Group and Personal Influence Consumer Behavior #6A Group and Personal Influence

Group and Personal Influences on Individuals Reference group: any person or group of people who significantly influences an individual’s behavior May be individuals (celebrities, athletes, or political leaders) or groups of individuals with similarities (musical groups or sports teams)

High Degree of Influence Personal and Group Influence on Individuals High Degree of Influence Types of Influence Normative Value Expressive Informational Transmission Personal Influences: •Groups •Individuals Lifestyles Behaviors Purchases Consumption Low Degree of Influence

Types of Reference Groups 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).

Types of Reference Groups 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 Membership: when individuals are recognized as members of a group, they have achieved formal acceptance status in the group

Types of Reference Groups Aspirational Groups: exhibit a desire to adopt the norms, values, and behaviors of others with whom the individuals aspire to associate. E.g.,? Dissociative Groups: groups from which an individual tries to avoid association Virtual Groups: groups that are based on virtual communities rather than geographic ones.

Personal Influences: •Groups •Individuals Personal and Group Influence on Individuals Types of Influence Normative Value Expressive Informational Personal Influences: •Groups •Individuals

Types of Group Influence Normative: when individuals alter their behaviors or beliefs to meet the expectations of a particular group. E.g., ??? Value-expressive: when a need for psychological association with a group causes acceptance of its norms, values, attitudes, or behaviors. E.g.,??? Informational: when people have difficulty assessing product or brand characteristics by their own observations or contact. E.g.,???

Personal and Group Influence on Individuals High Degree of Influence Types of Influence Normative Value Expressive Informational Transmission Lifestyles Behaviors Purchases Consumption Personal Influences: •Groups •Individuals Low Degree of Influence

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. E.g., Company manual may explain the dress code in the workplace Informal groups may tell them what styles are most comfortable and easiest to maintain

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. e.g.,

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 .

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

How Reference Groups Influence Individuals When are people more likely to conform to norms? Desire for social acceptance Degree of experience in situation or with decision Conspicuousness Complex product or luxury item

Reference Group Influence on Product and Brand Purchase Decisions Weak Reference Group Influence Strong Reference Group Influence PUBLIC NECESSITIES Influence: Weak product & strong brand (watch, autos, suits) PUBLIC LUXURIES Influence: Strong product & strong brand (golf clubs, skis, boat) Strong Group Influences (+) BRAND PRIVATE NECESSITIES Influence: Weak product & weak brand (mattress, refrigerator) PRIVATE LUXURIES Influence: Strong product & weak brand (TV, icemaker) Weak Group Influences (-)

How Reference Groups Influence Individuals Profits of conformity More likely to occur when the rewards of compliance exceeds its costs The degree of influence on final outcome is determined by an individual’s perception of the “profit” inherent in the transaction

How Reference Groups Influence Individuals Conspicuousness Conformity pressures are not sufficient to induce behavior unless the product or service is publicly conspicuous in its purchase and use Because other will see the product, many consumers will conform rather than risk embarrassment or ridicule Peers send clear signals about product alternatives

Appealing to Normative Influence in Marketing Strategy Normative compliance may be less important in industrialized nations as many consumers are putting personal needs ahead of group loyalty Extended families have less face-to-face contact and people are more socially isolated than in the past A weakened respect for social norms (anomie) leads some consumers to desire expression of individuality more than group affiliation

Self-Expression Outside of Social Norms High Product Visibility Raises Reference Group Influence

Celebrity and Other Reference Group Appeals in Advertising Testimonials: celebrities tout products based on personal usage Endorsements: celebrities lend their name or likeness to a product without necessarily being an expert in the area Actor or Spokesperson: someone who represents a brand or company for an extended time period

Celebrity and Other Reference Group Appeals in Advertising Expert appeal: appeal from a person possessing unique information or skills that can help consumers make better purchase decisions than other types of spokespersons. Common-man appeal: testimonials from “regular” consumers with whom most consumers can relate

Transmission of Influence Through Dyadic Exchanges Dyadic exchange requires the exchange of resources (opinions and comments) Three types of exchange: Word-of-mouth Communication Service Encounters Opinion Leadership

Word-of-Mouth Communication Word-of-mouth communication: informal transmission of ideas, comments, opinions, and information between two people, neither one of which is a marketer. The receiver gains information about behaviors and choices, which is valuable to the receiver in the decision process. The sender increases their confidence in the personal product or behavior choice by persuading others to do the same

Benefits of Word-of-Mouth

Opinion Leadership Opinion leadership: the sender of information is often considered an opinion leader—a person who influences the decisions of others. Opinion leaders might be experts in one area but not in others. The greater the perceived knowledge of a category, the more likely that person’s opinions are to influence others’ decisions

Opinion Leadership Opinion leadership is likely to occur when: An individual has limited knowledge of a product or brand The person lacks the ability to evaluate the product or service The consumer does not trust advertising and other sources of information Other information sources have low credibility with the consumer

Opinion Leadership Opinion leadership is likely to occur when: The individual has a high need for social approval Strong social ties exist between sender and receiver The product is complex The product is difficult to test against objective criterion The product is highly visible to others

Characteristics of Opinion Leaders Opinion leaders and receivers often share similar demographic characteristics and lifestyles, yet they may have greater social status within the same group as followers The most common characteristic is that opinion leaders are involved with a particular product category

Opinion Leadership Product innovators: similar to opinion leaders, these individuals are the first to try new products. Market mavens: gather much of their information from shopping experiences, openness to information and general market awareness, making them more aware of new products than other people Surrogate consumers (shoppers): an individual who acts as an agent to guide, direct, and conduct activities in the marketplace.

Service Encounters Service encounters: occurs when there is personal communication between a consumer and a marketer May be a consumption experience within a store—the various trans-actions and services that occur during a retail purchase May be an experience consuming the specific service a consumer purchases

How Personal Influences Are Transmitted Trickle-down: alleges that lower classes often emulate the behavior of their higher-class counterparts. Influence is transmitted vertically through social classes, when higher classes express wealth through conspicuous consumption, and lower classes copy their behavior. Two-step Flow: Opinion leaders are the direct receivers of information from advertisements and they interpret and transmit the information to others through word-of-mouth

Information and Influence How Personal Influences Are Transmitted Two-step Flow Information and Influence Information Mass Media Opinion Leader Opinion Seekers

How Personal Influences Are Transmitted Multistep Flow Information can flow directly to different types of consumers, including opinion leaders, gatekeepers, and opinion seekers and receivers

How Personal Influences Are Transmitted Multistep Flow: Information can flow directly to different types of consumers, including opinion leaders, gatekeepers, and opinion seekers and receivers Opinion Leader Opinion Seekers Mass Media Gatekeepers

WOM and Opinion Leaders in Advertising and Marketing Strategy WOM and personal communication can have a more decisive role in influencing behavior than advertising and other marketer-dominated sources. WOM is Viewed as a more trustworthy and credible source of information than salespeople or paid advertising. Advertising can provide information to consumers about products they might seek from other sources and which may be discussed in WOM

Primary Reliance on Word-Of-Mouth Advertising can create WOM among consumers and peer groups For some occasions, companies rely on WOM as a substitute for advertising Retailers such as Wal*Mart and Victoria’s Secret have demonstrated that advertising can be sharply reduced when word-of-mouth is strong

Stimulating Word-Of-Mouth—How to do it? Firms may stimulate WOM by giving away or loaning products to opinion leaders to display and use Firms can market to opinion leaders as a distinct segment (once they can be identified) Firms can create opinion leaders by providing incentives for new customers Organizations may induce opinion leaders to influence consumers

Creating Opinion Leaders Companies can activate search through advertising that encourages consumers to “ask a person who owns one” or “share the experience with a friend”

Managing Negative WOM Negative WOM is usually given high priority and weighs heavily in decision making The dissatisfied buyer is more motivated to share information. Firms can monitor the presence and impact of WOM—what dissatisfied consumers are saying about the product or company Monitoring rumors which do not always appear in customer complaint reports Creating a strategy to respond to rumors and negative WOM. What strategy may be used?

Curbing Negative WOM When something goes terribly wrong, denying the problem is not the answer The best strategy is immediate acknowledgement by a credible company spokesperson as negative WOM rarely goes away by itself Make sure you have all your facts straight and tell the truth