Group Influences
1996
What is a Reference Group?
Øan individual or group who serve as points of comparison or reference and have a significant relevance on an individual's evaluations, aspirations or behaviour
ØPlay a vital role in socializing the consumer and transmitting society’s norms and values
What do they do?
ØInfluence a person’s values, beliefs, attitudes and behaviors. Øabout
Øproducts and brands
ØWhat product attributes are important ØWhat lifestyles are desirable Øpurchase/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.
As the value of the group to the individual increases so too does the likelihood that the group will guide consumption decisions.
Normative: (e.g. families, peer groups)
Ø
influences members to conform to
fundamental norms, values, beliefs
.
Ø
affects the product class one consumes, not so
much the specific brand
Types of Reference Group Influence
Comparative:
Ø
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
Ø
Influences the specific
brands one purchases
rather than broader
product category
value-expressive (social image):
Ø
Products are chosen in the hope
that the reference group will have a
certain image of the consumer.
Functions of Reference Groups
Ø
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?
Ø
Information and experience (more informed and
experienced individuals in a product category are less
likely to be influenced by groups)
Ø
Individual difference factors, e.g. personality/
involvement
Ø
Conspicuousness of the product (e.g. public use of a
product can influence acceptance of group attitudes)
Ø
Credibility, attractiveness, and power of the reference
group
Ø
Degree of perceived risk (economic, social, physical)
Factors that Affect
Reference Group Influence
Referent Power Expert Power Coercive Power Information Power Reward Power Legitimate Power Sources of 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 modellegitimate power
officers in a formal structureInformation/expert power
your friend the computer geek
reward power
tangible or intangible
coercive power
Conformity
Changes in beliefs or actions due to group pressure to conform Øthat govern behaviournorms -- informal rules Øgovern many aspects of consumption
Øeg. about appropriate dress, gift giving, sex roles, personal hygiene
ØNormative social influences Øpeople conform to the expectations of the group
Conformity
Factors that Influence
Conformity to the Group
Ø
Cultural Pressures to conform
Ø
Fear and Consequences of Deviance (sanctions)
Ø
Commitment - motivation
Ø
Group Unanimity, Size and Expertise
Ø
Gender Differences – women conform more?
Ø
Individual differences
Ø
Importance of the Group to the individual
ØImpact on developing advertising appeals (e.g. informational influence via use of “experts”)
ØImpact on personal selling (salespeople as experts-objective sources of information or as a referent with similar needs as consumer)
ØMarketing research needed, to assess group membership (attitudes, psychographics)
ØPublic versus private consumption of goods and services
Implications of Reference
Groups for Marketing
Reference groups have a strong influence on brand
choice in certain situations
What are the implications of this?
Ø
is important for marketers to understand how
the reference groups of potential consumers
influence them in their choices of products.
Ø
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.
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%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
ØA US government study shows that one unhappy customer will tell 8-10 people of their bad experience ØEach of those 10 people, statistics show, will tell 5 more customers about the original bad experience.
ØThis 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. Customers spread your reputation and exaggerate your virtues or faults when you cannot.
7. 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
Ø
Involvement
Ø
Self-enhancement, getting status
Ø
Concern for others
Ø
Dissonance reduction
Motives for engaging in personal
word-of-mouth communication
WORD OF MOUTH COMMUNICATION (WOM)
Ø
informal communications about a business or its products ØEvery business, either knowingly or unknowingly, generates word of mouth that is either positive - which helps build their business, or negative - which hurts it.ØThe most powerful of all marketing methods
Ø
recommendations more trustworthy than formal
marketing ones
Ø
often backed by social pressure to conform with
these recommendations: I.e. buy or don’t buy
Ø
especially powerful when the consumer is relatively
unfamiliar with the product category
Why is word of Mouth so powerful?
Online NYC grocer FreshDirect opened in Sept 2002 and now has over 75,000 customers. The company did no marketing.
By far exceeding expectations their customers naturally wanted to share, brag, or talk about it raving about the company to their friends convincing them to try it.
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.
Øcentral figure in WOM communication is the "opinion leader". Øknowledgeable about products and whose advice is taken seriously by others
ØHave various types of power
ØOpinion leaders include "market mavens” (people who have up-to-date information about products, places to shop, and different markets) "product enthusiasts", and "influentials".
ØThe stronger the social tie between an opinion leader and an opinion seeker, the more likely the opinion seeker will act on the recommendation.
ØOpinion seekers depend upon opinion leaders to achieve their own goals.
ØBetween 20% and 40% of the population are opinion leaders.
OPINION LEADERSHIP
§
Opinion leaders influence the attitudes and behaviourchange of those who listen to them.
§
It is therefore often advantageous to direct marketing communications to the opinion leader to speed the acceptance of an advertising message.§
For example, promotions for a specific brand of dental floss are more effectively directed at dentists who then influence the attitudes and purchasing behaviour of their patients - the target market§
The basic idea is that the message “trickles down” from the opinion leader to influence its target group.§
Because of the important role opinion leaders play in influencing markets, advertisers have traditionally used them to give testimonials.Negative WOM
Ø
people tend to tell more people about bad
experiences than they do about good ones.
Ø
consumer is more likely to pay attention to
negative information than positive.
Ø
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.
Ø
now relatively easy for a customer to broadcast his/her
opinion of, or experience with, a company to a large
number of people.
Ø
Participants in online discussion forums, mailing lists,
bulletin boards, blogs, and newsgroups.
Ø
Many people have popular websites or email newsletters
on which to broadcast their views
Ø
Some people even build whole websites specifically
devoted to criticising or commenting on particular
companies
Ø
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
Øadded pressure on businesses (particularly online businesses) to provide good customer service all the time.
Øneed to be more careful about how employees interact with others on the Internet.
ØCompanies 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
t
his change brings?
Opportunities
Øeasier 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.
ØThis 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 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
Ømore than 2,600 new beverage products were introduced from 1997 to 2001
ØTo 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 Marketing
ØMarketing where the consumer doesn't realize they're being marketed to.
ØFor 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. ØThe goal of any undercover campaign is to generate buzz. Østarting a planned viral marketing campaign that looks spontaneous ØIt 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.
