Group Influences

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Group Influences
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1996
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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 societys norms and values

From a marketers point of view why are they
important?

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

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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.
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Types of Reference Groups
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Types of Reference Groups

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

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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
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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
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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

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• 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

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Functions of Reference Groups

• value-expressive (social image)
• Gain esteem in the eyes of others
• informational Recognize and rely on the
  expertise of others
• utilitarian Identify with an admired or
  respected group or person. Satisfy their
  expectations

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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.
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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)

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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 persons behavior.
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referent power
The model
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informational power
purveyors of knowledge
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legitimate power
officers in a formal structure
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expert power
your friend the computer geek
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• reward power

tangible or intangible
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coercive power
fear
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Conformity
Changes in beliefs or actions due to group
pressure to conform
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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

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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

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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

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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.

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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
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WORD OF MOUTH
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Caffeine comparison in refreshment
beveragesBeverage 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.
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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?
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You went to a restaurant suggested by a friend
but didnt enjoy the experience. What might some
of the reasons be?
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Most Important Reasons for Telling Someone NOT to
Visit a Restaurant
                                                  
      
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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 Mitilinis Pizza
Palace, then that's word of mouth.
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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

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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 dont buy
• especially powerful when the consumer is
  relatively unfamiliar with the product category

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Motives for engaging in personal word-of-mouth
communication

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

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• 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

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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.
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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
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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-o
f-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.
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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

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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.

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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.
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• 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

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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.