Products

Electronics (6%)

automotive (4%

)

travel/hotels (3%)

gas (4%)

restaurants (2%)

household (2%)

Misc. (5%

)ed

ucatio

n 2%

Cosm

etics

14%

Jew

elle

ry 2

%C

offe

e sh

ops

3%

Telecom. 7%

snac

ks 9

%

Ent

erta

inm

ent

9%

Clothing 15%sports...

Gro

cerie

s 4%

Fast

Foo

d 3%

Influences

gifts (4%)

service (3%)

points (6%)

return policies (2%)

convenience (7%)

sales (6%)

pop advertising (2%)

print ads (3%)

valentines (4%)

stor

e lo

yalty

5%

coupons/pr...

location 9%

bran

d lo

yalty

7%

packaging 8%

sales pe...

friends 1

4%

tv a

ds 1

1%

Group Influences

1996

What is a Reference Group? Institutions, individuals, or groups, imagined or real, who serve as points of comparison or reference.

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?

Types of Reference Groups

Types of Reference Groups Family

Peer Groups

Friendship Groups

Formal Associations and Organizations

Ethnic Groups

Neighbors

Celebrities

Sales People

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%

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

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 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

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

• Norms

• Values

• Roles

• Status

• Socialization

• Power

Features of Reference Groups

value-expressive (social image): Gain esteem in the eyes of others

informational: Recognize and rely on the expertise of others

utilitarian Identify with an admired or respected group or person

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

Functions of Reference Groups

Product(symbolic use)

Fine bone china/silver

service

Consumer

HostessReference group

Dinner Guests

I can impress my guests if…

…If I set out this fine china and silver service

Guests might notice this exclusive dinner service

value-expressive Function

IdeaDon’t smoke

Consumer

High school students

Reference Person

Celebrity

Christy Turlington has referent power over admirers

Connection is made between behaviour and respected individual

Idea endorsed by a celebrity

Utilitarian function

ProductLatest

computer

Consumer

Network computer

game enthusiast

Reference group

Game playing friends

Peer pressure from reference group to which she belongs

I better get a new computer or I’ll look like an idiot

Peers talk about their latest computer toy

Acceptance function

ProductHealth Plan X

Consumer

Health Plan shopper

Reference group

Consumer Reports

Consumer Reports has expert power

The experts have declared this product the best buy for my needs

Brand evaluated favorably in Consumer Reports

Informational function

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

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.

ReferentPower

ReferentPower

ExpertPower

ExpertPower

CoercivePower

CoercivePower

InformationPower

InformationPower

RewardPower

RewardPower

LegitimatePower

LegitimatePower

Sourcesof

Power

Sourcesof

Power

Reference Group Power Reference Group Power

Types of Power Which Reference Groups Have

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)

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

ConformityChanges 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

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

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 Group Influence for Marketing

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

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.

WORD OF MOUTH

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?

Involvement

Self-enhancement, getting status

Concern for others

Dissonance reduction

Motives for engaging in personal word-of-mouth communication

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, 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.

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.

What are some of the business opportunities and challengesThis change brings?

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". are 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

SocioMetric Methods

Used to trace communication patterns within defined groups (eg. Purchasers of a particular product)

Used to discover opinion leaders

A sociometric interview consists in the completion by each member of a group

Questions asked are similar to: who would you go to information

Then the lines of communication are traced and opinion leaders are identified by locating those named as providing useful information

Expensive

The Dept. of health and Welfare has asked you to design a national promotional campaign that will encourage the use of condoms by sexually active teenagers. You know that most teenagers have a weak sense of identity, are highly susceptible to influence from peers and idols, and strive to be “in” and “with it”. Describe the key features of one advertisement or communication that would be typical of your overall campaign, which is based on a specific reference group principle, and explain how the ad would achieve the desired objective by exploiting that principle.

Between 1981 and 1987, model David Goerlitz was the handsome tough-looking “Winston Man” who lent his macho image to glamorize Winston cigarettes by scaling cliffs and flying helicopters on billboards and in magazine ads. Now 48, Goerlitz, who has butted out his 23-year, 3 ½ pack-a-day habit after suffering a stroke, holds quit smoking clinics and seminars on how to resist tobacco advertising. Evaluate his potential effectiveness as a reference person for the anti-smoking lobby and for health agencies that might want to use him as a spokesperson to downplay the glamour of smoking. Consider his credibility in your arguments.

Opinion leaders can be powerful reference persons to consumers. Marketers often seek out opinion leaders and try to influence them when a new concept is first introduced ion the marketplace. Propose some practical and cost-effective ways of identifying and communication with opinion leaders for an organization wishing to use word of mouth marketing strategies to introduce a new product or service or concept. Provide examples.