In marketing, it is essential to understand how social factors influence consumer behavior. Reference groups are one of the key social factors that affects consumer responses. In this blog post, we will discuss everything you need to know about reference groups.
What are Reference Groups?
A reference group is a group that serves as a point of comparison or reference in forming a person’s attitudes or behavior. Reference groups can be either direct (face-to-face) or indirect. Direct reference groups are those with which an individual has personal interaction, while indirect reference groups are those with which an individual does not have personal interaction but whose attitudes or behaviors serve as a point of comparison.
Types of Reference Groups
There are four types of reference groups: Aspirational, Comparative, Dissociative, and Collective.
Aspirational Reference Group
An aspirational reference group is one to which an individual desires to belong but does not yet belong.
Comparative Reference Group
A comparative reference group is one that an individual uses for purposes of comparison (i.e., to evaluate his/her own attitudes, beliefs, or behaviors).
Dissociative Reference Group
A dissociative reference group is one from which an individual seeks to dissociate him/herself.
Collective Reference Group
A collective reference group is one in which individuals interact with each other directly and share common characteristics, interests, or experiences.
How Do Reference Groups Influence Consumer Behavior?
Reference groups have a strong influence on consumer behavior. This is because individuals use reference groups as a way to form their own identity and as a guide for their own behavior. Marketers try to identify the reference groups of their target markets.
There are at least three ways that reference groups influence a person.
They expose the person to new behaviors and living.
Because people want to ‘fit in’, groups can influence an individual’s attitudes and self-concept.
The pressure to conform can often dictate the types of products and brands a person chooses.
For example, if an individual’s peer group regularly buys name-brand clothes, the individual is likely to do the same in order to fit in and feel like he/she belongs. Additionally, people often seek out products and services that will signal their membership in a particular group. For example, someone who wants to signal his/her membership in the business world might buy a particular type of business suit or laptop computer.
The importance of group influence varies across products and brands, but it tends to be strongest for conspicuous purchases. A product or brand can be conspicuous for one of two reasons: because the buyer is one of the few people who own it, or because the buyer consumes it in public where others can see it.
Group influences do not much affect decisions about private necessities because other people will notice neither the product nor the brand.
The indirect influence of reference groups
Reference groups can also have an indirect influence on consumer behavior if they serve as role models. A role model is someone who is looked up to and respected by others. For example, celebrities often serve as role models for many people. Celebrities’ endorsements are effective because people often aspire to be like their favorite celebrities and want to purchase the same products that they use. However, it is important to note that not all celebrities make good role models because some have been known to engage in activities that are illegal or frowned upon by society (e.g., illegal drug use). Therefore, marketers must carefully select celebrities who will be good role models for their target market.
Tips for creating Reference Groups
When creating a reference group, it is important to consider the following factors:
1. Purpose of the reference group
A reference group is a collection of people who share some common attribute or experience. Reference groups can be used for a variety of purposes, including:
1. Determining the best course of action
A reference group can be used to help determine the best course of action by providing feedback and advice.
2. Evaluating products and services
A reference group can be used to evaluate products and services before making a purchase.
3. Obtaining information and opinions
A reference group can be used to obtain information and opinions about a product or service.
4. Establishing social norms
A reference group can be used to establish social norms.
2. Size of the reference group
The size of a reference group can vary, but it is typically best to keep the group small. A small reference group is more likely to be cohesive and provide feedback that is relevant to the individual. Additionally, a small reference group is less likely to be influenced by outside factors.
3. Geography of the reference group
The geography of a reference group can be important to consider when selecting members. For example, if you are looking for feedback about a product or service that will be sold in a specific geographic area, it is important to select reference group members from that area. Additionally, the geography of a reference group can influence the type of feedback you receive. For example, if you are looking for feedback about a product that will be sold in Europe, it is important to select reference group members from European countries.
4. Diversity of the reference group
When selecting a reference group, it is important to consider the diversity of the group. A diverse reference group is more likely to provide feedback that is relevant to a wider audience. Additionally, a diverse reference group is more likely to represent the demographic characteristics of your target market.
5. Common interests of the reference group members
When selecting a reference group, it is important to consider the common interests of the group members. Common interests can help to build cohesion among the group members and result in more relevant feedback. Some common interests that may be useful to consider include:
1. Hobbies
2. Interests
3. Professional affiliations
4. Social activities
6. Availability of group members
While picking a reference group, you must think about how easy it is to contact potential members, who are available to provide feedback are more likely to be responsive and provide relevant feedback. Additionally, it is important to consider the timeframe in which group members are available.
For example, if you are looking for feedback about a product that will be sold in six months, it is important to select reference group members who are available in six months.
7. Cost to participate in the reference group
The cost of participating in a reference group should be taken into account when choosing one. Potential members may be unwilling to participate if the cost is too high.
Additionally, the cost to participate in a reference group can influence the type of feedback you receive. For example, if you are looking for feedback about a product that will be sold in Europe, it is important to select reference group members from European countries who are willing and able to participate at no cost.
Other social groups
When selecting a reference group, it is important to consider other social groups that may be useful for obtaining feedback. Some other social groups that may be useful to consider include:
1. Professional associations, like American Marketing Association
2. Trade associations
3. Social networking groups
4. Online forums
5. Blogs
6. Consumer organizations
7. Government agencies
8. Academic institutions
9. Media outlets
10. Industry analysts
Conclusion
reference groups play an important role in consumer behavior. Marketers should keep this in mind when developing marketing strategies. Thanks for reading!