The Nature Of Reference Group Influence Marketing Essay

The Nature Of Reference Group Influence Marketing Essay Referent power plays a very important role in marketing communication, following report look in to different influences groups and referent power. How referent power affect one. How affective a referent power is? How a marketer can use it to his advantage. What are the factors which make referent power effective? Different theories have been discussed. This report will be looking critically on evaluating the role of referent power in marketing, evaluate the role it will play in future, and provide a future marketing plan. This report of Referent power and why it can be a potent force for marketing appeals was written as a final assignment for the Consumer Behavior module. Humans are social animals and they always looks to other for appreciation, they want acceptance in the social circle. They identify themselves with some groups and consciously or subconsciously they imitate members of the group to fit in. They try to imitate those qualities by copying the referents behavior. What we think of ourselves is influenced in our social interaction by the reaction of others whose values we share or judgment we respect. Our attire, vehicles we use and career make statements about us, and our behaviors and lifestyles are the presentation of ourselves to our influence groups. By wearing a particular brand T shirt bring us closure to our group. Advertisers have different task while creating a promo or advertising depending on what are their target segment. Marketers use all three major influencing groups before launching a campaign. There are three form of reference group; Informational, normative and identification When an individual is not sure he uses the behavior and opinion of reference group members as potentially useful bits of information and try to copy it. In this case individual may have similarity with the other members of the group or expertise of the member group. So a person sees members of group using the same brand of tea he may decide to try same for Himself because he has evidence that it may be a good brand. Ads which wants to use informational power will quote something like they used it will you? Intelligent people like only one thingà ¢Ã¢â€š ¬Ã‚ ¦ REFERRENT power is the power of prominent people to affect others consumption behaviors by virtue of product endorsement ( 50 cents for Reebok)(Pic 1.1), distinctive fashion statements On the cover of US Magazine today. Celebrity Baby Jessica Albas little princess, Honor Marie Wearing Ooh La La Mamas FLY SPIRIT onesie). or championing of causes. Campaign began with identifying three major sports figures who had a connection to lung cancer (Troy Aikman, Joe Buck, and Cal Ripken, Jr ( Pic 1.2) To understand this mechanism an example is helpful. Suppose there are two restaurants and a group of people on the street outside deciding which one to eat at. The most well-informed individuals (those with higher precision in making these types of decisions) will decide first and everyone will see some people start to line up outside of one restaurant. If the others know this person is of higher precision (and even if they dont) a few people will follow their lead and join the line. Each new person who lines up outside of the restaurant sends a signal to the rest of the group (and in particular their friends and family) that this is the restaurant to pick. The more people who follow the signal, the stronger it gets and you have an Informational Cascade. Pic 1.2 The idea is presented in rigorous detail in a paper called Theory of fads, Fashion, Custom and Cultural Change as Informational cascades written by Sushil Bikhchandani, David Hirshleifer and Ivo Welch and published in 1992. To paraphrase: An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him to follow the behavior of the preceding individual without regard to his own informationà ¢Ã¢â€š ¬Ã‚ ¦ The prediction that a low-precision individual imitates a higher-precision predecessor is consistent with the evidence of numerous psychological experiments demonstrating that a subjects previous failure in a task raises the probability that in further trials he will imitate a model performing the task (see Thelen, Dollinger, and Kirkland 1979, p. 146)à ¢Ã¢â€š ¬Ã‚ ¦ Reference group doesnt have equal power for all types of products and consumption activities. Question is does consumers search rationally or it depends on NEED It has been seen that search is more in consumers who are moderately knowledgeable, when the product is low in perceived risk. There are two dimension that influence the degree to which referent power can work they are whether the purchase is to be consumed publicly or privately and whether its luxury or a necessity. Referent has more power over purchase which re for luxury rather than necessity and second important place where we can see the referent power is when the purchase is socially visible to other(William.,O, et al,1982) Referent power is inferred to the influencer by their subordinates. Project team members who have a great deal of respect and high regard for their project managers willingly go along with decisions made by the project manager because of referent power. If one admires the quality of a person or a group will try to imitate by copying referent behavior Prominent people celebrities can affect peoples consumption behavior by virtue of product endorsement, fashion statements or championing cause . referent power is important to many marketing strategies because consumers voluntarily change to please or identify with a referent 3.2. Normative influence Also known as utilitarian influence, occurs when an individual follows group expectation to gain a direct reward or to avoid a sanction ( Fischer et al, 1998). You may purchase one brand of beer to win acceptance by a friend or wont wear one particular brand for of teasing by friend. This influence is directly related with the bond of a person with its group Strongest the bond strong will be the influence. Mostly younger consumer are powered by this influence. A teenager starts smoking under this influence. 3.3. Identification Influence Also known as value-expressive influence, occur when consumer has adopted all values and attitude of group and identify himself with the. Here to influence advertiser will show the brand being used by socially active group It has been seen that teenagers and young one get influenced by this groups as they live under peer pressure(Auty,s.2001) You will hear in super market a child convincing his mother to buy a particular brand of cereals cause His friends use it , or a particular brand of shoes because his friends told him they are the best. It is these influence which leads them to cigarettes alcohol consumption influence as well. These influences can be used directly or indirectly by the marketer. Many researcher have researchers have come to conclusion lineage is also a very important factor where mother daughter and sisters will use the same brand and will have same shopping pattern (Miller, 1975; Moore-Shay and Lutz, 1988). .4. Celebrity as a referent power in advertising Celebrities like movie stars, sports person, Television stars help grab attention and communicate easily with consumers who admire them or wants to be like them. Its also known as ubiquitous feature of modern Marketing ( Mc Cracken, 1989), and approximately 20 percent of all promotions and advertisement uses use some type of celebrity endorsement (Bradley, 1996) . Marketers spends huge amount of money on celebrity contract on the belief that celebrity are effective spokesperson for their product or brand. Its very common that one celebrity becomes identity of one particular brand or product but in some cases more than one celebrity are being used. Like Pepsi uses superstar Shahrukh khan for his brand promo. Selection of a celebrity is very important characteristics of celebrity should match up with the brand to communicate effectiveness.( Kahle, Homer, 1985),Some companies used multiple celebrities to communicate. In the context of celebrity endorsement advertisement consumer may ask whether endorsers are promoting the product because she really believe in it? Or just because she has been paid to promote it. Its the attributes of celebrity which should match with perception of consumer. Thus sometime using multiple celebrities to endorse the product may help the product to reach the consumer (Mowen and Brown, 1981). Market also assumes that to reach target audience the celebrity should be like the consumer. Celebrity should have credibility attractiveness, Integrity and the main thing Plausibility he/ she behaves as referent influence, if referent Is not plausible it will not be effective . Here referent will be effective and will hold power by their influence as they are aspiration ass ociate group. Celebrities with a bigger Halo will have bigger effect. Despite more and more celebrity are pitched in, many commercials using celebrity endorsers do not live up to the expectations (Miciak and Shanklin, 1994). However, if used appropriately, celebrity endorsers can play a very important role in developing brand equity and enhancing a brands competitive position. Like Andre Agassi fits well with, and enhances, the image of Canons Rebel line of cameras. And Nike and Michael Jordon are synonymous when one thinks of Jordon they think of Nike, they have become part of each other. Before endorsing a product with particular celebrity marketer should do research that how well the celebrity and the brand belong together and how celebrity represent the product.. If there is great ease and relation of brand an d celebrity they get more quickly develop an association. 5. Degree of Reference Group Influence If one sees critically around us we can clearly sees that consumer does not decide abruptly. Referent power of any kind is always playing at the back of his mind. It suggest that rational persuasion, inspirational appeals are effective in influencing final decision(Farrell and Schroder(1996).while the influence of personal appeals, coalition or any kind of pressure were ineffective in any decision outcome( Case etal., 1988). So one can say that things which does not personally appeal or internalize favorable attitude one are not effective or will not have a very strong motivation in buying behavior. As it is well said Power is the ability to effect change (Kohli and Zaltman, 1988.,Ghoneim, 1987) These influencing power can be used by marketer A number of authors have well said that power is the ability to effect changes. Conversely, power bases depends on the characteristics of an individual that afford Referent power will have different impact on different people in different situation, or may be the category of the product used, or the brand used As the purchase is done to influence the group, the product or brand should be visible, for example product like watch, shoes, here product category ( watch), and brand (Swatch) are all visible. The consumption of some tonic is private .Referent power is quite visible when the product is visible to the group and he get accepted or appreciated in the group for his buy. High involvement Low involvement Significant Differences between brands Complex buying behavior Variety- seeking buying behavior Few Differens between brands Dissonance-reducing Buying behavior Habitual buying behavior (Table 5.1) If the need is high there is less power of referent for example when one want to buy a microwave. Reference group influence will be higher if one wants to buy things which is less necessary e.g. in buying clothes or in simple words on can say that decision to buy toothpaste tennis racket, a personal computer, a refrigetor are all very different. Expensive and complex purchase or things which involve more knowledge involve more participant and more suggestion from peer are taken.( Table 5.1)( Henry 1987) Relationship, bondage of of an individual with the group is another very important criteria which can affect on purchasing decision. More one feels committed to the group more he get influence by the referent power . One will be more careful when in dressing up when joining a group whom he wants to influence than when he wants to go for dinner with group he doesnt feel related or committed. It also depends on activity in which individual is involve with a group , How relevant is the activity for example going for office dinner is more important than going out with your friend for a match. There is clear evidence that individual differ in tendency in getting powered by influence (keillor et al,1996)Reference influence is also related to a reward or punishments, reward may be in the form of acceptance in the group, promotion gain trust with your peer and punishments may be in the form of rejection or hatred. In preteen group it may be severe and of social consequences. So to it can be said that referent power should have authority to implement both. We can still argue that referent power should not misuse legal power or illegally pressurize as he might use credibility Refrent power is someone which is look upon by individual and if it loses credibility and trust power will be gone. So we can say that the greater the referent power, the lower the use of legitimate pressure (Farell et al.,1999). In this context its interesting to know about the balance theory (Heider, 1946) Every individual have some preconceived ideas and perception which remain at his subconscious level. And while purchasing it plays a very important role. The greatest power one has over other is when one is sufficiently intimate to permit other to facilitate, because the relation between influencer and consumer is cohesive. Referent power involvement Lets take an example I want to purchase a very expensive notebook I have seen advertisement of Dell, hp and Acer now I m confuse I want to buy something g which is very important but I dont have much knowledge what will I do I will not just go an d purchase it from the counter I will go to one of my friend or family member who has knowledge about it I will involve his opinion. But if at the same time I m hungry and I want to buy a packet of biscuit I will just go to the supermarket and choose any packet or may be the one I have been using from the shelf I would not involve others and take opinion from others for purchasing a pack of biscuit. So opinion leader are needed where there is high purchase involve with no knowledge of product while when low purchase involvement is there I wont take any opinion even if I have less knowledge( Table 1.1) PRODUCT/ PURCHASE INVOLVEMENT Product knowledge High Product knowledge Low HIGH Moderate High Low Low Moderate (Table 6.1) Consumers, especially gen X, tend to follow their peer what they feel trendy and worn by the `in crowd (Agins 1999; Spiegler 1996). Here we can see their deep-seated willingness and thirst to belong, often becoming image- and brand-conscious consumers. Now `what is trendy is what they drive from word-of-mouth communications. Retail Entrepreneur of the Year, Anne Yuri Namba, has found to be quoted as that her home business was initiated and stimulated entirely by word of mouth. As her fame spread, so did the demand for her unusual, highly distinctive fashions (Chain Store Age 2000). Marcus (1999) reported that word of mouth plays an very important role along with demographic information when decisions are made in the fashion industry. One can say, fashion demand may be generated by the simultaneous presence of local externalities and word-of-mouth communication (Corneo and Olivier 1999).Individual sharing information about with other highly target consumer plays a very critical role o n consumer decision and market success. Our friends and relatives are the main source of information, when we are in group we observe their styles, what product they use or by directly asking the opinion. One research shown that half of American agrees that that they often seeks advice of others before making any purchase and 40% feel that people come to them for advice. (Walkes, p 40). The internet has changed the term a little now it can be called Word Of Internet. Where one seek advice from a complete stranger. There are some individual who actively filter, interpret, or provide brand or product information to their family and friends, They are called opinion Leaders they play very strong referent power influence over other WE just cant credit only referent power involved in purchasing decision of an individual we cant pass anything to them making it look like their group or brand image Research have shown that decision to purchase particular product is also influenced by the image and credibility of the companies that market and manufacture consumer products (Lafferty and Goldsmith 1999). If the company is positively portrayed, and has a good image consumers generally maintain a positive disposition toward the company and its products. However, if the company has some rumor some ethical or cultural issues in the backyard , less favorable feelings may subsequently influence whether consumers decide to purchase the companys products (Lee and Bernstein 2000; Ligos 1999). How Much Does It affect During 1996 one rumored was spread about Tommy Hilfiger, stating that company had made some bad remarks African-Americans and Asian which were their core clients. The rumor was mostly on internet. Hilfiger websites denied the rumor completely and there was call to was call to boycott Tommy Hilfiger clothing, especially in the African-American. T The strength and persistence of the strength of rumor suggested that it will affect the sale of brand in African-American market African-American magazine telling them not to buy who doesnt respect ( Graves 1998) here the referent power was internet, mouth to mouth and magazine community, the whole impact was studied and recorded( kImberly 2001) One implication of these recordings was that the staying power of the rumors had eventually harm sales of the Tommy Hilfiger brand in a core target market. Wall street Journal article reported a 28 per cent decrease in sales for the Tommy Hilfiger company (Agins 2001). Company denied the rumored took African-American model and try to recapture the market and used integrated marketing scheme strategically. In retail market consumer is very important and referent power play a very important role Thus retail clothing market should take careful measurements to track their image all designers, regardless of popularity, must follow up their image a nd communications with their consumers. In one of the similar case Reebok has been forced to clarify itself for more than a decade against a rumor that company produce its products in South Africa and supported apartheid ( Turnet 1992). Initially company didnt take much notice and didnt think much of it but later company suffered protests and boycotts and then company has to come out its forceful campaign `Reebok is NOT in South Africa (Kazi-Ferrouillet 1990). And till now company addressed the issue on its website (Reebok.com) Referent influence has been examined in the context of consumer vulnerability to interpersonal influence (Bearden et al., 1989) where influence is the extent to which an individuals consumer choices are influenced by other people. In impulse buying its the cognitive behavior which is seen where a consumer cannot get the information from any one so He doesnt come under informational power but high level of normative influence comes in existence and affect the purchase decision, thus we can say that normative consumer susceptibility to interpersonal influence is positively related to the affective component of impulse buying. When will it effect We have to understand stages in purchasing decision of a buyers Information search Refrent group Internet search promo Check option Pricing Brand image Purchase decisions He decide to purchase Need Awareness May be prompted by marketing Post buying behavior, Reinforcement from media friends (Diagram 8.1) Stages of Consumer Buying Behavior 1. Need Awareness: A need may arise or been establish by promotion of a companys marketing. Refrent power here may or may not be very influential 2. Information Search: Buyers search and ask Internet has made research easier for buyers. He may read on websites of different company .Here referent power play a very important role. As he is seeking the information company may use its influence with promos, handout an updated websites or trial samples distribution 3. Check Options: Once information is collected customer will evaluate all option he will search for price and company credibility.. 4. Purchase Decision: The last step just sell and close the deals at this moment any influencing may harm. If he is still hesitant u can still recommend and help your buyers for the best deal .5. Post Buying Behavior: Todays marketer knows very well that to keep loyalty of a customer is very important as now he himself will be a referent power over the other potential buyers. Even at this stage any negative reinforcement will bring remorse and he may not recommend it to others. Influence of referent power also depends on at what stage is a brand once a brand mature its brand image itself is good referent power but at introduction stage a company needs good referent power. 9. Conclusion Referent power is very effective in certain cases and marketer should use that power but at the same time they should keep in mind that for that power to be influential they have to keep certain points in mind Referent power to be effective should bring a connection with the consumer, or he should look up to it or relate to him Message used by referent power should be used as simple as possible it should not be complex or confusing Celebrity power will be more effective if used repeatedly as it strengthen the relationship of brand with that celebrity and so it brings trust in the target audience When choosing a celebrity marketer should be careful that he is already not strongly associated to some other brand or services, but nothing comes without a drawback. If celebrity or your referent power get into negative publicity it brings down with him the product. A wrong selection will tarnish the whole image Referent power is effective if your target audience is young and not much knowledgeable about the brand or product. Its more affective on one who does not have much knowledge and have low self image It so one can say its most effective with children. Referent power does not only influence at the time of purchasing but also post purchasing as after purchasing a product Consumer look at his influence group for appreciation and even any negative comment at that stage will disheartened him and He may not buy the product again A company should not try to play its own trumpet but can bring trust and credibility through awards, media or testimonials of other customers Make a purchase an happy ending for him offer him warranty period or an extended trial period will help in Him becoming a potential referent power over other buyers