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

Play a vital role in socializing the consumer and transmitting society’s norms and values

What do they do?

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

From a marketer’s point of view why are they important?

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%

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

Types of Reference Group Influence

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 than broader product category

value-expressive (social image): Products are chosen in the hope that the reference group will have a certain image of the consumer.

Functions of Reference Groups

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?

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)

Factors that Affect Reference Group Influence

ReferentPower

ReferentPower

ExpertPower

ExpertPower

CoercivePower

CoercivePower

InformationPower

InformationPower

RewardPower

RewardPower

LegitimatePower

LegitimatePower

Sourcesof

Power

Sourcesof

Power

What does it mean for a Reference group to have Power?

Reference Group 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

ConformityChanges in beliefs or actions due to group pressure to conform

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

Conformity

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

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

Implications of Reference Groups for Marketing

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.

a. Brand of mouthwash

b. Purchase of Car Insurance

c. Contribution to United Way

d. Purchase of a Pet

e. Choice of Restaurant

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:

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.

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. Customers who spread your reputation 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.

WORD OF MOUTH

Involvement

Self-enhancement, getting status

Concern for others

Dissonance reduction

Motives for engaging in personal word-of-mouth communication

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

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

Why is word of Mouth so powerful?

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.

Tips on generating positive word of mouth advertising

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.

OPINION LEADERSHIP

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 Truths1. 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.

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

How has the Internet affected WOM

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.

What are some of the business opportunities and challenges this change brings?

Opportunitieseasier 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. Pepper39.6 Pepsi Cola 37.2

In Canada Mountain Dew does not contain caffeine.

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

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

Stealth or Undercover MarketingMarketing where the consumer doesn't realize they're being marketed to.

For example, a marketing company might pay an actor or socially adept person to use a certain product visibly and convincingly in locations where target consumers congregate.

The goal of any undercover campaign is to generate buzz.

starting a planned viral marketing campaign that looks spontaneous

It is the consumer's sense that this recommendation was spontaneous and unsolicited, and the resulting feeling that "one good turn deserves another", that drives the buzz.