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. 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.

7. Types of Reference Groups

8. Types of Reference Groups • Celebrities/Cultural Figures • Friendship Groups • Ethnic Groups • Formal Associations and Organizations • Family • Peer Groups • Neighbors • Sales People

9. 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%

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. 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

12. 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

13. 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

15. 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

17. 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

19. 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

20. 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.

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. 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.

23. referent power The model

24. informational power purveyors of knowledge

25. legitimate power officers in a formal structure

26. expert power your friend the computer geek

27. reward power tangible or intangible

28. coercive power fear

29. Conformity Changes in beliefs or actions due to group pressure to conform

30. 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

32. 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

33. 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

34. 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.

35. 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

36. WORD OF MOUTH

37. 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.

38. 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?

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

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

42. 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.

43. 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

44. 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

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

46. 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

47. “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.”

48. 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

49. 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.

50. 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