Reference Groups and Communities, Opinion Leaders and Word-of-Mouth

Reference Group: Groups that serve as sources of comparison, influence, and norms for people's
opinions, values, and behaviours.

Social Class: The division of members of a society into a hierarchy of distinct status classes, so
that members of each class have relatively the same status and members of all other classes have
either higher or lower status.

Culture: The collective values, customs, norms, arts, social institutions, and intellectual
achievements of a particular society which express its principles, standards, and priorities.

Sub-Culture: A group that shares certain beliefs, values, and customs, stemming from ethnicity,
religion, geographic location, age, or gender, while also being a part of a larger society.

Membership Group: A group to which a person either belongs or can join and whose values he
or she adopts.

Symbolic Group: A group to which an individual is unlikely to belong, but whose values and
behaviours he or she adopts nevertheless.

Slice of Life Commercial: Promotional messages showing typical consumers in everyday

situations. Instead of using celebrities, many ads show everyday consumers endorsing products.

Advergame: Brands embedded in video games played at homes, arcades or online

The Credibility and Persuasive Power of Reference Groups

1. Reference groups have a high degree of source credibility, defined as a
source’s persuasive impact, stemming from its perceived expertise, trustworthiness,
and believability.
2. A formal source is either a person or medium providing consumption-related information
and hired and paid by an organization. (Endorser, Salesperson, Advisor etc)
3. An informal source is a person whom the message receiver knows personally, such as
a parent or friend who gives product information or advice, or an individual met and
respected online.

Two types of influence from reference groups:

1. Normative Influence: Learning and adopting a group’s norms, values, and behaviours.
2. Comparative Influence: occurs when people compare themselves to others whom they
respect and admire, and then adopt some of those people’s values or imitate
their behaviours.

Consumption-Related Reference Group:

1. Advocacy Groups: The objective of consumption-focused advocacy groups is to assist
consumers in making decisions and support consumers’ rights
2. Friends: Seeking and maintaining friendships is a basic drive for most people.
3. Virtual Communities: Many websites encourage consumers to leave comments and have
others respond to them.
4. Fellow Shoppers: People may shop together just to enjoy shopping or to reduce their
perceived risk.

FACTORS AFFECTING REFERENCE GROUP INFLUENCE

1. Conformity (Compliance with Standard): The objective of some marketers, especially market
leaders, is to enhance consumer conformity. They often do so by portraying reference group
influences in their promotions. In contrast, marketers of new brands or brands that are not
market leaders often try to convince consumers to be different and not follow the crowd.
2. Group Power: Different reference groups may influence the beliefs, attitudes, and behaviours
of individuals at different times or under different circumstances. When consumers are
preoccupied with the power that a person or group can exert over them, they often purchase
products that conform to the norms of that person or group in order to be complimented on
their choices. However, unlike reference groups that are not power based, "power groups"
may bring about behaviours, but not changes in attitudes. Individuals may conform to the
behaviour of powerful persons or groups, but probably will neither change their attitudes nor
internalize their choices.
3. Product Expertise: Individuals who have firsthand experience with a product or service, or
can easily obtain detailed information about it, are less likely to be influenced by the advice
or example of others. For instance, when a young corporate sales rep wants to impress his
client, he may take her to a restaurant that he has visited before and liked or to one that has
been highly recommended by a restaurant guide. If he has neither personal experience nor
information, he may seek the advice of a friend, or imitate the behavior of others by taking
the client to a restaurant that is frequented by executives whom he views as role models.
One study examined how product and consumer characteristics moderate the influence of
online consumer reviews on product sales using data from the video game industry. The
findings indicated that online reviews were more influential for less popular games and
games whose players had greater internet experience.
4. Conspicuousness: The degree of reference group influence on purchase decisions varies
according to product conspicuousness (Distinctness/ Precision). A conspicuous product is
one that stands out and is noticed by others, such as an expensive watch or a newly released
digital camera. Products that are especially conspicuous and status revealing (e.g., a large
diamond ring) are most likely to be purchased with an eye to the reactions of relevant others.
More-conspicuous products are subject to greater reference group influence, both in terms of
owning the product to begin with and the brand or type owned. For example, a person's
reference group will have strong influence on whether or not to have a tattoo or piercing, as
well as on the type of piercing one gets or the design of a tattoo, because both are highly
visible. Because some people wear jewellery and others do not, reference groups are likely
to influence only the type of jewellery a person chooses to wear, but not whether or not to
wear jewellery. In contrast, a reference group will influence neither one's decision to use or
not use toothpaste (because everyone uses this product) nor the brand chosen (because the
brand of toothpaste one uses is invisible to others).
ENDORSERS & SPOKESPERSONS:

Source credibility is the believability of the endorser, spokesperson (An actual Customer, A
company Employee, A celebrity or A model), or individual in an advertisement.

Researchers have identified the following dimensions in measuring the credibility of a person
or organization: expertise, trustworthiness, attractiveness, and likeability.

Marketers also use Institutional Advertising, which consists of promoting a company’s image
without referring to any of its specific offerings
CELEBRITIES: By celebrity credibility, we mean the audience’s perception of both the celebrity’s
Expertise (how much the celebrity knows about the product area) and trustworthiness (how
honest the celebrity is about what he or she says about the product).

Marketers employ celebrities in promotion in the following ways:

1. Celebrity Testimonial: A promotional message where a celebrity attests to the product's
quality based on his or her usage of the product.
2. Celebrity Endorsement: An ad where a celebrity appears on behalf of a product, with
which he may or may not have direct experience or familiarity
3. Celebrity Actor: A celebrity who plays a part in a commercial for a product
4. Celebrity Spokesperson: A celebrity who endorses a brand, social cause, or company
over an extended period

SALESPERSON CREDIBILITY: Salespeople who engender confidence and who give the
impression of honesty and integrity are most persuasive.

VENDOR CREDIBILITY: The reputation of the retailer who sells the product has a major
influence on message credibility.

MEDIUM CREDIBILITY: The reputation of the medium that carries the advertisement
also enhances the credibility of the message.

Opinion Leaders and Word-of-Mouth

Opinion Leader: Opinion leaders provide both information and advice. They talk about
their experiences with products and advise others whether or not to buy products or brands.
A person can influence others, who might be opinion seeker or recipients.

Opinion Leader Characteristic

1. Highly knowledgeable in a certain area
2. A person who is self-confident, out-going and sociable
3. They have a specialized knowledge that enable them to give effective recommendations
to others.
4. Opinion leaders and its receiver belong to the same socioeconomics

Opinion Leadership: The process by which one person (the opinion leader) informally
influences others, who might be either opinion seekers or recipients.
 Word-of-Mouth: When one shares one’s experience of a certain product of service to others.
An oral or written communication in which satisfied customers tell others how much they
like a business, product, ser-vice, or event.
As a rule, opinion leaders are highly knowledgeable about specific products or activities and
are seen as the “go-to person” for specific types of information, and they often stimulate
word-of-mouth.

Strategic Application of Word-of-Mouth:

1. Social Network (Online): A virtual Platform where people share information about
themselves with others.
2. Brand Communities: Is a specialized, non-geographically bound community formed on
the basis of attachment to a product or brand.
3. Weblogs (Word of Mouth via Blogs): On these sites, consumers are free to express
opinions, describe experiences with products and services, solicit purchase advice, and
read others’ testimonials about products and brands.
a) A Blog is a medium for a discussion or informational site published on the internet and
consisting of discrete entries or post.
b) 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
c) Twitter is an online social networking service and microblogging service that enables
its users to send and read text-based messages of up to 140 characters, known as
“tweets.

Simulating Word-of-Mouth:
1. Giving free samples then ask for opinion (simple example).
2. Emphasing on viral marketing (A marketing technique that uses social networks to
increases brand awareness by encouraging individuals to pass along online email messages
or other contents) and the use of buzz agents (A consumer, employed by a marketer who
promotes products clandestinely in exchange for mostly free product samples).

Measuring Opinion Leadership:

1. Self-Designation Method: Asking respondents to evaluate the extent to which they had
provided others with information about products and influenced their purchases.
2. Self-Administered Questionnaires: A survey data collection method in which consumers
respond to a series of questions without the assistance of an administrator or researcher. Often
sent via email, post mail, or online.
3. Sociometric Method (Social Interaction): A technique of measuring opinion leadership that
records person-to-person communications about a product or brand among members of a
community where most people know each other by name.
4. Key Informants (Identifying Experts): Persons who are keenly knowledgeable about the
nature of social communications among members of a specific group.
5. Klout Scores (Online influence): Measure people influence online based on their abilities to
generate engagement and feedback of what they post. (Twitter, Blogger etc)
Diffusion of Innovations: Segmenting by Adopter Categories
1. Innovator: The earliest consumer to buy new products and they are prepared for any risk.
2. Early Adopter: Consumer who buy new products within a relatively short period
following introduction.
3. Early Majority: Consumer who buy innovation after early adopter have done so.
4. Late Majority: Risk averse and slow to adopt innovation.
5. Laggards: Very last consumer to adopt innovations.
6. Non-Adopter:
a) Prospective Adopter: Potentially become costumer.
b) Persistent Adopter: Unlikely become costumer.