Consumer Behaviour 10 by WzmWYhF6


									Consumer Behaviour
Topic 10

Group Influence on the Purchasing Decision

Consumers belong to or admire many different groups and are often
influenced in their purchase decisions by a desire to be accepted by
others. One form of group that has a definite impact on consumer
behaviour is the 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 behaviour.” Reference
groups have a normative influence (that is, the reference group helps to
set and enforce fundamental standards of conduct) and/or a comparative
influence (where decisions about specific brands or activities are
affected). Groups now appear on the Internet. A virtual community of
consumption is a collection of people whose online interactions are based
on shared enthusiasm for and knowledge of a specific consumption

Individuals have influence in a group to the extent that they possess
social power. Types of power include: information power, referent power,
legitimate power, expert power, reward power, and coercive power. The
chapter explores each of these power formats and gives examples that
apply to the contemporary study of consumer behaviour.

We conform to the desires of others for one of two basic reasons. People
who model their behaviour after others because they take others’
behaviour as evidence of the correct way to act are conforming because
of comparative influence. People who conform to satisfy the expectations
of others and/or to be accepted by the group are affected by normative
influence. Although people often like to compare their judgments and
actions to those of others, they tend to be selective about precisely whom
they will use as benchmarks. This choice of models is of interest to the
marketer. On the other hand, there can be resistance to conformity or
there can be a loss of individuality. These side effects are some of the
consequences of group membership and behaviour.

Groups have the effect of exerting pressures to conform on individuals.
These pressures are based on the norms that groups develop. Various
factors influence the likelihood of conformity, including cultural
pressures, fear of deviance, and group size. As strong as the pressures
are to conform, however, individuals may exert their own independence
and may even defy the group through anti-conformity.

Much of what we know about products comes about through word-of-
mouth communication (WOM) rather than formal advertising. The
marketer must study how this process occurs and learn how to influence
it if strategies are to be successful. The chapter examines these issues. It
has been observed that product-related information tends to be
exchanged in casual conversations. Although word of mouth is often
helpful for making consumers aware of products, it can also hurt
companies when damaging product rumours or negative word of mouth
occurs. Boycotts can even occur based on negative word of mouth.

Opinion leaders who are knowledgeable about a product and whose
opinions are highly regarded tend to influence others’ choices. Specific
opinion leaders are somewhat hard to identify, but marketers who know
their general characteristics can try to target them in their media and
promotional strategies. Some opinion leaders, however, are do not fit this
pattern. Market mavens (who have a general interest in the marketplace
activities) and surrogate consumers (who are compensated for their
advice about purchases) are examples.

The lecture concludes with a discussion of socio metric methods that
attempt to trace referral patterns. This information can be used to
identify opinion leaders and other influential consumers. Marketers may
use these methods to learn about those that exert an influential role in
the selection of products and services.

Lecture Outline

1. Reference Groups
    a. Humans are social animals. We all belong to groups, try to please
others, and take cues about how to behave by observing the actions of
those around us. We will often go to great lengths to please the members
of a group whose acceptance we covet.
       1) A reference group is “an actual or imaginary individual or
group conceived of having significant relevance upon an individual’s
evaluations, aspirations, or behaviour.”
       2) Reference groups influence consumers in three ways:
           a) Informational
           b) Utilitarian
           c) Value-expressive

      3) Reference groups are not always equally powerful. Two
dimensions that influence the degree to which reference groups are
important are whether the purchase is to be

             consumed publicly or privately and whether it is a luxury or a

       4) Reference groups derive their persuasiveness through social
power, the capacity to alter the actions of others. The following are types
of social power:
           a) Referent power—when a person admires a person or group
and tries to imitate them.
           b) Information power—power from merely possessing valuable
information that others do not have access to.
           c) Legitimate power—power that is granted by social
           d) Expert power—power based on possessing specific
knowledge about a content area.
           e) Reward power—when a person or group has the means to
provide positive reinforcement.
           f) Coercive power—the power to influence a person by social or
physical intimidation.

    Types of Reference Groups
    b. The term reference group may be used loosely to identify anyone
that has an influence on your behaviour. The primary types of reference
group influence are:
        1) Normative influence—that is, the reference group helps to set
and enforce fundamental standards of conduct (e.g., our family’s
        2) Comparative influence—where decisions about specific brands
or activities are affected (e.g., a club that you belong to).

    c. Reference groups can be large or small.
        1) A formal group has a recognized structure, regular meeting
times, and officers.
        2) An informal group is usually small and configured like a group
of friends.

   d. A more contemporary look at reference groups has identified brand
communities as a set of consumers who share a set of social relationships
based on usage or interest in a product.
       1) Such communities often meet for brief periods at organized
events known as “brand” “fests”.
       2) A consumer tribe is a similar concept that refers to people who
share a lifestyle based on an allegiance to an activity or product. Tribal
marketing seeks such groups as target markets.

e. Although some groups consist of people the consumer actually knows,
others are composed of people the consumer can either identify with or
       1) Membership reference groups.
       2) Aspirational reference groups—what you want to be, not what
you are (strong relationship with our ideal selves).
       3) Both of these group types are closely watched by marketers.
       4) The likelihood that people will become part of a consumer’s
identification reference group is affected by several factors, including:
            a) Propinquity—physical nearness.
            b) Mere exposure—frequency of contact.
            c) Group cohesiveness—the degree that members of a group
are attracted to each other and value their group membership.

   e. Reference groups may exert either a positive or negative influence
on consumption behaviours.
       1) Avoidance groups—groups the consumer wishes to distance
themselves from.
       2) In most instances, consumers model their behaviour to be
consistent with what they think the group expects of them.

2. Consumers do it in Groups
    a. The general effect of group behaviour on individual behaviour is
that the identity of the individual is submerged in a group. Less single
attention is given. This can be characterized as de-individualization.
Several things can occur when shopping with a group:
        1) Social loafing—people do not devote as much to a task when
their contribution is part of a larger group effort.
        2) Group members are willing to consider riskier alternatives.
This is called risky shift.
        3) As more people are involved in a decision, each individual is
less accountable for the outcome. This is called a diffusion of
            Another explanation can be the value hypothesis where
riskiness is a culturally valued characteristic.
        4) A more general effect is that of decision polarization. This
occurs where the group adopts an even riskier decision (or conservative)
after discussion.
        5) Shopping behaviours change when people shop in groups.
Home shopping parties capitalize on group pressures to boost sales.

   b. Conformity refers to a change in beliefs or actions as a reaction to
real or imagined group pressure.

      1)    For a society to function, its members develop norms, or
informal   rules that govern behaviour.
      2)    Norms change slowly over time.
      3)    Unspoken rules govern many aspects of consumption.

    b. Among the factors that affect the likelihood of conformity are the
        1) Cultural pressures— teenagers tend to “follow the crowd.”
        2) Fear of deviance—the group applies penalties to “rule
        3) Commitment—the more dedication, the stronger the follower.
        4) Group unanimity, size, and expertise—the “law of large
        5) Susceptibility to interpersonal influence — the individual’s need
to identify or enhance his or her image in the opinion of significant
    c. Sometimes we look to the behaviour of others to provide a yardstick
about reality.
        1) Social comparison theory asserts that this process occurs as a
way to increase the stability of one’s self-evaluation, especially when
physical evidence is unavailable.
        2) Consumers are selective about whom they use for
benchmarks. Similarity boosts confidence.
        3) In general people tend to choose a co-oriented peer, or a person
of equivalent standing, when undergoing a social comparison.

    Resisting Conformity
    d. We take pride in our individualism and uniqueness or in our ability
to resist the best sales efforts of salespeople and advertisers.
       1) In the study of consumer behaviour it is important to
distinguish between independence and anti-conformity (where there is a
defiance of the group).
       2) People have a deep-seated need to preserve freedom of choice.
            a) Reactance is a negative emotional state wherein people try
to overcome a loss of freedom. For example, censorship makes us want
things more.

3. Word-of-Mouth Communication
   a. Much information about the world is actually communicated by
individuals on an informal basis. This is called word-of-mouth
communication (WOM).
       1) Word-of-mouth communication is viewed as being reliable and
trustworthy by most people.

     2) WOM is often backed up by social pressure to conform with

    Negative WOM
    b. Word of mouth is not only rapid, it can be a double-edged sword for
       1) Negative WOM is weighted more heavily than positive WOM.
       2) Rumours are the chief form. Rumours can easily be spread
       3) Though most people would rather tell positive than negative
information, rumours tend to reveal the underlying fears of society.
       4) Rumours often result in boycotts of products, companies, or
services. These boycotts can be successful or unsuccessful depending on
their popularity, duration, and strength.

    c. Various strategies have been used by marketers to try to influence
WOM among consumers. One of these is to create an environment for a
virtual community of consumption to grow and thrive.
        1) Forms of these communities include:
            a) Multi-User Dungeons (MUD)—environments where fantasy
game players meet.
            b) Rooms, rings, and lists—chat rooms, organizations of
related home pages, and groups of people on a single mailing list who
share information.
            c) Boards—online communities organized around interest-
specific electronic bulletin boards.
            d) Blogs—Weblogs are online personal journals containing
random thoughts of thousands of individuals. The universe of active
Weblogs is known as the “Blogosphere”.
        2) The intensity of identification with a virtual community
depends on two factors:
            a) The more central the activity to a person’s self-concept, the
more likely he or she will be to pursue an active membership in a
            b) The intensity of the social relationships the person forms
with other members of the virtual community helps to determine his or
her extent of involvement.
        3) Types of members include:
            a) Tourists
            b) Minglers
            c) Devotees
            d) Insiders

   d. Guerrilla marketing consists of promotional strategies that use
unconventional location and intensive word-of-mouth campaigns to push
   e. Viral Marketing is the strategy of getting customers to sell a product
on behalf of the company that creates it. This strategy is well suited to
the Web.

4. Opinion Leadership
   a. Although consumers get information from personal sources, they
do not tend to ask just anyone for advice about purchases.

   The Nature of Opinion Leadership
   b. Everyone knows people who are knowledgeable about products and
whose advice is taken seriously by others. These people are called opinion
leaders. Reasons for opinion leaders being taken seriously as information
providers include:
      1) They are technically competent.
      2) They have pre-screened, evaluated, and synthesized (in an
unbiased way) product information.
      3) They are socially active and interconnected in their
      4) They are similar to the consumer in value and beliefs.
      5) They are often among the first to buy new products. They often
absorb risk because they purchase products first.

    c. When marketers and social scientists initially developed the
concept of the opinion leader, it was assumed that certain influential
people in a community would exert an overall impact on group members’
        1) There is a question today as to whether there is such a thing
as a generalized opinion leader.
        2) Opinion leaders tend to be concentrated in their field of
interest or expertise.
        3) Some opinion leaders overlap into other fields, but not into all
             a. Monomorphic—experts in a limited field.
             b. Polymorphic—experts in several fields (but usually
    d. It is thought that opinion leadership is more complex than a set
static process.
        1) Opinion leaders may or may not be purchasers of products
they recommend.
        2) Characteristics of opinion leaders include:
             a) Innovators

          b)   Early and innovative communicators
          c)   Socially active
          d)   Appearance conscious and narcissistic
          e)   Like music and contemporary music culture.
          f)   Magazine readers
          g)   Own more clothing and have a broader range of styles
          h)   Opinion seekers

    e. A consumer category called the market maven has been proposed to
describe people who are actively involved in transmitting marketplace
information of all types. Market mavens are closer to the conception of a
general opinion leader. “Bloggers” are an example.

   f. A surrogate consumer is a person who is hired to provide input into
purchase decisions. The surrogate consumer is usually compensated for
this involvement.
       1) Examples would include interior decorators, stockbrokers,
professional shoppers, or college consultants.

   Identifying Opinion Leaders
   g. Marketers are interested in identifying opinion leaders. Many ads
are intended to reach these consumers.
       1) Unfortunately, opinion leaders are hard to find.
       2) Methods of identifying opinion leaders include:
           a) The self-designing method—ask individual consumers
whether they consider themselves to opinion leaders.
               1. A bona fide opinion leader
               2. A key informant
           b) Sociometry—tracing communication patterns among group
members. This is called socio metric method.
               1. Examines referral behaviour
               2. Examines networks
               3. Examines cliques


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