Reference Groups and Word

of Mouth
 Learning Objectives
To understand the credibility of reference groups and their influence
on consumer behavior.
To understand the persuasive power and credibility of spokespersons,
endorsers, celebrities, salespersons, vendors, and media.
To understand the dynamics and measurement of opinion leadership
and word-of-mouth.
To understand the strategic applications, advantages, and potential
perils of word-of-mouth.
To understand the process for diffusion of innovations, and adopter
categories as distinct market segments.
 Reference Groups
Reference groups are groups that serve as sources of comparison,
influence and norms for peoples opinion, values and behaviour.
Most Important reference group is family.
 Types of Reference Groups
Primary vs Secondary Reference Groups
Primary Reference Groups
Intimate, immediate and face-to-face relationship
Small in size
Secondary Groups
Large, formal groups organized to achieve specific goals.
 Types of Reference Groups
Membership (occupied groups) vs Symbolic groups
Membership (occupied groups)
A group to which a person belongs or realistically join.
Symbolic Group
A group to which a person is unlikely to join (eg sports celebrity)
 Reference Group Influence
Normative Influence
Learn and adopt a groups norms, values and behaviours
Comparative Influence
Compare with others whom they respect and admire.
 Source Credibility
A sources persuasive impact, stemming from its
perceived expertise
trustworthiness
believability
 Credibility of Spokespersons & Endorsers
Synergy between endorser and type of product/service.
Similarity in demographics.
Customers may like ad featuring a famous endorser but they will buy
it only if they Trust the marketer.
 Celebrity Endorsement
Testimonial: Expertise of celebrity is relevant to the product category
(Boost-Virat Kohli)
Endorsement
Actor
Spokesperson (Long relationship between celebrity-brand)
 Use of Celebrity Endorsement
More successful in lifestyle products or products consumed in public.
The consonance between the personality of celebrity and brand is
very important.
It is dualistic in nature.
Effectiveness of different type of spokesperson varies with the
product category.
Lifestyle products celebrities are likely to be more effective.
Technical products experts are likely to be better.
Mass consumed products common person is better.
 Virat Kohlis Endorsements
Audi cars Puma
MRF tyres
Tissot watches
Gionee phones
Boost milk drink
Colgate toothpaste
Vicks lozenges
 Ranveer Singhs Endorsement
Jack and Jones, Colgate Maxfresh
Rupa Frontline Maruti Suzuki Ciaz
Vivo MakeMyTrip
Royal Stag Quikr
Kelloggs Oats Switzerland Tourism
Set Wet deodorants/hair gel Chings Secret
Head & Shoulders
 Word-of-Mouth (WOM)
It consists of communications where satisfied customers tell other
people how much they like a product or service.
WOM is one of the most credible forms of buying related information.
 Opinion Leadership
It is the process by which one person influences others informally by
sharing information.
 Characteristic of Opinion Leaders
Highly knowledgeable about a particular product category.
They are self-confident, outgoing and sociable.
Read special interest magazines and websites.
 Measuring Opinion Leadership
Self-designating Method
Socio-metric Method
Key Informant Method
Klout Scores
 Strategic Applications of WOM
Special Interest Social Networks
Brand Communities
Weblogs
Stimulating WOM
Viral Marketing
 Special Interest Social Networks

Virtual communities where people share information with others

Consumers reactions to negative WOM
Hedonic products it is not considered useful.
Utilitarian products it is considered useful.
Highly involved customers post rational information.
 Brand Communities
Most famous Brand Community in India is likely to be Royal Enfield.
Brands should not try to control the communities rather just act as
facilitators.
Can Marketers encourage customers
to spread a Positive WOM?
 How do Marketers Make Their Video Viral
Characteristics of Video
Do these videos become viral naturally or marketers
do something about it.
 Buzz Agents
Consumers who promote products clandestinely
Receive Points or free samples of the product
Demonstrate these products to their friends
Buzz agents like being opinion leaders
Several firms offer buzz related services
It is important to select right buzz agents by identifying appropriate
characteristics
 Adopter Categories
Innovators
Early Adopters
Early Majority
Late Majority
Laggards