Reference Group

Meaning and Nature:

“Reference Group is a group that serves as a reference point for an individual in the

formation of his/her beliefs, attitudes and behaviour.” Marketers frequently advertise their

products in a group setting- the family eating breakfast cereals, the neighbor admiring the

paint of the house.

The purpose of these examples is to demonstrate the influence that friends and relatives have

on consumers. Advertisers use celebrities to mirror group influences and sometimes typical

consumers as spokesperson’s as they reflect the purchaser’s norms and values and act as a

representative of the consumer’s reference group. For example – In Vim bar ad, only the next

door house wives are shown.

Reference groups provide points of comparison by which to evaluate attitudes and behaviour.

A consumer can either be a member of a reference group (like family) or aspire to belong to a

group. In first case, the individual is said to be in a membership group and in the second, the

individual is part of an aspiration group.

When an individual joins a group and then rejects the group’s values this type of group is a

dis-claimant group for the individual. If an individual avoids the membership of a certain

group, this type is called as dissociative group. This means reference groups can also be

viewed negatively.

Types of Reference Groups:

These four types of reference groups are shown in the Fig 8.1. Advertisers use only positive

attitude appeals in their ads.

Membership Groups:
As marketers are interested only in the positive type of membership group, let us further

break down membership and aspiration group. Membership group can be further divided into

primary or secondary and informal or formal. If a person has regular contact with certain

individuals such as family, friends etc., those individuals form a primary group. If the group

members have less frequent contact amongst themselves, they from a secondary group like

shopping groups, sports club etc.

Marketers are interested in studying the primary group as they help in developing product

beliefs, tastes and preferences and also directly influence the purchasing behaviour of an

individual. It is seen through research that members of groups with the greatest contact in a

variety of situations are more likely to buy the same brands.

Groups can also be divided by whether they have a formal structure with specific roles or an

informal structure. This classification produces four types of membership groups as shown in
the Fig 8.2. The family/peer groups represent primary informal groups which is important

because of the frequency of contact and the closeness between the individual and group

members. Advertisers frequently portray consumption among friends and family.

Primary formal groups have a more formal structure. These are groups with which the

consumer frequently comes into contact. For example – business executive’s who-are

assigned the project together. Advertisers show membership in such groups as a means of

winning product approval.

Secondary formal groups are not important to the consumer, as they meet infrequently, are

structured, and are closely knit. For example-alumni Groups, business clubs etc. This group is

of least interest to the marketer.

Aspiration Groups:
There are two types of aspiration groups. These are:

(a) Anticipatory aspiration groups are those groups, in which an individual plans to join at a

future time and also in most cases he/she has direct contact. For example- when an individual

aspires for a group higher in the organizational hierarchy, this is basically for rewards like

power, status, prestige and money. Marketers specially of clothing and cosmetic industry’s

appeal to the desire to enhance one’s position by climbing to a higher aspiration group.

(b) Symbolic aspiration groups are those groups, in which an individual is not likely to

belong, despite acceptance of the group’s beliefs and attitudes. Marketers appeal to symbolic

aspirations by using celebrities to advertise certain products.

Nature of Reference Groups:

Reference groups have certain characteristics that affect their influence on consumers. They

establish norms, roles, socialization, status and power.

(i) Norms:

Norms are the rules and standards of conduct established by a group. This means group

members are expected to conform to these norms and they may relate to eating habits, makes

of cars, clothes or cosmetics etc.

(ii) Roles:

Roles are the functions that the group assigns to an individual to attain group objectives.

Various roles that have been identified in family decision making are the influences, the

gatekeeper, decision maker, the purchaser and the consumer.

(iii) Status:

Status refers to the position an individual enjoys within the group. High status implies greater

power and influence. A person may enjoy a highest status in the organization but may be the

weakest member in the tennis club.

(iv) Consumers sometimes purchase products to demonstrate status in a broader societal

sense so that the message is one of wealth and implied superiority.

(v) Socialization:

Socialization is a process by which an individual learns the group’s norms and role

expectations.

Consumer socialization is the process by which consumers acquire the knowledge and skills

necessary to operate in the marketplace.

(vi) Power:

The influence that a group has on an individual is closely related to the group’s power.

Three sources of group influence which are relevant for marketing strategy are:

(a) Expert Power:

For this an individual or group must have knowledge and experience.

(b) Reference Power:

Reference power depends on the individual’s identification with members of the group. The

greater the similarity between the individual’s beliefs and attitudes and those of group

members, the greater the reference power of the group. Either the individual is the member of

the group or he/ she aspires to belong to a group.

(c) Reward Power:

It is based on the group’s ability to reward the individual. An employer rewards an employee

with money and status, family rewards the child with praise and approval.

Factors That Affect Reference Group Influence:

Reference Groups affect consumer choice because of following factors:
(1) Normative Influence:

When reference groups affect behaviour and attitudes through pressures for conformity, then

this is known as normative influence. According to Park and Lessig, a consumer is motivated

to conform to the norms and behaviour of the group if:

(a) The group provides significant rewards for compliance and punishment for lack of
compliance and
(b) The individual’s behaviour in conforming is visible to members of the group.

Conformity pressures become most potent when there is both positive motivation to maintain

group identity and the motivation of threats of sanctioning power in the form of rewards and

punishments. Normative influence can occur even when others do not control tangible

outcomes because people are concerned with their perceptions of what other think of them.

This means, it may also occur for items such as mouthwash and denture adhesive, even if

these items are not visible. Marketing studies reveal that conformity pressures do impact is

buying decisions and this is true when the product is conspicuous in its purchase and use and

when group social acceptance is a strong motivator. For example- fashion conscious women

receives clear signals from their peers which product to buy so that their choices were

socially correct.

(2) Informational influence:

A consumer will accept information from a group if he or she considers the group a credible

source of information and expertise and if he/she believes the information will enhance

knowledge about product choices. The information can be collected directly from

knowledgeable persons or by observing the behaviour.

Consumer may consider the marketer’s claim with suspicion because of the company’s

vested interest in promoting the product. Consumers usually seek expert advice from personal

sources such as friends and neighbors than from commercial sources.

Table 1 explains the nature of informational influence by describing the consumer’s

objectives as obtaining knowledge, the information is accepted because the credibility of

source, the source of power as expertise and the final behaviour as acceptance of influence.

Informational influence is likely to be most important in two conditions. First, when there is

social, financial performance risk in buying the product. Second, if the individual has limited

knowledge or experience regarding the product. For example, products like car, computer,

cellular phones, fax machines etc are likely to be purchased after seeking expert’s advice.
Types of Influence Exerted by Reference Groups:
Comparative Influence:

Comparative influence means comparing oneself to other members of the group and also

judging whether groups would be supportive. Consumers constantly compare their attitudes

to those of members of important groups. They try to associate themselves with groups with

which they agree and by dissociating themselves from groups with which they disagree.

In Table comparative influence is a process of self maintenance and enrichment. Individual

looks forward to enhance his/her self concept by associating with groups that will provide

reinforcement and ego gratifications. Individual’s behaviour toward the group is similar and

the source of power is referent power.

Comparative influence implies that those being influenced should have characteristics similar

to one who is influencing. A study reveals that consumers seek information from those whose

view is similar to themselves. The study says that advertisers should use spokespersons to
whom consumers perceive as being similar to themselves.

This sometimes gives the feeling to an individual that the purchase of a particular brand helps

show others what he/she is or would like to be, for example a successful business person, a

perfect housewife, athlete etc.

Consumer conforms with Reference Group:

Marketers are basically more interested in the ability of reference groups to change consumer

attitudes and behaviour (i.e. to encourage conformity).

Factors on which group membership affects brand choice are:

(a) The nature of the product, (example-burger versus toothpaste).

(b) The type of social relationship (example-friends, etc.).

(c) The social structure of the group. This means the extent of personal ties between group

members.

Through research it was observed, members of close-knit groups were more likely to reveal a

preference for the same brands.

To encourage conformity, a reference group must:

1. Inform about a product or brand.

2. give an opportunity to an individual to compare his/her own thinking with the attitudes and

behaviour of the group.

3. Influence an individual to adopt norms of the group.

4. Legitimize him/her to use the same products as the group.

Application of Reference Group Concept:

Marketers and advertisers use reference group appeals very effectively to communicate with

their customers. They use three types of group influence informational, comparative and

normative to develop advertising and personal selling strategies.

Informational Influence:

Advertising strategies have portrayed informational influence through expert spokespersons,

comparative influence by using typical consumers and normative influence by showing the

rewards of using a product or the risks of not using it.

Marketers use expert spokesperson to convey informational influence through advertising.

They are used then to communicate product features and performance. For example – doctor

is used for a medical product, an engineer for a technical product. Marketers usually use two

approaches to portray expert spokespersons. One is to portray the role the expert plays as in

the example above.

A second approach is to show a celebrity who has expertise in the product area. For example-

using a cricket star’s testimonial for a cricket bat. The second approach uses celebrities to

provide product testimonials. Such testimonials are accepted only to the degree that

consumers view the spokesperson as being an expert on the product.

For example – when for Nike athlete shoes some sports star like P.T. Usha is used as an

expert consumer are likely to view a testimonial from P.T. Usha for the product category as

credible.

Comparative Influence:

Advertisers use a “typical consumer” approach to persuade consumers that people like them-

selves have chosen the advertised product. This is used to portray comparative influence and

here typical consumer is referent because, by citing common needs and problems, he or she is

portrayed as similar to the prospective purchase. For example – in Dove, “typical consumer”

approach is used i.e. those ladies who don’t have time to spend hours for looking beautiful. A

consumer in the market for soap could easily identify with these individuals.

Another way advertisers convey comparative influence is to use a celebrity as a referent. This

approach is effective if a segment of consumers wants to identify with the referent because he

or she is likable and/or attractive.

Normative Influence:

Marketers convey this type of influence by showing group approval in advertising. For ex-

ample- in ads like shampoo, car, floor cleaner etc. In all these ads glorious and shiny hair,

smooth and comfortable ride, shiny and clean floor are used as advertising’s simulation of

social approval. In all the above cases, an individual who is important to-the consumers (i.e. a

friend, neighbour, spouse etc.) has expressed approval of the consumer’s choice. For

example, in Green Label’ a liquor ad shows reward power by associating the product with the

rewards for achievement in the organization.

Personal Selling Strategies:

Marketers also use the three types of reference group influences to develop sales strategies to

influence.
Customers:

Sales strategy implications of informational and comparative influence.

Applications of Informational and Comparative Influence Suggest Two General

Approaches to Customers-sales Person Interactions:

(a) The salesperson can be a objective source of information that is he/she acts as an expert.

(b)The salesperson can attempt to reinforce the customer’s ego and social needs by

demonstrating similar needs, concerns and predispositions. In this he/she acts as a referent.

Conditions in which salespersons should establish expertise rather than similarity are:

(a) If salesperson has the knowledge and credentials to be seen as an expert.

(b) If customers is engaged in a high risk, complex buying task requiring expertise.

(c) If the salesperson does not regularly sell to the buyer.

Similarity, it is well established that when the salesperson is in fact similar, the buying task is

simple and low risk and the salesperson regularly sells to the buyer.