Does reference-group comparison impact compensatory consumption for bottom of the pyramid (BOP) consumers?

Abstract

This article investigates the effect of reference group comparison on compensatory consumption for bottom-of-the-pyramid (BOP) consumers. While existing research reveals a relationship between upward social comparisons and compensatory consumption, there has been minimal focus on how BOP consumers react to such comparisons. By conducting multiple studies targeting low-income but educated employees of different organizations, this research demonstrates that BOP consumers engage in conspicuous consumption behavior; in particular, they prefer conspicuous material goods when undergoing reference group comparisons (both upward and downward), which is a marked contrast from their more affluent peers and the western population. Furthermore, while incidental envy explains the underlying mechanism of the relationship between upward reference group comparison and conspicuous material consumption, anxiety is the mediator between downward reference group comparison and conspicuous material consumption for BOP consumers. Overall, this research significantly contributes to the BOP and compensatory consumption literature and has managerial implications for marketers serving BOP markets.

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