Reference Groups

Reference Groups and Consumer Behavior

1. Buying Behavior Reference Groups & Opinion Leadership Prof. Abhipsa Mishra

2. Learning Objectives Understand how reference groups influence consumer behaviour Discuss the role of conformity as a social influence Discuss the importance of word-of-mouth communication Understand the nature of opinion leadership Understand the impact of Groups and Social Networks

3. What is a Reference Group Reference group : any person or group of people who significantly influences an individual’s behavior Eg . Individuals (Celebrities , Athletes , or Political leaders) G roups of individuals with similarities (Musical groups or Sports teams )

4. Reference Groups Influence Consumers in Three Ways: Informational Value-Expressive Utilitarian W hen individuals alter their behaviors or beliefs to meet the expectations of a particular group W hen a need for psychological association with a group causes acceptance of its norms, values, attitudes, or behaviors When people have difficulty assessing product or brand characteristics by their own observations or contact

5. Why Reference Groups are Important? Social Power: The capacity to alter the actions of others Referent Power: When consumers imitate qualities by copying behaviors of a prominent person they admire. Information Power: Able to influence consumer opinion by virtue of their (assumed) access to the “truth” Legitimate Power: Granted to people by virtue of social agreements

6. Expert Power: Derived from possessing specific knowledge about a content area Reward Power: When a person or group has the means to provide positive reinforcement Coercive Power: Influencing a person by social or physical intimidation Why Reference Groups are Important?

7. Primary Groups: a social aggregation that is sufficiently intimate to permit and facilitate unrestricted direct interaction (e.g., family) Secondary Groups: also have direct interaction, but it is more sporadic, less comprehensive, and less influential in shaping thought and behavior (e.g., professional associations or community organizations) Formal Groups : Characterized by a defined structure (often written) and a known list of members and requirements for membership Informal Groups : Have less structure than formal groups and are likely to be based on friendship or interests Types of Reference Groups

8. Membership : when individuals are recognized as members of a group, they have achieved formal acceptance status in the group Aspirational Groups : exhibit a desire to adopt the norms, values, and behaviors of others with whom the individuals aspire to associate Dissociative Groups : groups from which an individual tries to avoid association Virtual Groups : groups that are based on virtual communities rather than geographic ones Types of Reference Groups

9. How Reference Groups Influence Individuals Self-concept: people protect and modify their self-concept by their interactions with group members People can maintain self-concept by conforming to learned roles Testimonial advertising is effective when the self projected in the ad is consistent with the idealized self of the target consumer

10. Reference Groups Help Define Self-Concept

11. Testimonial advertising

12. How Reference Groups Influence Individuals Socialization: permits an individual to know what behavior is likely to result in stability both for the individual and the group Company manual may explain the dress code in the workplace Informal groups may tell them what styles are most comfortable and easiest to maintain

13. How Reference Groups Influence Individuals Social comparison: individuals often evaluate themselves by comparing themselves to others Consumers often use reference groups as benchmarks to measure their own behaviors, opinions, abilities, and possessions Advertising or television can be sources of social comparison

14. How Reference Groups Influence Individuals Conformity : a change in beliefs or actions based on real or perceived group pressures Compliance: when an individual conforms to the wishes of the group without accepting all its beliefs or behaviors Acceptance : when an individual actually changes his or her beliefs and values to those of the group

15. Reference Group Influence on Product and Brand Purchase intentions

16. Brand Communities and Tribes Brand Community: A set of consumers who share a set of social relationships based upon usage or interest in a product. Eg . Brandfests Consumer Tribe: A group of people who share a lifestyle and who can identify with each other because of a shared allegiance to an activity or product. Tribal Marketing: To link one’s product to the needs of a group as a whole.

17. Products as a Way to be Popular Many products, especially those targeted to young people, are often touted as a way to take the inside track to popularity. This Brazilian ad lets us know about people who don’t like a certain shoe. Whoever doesn’t like it is

18. Membership vs. Aspirational Reference Groups Aspirational Reference Groups Comprise idealized figures such as successful business people, athletes, or performers. Membership Reference Group Ordinary people whose consumption activities provide informational social influence. Propinquity: Physical nearness Mere Exposure: Liking persons or things simply as a result of seeing them more often ( mere exposure phenomenon ) Group Cohesiveness: The degree to which members of a group are attracted to each other and value their group membership

19. Match.com

20. Positive Versus Negative Reference Groups Avoidance Groups Groups that consumers purposely try to distance themselves from Nerds Druggies Preppies The motivation to distance oneself from a negative reference group can be as powerful or more powerful than the desire to please a positive group

21. Positive Reference Groups This recruiting ad presents a compelling role model for young women contemplating a career in the armed forces.

22. Consumers Do it in Groups Deindividuation : A process in which individual identities become submerged within a group. Social Loafing: People do not devote as much to a task when their contribution is part of a larger group effort Risky Shift: Group members are willing to consider riskier alternatives subsequent to group discussion Diffusion of Responsibility: As more people are involved in a decision, each individual is less accountable for the outcome

23. Deindividuation Costumes hide our true identities and encourage deindividuation.

24. Consumers Do it in Groups (cont.) Value Hypothesis: Riskiness is a culturally valued characteristic to which individuals feel pressure to conform Decision Polarization: Whichever direction the group members were leaning toward before discussion becomes more extreme subsequent to discussion Home Shopping Parties: Capitalize on group pressures to increase sales

25. Home Shopping Parties Women at a home Tupperware party.

26. Group Influences Group pressure often influences our clothing choices.

27. Conformity Conformity A change in beliefs or actions as a reaction to real or imagined group pressure. Norms Informal rules that govern behavior. Factors Influencing the Likelihood of Conformity Cultural Pressures Fear of Deviance Commitment Principle of Least Interest Group Unanimity, Size, and Expertise Susceptibility to Interpersonal Influence Role-relaxed consumers

28. Social Comparison Social Comparison Theory: Asserts that people look to the behavior of others to increase the stability of their self-evaluation Co-oriented peer: A person of equivalent standing Resisting Conformity: Independence: Being oblivious or indifferent to the expectations of others Anticonformity : Defiance of the group is the actual behavior Reactance: The negative emotional state that results when we are deprived of our freedom to choose

29. Word-of-Mouth Communication Word-of-Mouth (WOM): Product information transmitted by individuals to individuals. Negative WOM and the Power of Rumors: Negative WOM: Consumers weigh negative info from other consumers more heavily than they do positive comments

30. Word-of-Mouth The U.S. Postal Service hopes to create a buzz via word of mouth.

31. Rumors Hoaxkill.com is a Web site dedicated to tracking hoaxes and debunking product rumors.

32. The Transmission of Misinformation

33. Changing Information Serial Reproduction: Technique to examine the phenomenon that information changes as it is transmitted among consumers Assimilation: Distortions tend to follow a pattern from ambiguous to conventional to fit with existing schemas Leveling: Details are omitted to simplify structure Sharpening: Prominent details are accentuated

34. Cutting-Edge WOM Strategies Virtual Communities Virtual Community of Consumption: A collection of people whose online interactions are based upon shared enthusiasm for and knowledge of a specific consumption activity. Multi-user Dungeons (MUD) Rooms, rings and lists (e.g. chat rooms) Boards Blogs (weblog)

35. Multi-User Dungeons

36. Four Types of Virtual Community Members Tourists: Lack strong social ties to the group Minglers : Maintain strong social ties, but are not interested in the central consumption activity Devotees : Express strong interest in the activity, but have few social attachments to the group Insiders : Exhibit both strong social ties and strong interest in the activity

37. Virtual Communities

38. Guerrilla Marketing Guerrilla Marketing Promotional strategies that use unconventional locations and intensive word-of-mouth campaigns to push products. Brand Ambassadors Viral Marketing Refers to the strategy of getting customers to sell a product on behalf of the company that creates it.

39. Guerrilla Marketing Ads Ads painted on sidewalks are one form of guerrilla marketing

40. Opinion Leadership The Nature of Opinion Leadership Opinion Leaders: People who are knowledgeable about products and whose advice is taken seriously by others. Homophily : The degree to which a pair of individuals is similar in terms of education, social status, and beliefs. How Influential Is an Opinion Leader? Generalized Opinion Leader: Somebody whose recommendations are sought for all types of purchases. Monomorphic : An expert in a limited field. Polymorphic: An expert in many fields.

41. Opinion Leaders Market Shoes Opinion leadership is a big factor in the marketing of athletic shoes. Many styles first become popular in the inner city and then spread by word-of-mouth.

42. Types of Opinion Leaders Innovators Early purchasers Innovative Communicators Opinion leaders who also are early purchasers Opinion leaders also are likely to be opinion seekers The Market Maven Describes people who are actively involved in transmitting marketplace information of all types. The Surrogate Consumer A person who is hired to provide input in purchase decisions.

43. Perspectives on the Communications Process

44. Fashion Opinion Leaders Fashion opinion leaders tend to be knowledgeable about clothing and highly motivated to stay on top of fashion trends.

45. Identifying Opinion Leaders Self-designated Opinion Leaders Sociometric Methods Trace Communication patterns among members of a group. Referral Behavior Network Analysis: Focuses on communication in social systems Referral Network Tie Strength: The nature of the bond between people. Bridging Function: Allows a consumer access between subgroups. Cliques: Subgroups

46. Revised Opinion Leadership Scale