Chapter 11 Group Influence and Opinion Leadership

Reference Groups Reference group: an actual or imaginary individual/group that influences an individual’s evaluations, aspirations, or behavior

Reference Group Influences Reference group influences stronger for purchases that are: Luxuries rather than necessities Socially conspicuous/visible to others

When Reference Groups Are Important Social power: capacity to alter the actions of others Types of social power: Referent power Information power Legitimate power Expert power Reward power Coercive power

Types of Reference Groups Any external influence that provides social clues can be a reference group Friends / Peers Cultural figure (Barack Obama) Parents or Family Large, formal organization Small and informal groups Can exert a more powerful influence on individual consumers than larger groups A part of our day-to-day lives: normative influence

Brand Communities and Consumer Tribes A group of consumers who share a set of social relationships based upon usage or interest in a product Brandfests or Productfests enhance brand loyalty Consumer tribes share emotions, moral beliefs, styles of life, and affiliated product Tribal marketing: linking a product to the needs of a group as a whole

Membership & Aspirational Reference Groups Membership reference groups: people the consumer actually knows and admires Advertisers use “ordinary people” Aspirational reference groups: people the consumer doesn’t personally know but admires Advertisers use celebrity spokespeople

Positive versus Negative Reference Groups Reference groups may exert either a positive or negative influence on consumption behaviors Avoidance groups: motivation to distance oneself from other people/groups (a.k.a. “Dissociative Groups”) First class vs. coach on airplanes Marketers show ads with undesirable people using competitor’s product Antibrand communities: coalesce around a celebrity, store, or brand—but are united by their disdain for it rachelraysucks.com ihatewalmart.com Delfina in SF (anti-yelp?)

Consumers in Groups Deindividuation: individual identities become submerged within a group Example: binge drinking at college parties Example 2: Army training boot camp Social loafing: people devote less effort to a task when they’re in groups Example: we tip less when eating in groups Example 2: Kitty Genovese case Risky shift: group show a greater willingness to consider riskier alternatives than if members made their own decisions individually (Why?)

Consumers in Groups (cont.) Decision polarization: after group discussion of an issue, opinions become more extreme Home shopping parties (Tupperware, Pampered Chef, Botox) capitalize on group pressure to boost sales

Conformity Most people tend to follow society’s expectations regarding how to look, act and even feel Factors influencing conformity: Cultural pressures Fear of deviance and being ostracized Commitment to and benefits of group membership Group influence, power and size Susceptibility to interpersonal influence

Word-of-Mouth Communication WOM: product information transmitted by individuals directly to individuals Most reliable / efficacious form of marketing Cheapest form of marketing * Uses social pressure to conform Influences two-thirds of all sales We rely upon WOM more in later stages of product adoption / mature products Especially powerful when we are unfamiliar with product category

Negative WOM and Power of Rumors We weigh negative WOM more heavily than positive WOM. Negative WOM is easy to spread, especially online Any one can start a negative WOM thread Information/rumor distortion Larger companies can sustain bigger damages, but can cope better than smaller companies Prentice-Hall, cr 2009

The Transmission of Misinformation

Negative WOM and the Power of Rumors Three basic themes found in Web-based “protest” communities: Injustice: consumers talk about their repeated attempts to contact the company and seek help only to be ignored. Identity: characterize the violator as evil, rather than simply wrong. (e.g. Starbucks, P&G) Agency: individual Web site creators try to create a collective identity for those who share their anger with a company. (is this just social bonding?)

Virtual Communities A collection of people who share their love or hatred of a product in online interactions Chat Rooms (IRC), rings, and lists Message Boards Blogs Great potential for abuse via untrustworthy / questionable practices Amazon.com lawsuit (charging publishers to post positive reviews of Web site) Retailers buy off critical Yelpers

Virtual Communities Which type of Web surfer are you?

Guerrilla Marketing Guerilla marketing: promotional strategies that use unconventional locations and intensive WOM efforts to push products Recruits legions of real consumers for street theater Hip-hop “mix tapes”/street teams Brand ambassadors Stealth Marketers in bars, tourist locations, etc.

Viral Marketing Viral marketing: WOM that spreads electronically (like a virus) Consumers knowingly or unknowingly forward information to others typically via e-mail Typically drive recipients to web site and encourage them to recruit others, reinforcing the viral cycle

Social Networking and Crowd Power Web sites where members post information about themselves and make contact with similar others Share interests, opinions, business contacts, etc.

Social Networking and Crowd Power (cont.) Wisdom of crowds perspective: under the right circumstances, groups are smarter than the smartest people in them (“40,000 Frenchmen”) Some crowd-based Web sites: CrowdSpirit.com: participants submit ideas for consumer electronics products and the community votes for the best ones Sermo.com: social network for physicians Eventful.com: fans can demand events and performances in their town and spread the word to make them happen

Opinion Leadership Opinion leaders: influence others’ attitudes and behaviors They are good information sources because they: May be experts Provide unbiased evaluation Are socially active and popular Are similar to the consumer Are usually among the first to buy (i.e. “adopters” or “innovators”) Hands-on product experience (absorb risk) Companies spend lots of $ to court opinion leaders

Opinion Leadership (cont.) Monomorphic vs. Polymorphic Opinion Leaders Expertise tends to overlap across similar categories (i.e. cosmetics and fashion or appliances and computers) It is rare to find a “general” opinion leader, but they do exist Opinion seekers More likely to talk about products with others and solicit others’ opinions Typically at lower rungs of the social hierarchy May lack self-esteem

The Market Maven Market maven: actively involved in accumulating and disseminating marketplace information of all types Makes efforts to be continuously aware of what’s happening in the marketplace Know how and where to get stuff May not actually buy products!

Surrogate Consumers Surrogate consumer: a marketing intermediary hired to provide input into purchase decisions Interior decorators, stockbrokers, professional shoppers, college consultants Consumer relinquishes control over decision-making functions Marketers should not overlook influence of surrogates!