Group Influences

1. Group Influences

3. 1996

5. 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

6. Types of Reference Groups

7. Types of Reference Groups • Family • Peer Groups • Friendship Groups • Formal Associations and Organizations • Ethnic Groups • Neighbors • Celebrities • Sales People

8. Who would you look for 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%

9. 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. • 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 • This influences the specific brands one purchases rather the broader product class level decisions. • Comparative reference groups serve as benchmarks for specific/narrowly defined attitudes or behavior

10. 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

11. Features of Reference Groups • Norms • Values • Roles • Status • Socialization • Power

12. 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 • Acceptance: Gain or maintain acceptance in a group by complying with group norms

14. value-expressive Function I can impress my guests if… Consumer Hostess Reference group Dinner Guests …If I set out this fine china and silver service Guests might notice this exclusive dinner service Product (symbolic use) Fine bone china/silver service

16. Utilitarian function Christy Turlington has referent power over admirers Consumer High school students Reference Person Celebrity Connection is made between behaviour and respected individual Idea endorsed by a celebrity Idea Don’t smoke

18. Acceptance function Peer pressure from reference group to which she belongs Consumer Network computer game enthusiast Reference group Game playing friends I better get a new computer or I’ll look like an idiot Peers talk about their latest computer toy Product Latest computer

20. 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

21. 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)

22. 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.

23. Reference Group Power Referent Power Information Power Coercive Power Sources of Power Legitimate Power Reward Power Expert Power

24. Types of Power Which Reference Groups Have What does it mean for a Reference group to have Power? The ability to change a person’s behavior. • referent power (the model) • informational power (purveyors of knowledge) • legitimate power (officers in a formal structure) • expert power (your friend who is a computer expert) • reward power (tangible or intangible) • coercive power (fear)

25. referent power The model

26. informational power purveyors of knowledge

27. legitimate power officers in a formal structure

28. expert power your friend who is a computer expert

29. reward power tangible or intangible

30. coercive power fear

31. Conformity Changes in beliefs or actions due to group pressure to conform • norms -- informal rules that govern behavior • 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

33. 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

34. Implications of Group Influence 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

35. WORD OF MOUTH

36. 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?

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

39. Most Important Reasons for Telling Someone NOT to Visit a Restaurant

40. 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.

41. 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

42. 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

43. Motives for engaging in personal word-of-mouth communication • Involvement • Self-enhancement, getting status • Concern for others • Dissonance reduction

44. 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

45. “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.”

46. 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

47. 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.

48. 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

50. 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.