1. MKT201 - Week 11 Group Influence and Opinion Leadership (Ch. 11)

2. Reference Groups Reference Group –An actual or imaginary individual or group conceived of having significant relevance upon an individual’s evaluations, aspirations/intentions, or behavior –Three ways reference groups influence consumers 1.Informational 2.Utilitarian 3.Value-Expressive –Some people are more influential than others in affecting consumers’ product preferences.

3. Reference Groups Reference Group A Reference Group is an Actual or Imaginary Individual or Group Conceived of Having Significant Relevance Upon an Individual’s Evaluations, Aspirations, or Behavior. Reference Groups Influence Consumers in Three Ways/Forms: Informational Value-Expressive Utilitarian Information, brand- related knowledge, experts’ experience Influenced by other social/family members, etc.; as expected Image enhancement, admired or respected by others; Help showing as: athlete, successful person, good parents, etc.

4. When Reference Groups Are Important Luxuries Rather Than Necessities Luxuries Rather Than Necessities Socially Conspicuous or Visible to Others Socially Conspicuous or Visible to Others A Reference Groups Influence Is More Powerful and Important for Purchases That Are: e.g. sailboats e.g. living room furniture, clothing

5. Relative Reference Groups’ Influence on Purchase Intention (2 dimensions of the “degree of importance” of reference group: publicly/privately consumed, luxury/necessity product) Figure 11.1

6. When Reference Groups Are Important (or so Persuasive)? Social Power: –The capacity to alter the actions of others – different sources or basis of social power: 1. Referent Power: – When consumers imitate qualities by copying behaviors of a prominent person they admire. 2. Information Power: – Able to influence consumer opinion by virtue of their (assumed) access to the “truth” 3. Legitimate Power: – Granted to people by virtue of social agreements, sometimes conferred by a uniform

7. When Reference Groups Are Important (cont.) 4. Expert Power: –Derived from possessing specific knowledge about a content area 5. Reward Power: –When a person or group has the means to provide positive reinforcement 6. Coercive Power: –Influencing a person by social or physical intimidation

8. The Power of Reference Groups Referent Power Referent Power Legitimate Power Legitimate Power Information Power Information Power Expert Power Expert Power Coercive Power Coercive Power Reward Power Reward Power Types of Reference Group Power e.g. Michael Jordan – admired person e.g. Editor of a newspaper e.g. policemen, professors, doctors e.g. a famous scientist, expert in Robotics e.g. reward, social acceptance – awards or medals e.g. social or physical intimidation/threat - gangsters; fear appeals SOCIAL POWER- Capacity to alter the actions of others

9. Expert Power A physician has expert power, and a white coat reinforces this expertise by conferring legitimate (legal or high professional quality) power.

10. Types of Reference Group Influence Reference Group: –Any external influence that provides social cues (signals) (1) Normative Influence: –The reference group helps to set and enforce fundamental standards of conduct. (e.g. parents’ influence on marriage attitude; a Photo club) (2) Comparative Influence: –When decisions about specific brands or activities are affected. (e.g. Harley-Davidson club)

11. Marketers often portray products being used in groups that represent favorable reference groups to the target market. What type of message does this ad convey? What type of influence is this ad designed to exert on its target audience? Discussion Question

12. What type of message does this ad convey? –Persuasive message with the use of Reference Group’s influence What type of influence is this ad designed to exert on its target audience? –Comparative influence Discussion Question

13. Brand Communities and Tribes Brand Community: –A set of consumers who share a set of social relationships based upon usage or interest in a product. (don’t necessary live near each other) E.g. Brandfests (e.g. organized events sponsored by Nike) Consumer Tribe: –A group of people who share a lifestyle and who can identify with each other because of a shared allegiance (loyalty) to an activity or product (such as skateboarding, basketball, car driving) Tribal Marketing: –To link one’s product to the needs of a group as a whole. (e.g. Mini Cooper, Mustang – car racing)

14. Products as a Way to be Popular Many products, especially those targeted to young people, are often touted/promoted as a way to take the inside track to popularity. This Brazilian ad lets us know about people who don’t like a certain shoe. Bonehead – stupid person

15. Membership vs. Aspirational Reference Groups Aspirational Reference Groups –Comprise idealized figures such as successful business people, athletes, or performers. Membership Reference Group –Ordinary people whose consumption activities provide informational social influence. Membership are affected by several factors: Propinquity: Physical nearness. Mere Exposure: Liking persons or things simply as a result of seeing them more often (mere exposure phenomenon) Group Cohesiveness: The degree to which members of a group are attracted to each other and value their group membership.

16. Match.com

17. Positive Versus Negative Reference Groups Avoidance Groups –Groups that consumers purposely try to distance themselves from Nerds (stupid, unattractive) Druggies (addicted to drugs) Preppies (manner and dress like in traditional preparatory school) –The motivation to distance oneself from a negative reference group can be as powerful or more powerful than the desire to please a positive group

18. Positive Reference Groups This recruiting ad presents a compelling role model for young women contemplating a career in the armed forces.

19. Consumers Do it in Groups Some Phenomena Deindividuation: – A process in which individual identities become submerged within a group. Social Loafing: –People do not devote as much to a task when their contribution is part of a larger group effort Risky Shift: –Group members are willing to consider riskier alternatives subsequent to group discussion Diffusion of Responsibility: –As more people are involved in a decision, each individual is less accountable for the outcome

20. Consumers Do it in Groups (cont.) Value Hypothesis (to explain the increased riskiness/risky shift): –Riskiness is a culturally valued characteristic to which individuals feel pressure to conform to attributes valued by society Decision Polarization: –Whichever direction the group members were leaning toward before discussion becomes more extreme subsequent to discussion (risky choice Vs conservative choice) Home Shopping Parties: –Capitalize on group pressures to increase sales (e.g. Tupperware party)

21. Deindividuation Costumes hide our true identities and encourage deindividuation.

22. Home Shopping Parties Women at a home Tupperware party.

23. Group Influences Group pressure often influences our clothing choices.

24. Group Effects on Individual Behavior Deindividu- alism Social Loafing Social Loafing Risky Shift Risky Shift Group Effects Group Effects Bandwagon Effect Bandwagon Effect Shopping Behavior Shopping Behavior Decision Polarization Decision Polarization e.g. behave wildly at costume parties greater willingness to take risk following group discussion moving toward extreme; risky - conservative more purchase with one other person devote less effort for group work more & more group members, more conform

25. Conformity –A change in beliefs or actions as a reaction to real or imagined group pressure. Norms –Informal rules that govern behavior (for a society to function) Factors Influencing the Likelihood of Conformity –Cultural Pressures –Fear of Deviance (resulted in punishment or sanctions) –Commitment Principle of Least Interest (person/group that is least committed to staying in a relationship has the most power) –Group Unanimity (same opinions), Size, and Expertise – as groups gain in power, compliance increases –Susceptibility to Interpersonal Influence Role-relaxed consumers (those are low in susceptibility to influence of others)

26. Informational Conformity That Occurs Because the Group’s Behavior is Taken as Evidence About Reality. Informational Conformity That Occurs Because the Group’s Behavior is Taken as Evidence About Reality. Conformity Conformity Conformity Refers to a Change in Beliefs or Actions as a Reaction to Real or Imagined Group Pressure. Types of Social Influence Normative Person Conforms to Meet the Expectations of a Person or Group. Normative Person Conforms to Meet the Expectations of a Person or Group. e.g. clothing; ?? wearing masks in public (SARS) e.g. mimic others’ behavior, gift-giving Situation is uncertain, ambiguous

27. Factors Affecting the Likelihood of Conformity Cultural Pressures Fear of Deviance Commitment Group Dynamics Sex Differences Interpersonal Influences China/Japan - collectivism e.g. terrorists’ willing to die As groups gain in power, compliance increases susceptibility to be influenced by others

28. Social Comparison Social Comparison Theory: –Asserts that people look to the behavior of others to increase the stability of their self-evaluation –People tend to choose co-oriented peer: a person of equivalent standing Resisting Conformity: –Independence: Being oblivious (unaware of) or indifferent to the expectations of others –Anticonformity: Defiance (opposing) of the group is the actual behavior –Reactance: The negative emotional state that results when we are deprived of our freedom to choose

29. Resistance to Influence Vs. Anticomformity Defiance of the Group is the Object of Behavior Independence Oblivious to (unaware of) what is expected by others Reactance Need to Preserve Freedom of Choice; People try to Overcome a Loss of Freedom; Negative to extremely overbearing promotions.

30. This ad for a video game says, “Conformity Bytes!”, but then captions (titles), “Join the Revolution!” Why? Does this ad encourage independence or anticonformity? Discussion Question

31. Word-of-Mouth Communication Word-of-Mouth (WOM): –Product information transmitted by individuals to individuals. Negative WOM and the Power of Rumors: –Negative WOM: Consumers weigh negative info from other consumers more heavily than they do positive comments

32. Word-of-Mouth Communication Word-of-Mouth Communication (WOM) Much Information About Products and Services is Actually Conveyed by Individuals on an Informal Basis called Word-of-Mouth Communication (WOM) Factors That Encourage WOM Are: Person is Highly Involved With the Product Person is Highly Knowledgeable About the Product Person Has a Genuine Concern for Someone Else (benevolence) Person Has a Genuine Concern for Someone Else (benevolence) Person May be Uncertain About a Recent Purchase

33. Word-of-Mouth The U.S. Postal Service hopes to create a buzz via word of mouth.

34. Rumors Hoaxkill.com is a Web site dedicated to tracking hoaxes/tricks and debunking/exposing product rumors.

35. The Transmission of Misinformation Figure 11.2

36. Cutting-Edge WOM Strategies Virtual Communities –Virtual Community of Consumption: A collection of people whose online interactions are based upon shared enthusiasm for and knowledge of a specific consumption activity. Multi-user Dungeons (underground chamber) (MUD) Rooms, rings and lists (e.g. chat rooms) Boards Blogs (weblog)

37. Multi-User Dungeons

38. Four Types of Virtual Community Members Tourists: –Lack strong social ties to the group Minglers (merger, mixer): –Maintain strong social ties, but are not interested in the central consumption activity Devotees: –Express strong interest in the activity, but have few social attachments to the group Insiders: –Exhibit both strong social ties and strong interest in the activity

39. Virtual Communities Figure 11.3 2 factors: self-centrality (dominance of activity towards self-concept); intensity of social relationship/ties

40. Guerrilla and Viral Marketing Guerrilla Marketing –Promotional strategies that use unconventional locations and intensive word-of-mouth campaigns to push products. Brand Ambassadors Viral Marketing –Refers to the strategy of getting customers to sell a product on behalf of the company that creates it. (e.g. a small ad embedded in Hot Mail)

41. Guerrilla Marketing Ads Ads painted on sidewalks are one form of guerrilla marketing.

42. Social Networking Web sites letting members post information about themselves and make contact with similar others –Share interests, opinions, business contacts THEFACEBOOK.COMMYSPACE http://www.myspace.com/ http://www.facebook.com/

43. Opinion Leadership The Nature of Opinion Leadership –Opinion Leaders: People who are knowledgeable about products and whose advice is taken seriously by others. –Homophily: The degree to which a pair of individuals is similar in terms of education, social status, and beliefs. (appear to be more convincing than heterophily) How Influential Is an Opinion Leader? –Generalized Opinion Leader: Somebody whose recommendations are sought for all types of purchases. –Monomorphic: An expert in a limited field. –Polymorphic: An expert in many fields (in a broad domain such as electronics or fashion).

44. Reasons to Seek Advice from Opinion Leaders Expertise Unbiased knowledge power Highly interconnected in communities (social standing) Referent power/homophily Hands-on product experience (absorb risk)

45. Opinion Leaders Market Shoes Opinion leadership is a big factor in the marketing of athletic shoes. Many styles first become popular in the inner city and then spread by word-of- mouth.

46. Types of Opinion Leaders Innovators –Early purchasers Innovative Communicators –Opinion leaders who also are early purchasers –Opinion leaders also are likely to be opinion seekers The Market Maven (Expert) – a consumer category –Describes people who are actively involved in transmitting marketplace information of all types. (not necessarily have interests or have purchased the products) The Surrogate Consumer – a class of marketing intermediary –A person who is hired to provide input in purchase decisions. (e.g., interior decorators, stockbrokers, college consultants)

47. Perspectives on the Communications Process Figure 11.4 (tend to be opinion seekers)

48. Fashion Opinion Leaders Fashion opinion leaders tend to be knowledgeable about clothing and highly motivated to stay on top of fashion trends.

49. Identifying Opinion Leaders Many ads intend to reach influentials rather than average consumer –Local opinion leaders are harder to find –Companies try to identify influentials in order to create WOM “ripple effect” –Exploratory studies identify characteristics of opinion leaders for promotional strategies

50. Identifying Opinion Leaders Self-designated Opinion Leaders Sociometric Methods Trace Communication patterns among members of a group. –To better understand Referral Behavior –Network Analysis: Focuses on communication in social systems Referral Network Tie Strength: The nature of the bond between people. –Bridging Function (weak ties): Allows a consumer access between subgroups. –Cliques: Subgroups (friends or associates, etc.; sharing preferences or brand choices for various products)

51. Characteristics of Opinion Leaders Appearance- Conscious and Narcissistic Appearance- Conscious and Narcissistic Own More Clothing With a Broader Range of Styles Own More Clothing With a Broader Range of Styles Are Opinion Seekers Are Opinion Seekers Early Communicators Early Communicators Innovators Key Characteristics of Opinion Leaders Key Characteristics of Opinion Leaders Socially Active Socially Active Like Music and Magazines Like Music and Magazines Self-worship, love of oneself

52. Revised Opinion Leadership Scale Figure 11.5