Reference Groups and Word of Mouth

Reference group: a group that a person identifies with so strongly that he or she adopts
the values, beliefs, attitudes, and behaviour of group members.

Reference groups can be large or small. Most people have several reference groups such
as: families, friends, work related groups, unions, civic clubs, professional organizations,
social class, cultures, sub-cultures, religious groups, etc.

In general, there are 3 major types of reference groups: membership, aspirational, and
disassociative.

A membership reference group is one to which an individual actually belongs. The

individual in this case identifies with group member strongly enough to take on the
values, attitudes, and behaviours of people in that group.

Aspirational reference group is one that the individual aspires to belong; the individual
desires to be like those group members.

A group that a person does not wish to be associated with is a disassociative or negative
reference group; the person does not want to take on the values, attitudes, and
behaviour of that group.

A reference group may serve as an individual’s point of comparison and source of

information.

A customer’s behaviour may change to be more in line with actions and beliefs of group
member.

For example, a person may stop buying one brand of shirts and switch to another based
on reference group’s advice.

An individual may also seek information from the reference group about other factors
regarding a prospective purchase, such as where to buy a certain product.

Reference groups can affect whether a person does or does not buy a product at all, buys
a type of product within a product category, or buys a specific brand.

One way that a reference group may influence behaviour is by ridiculing people who
violate group norms.
  Types of Influence

Normative influence: consists of learning and adopting a group’s norms, values, and
behaviour. Family, peers, friends, members of community are potential sources.

Comparative influence: arises when people compare themselves to others whom they
respect and admire, and then adopt some of those people’s values or imitate their
behaviour.

 Consumption Related Reference Group

Friendships groups: seeking friendship is a basic drive for human beings.

They fulfil a wide range of needs, including companionship, security, and opportunities to
discuss matters.

People consider friends as a credible source for information at all levels including
purchase.

Shopping groups: people may get together to enjoy the act of shopping or to reduce the
perceived risk.

For example they might bring an expert along to provide advice.

Members tend to feel better about collective decisions regarding purchases.

Virtual communities: many websites today encourage consumers to leave comments and
have others respond to them.

Most young adults have extensive lists of names of people they have met only online.

Many feel free to express thoughts or needs with strangers or through within a virtual
environment.

Example is an online group called “foodies”, in which members try out food items and
restaurants and post recommendations.

Advocacy groups: the objective of consumption-focused advocacy groups is to assist

consumers in making decisions and support consumers’ rights. There are two types of
advocacy groups:
 a) Cause-specific consumer action group: Entities organized to correct a specific
consumer abuse and tends to be temporary.

Example: a group of parents attending a meeting to demand additional stop signs to

increase safety.

b) Enduring consumer action groups: entities organized with the purpose of addressing
broader problem areas and operate over an extended time-period.

Example:(Mothers Against Drunk Driving)

 Credibility of Endorsers

Source credibility:

is the believability of the endorser, spokesperson, or individuals.

The spokesperson can be an actual customer, company employee, or a celebrity.

Researchers have identified the following dimensions in measuring the credibility of a

person or organization:

Expertise, trustworthiness, attractiveness, and likability.

Marketer dominated resources are assumed to seek profit, therefore they tend to be less
credible than informal references.

Good performance, image, reputation, and

attractiveness of the spokesperson are all elements that increase credibility.

(image) Marketers use institutional advertising, which is promoting the company without
referring to any of its offerings.

Non-profit sources tend to be more credible than marketers sources such as consumer
reports and consumption related sources.
  Endorsers and Spokespersons

The synergy of the endorser and the type of product advertised is highly important.

The greater the fit between the celebrity and the product endorsed, the higher the
persuasion (i.e. a glamorous celebrity endorser)

Endorsers whose demographic characteristics (age and ethnicity) are similar to the target
market are viewed as more credible and persuasive.

This more likely applies on consumers with strong identification.

Although consumers may like an ad featuring a famous endorser, they will buy the
product advertised only if they trust the marketer as well.

Thus, when marketers measure the persuasiveness of the advertising’s message that
features famous endorsers, they must also measure consumer’s attitudes towards the
brand advertised, and purchase intentions.

Marketers who use celebrities in endorsements must ensure that the message contents
are congruent with spokesperson’s qualifications.

 Celebrities

Movie stars, singers, TV personalities, popular entertainers, and sport icons, are symbolic
reference group because they are liked, admired, and often have a high degree of
perceived credibility.

Many marketers use them to promote their products and services in the following ways:

- Celebrity testimonial: based on personal usage, the celebrity attests to product’s

quality.
- Celebrity endorsement: celebrity appears on behalf of product with which they
may or may not have direct familiarity. Ads here link a personality characteristic between
the product and the endorser. i.e. acts a role in an advertisement.
Celebrity spokesperson: the celebrity represents the brand or the company over an
extended period.

Some companies refuse to adopt the approach of using celebrities, fearing the possibility
that if the celebrity gets involved in an undesirable act, it will reflect negatively on the
image of the company.
  Opinion Leaders

Opinion leaders: a member of an informal group who provides information about a

specific topic to other group members.

He or she is in a position or has knowledge or expertise that makes him or her a credible
source of information about few topics.

Opinion leaders are easily accessible, and they are viewed as being well informed about
a particular topic.

They are not the foremost authority on all topics, but because such individuals know they
are opinion leaders, they feel responsible to remain informed about a topic and thus
seek out advertisements, manufacturer’s brochures, salespeople, and other source of
information.

Opinions leaders in turn are category specific, which means they are specialized in a
certain product categories about which they offer information and advice.

Impact:

An opinion leader is likely to be most influential when:

- consumers have high product involvement but low product knowledge.

- When they share the opinion leader’s values and attitudes,

- when the product details are numerous or complicated.

Opinion leaders are highly knowledgeable regarding a particular product category, follow
new products that come into markets.

They are self- confident, outgoing, and sociable.

They readily discuss products and consumptions behaviours with others.

They read special-interest publications, research, and visit websites devoted for the
specialization.

This generates effective knowledge that enables them to make recommendations to their
contacts.
  Word of Mouth

Word-of-Mouth communication (WOM) involves the passing of information between a

non-commercial communicator (i.e. someone who is not rewarded) and a receiver
concerning a brand, a product, or a service.

 Buzz Agents: many firms enlist typical consumers to serve as their buzz agents-
consumers who promote products and generally receive free product samples but not
monetary payments.

 For example, buzz agents might read a book on mass transit vehicles with titles clearly
visible, talk to a consumer into trying a product during shopping trips, or bring a
product to a public event like a national celebration.

When WOM is mediated through electronic means, the resulting electronic word of
mouth.

(eWoM): refers to any statement consumers share via the Internet (e.g., web sites,
social networks, instant messages, news feeds) about a product, service, brand, or
company.

 Strategic Application of E-WOM

Social networks:

- Online, social networks are virtual communities where people share information
about themselves with others, generally with similar interests, with whom they
have established relationships that takes place in cyberspace.

- Because consumption and the products people buy are integral parts of their lives,
their online profiles and discussions with others include a tremendous amount of
purchase information and advice.

- The major social networks are Facebook, YouTube, Twitter, and Myspace.

 Brand Communities:

- A specialized non-geographically bound community formed on the basis of

attachment to a product or brand. - Admirers of a particular item, find others
with similar interests and form a community fostering a feeling of belonging.
  Weblogs:

Website that consists of a series of entries arranged in order, often updated on

frequently with new information about particular topics.

The information can be written by the site owner, or contributed by users.

-A blog: is a discussion or informational site published on the Internet and consisting of

posts.

At first, it was similar to a diary or personal space by a single individual or a small group,
and mostly covered a single topic.

Today most blogs have multiple authors and are often managed by media outlets,
companies, and other interest groups.

-A microblog has less content than the traditional blog and allow users to exchange small
elements of content, such as short sentences, individual images, and video links, mostly
via Twitter.

 Viral Marketing:

Marketing techniques that use technologies to try to produce increases in brand

awareness or to achieve other marketing objectives. i.e. YouTube.

Viral marketing may take the form of video clips, interactive games, ebooks, images, text
messages, email messages, or web pages.

The ultimate goal of marketers interested in creating successful viral marketing programs
is to create viral messages that appeal to individuals with high social networking
potential (SNP) and that have a high probability of being presented and spread by these
individuals and their competitors in their communications with others in a short period of
time.

 Diffusion theory

Diffusion theory seeks to explain how, why, and at what rate new ideas and technology
spread through cultures. One way to measure diffusion is through adopter categories:

(characteristics of innovation, adoption process)

 Innovators
-These are people who want to be the first to try the innovation. Some of which are
opinions leaders.
- They are venturesome and interested in new ideas.
-These people are very willing to take risks, and are often the first to develop new ideas.
-Very little, if anything, needs to be done to appeal to this population.

 Early Adopters
-These are people who represent opinion leaders.
-They enjoy leadership roles, and embrace change opportunities.
-They are already aware of the need to change and so are very comfortable adopting new
ideas.
-Strategies to appeal to this population include how-to manuals and information sheets
on implementation.
-They do not need information to convince them to change.

 Early Majority
These people are rarely leaders, but they do adopt new ideas before the average person.
-They need to see evidence that the innovation works before they are willing to adopt it.
-Strategies to appeal to this population include success stories and evidence of the
innovation's effectiveness.
-Members in this category are somewhat risk averse.
Risk aversion refers to the reluctance to take risks and low tolerance of ambiguous
situations.

 Late Majority
These people are sceptical of change
- will only adopt an innovation after it has been tried by the majority.
- Strategies to appeal to this population include information on how many other people
have tried the innovation and have adopted it successfully.

 Laggards

-These people are bound by tradition and very conservative. They are very sceptical of
change and are the hardest group to bring on board.
-Strategies to appeal to this population include statistics, fear appeals, and pressure from
people in the other adopter groups.