Harmeling et al. (2017) Group Marketing The use of the psychological mechanisms underlying group influence to drive customer behaviors that are beneficial to the firm.

Examples of Group Marketing Harmeling et al. (2017) Examples of Group Marketing Toms facilitates and provides resources for more than 1,000 “supporter-led” groups that both contribute to Toms’ mission and increase product purchases Group marketing is the use of the psychological mechanisms underlying group influence to guide customer behaviors that are beneficial to the firm. Firms can become group providers such as what is studied in brand communities or they can leverage existing groups or somewhere in between. For example, Nike has shifted 1/3 of its multibillion dollar marketing budget to support group based initiatives such at the Nike + system. Toms, falling more on the leveraging side, provides resources to more than 1000 support led groups that contribute to the tom’s mission. But what makes these strategies effective? In the past five years, Nike has shifted more than one-third of its multibillion dollar marketing budget to support group-based initiatives Nike+, a system that helps customers build groups, generated $840 million in sales in one year

Harmeling et al. (2017) Necessary Conditions of Group Marketing and how it Differs from Segmentation Firms must make customers aware of their association to the group Segmentation does not assume any psychological connections among the customers in a segment; it simply predicts that they share common characteristics Firms can prime customers with new membership, make customers’ existing group memberships salient, or identify and leverage customers’ self-selected groups Firms must expose customers to group norms Segmentation does not assume visibility or knowledge of group norms, just common needs Firms can expose consumers to group norms by enabling direct group member-to-customer communication, facilitating customer observation of group member behavior, or dictating aggregate group norms in marketing communication

Mechanisms Underlying Group Marketing Effectiveness Harmeling et al. (2017) Mechanisms Underlying Group Marketing Effectiveness Informational appraisals People strive to make accurate decisions and must filter a vast amount of potentially relevant information Because group members share objectives and values, information coming from them relative to other sources can seem more diagnostic to the decision Identity appraisals When people make product decisions they are often assessing how valuable it is to managing the self People have a need to belong and also a need to be distinct and balancing this is critical to a positive self-concept; managing a social identity is critical to this Salience of the group identity in making self relevant decision can alter identity appraisals Necessary Conditions Group Influence Informational appraisal Group product norm Conforming product purchase Identity appraisal Customer’s group association H1 Aron and McLaughlin-Volpe 2001, p. 89, 10 Cruz, Henningsen, and Williams 2000, Bolton and Reed 2004, Tajfel and Turner 1985 Social Influence

Harmeling et al. (2017) Group Influence on Consumer Decisions when Information Appraisals Predominate Strong Effect of Group Norms on Purchase Behavior Time in Domain Once familiar with the purchase domain, the person’s domain knowledge overcomes group information, which decreases the value of group norms as a source of information. When new to a purchase domain, the consumer has limited but increasing domain knowledge, which improves his or her ability to absorb domain-specific information and thus increases the value of group norms as a source of information. Weak Effect of Group Norms on Purchase Behavior

Harmeling et al. (2017) Group influence on Consumer Decisions when Identity Appraisals Predominate Weak Effect of Group Norms on Purchase Behavior Strong Effect of Group Norms on Purchase Behavior When new to a purchase domain, a consumer preserves a unique, personal identity but also seeks to alleviate the discomfort of extreme individuality with increasingly selective group norm violations and conforming behaviors. Once a person is familiar with the domain, the group becomes a significant contributor to his or her identity, and conforming to group norms is essential to managing that social identity. Time in Domain

Four Steps For Implementing Group Marketing Harmeling et al. (2017) Four Steps For Implementing Group Marketing Step 1 Step 2 Step 3 Step 4 Identify customer targets Determine type of group marketing Establish necessary group marketing conditions Communicate benefits of group affiliation Customer awareness of group affiliation Exposure to group norms Build internal group Communicate social benefits of group affiliation yes no Use a firm- managed group? Is the customer new to the domain? Decision to implement group marketing Identify desirable customer segment Build psychological affiliation to group Develop group norms for desired behavior Evaluate effectiveness of group marketing yes no Identify most salient external group Communicate informational benefits of group affiliation

Classroom Activity Firm-Provided Group Firm-Leveraged Group Harmeling et al. (2017) Classroom Activity There are two primary ways to implement group marketing, firm provided groups and firm leveraged groups. Imagine you are the brand manager for a new running shoe and have been asked to implement one of the two following strategies. Firm-Provided Group Firm-Leveraged Group How would you execute this strategy? How would you motivate customer affiliation to the group? How would you guide the development of firm benefiting norms? What are the pros and cons of implementing a firm-provided group? Unique benefits? Unique costs? How would you customize your initiative to new runners? How would you execute this strategy? How would you leverage customer affiliation to the group? How would you expose customers to firm benefiting norms? What are the pros and cons of implementing a firm-leveraged group? Unique benefits? Unique costs? How would you customize your initiative to experienced runners? Firm provided group should first discuss an example of how they would create the affiliation to the group (i.e. recruitment, member socialization and management). They should then discuss the key norms for making this a successful strategy. For pros and cons they should discuss the added control of membership as well as norm development. They should also discuss added costs, overhead, management, commitment, meeting space, recruitment strategies Firm-leveraged groups should discuss the use of priming or message design to make the group affiliation salient. For norm exposure discussion could include incentivized customer-to-customer interactions such as brand advocates that allow nonusers to observe the use of the product, or referral systems. They could also discuss aggregate feedback mechanisms. For pros and cons they should discuss the much lower costs and less commitment, but also less control over norms.