group and personal influence

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Group and Personal Influence

WEEK 10CHAPTER 10


A) Group and Personal Influences on Individuals

Reference group: any person or group of people who significantly influences an individual’s behavior

May be individuals (celebrities, athletes, or political leaders) or groups of individuals with similarities (musical groups or sports teams)


Types of Types of InfluenceInfluenceNormativeNormative

Value ExpressiveValue ExpressiveInformationalInformational

TransmissionTransmission

Personal Personal Influences: Influences: ••Groups Groups

••IndividualsIndividuals

Lifestyles Behaviors Purchases

Consumption

Low Degree of Influence

High Degree of Influence

Personal and Group Influence on Individuals


Types of Reference GroupsPrimary Groups: a social aggregation that is sufficiently intimate to permit and facilitate unrestricted direct interaction (e.g., family)

Secondary Groups: also have direct interaction, but it is more irregular, less comprehensive, and less influential in shaping thought and behavior (e.g., professional associations or community organizations)

Formal Groups: characterized by a defined structure (often written) and a known list of members and requirements for membership

Informal Groups: have less structure than formal groups and are likely to be based on friendship or interests


Types of Reference GroupsMembership: when individuals are recognized as members of a group, they have achieved formal acceptance status in the group

Aspirational Groups: exhibit a desire to adopt the norms, values, and behaviors of others with whom the individuals aspire to associate

Dissociative Groups: groups from which an individual tries to avoid association

Virtual Groups: groups that are based on virtual communities rather than geographic ones


Types of Group Influence

Normative: when individuals alter their behaviors or beliefs to meet the expectations of a particular group

Value-expressive: when a need for psychological association with a group causes acceptance of its norms, values, attitudes, or behaviors

Informational: when people have difficulty assessing product or brand characteristics by their own observations or contact

Behaviour /beliefs

Psycholo-gical


B) How Reference Groups Influence Individuals

Socialization: permits an individual to know what behavior is likely to result in stability both for the individual and the group. E.g. Company manual may explain the dress code in the workplace

Self-concept: people protect and modify their self-concept by their interactions with group members. E.g. cloth represent about people

Social comparison: individuals often evaluate themselves by comparing themselves to others. Consumers often use reference groups as benchmarks to measure their own behaviors, opinions, abilities, and possessions

Conformity: a change in beliefs or actions based on real or perceived group pressures


PRIVATE LUXURIESPRIVATE LUXURIES

Influence: Strong Influence: Strong product & weak brandproduct & weak brand

(TV, icemaker)(TV, icemaker)

PRIVATE NECESSITIESPRIVATE NECESSITIES

Influence: Weak Influence: Weak product & weak brandproduct & weak brand

(mattress, refrigerator)(mattress, refrigerator)

PUBLIC LUXURIESPUBLIC LUXURIES

Influence: Strong Influence: Strong product & strong brandproduct & strong brand

(golf clubs, skis, boat)(golf clubs, skis, boat)

PUBLIC NECESSITIESPUBLIC NECESSITIES

Influence: Weak Influence: Weak product & strong brandproduct & strong brand

(watch, autos, suits)(watch, autos, suits)

Strong Reference Group Influence

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Weak Reference Group Influence

We

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Reference Group Influence on Product and Brand Purchase Decisions


When are people are likely to conform to norms?

Profits of conformity

More likely to occur when the rewards of compliance exceeds its costs

The degree of influence on final outcome is determined by an individual’s perception of the “profit” inherent in the transaction

Conspicuousness

Conformity pressures are not sufficient to induce behavior unless the product or service is publicly conspicuous in its purchase and use

Because other will see the product, many consumers will conform rather than risk embarrassment or ridicule


A weakened respect for social norms (anomie) leads some consumers to desire expression of individuality more than group affiliation

Appealing to Normative Influence in Marketing Strategy

Being individual


Celebrity and Other Reference Group Appeals in Advertising

Testimonials: celebrities publicize products based on personal usage

Endorsements: celebrities lend their name or likeness to a product without necessarily being an expert in the area

Expert appeal: appeal from a person possessing unique information or skills that can help consumers make better purchase decisions than other types of spokespersons

Common-man appeal: testimonials from “regular” consumers with whom most consumers can relate


C) Transmission of group influence1) Word-of-mouth communication: informal transmission of ideas, comments, opinions, and information between two people, neither one of which is a marketer


2) Opinion LeadershipOpinion leadership: the sender of information is often considered an opinion leader—a person who influences the decisions of others

Opinion leaders might be experts in one area but not in others

An individual has limited knowledge of a product or brand

The person lacks the ability to evaluate the product or service

The consumer does not trust advertising and other sources of information

Other information sources have low credibility with the consumer

The individual has a high need for social approval

Strong social ties exist between sender and receiver

The product is complex

The product is difficult to test against objective criterion

The product is highly visible to others

More influence

when


Product innovators: similar to opinion leaders, these individuals are the first to try new products

Example of Opinion Leaders

Market mavens: gather much of their information from shopping experiences, openness to information and general market awareness, making them more aware of new products than other people

Surrogate consumers (shoppers): an individual who acts as an agent to guide, direct, and conduct activities in the marketplace


C) Service Encounters

Service encounters: occurs when there is personal communication between a consumer and a marketer

Customer remember how they were treated, not the advertising

Customer intimacy: detailed understanding and focus on customers’ needs lifestyles and behaviors in an effort to create a deep cultural connections with the customers

Reverse customer intimacy: how well marketers facilitate customers knowing the marketer


Trickle-down: alleges that lower classes often emulate the behavior of their higher-class counterparts

Influence is transmitted via social classes, when higher classes express wealth through conspicuous consumption, and lower classes copy their behavior

How Personal Influences Are Transmitted

Two-step Flow

Opinion leaders are the direct receivers of information from advertisements and they interpret and transmit the information to others through word-of-mouth

Multistep Flow

Information can flow directly to different types of consumers, including opinion leaders, gatekeepers, and opinion seekers and receivers


C) WOM and Opinion Leaders in Advertising and Marketing StrategyWOM and personal communication can have a more decisive role in influencing behavior than advertising and other marketer-dominated sources

Viewed as a more trustworthy and credible source of information than salespeople or paid advertising

Advertising influences the effectiveness of WOM and vice versa

Advertising can provide information about products consumers might not seek from other sources

Advertising can create WOM among consumers and peer groups


For some occasions, companies rely on WOM as a substitute for advertising

Retailers such as Wal*Mart and Victoria’s Secret have demonstrated that advertising can be sharply reduced when word-of-mouth is strong

Primary Reliance on Word-Of-Mouth


Managing Negative WOMNegative WOM is usually given high priority and weighs heavily in decision making

The dissatisfied buyer is more motivated to share information

When something goes terribly wrong, denying the problem is not the answer

The best strategy is immediate acknowledgement by a credible company spokesperson as negative WOM rarely goes away by itself

Make sure you have all your facts straight and tell the truth


D) Diffusion of InnovationsInnovation: any idea or product perceived by the potential adopter to be new

Consumers can view innovations subjectively (thought) or objectively (external criteria; innovations are ideas, behaviors, or things)

The use of the word “new” in advertising is limited to products available for less than six months


Types of Innovations


E) Why Some Innovations Succeed and Others Don’t


TrialabilityNew products are more apt to succeed when consumers can experiment with or try the idea on a limited basis, with limited financial risk

ObservabilityThe degree to which results from using a new product are visible to friends and neighbors


F) The Diffusion ProcessDiffusion: the process by which an innovation (new idea) is communicated through certain channels over time among the members of a social system

Includes:Diffusion of information and communication

Consumer decision process

Diffusion or demise of innovation


The Diffusion Process

InfluencerInfluencer

CCoonnssuumme e rr

Organi-Organi-zationzation

RejectReject

AcceptAccept

Demise Demise of of

InnovationInnovation

Diffusion Diffusion of of

InnovationInnovation

Consumer decision process

Diffusion of Information and Communication

(X number of people)


Factors Affecting Diffusion

Communication (how consumers learn about new products)

Time (how long it takes for a person to move from product awareness to product purchase or rejection)

Social system (groups or segments to which individuals belong affect adoption or rejection)


Speed of Diffusion

Diffusion will be faster if:

Supplier is intensely competitive

Supplier’s reputation is good

Standardized technology is used

Vertical coordination among channel members exists

Resource commitments are significant


Rogers Model of Innovation Decision Process

Implemen-Implemen-tationtation DecisionDecisionKnowledgeKnowledge ConfirmationConfirmation PersuasionPersuasion

Communication Channels

The most widely adopted model for understanding the adoption process of innovation

Perceive risk Adopt/ reject

Use Continue/ discontinue


Consumers Likely to Buy New Products

Innovators: the first consumer group to adopt products

Early adopters: opinion leaders and role models for others,

Early majority: consumers who on purpose at length before buying new products, yet adopt them just before the average time it takes the target population as a whole

Late majority: tends to be cautious when evaluating innovations, taking more time than average to adopt them, and often at the pressure of peers

Laggards: the last groups that tend to be anchored in the past, are suspicious of the new, and exhibit the lowest level of innovativeness among adopters


G) Managerial Perspectives on Adoption and Diffusion of Innovation

New products for the profitability and long-term financial success of firms

While development groups are producing line and brand extensions, breakthroughs are needed to fuel growth and profits

Consumer insight helps create products that consumers are likely to adopt

Intuition and information (often gained from consumers through research) leads to the formation of an insight

End

group and personal influence

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