Reference Groups and Word of

Mouth
Reference group: a group that a person identifies
with so strongly that he or she adopts the values,
beliefs, attitudes, and behaviour of group members.

Reference groups can be large or small. Most

people have several reference groups such as:

families, friends, work related groups, unions,

civic clubs, professional organizations, social
class, cultures, sub-cultures, religious groups, etc.
In general, there are 3 major types of reference
groups: membership, aspirational, and
disassociative.

A membership reference group is one to which

an individual actually belongs. The individual
in this case identifies with group member
strongly enough to take on the values, attitudes,
and behaviours of people in that group.
Aspirational reference group is one that the
individual aspires to belong; the individual
desires to be like those group members.

A group that a person does not wish to be

associated with is a disassociative or
negative reference group; the person does
not want to take on the values, attitudes, and
behaviour of that group.
A reference group may serve as an individual’s
point of comparison and source of information.

A customer’s behaviour may change to be more

in line with actions and beliefs of group member.

For example, a person may stop buying one

brand of shirts and switch to another based on
reference group’s advice.
An individual may also seek information
from the reference group about other factors
regarding a prospective purchase, such as
where to buy a certain product.
Reference groups can affect whether a
person does or does not buy a product at all,
buys a type of product within a product
category, or buys a specific brand.

One way that a reference group may

influence behaviour is by ridiculing people
who violate group norms.
Types of Influence
Normative influence: consists of learning and
adopting a group’s norms, values, and
behaviour. Family, peers, friends, members of
community are potential sources.

Comparative influence: arises when people

compare themselves to others whom they
respect and admire, and then adopt some of
those people’s values or imitate their
behaviour.
Consumption Related Reference
Group
Friendships groups: seeking friendship is a basic
drive for human beings.

They fulfil a wide range of needs, including

companionship, security, and opportunities to
discuss matters.

People consider friends as a credible source for

information at all levels including purchase.
Shopping groups: people may get together
to enjoy the act of shopping or to reduce
the perceived risk.

For example they might bring an expert

along to provide advice.

Members tend to feel better about collective

decisions regarding purchases.
Virtual communities: many websites today encourage
consumers to leave comments and have others respond to them.

Most young adults have extensive lists of names of people they

have met only online.

Many feel free to express thoughts or needs with strangers or

through within a virtual environment.

Example is an online group called “foodies”, in which members

try out food items and restaurants and post recommendations.
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:

a) Cause-specific consumer action group: Entities organized to correct a

specific consumer abuse and tends to be temporary.

Example: a group of parents attending a meeting to demand additional stop

signs to increase safety.

b) Enduring consumer action groups: entities organized with the purpose

of addressing broader problem areas and operate over an extended time-
period.

Example:(Mothers Against Drunk Driving)

Credibility of Endorsers

Source credibility:

is the believability of the endorser, spokesperson, or

individuals.

The spokesperson can be an actual customer, company

employee, or a celebrity.

Researchers have identified the following dimensions in

measuring the credibility of a person or organization:
Expertise, trustworthiness, attractiveness, and
likability.

Marketer dominated resources are assumed to

seek profit, therefore they tend to be less credible
than informal references.

Good performance, image, reputation, and

attractiveness of the spokesperson are all elements
that increase credibility.
(image) Marketers use institutional
advertising, which is promoting the
company without referring to any of its
offerings.

Non-profit sources tend to be more

credible than marketers sources such as
consumer reports and consumption related
sources.
Endorsers and Spokespersons
The synergy of the endorser and the type of
product advertised is highly important.

The greater the fit between the celebrity and

the product endorsed, the higher the
persuasion (i.e. a glamorous celebrity
endorser)
Endorsers whose demographic
characteristics (age and ethnicity) are
similar to the target market are viewed as
more credible and persuasive.

This more likely applies on consumers with

strong identification.
Although consumers may like an ad featuring a
famous endorser, they will buy the product
advertised only if they trust the marketer as
well.

Thus, when marketers measure the

persuasiveness of the advertising’s message that
features famous endorsers, they must also
measure consumer’s attitudes towards the
brand advertised, and purchase intentions.
Marketers who use celebrities in
endorsements must ensure that the message
contents are congruent with
spokesperson’s qualifications.
Celebrities
Movie stars, singers, TV personalities,
popular entertainers, and sport icons, are
symbolic reference group because they are
liked, admired, and often have a high
degree of perceived credibility.

Many marketers use them to promote their

products and services in the following ways:
 Celebrity testimonial: based on personal
usage, the celebrity attests to product’s
quality.

- Celebrity endorsement: celebrity appears on

behalf of product with which they may or may
not have direct familiarity. Ads here link a
personality characteristic between the
product and the endorser. i.e. acts a role in an
advertisement.
Celebrity spokesperson: the celebrity
represents the brand or the company over
an extended period.

Some companies refuse to adopt the

approach of using celebrities, fearing the
possibility that if the celebrity gets involved
in an undesirable act, it will reflect
negatively on the image of the company.
Opinion Leaders
Opinion leaders: a member of an informal
group who provides information about a
specific topic to other group members.

He or she is in a position or has knowledge

or expertise that makes him or her a
credible source of information about few
topics.
Opinion leaders are easily accessible, and they
are viewed as being well informed about a
particular topic.

They are not the foremost authority on all

topics, but because such individuals know they
are opinion leaders, they feel responsible to
remain informed about a topic and thus seek
out advertisements, manufacturer’s brochures,
salespeople, and other source of information.
Opinions leaders in turn are category specific, which means they are
specialized in a certain product categories about which they offer
information and advice.

Impact:

An opinion leader is likely to be most influential when:

- consumers have high product involvement but low product

knowledge.

- When they share the opinion leader’s values and attitudes,

- when the product details are numerous or complicated.

Opinion leaders are highly knowledgeable
regarding a particular product category,
follow new products that come into markets.

They are self- confident, outgoing, and

sociable.

They readily discuss products and

consumptions behaviours with others.
They read special-interest publications,

research,

and visit websites devoted for the specialization.

This generates effective knowledge that enables

them to make recommendations to their contacts.
Word of Mouth
Word-of-Mouth communication (WOM)
involves the passing of information
between a non-commercial communicator
(i.e. someone who is not rewarded) and a
receiver concerning a brand, a product, or
a service.
Buzz Agents: many firms enlist typical
consumers to serve as their buzz agents-
consumers who promote products and
generally receive free product samples but
not monetary payments.

For example, buzz agents might read a

book on mass transit vehicles with titles
clearly visible, talk to a consumer into
trying a product during shopping trips, or
bring a product to a public event like a
national celebration.
When WOM is mediated through
electronic means, the resulting electronic
word of mouth.

(eWoM): refers to any statement

consumers share via the Internet (e.g.,
web sites, social networks, instant messages,
news feeds) about a product, service, brand,
or company.
Strategic Application of E-WOM
Social networks:

 Online, social networks are virtual

communities where people share
information about themselves with
others, generally with similar interests,
with whom they have established
relationships that takes place in
cyberspace.
 Because consumption and the products
people buy are integral parts of their lives,
their online profiles and discussions with
others include a tremendous amount of
purchase information and advice.

- The major social networks are Facebook,

YouTube, Twitter, and Myspace.
 Brand Communities:
 A specialized non-geographically bound
community formed on the basis of
attachment to a product or brand.

- Admirers of a particular item, find others

with similar interests and form a community
fostering a feeling of belonging.
 Weblogs:
Website that consists of a series of entries
arranged in order, often updated on
frequently with new information about
particular topics.

The information can be written by the site

owner, or contributed by users.
-A blog: is a discussion or informational site
published on the Internet and consisting of posts.

At first, it was similar to a diary or personal

space by a single individual or a small group, and
mostly covered a single topic.

Today most blogs have multiple authors and are

often managed by media outlets, companies, and
other interest groups.
-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, mostly via Twitter.
Viral Marketing:

Marketing techniques that use technologies

to try to produce increases in brand
awareness or to achieve other marketing
objectives. i.e. YouTube.
Viral marketing may take the form of
video clips, interactive games, ebooks,
images, text messages, email messages, or
web pages.
The ultimate goal of marketers interested in
creating successful viral marketing
programs is to create viral messages that
appeal to individuals with high social
networking potential (SNP) and that have
a high probability of being presented and
spread by these individuals and their
competitors in their communications with
others in a short period of time.
Diffusion theory
Diffusion theory seeks to explain how, why,
and at what rate new ideas and technology
spread through cultures.

One way to measure diffusion is through

adopter categories:

(characteristics of innovation, adoption

process)
 Innovators
-These are people who want to be the first to try the
innovation. Some of which are opinions leaders.

 They are venturesome and interested in new ideas.

-These people are very willing to take risks, and are

often the first to develop new ideas.

-Very little, if anything, needs to be done to appeal to

this population.
Early Adopters
-These are people who represent opinion leaders.

-They enjoy leadership roles, and embrace change

opportunities.

-They are already aware of the need to change and so are

very comfortable adopting new ideas.

-Strategies to appeal to this population include how-to

manuals and information sheets on implementation.

-They do not need information to convince them to change.

Early Majority
These people are rarely leaders, but they do adopt new
ideas before the average person.

-They need to see evidence that the innovation works

before they are willing to adopt it.

-Strategies to appeal to this population include success

stories and evidence of the innovation's effectiveness.

-Members in this category are somewhat risk averse.

Risk aversion refers to the reluctance to take risks and low
tolerance of ambiguous situations.
Late Majority
These people are sceptical of change

- will only adopt an innovation after it has

been tried by the majority.

- Strategies to appeal to this population

include information on how many other
people have tried the innovation and have
adopted it successfully.
Laggards
-These people are bound by tradition and
very conservative. They are very sceptical
of change and are the hardest group to bring
on board.

-Strategies to appeal to this population

include statistics, fear appeals, and
pressure from people in the other adopter
groups.