................................................. 29 4.1.1 Research Setting ........................................................................................................... 29 4.2 Population ....................................................................................................... 30 iii 4.3 Unit of Analysis ............................................................................................... 31 4.4 Sampling Method and Size ............................................................................ 32 4.5 Data Gathering Instrument ............................................................................ 33 4.6 Data Gathering Process ................................................................................. 34 4.7 Data Analysis .................................................................................................. 36 4.8 Research Methodology Limitations .............................................................. 38 CHAPTER 5: RESULTS ......................................................................................... 40 5.1 Introduction ..................................................................................................... 40 5.1.1 A summary of the research methodology ...................................................................... 40 5.2 General ObserVations .................................................................................... 41 5.3 Results for Research Question 1 (Topic 1) .................................................. 41 5.3.1 Results for Topic 1, Question 1 ..................................................................................... 42 5.3.2 Results for Topic 1, Question 2 ..................................................................................... 49 5.3.3 Results for Topic 1, Question 3 ..................................................................................... 52 5.4 Results for Research Question 2 (Topic 2) .................................................. 54 5.4.1 Results for Topic 2, Question 1 ..................................................................................... 54 5.4.2 Results for Topic 2, Question 2 ..................................................................................... 57 5.5 Results for Research Question 3 (Topic 3) .................................................. 60 5.5.1 Results for Topic 3, Question 1 ..................................................................................... 60 5.5.2 Results for Topic 3, Question 2 ..................................................................................... 63 5.6 Results for Research Question 4 (Topic 4) .................................................. 67 5.6.1 Results for Topic 4, Question 1 ..................................................................................... 67 5.6.2 Results for Topic 4, Question 2 ..................................................................................... 70 5.6.3 Results for Topic 4, Question 3 ..................................................................................... 73 5.7 Results for Research Question 5 (Topic 5) .................................................. 75 5.7.1 Results for Topic 5, Question 1 ..................................................................................... 75 5.7.2 Results for Topic 5, Question 2 ..................................................................................... 78 5.7.3 Results for Topic 5, Question 3 ....................................................................................
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