Group and Personal Influence: Trademarks Used Herein Under License

Group and Personal
Influence
COPYRIGHT 2006 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are
trademarks used herein under license.
Group and Personal Influences
on Individuals
on Individuals
Other people, whether as
individuals or groups, exert
enormous influence on
consumers
Belonging to groups, trying to fit
in, and striving to please others
affects every stage in the decision
process
on Individuals
Reference group: any person or
group of people who significantly
influences an individuals behavior
May be individuals (celebrities,
athletes, or political leaders) or
groups of individuals with
similarities (musical groups or
sports teams)
Personal and Group Influence
High Degree
on Individuals of Influence
Personal Types of Lifestyles

Influences: Influence Behaviors
Groups Normative Transmission Purchases
Individuals Value Expressive Consumption
Informational
Low Degree
of Influence
on Individuals
Personal
Influences:
Groups
Individuals
Types of Reference Groups
Primary 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
sporadic, 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
Membership: 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
on Individuals
Personal
Influences:
Groups
Individuals
on Individuals
Personal Types of
Influences: Influence
Groups Normative
Individuals Value Expressive
Informational
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
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
on Individuals
Personal Types of
Groups Normative
Informational
on Individuals
Personal Types of
Groups Normative Transmission
Informational
High Degree
on Individuals of Influence
Personal Types of Lifestyles

Influences: Influence Behaviors
Groups Normative Transmission Purchases
Individuals Value Expressive Consumption
Informational
Low Degree
of Influence
How Reference Groups Influence
Individuals
Individuals
Socialization: permits an individual
to know what behavior is likely to
result in stability both for the
individual and the group
Company manual may explain the
dress code in the workplace
Informal groups may tell them
what styles are most comfortable
and easiest to maintain
Individuals
Self-concept: people protect and
modify their self-concept by their
interactions with group members
People can maintain self-concept
by conforming to learned roles
Testimonial advertising is effective
when the self projected in the ad is
consistent with the idealized self
of the target consumer
Reference Groups Help
Define Self-Concept
Individuals
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
Advertising or television can be
sources of social comparison
Individuals
Conformity: a change in beliefs or
actions based on real or perceived
group pressures
Compliance: when an individual
conforms to the wishes of the group
without accepting all its beliefs or
behaviors
Acceptance: when an individual
actually changes his or her beliefs
and values to those of the group
Individuals
Factors affecting how likely people
are to conform to group norms:
Individuals
When are people more likely to
conform to norms?
Individuals
Factors affecting how likely people
are to conform to group norms:
Desire for social acceptance
Degree of experience in situation or
with decision
Conspicuousness
Complex product or luxury item
Reference Group Influence on Product and
Brand Purchase Decisions
PRODUCT
Weak Reference Strong Reference
Weak Group Strong Group Group Influence Group Influence
Influences (-) Influences (+)
PUBLIC NECESSITIES PUBLIC LUXURIES
Influence: Weak Influence: Strong
product & strong brand product & strong brand
(watch, autos, suits) (golf clubs, skis, boat)
BRAND
PRIVATE NECESSITIES PRIVATE LUXURIES

Influence: Weak Influence: Strong
product & weak brand product & weak brand
(mattress, refrigerator) (TV, icemaker)
Individuals
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
individuals perception of the profit
inherent in the transaction
Individuals
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
Peers send clear signals about
product alternatives
Appealing to Normative Influence
in Marketing Strategy
Normative compliance may be less
important in industrialized nations as
many consumers are putting personal
needs ahead of group loyalty
Extended families have less face-to-face
contact and people are more socially
isolated than in the past
Television and mass media expand
peoples horizons beyond social circles
Appealing to Normative Influence
in Marketing Strategy
A weakened respect for social norms
(anomie) leads some consumers to
desire expression of individuality more
than group affiliation
High Product Visibility Raises
Reference Group Influence
Self-Expression Outside
of Social Norms
Celebrity and Other Reference
Group Appeals in Advertising
Testimonials: celebrities tout
products based on personal usage
Testimonials: celebrities tout
products based on personal usage
Endorsements: celebrities lend
their name or likeness to a product
without necessarily being an
expert in the area
Actor or Spokesperson: someone
who represents a brand or
company for an extended time
period
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
Transmission of Influence
Through Dyadic Exchanges
Transmission of Influence
Through Dyadic Exchanges
Exchange between two individuals
that influence these individuals
behaviors or beliefs
Dyadic exchange requires the
exchange of resources (opinions
and comments)
Dyadic Exchanges
Word-of-mouth Communication
Service Encounters
Opinion Leadership
Word-of-Mouth Communication
Word-of-mouth communication:
informal transmission of ideas,
comments, opinions, and
information between two people,
neither one of which is a marketer
The receiver gains information
about behaviors and choices, which
is valuable to the receiver in the
decision process
Word-of-Mouth Communication
The sender increases their
confidence in the personal product
or behavior choice by persuading
others to do the same
Benefits of Word-of-Mouth
Opinion Leadership
Opinion leadership: the sender of
information is often considered an
opinion leadera person who
influences the decisions of others
Opinion leaders might be experts in
one area but not in others
The greater the perceived knowledge
of a category, the more likely that
persons opinions are to influence
others decisions
Opinion Leadership
Personal influence in the form of opinion
leadership is likely to occur when:
Opinion Leadership
Personal influence in the form of opinion
leadership is likely to occur when:
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
Opinion Leadership
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
Characteristics of Opinion Leaders
Opinion leaders and receivers often
share similar demographic
characteristics and lifestyles, yet
they may have greater social status
within the same group as followers
The most common characteristic is
that opinion leaders are involved
with a particular product category
Opinion Leadership
Product innovators: similar to
opinion leaders, these individuals
are the first to try new products
Overlapping Opinion Leadership
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
Overlapping Opinion Leadership
Surrogate consumers (shoppers):
an individual who acts as an agent
to guide, direct, and conduct
activities in the marketplace
Service Encounters
Service encounters: occurs when
there is personal communication
between a consumer and a marketer
May be a consumption experience
within a storethe various trans-
actions and services that occur
during a retail purchase
May be an experience consuming the
specific service a consumer
purchases
Service Encounters
Service providers must understand
the needs of different customers and
match the appropriate sales
associate or sales approach to each
individual customer
Which customers desire a great deal
of assistance and which ones prefer
little interaction
Salespeople foster a relationship
between buyer and seller
Service Encounters
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
How Personal Influences Are
Transmitted
Transmitted
Trickle-down: alleges that lower
classes often emulate the behavior
of their higher-class counterparts
Influence is transmitted vertically
through social classes, when higher
classes express wealth through
conspicuous consumption, and lower
classes copy their behavior
Transmitted
Today, trends are transmitted through
mass media and there is very little
direct, personal contact between social
classes
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
Transmitted
Two-step Flow
Information
Information and Influence
Mass Opinion Opinion

Media Leader Seekers
Transmitted
Multistep Flow
Information can flow directly to
different types of consumers,
including opinion leaders,
gatekeepers, and opinion seekers
and receivers
Transmitted
Multistep Flow
Mass Opinion Opinion

Media Leader Seekers
Gatekeepers
WOM and Opinion Leaders in
Advertising and Marketing
Strategy
Strategy
WOM 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
Strategy
Advertising can provide
information to consumers about
products they might seek from
other sources and which may be
discussed in WOM
However, consumers dont always
trust that the advertiser has their
best interests in mind
Strategy
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
Primary Reliance on
Word-Of-Mouth
For some occasions, companies
rely on WOM as a substitute for
advertising
Primary Reliance on
Word-Of-Mouth
For some occasions, companies
rely on WOM as a substitute for
advertising
Retailers such as Wal*Mart and
Victorias Secret have demonstrated
that advertising can be sharply
reduced when word-of-mouth is
strong
Targeting Opinion Leaders
Firms can market to opinion leaders

as a distinct segment (once they
can be identified)
Mass media can be used to target
leadership roles and
responsibilities with other options
such as association memberships,
direct mail, and trade or special
interest magazines
Stimulating Word-Of-Mouth
Firms may stimulate WOM by giving

away or loaning products to opinion
leaders to display and use
Organizations may induce opinion
leaders to influence consumers
Creating Opinion Leaders
Firms can create opinion leaders by

providing incentives for new
customers to attract others to the
store
Companies can activate search
through advertising that
encourages consumers to ask a
person who owns one or share
the experience with a friend
Creating Opinion Leaders
Managing Negative WOM
Just as positive word-of-mouth can
be a great asset to marketers, the
opposite can be true when the
content in negative
Negative WOM is usually given
high priority and weighs heavily
in decision making
The dissatisfied buyer is more
motivated to share information
Monitoring the Content of WOM
Firms can monitor the presence and
impact of WOMwhat dissatisfied
consumers are saying about the
product or company
Monitoring rumors which do not
always appear in customer
complaint reports
Creating a strategy to respond to
rumors and negative WOM
Curbing Negative WOM
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
Diffusion of Innovations
Innovation: any idea or product
perceived by the potential adopter
to be new
Product innovation: any new
product recently introduced to the
market or perceived to be new
when compared to existing
products
Consumers can view innovations
subjectively or objectively
Subjective Innovation: a definition
derived from the thought structure
of a particular individual or entity
Objective innovation: based on
external criteria; innovations are
ideas, behaviors, or things that are
qualitatively different from
existing forms
Innovations and New Products
Marketers often use the word
new to call attention to products
recently introduced to the
marketplace
The use of the word new in
advertising is limited to products
available for less than six months
New products can change the way
consumers live and how society is
organized
Types of Innovations
Classified based on the impact of
the innovation on behavior in the
social structure
Classified based on the impact of
the innovation on behavior in the
social structure
Continuous innovation
Dynamically continuous
innovation
Discontinuous innovation
Continuous Innovation
The modification of an existing
product rather than the
establishment of a totally new
product
Modification may be in the taste,
appearance, performance, or
reliability of the existing product
Continuous Innovation
Dynamically Continuous
Innovation
May involve either the creation of a
new product or a significant
alteration of an existing one
Does not generally alter
established purchase or usage
patterns
Dynamically Continuous
Innovation
Discontinuous Innovation
Involves the introduction of an
entirely new product that
significantly alters consumers
behavior patterns and lifestyles
Examples include automobiles,
televisions, videocassette
recorders, and computers
While innovations are usually
considered in terms of new
products, they might also be
usage basedfinding new uses
for old products
Why Some Innovations
Succeed and Others Dont
Successful products are those that
become culturally anchoredso
inextricably a part of a consumers
life and sociocultural surroundings
that the person-product interface is
an important part of the individuals
self-concept
Imagine being without personal
computers or microwave ovens
Why Some Innovations
Succeed and Others Dont
Relative Advantage
Compatibility
Complexity
Trialability
Observability
Relative Advantage
The degree to which consumers
may perceive the innovation to
offer substantially greater benefits
than the product they currently use
Relative Advantage
The degree to which consumers
may perceive the innovation to
offer substantially greater benefits
than the product they currently
use
To what degree will the new product
be a substitute for existing ones or
complement those already in
consumers inventories?
New products most likely to succeed
appeal strongly to felt consumer
needs
Compatibility
The degree to which a new product
is consistent with an individuals
existing practices, values, needs,
and past experiences of the
potential adopters
Compatibility
The degree to which a new product
is consistent with an individuals
existing practices, values, needs,
and past experiences of the
potential adopters
How does the innovation blend with
products consumers might own?
Will it replace other products or will it
become a part of an existing system?
How does the innovation fit current
purchase or consumption behaviors?
Complexity
The degree to which an innovation
is perceived as difficult to
understand and use
The more complex, the more difficult
it will be to gain acceptance
Complexity is a deterrent of trying
new technology
Complexity
How difficult is the innovation to
understand?
How easy is it to explain to consumers
in written form and oral communication?
How frustrating will it be to consumers
when evaluating products or learning
how to use new innovation?
How much time will consumers have to
devote to learning how to use and care
for the product?
Trialability
New products are more apt to
succeed when consumers can
experiment with or try the idea on a
limited basis, with limited financial
risk
How can a company encourage
consumers to try a new product?
Where will consumers be able to try
the innovation and how will they
receive answers to their questions?
Observability
The degree to which results from
using a new product are visible to
friends and neighbors
If consumers can see others
benefiting from the use of a new
product, that innovation is more
likely to be successful and diffuse
faster
The Diffusion Process
Diffusion: the process by which an
innovation (new idea) is
communicated through certain
channels over time among the
members of a social system
Diffusion: the process by which an
innovation (new idea) is
communicated through certain
channels over time among the
Includes:
Diffusion of information and
communication
Consumer decision process
Diffusion or demise of innovation
Diffusion
Accept of
C Innovation
o
n
Organi- s
Influencer (X number of people)
zation u
m
e
r
Demise
Reject of
Innovation
Diffusion of Information
and Communication
Consumer decision process

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:
Speed of Diffusion
Diffusion will be faster if:
Supplier is intensely competitive
Suppliers reputation is good
Standardized technology is used
Vertical coordination among
channel members exists
Resource commitments are
significant
Consumer Decision Process for
Innovations
Rogers Model of Innovation Decision Process
Knowledge: begins when the

consumer receives physical or
social stimuli that gives exposure
and attention to the new product
and how it works
How a person receives and
interprets the knowledge is
affected by their personal
characteristics
Knowledge
Characteristics of the
Decision Making Unit
Persuasion: refers to the

formation of favorable or
unfavorable attitudes towards
the innovation
Persuasiveness is related to the
perceived risks and
consequences of adopting and
using the new product
Knowledge Persuasion
Perceived Characteristics
of the Innovation
Decision: involves a choice

between adopting and rejecting
the innovation
Adoptors are people who have
made a decision to use a new
product whereas other are
nonadoptors
Rejection may be active or
passive
Knowledge Persuasion Decision
Continued adoption
Adoption
Later adoption
Discontinuance
Rejection
Continued Rejection
Implementation: occurs when the

consumer puts an innovation to
use
The process has been a mental
exercise until this point where it
requires a behavioral change
The strength of the marketing
plan may be the critical
determinant in a sale resulting
Implemen-
Knowledge Persuasion Decision
tation
Confirmation: during this stage,

consumer seek reinforcement for
their innovation decision
Consumer may reverse previous
decision due to conflicting
messages resulting in dissonance
Discontinuance is a serious
concern to marketers who strive
for continued acceptance
Implemen-
Knowledge Persuasion Decision Confirmation
tation
Communication Channels
Implemen-
Knowledge Persuasion Decision Confirmation
tation
Consumer Most Likely to Buy
New Products
Consumer Most Likely to Buy
New Products
Marketers need to determine who
is most likely to buy the new
product while in the development
process
Determinants include individuals
personalities, social status, education
level, and aversion to or acceptance of
risk
Different adoptor classifications behave
differently during the decision process
Adopter Classes
A B C D E
A= Innovators (2.5%)
B= Early Adopters (13.5%)
C= Early Majority (34%)
D= Late Majority (34%)
E= Laggards (16%)
Consumers Likely to Buy New
Products
Innovators: the first consumer group to
adopt products
Early adopters: opinion leaders and role
models for others, with good social
skills and respect within larger social
systems
Early majority: consumers who
deliberate extensively before buying
new products, yet adopt them just
before the average time it takes the
target population as a whole
Products
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
Products
Innovativeness: the degree to
which an individual adopts an
innovation earlier than other
Cognitive innovators: have a strong
preference for new mental experiences
Sensory innovators: have a strong
preference for new sensory experiences
Advertising and other communications
can be targeted accordingly
Managerial Perspectives on
Adoption and Diffusion of
Innovation
Innovation
New products for the profitability and
long-term financial success of firms
While development groups are produc-
ing line and brand extensions,
breakthroughs are needed to fuel growth
and profits
New product development requires the
coordination of marketing, engineering,
research and other parts of the firm
Innovation
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
Insights drive the creation of a new or
adaptation of an existing product
Research is important to the innovation
development process
Positioning New Products on Insight

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Group and Personal

Personal Types of Lifestyles

Personal Types of Lifestyles

PRIVATE NECESSITIES PRIVATE LUXURIES

Mass Opinion Opinion

Mass Opinion Opinion

Firms can market to opinion leaders

Firms may stimulate WOM by giving

Firms can create opinion leaders by

Consumer decision process

Knowledge: begins when the

Persuasion: refers to the

Decision: involves a choice

Knowledge Persuasion Decision

Implementation: occurs when the

Confirmation: during this stage,

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