Group Influences
1996
What is a Reference Group?
 an individual or group who serve as points of comparison
or reference and have a significant relevance on an
individual's evaluations, aspirations or behaviour
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
Consumers want to be
like the people they
admire and respect.
They will
• emulate them
• aspire to be like them,
• listen to them
• identify with them
• and buy what they buy.
Types of Reference Groups
Types of Reference Groups
 Family
 Peer Groups
 Neighbors
 Sales People
 Celebrities/Cultural Figures
 Friendship Groups
 Ethnic Groups
 Formal Associations and Organizations
As the value of the group to the individual increases so too
does the likelihood that the group will guide consumption
decisions.
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%
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
Types of Reference Group Influence
Normative: (e.g. families, peer groups)
 influences members to conform to
fundamental norms, values, beliefs.
 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
 Influences the
specific brands one
purchases rather the
broader product
Functions of Reference Groups
value-expressive (social image):
Products are chosen in the hope
that the reference group will have a
certain image of the consumer.
The individual feels that those who purchase the
product possess the characteristics that he or she would
like to have.
informational: The individual seeks information about
product groups and brands from the group
utilitarian: consumers choice of product is influenced by
the reference group's preferences
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.
Which specific function
or reference group
theory is operating
here?
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)
Reference Group Power
Referent
Power
Coercive
Power
Information
Power
Sources
of
Power
Legitimate
Power
Reward
Power
What does it mean for a
Reference group to have
Power?
Expert
Power
The ability to change
a person’s behavior.
referent power
The model
legitimate power
officers in a
formal structure
Information/expert power
your friend the computer geek
reward power
tangible or intangible
coercive power
fear
Conformity
Changes in beliefs or actions due to group pressure to conform
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
 Cultural Pressures to conform
 Fear and Consequences of Deviance (sanctions)
 Commitment - motivation
 Group Unanimity, Size and Expertise
 Gender Differences – women conform more?
Individual differences
Importance of the Group to the individual
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 expertsobjective 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
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 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 reference group influences can be
leveraged to separate their product from the
pack.
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
WORD OF MOUTH
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?
You went to a restaurant
suggested by a friend but
didn’t enjoy the experience.
What might some of the
reasons be?
Most Important Reasons for Telling
Someone NOT to Visit a Restaurant
A US government study
shows that one unhappy
customer will tell 8-10 people
of their bad experience
Each of those 10 people,
statistics show, will tell 5 more
customers about the original
bad experience.
This means that 50- 60
potential customers are
actively turned away when one
customer is not cared for.
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.
Motives for engaging in personal
word-of-mouth communication
 Involvement
 Self-enhancement, getting status
 Concern for others
 Dissonance reduction
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
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
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.
OPINION LEADERSHIP
 The central figure in WOM communication is the "opinion
leader".
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.
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
“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.”
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
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.
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, blogs, 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
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.
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.
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