50 terms

Marketing 115 Chapter 9: Reference Groups and Word-of-Mouth

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Reference Groups
Groups that serve as sources of comparison , influence, and norms for peoples' opinions, values, and behaviors.
The most important reference group
The family because it provides children with the skills, knowledge, attitudes, and experiences necessary to function as consumers.
Word-of-Mouth
It consists of communications where satisfied customers tell other people how much they like a business, product, srvice, or event (although the information transmitted can also be negative).
Source Credibility
A source's persuasive impact, stemming from its perceived expertise, trustworthiness, and believability.
Formal Source
It is either a person or medium providing consumption-related information and hired and paid by an organization.
Informal Source
It 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.
Normative Influence
It consists of learning and adopting a group's values and behaviors. For example, families have a large normative influence on children because the mold young children's initial consumption-related values.
Comparative Influence
It arises when people compare themselves to others whom they respect and admire, and then adopt some of those people's values or imitate their behaviors. For example, when a recently-graduated student who holds a "start of the ladder" position in a corporation admires her boss and aspires to live like the boss and have similar possessions, the boss exerts comparative influence on the lower-level employee.
Membership Group
A group to which a person longs to, or realistically can join. For example, the group of men with whom a young executive plays poker weekly would be considered his membership group.
Symbolic Group
It is a group to which an individual is unlikely to belong, but whose values and behaviors that person adopts. For instance, professional tennis players may constitute a symbolic group for an amateur tennis player, who identifies with certain players and imitates their behavior (e.g. By purchasing a specific brand of tennis racquet or tennis shoe).
The consumption-related groups that influence consumers' attitudes and behavior include:
1.) Friendship groups
2.) Shopping groups
3.) Virtual communities
4.) Advocacy groups
Friendship Groups
Seeking and maintaining friendships is a basic drive for most people. Friends fulfill a wide range of needs: They provide companionship, security, and opportunities to discuss problems that an individual may be reluctant to discuss with family members. Friendships are also a sign of maturity and independence, for they represent a breaking away from the family and the forming of social ties with the outside world.
Shopping Groups
People may shop together just to enjoy shopping or to reduce their perceived risk; that is, they may bring someone along whose expertise regarding a particular product category will reduce their chances of making incorrect purchases. Another example of a shopping group is the shared experience of waiting in line. A concept known as "social proof" says that by standing in a crowd, shoppers see themselves as making the right buying decision.
Virtual Communities
Many websites encourage consumers to leave comments and have others respond to them. The anonymity of the online environment allows people the freedom to express their views and benefit from others' views.
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: Entities organized to correct a specific consumer abuse and then disband, and groups whose purpose is to address broader, more pervasive problem areas and operate over an extended period of time.
Factors Affecting Reference Group Influence
1.) Conformity
2.) The group's power and expertise
3.) The individual's experience and personality
4.) The conspicuousness of the product
Conformity
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.

To influence its members, a reference group must:
1.) Inform or make members aware that the brand or product exists.
2.) Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group.
3.) Influence the individual to adopt attitudes and behavior that are consistent with the group's norms.
4.) Legitimize the member's decision to use the same products as other members.
Groups' Power and Expertise
Different reference groups may influence the beliefs, attitudes, and behaviors of individuals at different times or under different circumstances. For example, the dress habits of a young staff member working for a conservative law firm may vary, depending on her place and role. 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.
Relevant Information and Experience
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.
Product Conspicuousness
The degree of reference group influence on purchase decisions varies according to product conspicuousness. A conspicuous product is one that stand out and is noticed by others, such as an expensive watch or a newly released digital camera.
Personality Characteristics
Several personality traits affect the degree of a reference group's influence on its members. People who are compliant, have a tendency to conform need to be affiliated and like by others, and are other-directed are more receptive to group influences. Competitive people who desire to control other people and events and are inner-directed are less likely to look for guidance from reference groups.
Institutional Advertising
It consists of promoting a company's image without referring to any of its specific offerings.
Endorses and Spokepersons
1.) The synergy between the endorser and the type of product or service advertised is very important. The greater the fit between the celebrity and the product endorsed, the higher the persuasiveness of the message.
2.) Endorsers whose demographic characteristics (e.g. Age and ethnicity) are similar to those of the target audience are viewed as more credible and persuasive than those whose characteristics are not.
3.) Although consumers may like an ad featuring a famous endorser, they will buy the product advertised only if they trust the marketer as well.
4.) Marketers who use celebrities in testimonials or endorsements must ensure that the message contents are congruent with spokespersons' qualifications.

Marketers must ensure that there is a synergy among the celebrity's trustworthiness, expertise, physical attractiveness, and the product or brand endorsed.
Celebrities
It is a symbolic reference group.

Marketers employ celebrities in promotion in the following ways:

1.) Celebrity testimonial - Based on personal usage, the celebrity attests to the product's quality.
2.) Celebrity endorsement - Celebrities appear on behalf of products, which they may or may not have direct experience or familiarity.
3.) Celebrity actor - The celebrity plays a art in a commercial for the product.
4.) Celebrity spokesperson - The celebrity represents the brand or company over an extended period.
Salesperson Credibility
Salesperson who engender confidence and who give the impression of honesty and integrity and most persuasive.
Vendor Credibility
The reputation of the retailer who sells the product has a major influence on message credibility. Products sold by well-known, quality stores carry the added endorsement of the store itself. Fulfilled product expectations increase the credibility accorded to future messages by the same advertiser. The key basis for message credibility is the ability of the product, service, or brand to deliver consistent quality, value, and satisfaction to consumers.
Medium Credibility
The reputation of the medium that carries the advertisement also enhances the credibility of the message. Most consumers believe that a respectable medium would only advertise products that it "knows" to be of good quality.
Effects of Time on Source Credibility
Sleeper effect:
It is one's disassociation of the message from its source over time, and remembering only the message content but not its source.

Differential Decay:
The theory suggests that the memory of a negative cue simply decays faster than the message itself, leaving behind the primary message content.
Opinion Leadership
The process by which one person - the opinion leader - informally influences others, who might be either opinion seekers or recipients.

Opinion leadership is category specific; that is, opinion leaders often specialize in certain product categories about which they offer information and advice.

Opinion leaders often specialize in certain product categories about which they offer information and advice. When other product categories are at issue, they become opinion receivers.
Characteristics of Opinion Leaders
1.) Opinion leaders are highly knowledgeable regarding a particular product category, follow new products that come into the markets, and are often consumer innovators in their area of expertise.

2.) Opinion leaders are self-confident, outgoing, and sociable. They readily discuss products and consumption behaviors with others.

3.) Opinion leaders read special-interest publications and regularly visit websites devoted to the specific topic or product category in which they specialize. They have specialized knowledge that enables them to make effective recommendations to relatives, friends, and neighbors.

4.) Usually, opinion leaders and receivers belong to the same socioeconomic and age groups.
Measuring Opinion Leadership
1.) The self-designating method
2.) The sociometric method
3.) The key informant method
4.) Klout scores
The Self-Designating Method
The self-designating method employs a self-administered questionnaire that requires respondents to evaluate the extent to which they have provided others with information about a product category or specific brand or have otherwise influenced the purchase decisions of others.
Sociometric Method
It measures the person-to-person communications about a product or brand among members of a community where most people know each other by name.

1.) The specific individuals (if any) to whom they provided advice or information about the product or brand under study.

2.) The specific individuals (if any) who provided them with advice or information about the same product or brand.

Sociometric questioning provides the most valid results for designing opinion leaders and receivers. However, the questioning is expensive and analyzing the results is complex. In addition, this method can be used only within populations where most member known each other by name and regularly interact; it is inapplicable for studies that use large samples.
Key Informant Method
A person who is keenly knowledgeable about the nature of social communications among members of a specific group.

This research method is relatively inexpensive because it involves collecting data from one person only, whereas the self-designating and sociometric methods require questioning many respondents.
Klout Scores
It measures people's influence online based on their abilities to generate engagement and feedback to what they post.
E-wom
Word-of-mouth taking place online is called e-wom and occurs in social networks, brand communities, blogs, chat rooms, and tweets.
Social Networks
They are virtual communities where people share information about themselves with others, generally with similar interests, with whom they have established relationships that, for the most part, exist only in cyberspace.

3 dimensions underlying consumers' engagement in e-wom:

Tie-strength - the degree of intimacy and frequency of contacts between the information seeker and the source.

Similarity - among the group's members in terms of demographics and lifestyles.

Source credibility - the information seeker's perceptions of the source's expertise.
Brand Community
It is a specialized, nongeographically bound community formed on the basis of attachment to a product or brand. Generally, admirers of a particular item, often with nostalgic emotions and in possession of versions that are no longer made, find others with similar interests and form a community fostering a feeling of belonging across geographic, linguistic, and cultural barriers. K-Pop etc.
Blog
It is a discussion or informational site published on the Internet and consisting of discrete entries ("posts").
Microblog
It 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.
Twitter
It 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".
Viral Marketing (Viral Advertising)
It is a marketing technique that uses pre-existing social networks and other technologies to produce increases in brand awareness or to achieve other marketing objectives through encouraging individuals to pass along email messages or other contents online.

It uses self-replicating viral processes, analogous to the spread of computer viruses. Viral marketing may take the form of video clips, interactive Flash games, advergames, e-books, brandable software, images, text messages, and email messages.

A study that investigated the motivations for passing along emails found that:

1. People were receptive only to emails from people they knew. The kind of emails they received included jokes, virus alerts, inspirational stories, requests to vote on certain issues, video clips, and links to other websites.

2. The main reasons for not forwarding emails were outdated, dull, and inappropriate contents. About one-third of the forwarded emails included personalized notes from the forwarders, and most of the senders did not alter the emails' original subject lines.

3. The key reasons for forwarding emails were enjoyment (e.g. Fun, entertaining, exciting) and helping others (i.e., let others know that the senders care about them). The forwarders also reported that they only passed along contents that they believed the receivers would find interesting and appropriate.
Buzz Agents
Consumers who promote products clandestinely and generally receive free product samples but not monetary payments.
Adopter Categories
The concept of adopter categories is a classification that depicts where consumers stand in relation to other consumers in terms of the first time they purchase an innovation (e.g., a new product or model).
Innovators
The innovators are the earliest consumers to buy new products, They are prepared to take the risk that the product will not work well, become unavailable, or e quickly replaced by an improved model (i.e., they are broad categorizers).

They often willing to pay somewhat higher prices for newly introduced products, because they enjoy being the first to own gadgets and show them off.

When targeting innovators, ads should know them using new products conspicuously and being noticed and even asked questions by others.
Early Adpoters
The early adopters are consumers who buy new products within a relatively short period following introduction, but not as early as the innovators.

They are venturesome, likely to engage in word-of-mouth, and also likely to assist others who are considering adopting the new products.

Ads targeting members of this segment should show them praising the new products.
Early Majority
The early majority consists of consumers who buy innovations after the early adopters have done so. They waited for prices to decline and, after quite a few people purchased it (and its price declined).

Risk aversion is defined as the reluctance to take risks and low tolerance of ambiguous situations, as illustrated by the consumption-related characteristics of risk-averse consumers. Members of the early majority are somewhat risk averse, whereas the late majority and laggards are highly risk-averse consumers.
Late Majority
Members of the late majority are risk averse and slow to adopt innovation. They wait until most other consumers have adopted the new product before buying it.

When they finally buy their first e-readers, they are likely to buy older models, which marketers sell at lower prices, and always look for extensive guarantees.

If these consumers are happy with their initial purchases, they are likely to become members of the early majority and likely to buy newly introduced e-readers.
Laggards
The laggards are the very last consumers to adopt innovations. By the time they get around to purchasing their first e-readers, the innovators and early adopters have already switched to the most advanced models.

Laggards are high-risk perceives and the last ones to recognize the value of innovative products.
Non-adopters
Marketers often "write off" non-adopters, but not all non-adopters are the same, and understanding nonusers is important.

1. Prospective adopters, who could potentially become customers.

2. Persistent non-adopters, who are very unlikely to become customers.