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Group Influences. 1996. What is a Reference Group?. Institutions, individuals, or groups, imagined or real, who serve as points of comparison or reference. What do they do?. Play a vital role in socializing the consumer and transmitting society’s norms and values.

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what is a reference group
What is a Reference Group?
  • Institutions, individuals, or groups, imagined or real, who serve as points of comparison or reference.

What do they do?

  • Play a vital role in socializing the consumer and transmitting society’s norms and values

From a marketer’s point of view why are they important?

  • Influence a person’s values, beliefs, attitudes and behaviors.
  • about
    • products and brands
    • What product attributes are important
    • What lifestyles are desirable
    • purchase/consumption decisions
slide6

Consumers want to be like the people the admire and respect. They will emulate them, aspire to be like them, listen to them, identify with them and buy what they buy.

slide8

Types of Reference Groups

  • Celebrities/Cultural Figures
  • Friendship Groups
  • Ethnic Groups
  • Formal Associations and Organizations
  • Family
  • Peer Groups
  • Neighbors
  • Sales People
slide9

Who would you go to for information or advice on skin Care products?

Friend 30.2%

Doctor (Specialist) 22.1

Hair dresser/beautician) 18.6

Other 14.0

Pharmacist 8.1

Spouse 7.0

Total 100%

slide10

What specific reference persons or groups are likely to be influential to:

A newlywed couple planning to visit Europe for a month?

A recent home buyer planning to renovate the house with the latest available materials and fixtures

A student intending to buy a personal computer for the first time

A graduate about to outfit herself with a wardrobe for her new job

slide11

Types of Reference Group Influence

  • Normative: (e.g. families, peer groups)
  • influences members to conform to fundamental norms, values, beliefs.
  • This kind of influence affects the product class one consumes, not so much the specific brand
slide12

Comparative:

  • members of groups that are important to a consumer serve as bases for comparison about product choice, brands, product usage, activities, lifestyle, and so on
  • Influences the specific brands one purchases rather the broader product
slide13

Functions of Reference Groups

  • value-expressive (social image):

Gain esteem in the eyes of others

  • informational: Recognize and rely on the expertise of others
  • utilitarianIdentify with an admired or respected group or person. Satisfy their expectations
slide15

Value-expressive

Function

I can impress my guests, who will think I have taste. Since only people who buy Duke of Gloucester china have taste

Consumer

Hostess

Reference group

Dinner Guests

Product

(symbolic use)

Duke of Gloucester china

…If I set out Duke of Gloucester china

Guests might notice this exclusive dinner service

slide17

Utilitarian function

Consumer

High school student

Reference Person

Celebrity

Idea

Don’t smoke

Christy Turlington has referent power over admirers. She expects me not to smoke

If I don’t smoke Christy Turlington will approve

Idea endorsed by a celebrity

slide19

Informational function

Consumer Reports has expert power

Consumer

Health Plan shopper

Reference group

Consumer Reports

The experts have declared this product the best buy for my needs

Brand evaluated favorably in Consumer Reports

Product

Health Plan X

slide20

After “the Fonz” (Henry Winkler) the popular lead actor in Happy Days took out a library card in one episode of the show there was a 500% increase in library-card applications by 9-14 year olds. Describe which specific function or reference group theory is operating here.

slide21

Factors that Affect

Reference Group Influence

  • Information and experience (more informed and experienced individuals in a product category are less likely to be influenced by groups)
  • Individual difference factors, e.g. personality/involvement
  • Conspicuousness of the product (e.g. public use of a product can influence acceptance of group attitudes)
  • Credibility, attractiveness, and power of the reference group
  • Degree of perceived risk (economic, social, physical)
slide22

Reference Group Power

Referent

Power

Information

Power

Coercive

Power

Sources

of

Power

Legitimate

Power

Reward

Power

Expert

Power

What does it mean for a Reference group to have Power?

The ability to change a person’s behavior.

slide24

informational power

purveyors of knowledge

slide25

legitimate power

officers in a formal structure

slide26

expert power

your friend the computer geek

slide27

reward power

tangible or intangible

slide29

Conformity

Changes in beliefs or actions due to group pressure to conform

slide30

Conformity

  • norms -- informal rules that govern behaviour
  • govern many aspects of consumption
    • eg. about appropriate use of clothing and other personal items, gift giving, sex roles, personal hygiene
  • Normative social influences
    • people conform to the expectations of the group
factors that influence conformity to the group
Factors that Influence Conformity to the Group
  • Cultural Pressures to conform
  • Fear and Consequences of Deviance (sanctions)
  • Commitment - motivation
  • Group Unanimity, Size and Expertise
  • Gender Differences – women conform more?
  • Individual differences
slide33

Implications of Reference Groups for Marketing

  • Impact on developing advertising appeals (e.g. informational influence via use of “experts”)
  • Impact on personal selling (salespeople as experts-objective sources of information or as a referent with similar needs as consumer)
  • Marketing research needed, to assess group membership (attitudes, psychographics)
  • Public versus private consumption of goods and services is an important issue
slide34

Reference groups have a strong influence on brand choice in certain situations

What are the implications of this?

  • is important for marketers to understand how the the reference groups of potential consumers influence them in their choices of products.
  • For products that have little to no discernable advantages over competitive products, understanding of reference group influences can be leveraged to separate their product from the pack.
slide35

Using U of L students as the market segment, describe the most relevant reference group(s) and indicate the probable degree of influence for each of the following decisions:

a. Brand of mouthwash

b. Purchase of Car Insurance

c. Contribution to United Way

d. Purchase of a Pet

e. Choice of Restaurant

slide37

Caffeine comparison in refreshment beverages:Beverage Caffeine (mg)

Jolt 100.0

Afri-Cola 100.0

Mountain Dew 55.0

Diet Mountain Dew 55.0

Mello Yellow 52.8

Tab 46.8

Coca-Cola 45.6

Diet Cola 45.6

Mr. Pibb 40.8

OK Soda 40.5

Dr. Pepper 39.6

Pepsi Cola 37.2

Mountain Dew is the leading soft drink among Generation Y due in large part to Word-of mouth communication that it was loaded with more caffeine than Coke

In Canada Mountain Dew does not contain caffeine.

slide38

You and your partner/friend have decided to go out to dinner and want to try some place new, and a little classier than Taco Bell. How do you choose which restaurant to go to?

slide40

You went to a restaurant suggested by a friend but didn’t enjoy the experience. What might some of the reasons be?

slide42

WORD OF MOUTH

1. People talk.

2. People talk because they feel.

3. People talk about things that have meaning.

4. People talk about things of mutual interest.

5. Some people get listened to more than others.

6. You can identify the talkers who get listened to in your business.

7. Champion customers who spread your reputation can expand and exaggerate your virtues or faults when you cannot.

8. When you tell a friend what a great (or terrible) meal you had at Mitilini’s Pizza Palace, then that's word of mouth.

slide43

WORD OF MOUTH COMMUNICATION (WOM)

  • informal communications about a business or its products
  • Every business, either knowingly or unknowingly, generates word of mouth that is either positive - which helps build their business, or negative - which hurts it.
  • The most powerful of all marketing methods
slide44

Why is word of Mouth so powerful?

  • recommendations more trustworthy than formal marketing ones
  • often backed by social pressure to conform with these recommendations: I.e. buy or don’t buy
  • especially powerful when the consumer is relatively unfamiliar with the product category
slide45

Motives for engaging in personal word-of-mouth communication

  • Involvement
  • Self-enhancement, getting status
  • Concern for others
  • Dissonance reduction
slide46

Negative WOM

  • people tend to tell more people about bad experiences than they do about good ones.
  • consumer is more likely to pay attention to negative information than positive.
  • Negative word of mouth is just as useful to potential customers as positive word of mouth in that it helps them discriminate on one or more product/service attributes
slide47

“Did you know that Pop Rocks can explode in your stomach, cut holes in your throat and little Mikey (of Life cereal Fame) died when his stomach exploded after drinking a Coke shortly after eating a packet of Pop Rocks.”

slide48

13 WOM Truths

1. If you try to stop it, word-of-mouth momentum increases.

2. If you try to force it into motion, you will probably stop it or prevent it from beginning.

3. Word of mouth increases as the product is more difficult to get.

4. The more secrecy shrouds a product, the more people want to talk about it.

5. In the perception of the consumer WOM always tells the truth

6. Word of mouth usually goes fast in all directions.

7. Negative WOM travels farther and faster than positive WOM

slide49

8. For any given product, word of mouth is time-limited and eventually will end or shift to focus on another product when the community is satisfied that it has heard enough

9. WOM moves under its own power and according to its own rules.

10.The following tend to accelerate word of mouth: Controversy, surprises, the bizarre or unusual, free samples, a human-interest story, moral dilemmas, irony, curiosity, any core element of culture.

11.Word-of-mouth is the primary means by which your reputation is spread.

12.Word-of-mouth universally is considered the best method to signal value to customers.

13.Word-of-mouth is controlled by your customers.

slide50

How has the Internet affected WOM

  • now relatively easy for a customer to broadcast his/her opinion of, or experience with, a company to a large number of people.
  • Participants in online discussion forums, mailing lists, bulletin boards, and newsgroups.
  • Many people have popular websites or email newsletters on which to broadcast their views
  • Some people even build whole websites specifically devoted to criticising or commenting on particular companies
  • numerous websites built specifically to give a voice to the consumer/customer opinions and reviews. Eg Epinions.com, and Amazon.com Rip-Off report
slide52

What are some of the business opportunities and challenges

This change brings?

Challenges

  • added pressure on businesses (particularly online businesses) to provide good customer service all the time.
  • need to be more careful about how employees interact with others on the Internet.
  • Companies need to monitor the Internet proactively and be prepared to state their case in the face of negative WOM.

Opportunities

  • easier for a business to find out what customers are saying about them and their products or services, by browsing or searching appropriate discussion forums and web sites.
  • This information can be used to make targeted improvements in practices and products, or modify marketing strategies.
slide53

Tips on generating positive word of mouth advertising

1) Deliver quality products and services and continually improve.

2) Solicit feedback in the form of questions, comments, and even complaints from customers and prospects. View these as opportunities to improve your products, services and customer support.

3) Follow through with what you say you're going to do. Don't make unreasonable promises you know you can't keep.

4) Don't just try to meet your customer's expectations. Exceed them. In other words, under-promise and over-deliver.

5) If a customer is not satisfied, take reasonable steps to try to make them happy. Satisfied, loyal customers will be your best form of advertising.

slide54

more than 2,600 new beverage products were introduced from 1997 to 2001

  • To break through the clutter, ad strategies now concentrate on creating a ‘buzz’, which can be described as a an excitement among consumers leading to the spread of word of mouth
slide55

OPINION LEADERSHIP

  • The central figure in WOM communication is the "opinion leader".
  • are knowledgeable about products and whose advice is taken seriously by others
  • Have various types of power
  • Opinion leaders include people such as "market mavens” (people who have up-to-date information about products, places to shop, and different markets)"product enthusiasts", and "influentials".
  • The stronger the social tie between an opinion leader and an opinion seeker, the more likely the opinion seeker will act on the recommendation.
  • Opinion seekers depend upon opinion leaders to achieve their own goals.
  • Between 20% and 40% of the population are opinion leaders.
slide56

Product/purchase involvement

Product knowledge

High Low

High

Low

Moderate

High

Low

Moderate

Likelihood of Seeking an Opinion Leader