331 consumer... · Web view[LO1] How do reference groups influence value? Answer: Reference groups...

CHAPTER 10GROUP AND INTERPERSONAL INFLUENCE

WHAT DO YOU THINK POLLING QUESTIONThe groups I belong to have a great impact on how I see myself.Strongly disagree 1 2 3 4 5 6 7 Strongly agree

Have students access www.cengagebrain.com to answer the polling questions for each chapter of CB. Ask them to take the online poll to see how their answers compare with other students taking a consumer behavior course across the country. Then turn to the last page of the chapter to find the What Others Have Thought box feature. This graph is a snapshot of how other consumer behavior students have answered this polling question thus far.

LEARNING OUTCOMESAfter studying this chapter, the student should be able to:L01 Understand the different types of reference groups that influence consumers and how

reference groups influence value perceptions.L02 Describe the various types of social power that reference groups exert on members.L03 Comprehend the difference between informational, utilitarian, and value-expressive

reference group influence.L04 Understand the importance of word-of-mouth communications in consumer behavior.L05 Comprehend the role of household influence in consumer behavior.

SUGGESTED LECTURE OPENERWhen we hear the term peer-pressure we tend to think of the negative effects group behavior can have on young adults. Well try this on for size—billionaires using peer-pressure to increase philanthropic giving. The intent of the “giving pledge,” founded in the summer of 2010, is to encourage giving from America’s wealthiest citizens in order to address some of America’s most pressing social issues. With an impressive list of names like Warren Buffet, Bill and Melinda Gates, Michael Bloomberg, Barron Hilton, Ted Turner, and George Lucas, the hope is to generate peer-pressure among billionaires, encouraging them toward a large-scale approach to philanthropy. [Source: Andrew Clark, “U.S. Billionaires Club Together—To Give Away Half Their Fortunes to Good Causes,” The Guardian, August 4, 2010, http://www.guardian.co.uk.]

LECTURE OUTLINE WITH POWERPOINT® SLIDES

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©2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. 1

LO1. Understand the different types of reference groups that influence consumers and how reference groups influence value perceptions.

Reference Groups

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Reference GroupsA reference group is a group of individuals who has significant relevance for a consumer and who impacts the consumer’s evaluations, aspirations, and behavior. Even the decision to “like” a Facebook page can mean something special to a particular consumer because of the way it reflects membership with a group.

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Have students consider the ways in which reference groups influence their daily lives. They might be really surprised. Reference groups typically exert great influence on their members. Within a college setting, there should be many groups for students to discuss.

Group Influence Group influence refers to the ways in which group members influence the attitudes, opinions, and behaviors of others within the group. Consider the following aspects of group life:

Group members share common goals and interests. Group members communicate with, and influence, one another. Group members share a set of expectations, rules, and roles. Group members view themselves as members of a common social unit.1

1 Michener, H. Andrew and Michelle P. Wasserman (1995). “Group Decision Making,” In Sociological Perspectives on Social Psychology, Karen S. Cook, Gary Alan Fine, and James S. House (eds.), Boston:


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Q: The book uses sorority sisters as an example of group influence. Sorority sisters share a common set of expectations that ultimately influences members’ decisions about activities, attire, and social involvement. What other groups exist on campus?

A: Answers will include various clubs and organizations on campus. Determine how many groups students are familiar with. If you are not familiar with campus organizations, you can visit the school’s website or student handbook to view the full listing.

Primary/Secondary GroupsA primary group is a group that includes members who have frequent, direct contact with one another. An example of a primary reference group is the family unit. Secondary group interaction is much less frequent than primary group interaction. Professional organizations and social clubs are examples of secondary groups. A brand community is a special type of secondary group that does have a significant influence on consumers through shared interests or product usage. A popular example of a brand community is Harley-Davidson’s “HOG” (Harley Owners Group).

Formal/Informal GroupsA formal group is a group in which a consumer formally becomes a member. For example, a consumer becomes a formal member of a church congregation. An informal group is a group that has no membership or application requirements, and codes of conduct may be nonexistent. Examples of informal groups include groups that meet regularly to exercise together, have coffee, or go to sporting events together.

Aspirational/Disassociative GroupsAn aspirational group is a group in which a consumer desires to become a member. Aspirational group membership often appeals to the consumer’s ideal self. A dissociative group is a group to which a consumer does not want to belong. For example, a Republican might want to avoid being perceived as belonging to a Democratic group (and vice versa).

Allyn and Bacon, pps. 336-361.


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ConformityConformity is a result of group influence whereby an individual yields to the attitudes and behaviors or others.

Peer PressurePeer pressure refers to the extent to which group members feel pressure to behave in accordance with group expectations. Consumers of all ages feel peer pressure. In fact, very young children often desire to wear the appropriate clothing and brands that will allow them to feel accepted.

Negative Peer PressureNegative peer pressure is a topic that receives much media attention and refers to peer pressure involving unethical or illegal behaviors, such as illegal alcohol consumption or underage smoking. The National Institute on Drug Abuse (NIDA) created a website for teens to educate young adults on the facts about drug abuse.

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Ask students to relate an occasion when they felt peer pressure. Many students feel peer pressure to wear brand labels, drink, smoke, and use fake IDs.

LO2. Describe the various types of social power that reference groups exert on members.

Social Power

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Types of Social PowerSocial power refers to the ability of an individual or group to alter the actions of others. Social power is classified into five categories. These power bases are discussed in the following list and are presented in Exhibit 10.1.

1. Referent Power A new resident desires to join the local Rotary club.2. Legitimate Power Bosses have legitimate authority over their employees.3. Expert Power Consumers seek out groups that have health-related information, such

as the American Dental Association.4. Reward Power Sports teams give “MVP” honors to a team member.5. Coercive Power A college football player is kicked off a team for using illegal substances.

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LO3. Comprehend the difference between informational, utilitarian, and value-expressive reference group influence.

Reference Group Influence

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Reference group influence generally falls into one of three categories defined in the following list:

1. Informational Influence – Consumers use the behaviors and attitudes ofreference groups as information when making their own decisions.

2. Utilitarian Influence – Consumers conform to group expectations to receive areward or avoid punishment.

3. Value-Expressive Influence – Consumers internalize a group’s values or joingroups to express their own values and beliefs.

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Value and Reference GroupsThere are many ways in which reference groups and values are related.

Utilitarian value – Group membership becomes a means to a valued end state. Hedonic value – Value is an end in and of itself. Information obtained directly impacts consumer expectations, which then affects value perceptions and satisfaction.

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The success of Facebook has allowed opportunities for marketers to interact with consumer in new ways. Consumers can also join online groups like Groupon that deliver benefits right to the consumer. Not only do the electronic coupons and offers cut down on administrative costs associated with distribution, they also allow the marketer an easy opportunity to grow their fan base.

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Reference Group Influence on Product SelectionReference groups can influence product selection. First, the situation in which the product is consumed must be considered. “Public” products are easily seen by others (e.g., a purse), whereas “private” products are not (e.g., a toothbrush). Second, the extent to which the product is considered to be a necessity or a luxury affects the level of reference group influence.

Social Media and Group InfluenceSocial media and the Internet are radically changing consumer behavior and group influence.

Social Media – Refers to media through which communication occurs Social Networks – Consumers connecting with one another based on common interests,

associations, or goals Social Networking Websites – Facilitate online social networking

Popularity of Social Networking WebsitesFacebook, MySpace, and Twitter highlight the popularity of online social networking. Consumers realize, through these sites, the benefits of maintaining connectivity with friends and social groups. There are many other additional websites that offer social networking and media.

Value, Social Media, and Social NetworkingThese sites offer both hedonic and utilitarian value by allowing consumers to make connections with others, join groups, gather information, buy products, participate in causes, and spread information through word-of-mouth. Here are a few examples:

Socialvibe.com – Allows users to connect with brands and empowers them to share content with others to benefit a cause of their choice.

Kaboodle.com – Offers a social shopping community where people recommend products. Freerice.com – Invites visitors to answer a series of questions with each right answer

leading to a donation of rice to hungry consumers worldwide. Foursquare.com – Centers around geolocation and mobile technologies, allowing users to

inform their friends of their location, earn rewards, and leave tips about locations.


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Ask students about their online groups and favorite social networking websites. Have they used any of the above examples on a regular basis?

Individual Differences in Susceptibility to Group InfluenceNot all consumers conform equally to group expectations. Individual difference variables play an important role in the extent to which consumers conform to the expectations of others. Three important variables to consider are:

1. Susceptibility to Interpersonal Influence Assesses consumers’ needs to enhance their image with others by acquiring and using products, conforming to the expectations of others, and learning about products by observing others.

2. Attention to Social Comparison Information (ATSCI) Assesses the extent to which consumers are concerned with how other people react to their behavior. For example, a consumer who has a strong degree of ATSCI might buy an imported beer when he is shopping with others.

3. Separateness–Connectedness Some consumers simply feel more “connected” to others than do other consumers. Culture plays an important role in how separate or connected consumers feel. A consumer with a sense of connectedness sees him or herself as an integral part of a group. A consumer with a sense of separateness perceives him or herself as distinct and separate from others.

4. Social Influence and Embarrassment – When buying personal products, consumers can feel uneasy or even embarrassed.

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Ask students to provide examples of situations when they felt uncomfortable. Answers may be similar to those provided in the book, but others may include purchasing personal hygiene items or dancing in a club.

LO4. Understand the importance of word-of-mouth communications in consumer behavior.

Word-of-Mouth

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Word-of-mouth (WOM) refers to information about products, services, and experiences that is transmitted from consumer to consumer. Two following types of WOM influence can be distinguished:

1. Organic Occurs naturally when consumers truly enjoy a product or service and want to share their experiences with others.

2. Amplified Occurs when marketers attempt to launch or accelerate WOM in existing customer circles or when marketers develop entirely new forums for WOM (such as discussion boards on web pages).2

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Positive and Negative WOMThe more satisfied that consumers are with a company or product, the more likely they are to spread positive WOM. Marketers realize that negative WOM can be extremely damaging to a company because this form of WOM is especially influential. In general, negative word-of-mouth is more influential than positive word-of-mouth.

2 Online content retrieved at Word of Mouth Marketing Association (WOMMA) website: www.womma.org/wom101/04/.


Value and Word-of-MouthWOM is affected in large part by the perceived value that consumers receive from products and services.

Word-of-Mouth in the Digital AgeThe rapid adoption and acceptance of the Internet has had a major impact on WOM. One estimate revealed that as many as 80% of all Internet users have sought online advice for health issues.

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Buzz MarketingBuzz marketing is one form of what is called guerilla marketing, or the marketing of a product using unconventional means. Marketing efforts that focus on generating excitement is called buzz marketing. Viral marketing is a buzz marketing tactic that uses online technologies to facilitate WOM by having consumers spread marketing messages through their online conversations.

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Stealth MarketingStealth marketing is a guerilla marketing tactic that is similar to buzz marketing. A key difference between the terms is the degree to which consumers realize that they are being targeted by a marketing message (hence the term, stealth).

The Word of Mouth Marketing Association (WOMMA) is opposed to stealth tactics. In fact, WOMMA has developed several categories of what it considers to be “unethical” marketing practices, including the following types of marketing techniques:3

3 WOMMA. “Unethical Word-of-Mouth Marketing Strategies,” online content retrieved at: http://www.womma.org/wom101/06/.


Stealth marketing Deceiving consumers about the involvement of marketers in a communication. Shilling Compensating consumers for talking about, or promoting, products without disclosing that they are working for the company. Infiltrating Using fake identities in online discussions to promote a product.

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Opinion LeadersOpinion leaders are consumers who have great influence on the behavior of others relating to product adoption and purchase. An example is BCBGirl, a perfume marketed by BCBG Fashion. BCBGirl was introduced when the company sent bottles of the fragrance to teen trendsetters along with 100 samples that each teen was expected to share with friends. The tactic was a success, and the perfume became the best-selling product in selected cities during the week of its full product launch.

Market Mavens and Surrogate ConsumersA market maven is a consumer who spreads information about all types of products and services. The key difference between an opinion leader and a market maven is that the market maven’s influence is not category specific. A surrogate consumer is hired by another consumer to provide input into a purchase decision. Interior decorators, travel consultants, and stock brokers are all considered to be surrogate consumers.

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Diffusion ProcessesThe diffusion process refers to the way in which new products are adopted and spread throughout a marketplace. Five categories of consumers have been identified, and these groups are presented in Exhibit 10.4. The groups include:

1. Consumer Innovators


2. Early Adopters3. Early Majority4. Late Majority5. Laggards

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LO5. Comprehend the role of household influence in consumer behavior.

Household Decision Making

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Consider the many ways in which the family impacts consumer behavior. Household decision making refers to the process by which decisions are made in household units.

Traditional Family StructureTraditionally, the family household has been viewed as at least two people who are related by blood or marriage who occupy a housing unit. Other definitions of a family include the nuclear family, which consists of a mother and father and a set of siblings. The extended family consists of three or more generations of family members including grandparents, parents, children, and grandchildren.

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Emerging Trends in Family StructureThe latest census information states that 33% of households are defined as nonfamily households, which means consumers who share the same living quarters with others who are not related by blood or marriage. With divorce rates hitting 50%, trends in family structure include:

Blended families Single-parent households Same-sex marriage households Traditional households

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Household Life CycleThe household life cycle (HLC) represents a segmentation technique acknowledging the fact that changes in family composition and income alter household demand for products and services. Product expenditures vary greatly by stage in the HLC and, at each stage, consumers often try to obtain the most value that they can from their purchases. See Exhibit 10.6 for traditional household life cycle categories.

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Q: Ask students about their families. How many come from a traditional family? How many from a nontraditional family?

A: Answers will vary. An interesting comparison is to bring up the www.census.gov website as a comparison. You can reference the states where students reside and the state in which your college is located.

Middle-Aged Consumers: Boomerang Kids and the Sandwich GenerationBoomerang kids are young adults aged 1834 years who graduate from college and move back home with their parents. Some have suggested the term “adultolescence” to describe this stage. The sandwich generation consists of those consumers who must take care of both their own children and their aging parents, affecting an estimated 20 million consumers in the United States.

Household Purchase RolesThe following list details five important roles in the household purchase process:

1. Influencer – The person in the household who recognizes a need andprovides information about a potential purchase to others.

2. Gatekeeper – The person who controls information flow into thehousehold, such as a mother who blocks unwanted email solicitations from herchild’s email account.

3. User – The actual user of the product under consideration.4. Decision maker – The person who makes the final decision regarding

product purchases or nonpurchases.5. Purchaser – The person who actually buys the product under consideration.

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Gender Roles and Household Decision MakingA family’s sex role orientation (SRO) influences the ways in which household decisions are reached. Families that have a traditional SRO believe that it is the responsibility of the male head of household to make large purchase decisions, while families with a “modern” SRO believe in a more democratic approach.

Kid PowerThe role of children in household decision making is also evolving. Today, children aged 812 years spend $30 billion dollars per year of their own money and influence another $600 billion per year in total household spending. This phenomenon has led to the development of a well-known marketing catchphrase, KGOY (Kids Growing Older, Younger).


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VIDEO CLIPPowerPoint Clip from Peet’s Coffee and TeaRun time 1:30 minutes

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Peet’s Coffee and Tea has focused on building relationships and founding a community since it’s founding. In 1966 Alfred Peet opened a coffee shop in Berkley, California where he roasted coffee beans using techniques he learned in his native Holland. The shop soon became a place for the community to gather as well as a place for consumers to purchase and learn about Peet’s products. Now a large-scale chain, Peet’s developed the Peetniks member program to develop and maintain a sense of community that will enhance consumers’ experiences as well as bolster sales.

Ask your students:1. How does the Peetniks program create a sense of group influence?

Answer: Members benefit from a sense of exclusivity through a member community as well as member only offers and information. Even the name of the program, Peetniks, reinforces the sense of community because it is actually the term Peet’s Coffee and Tea uses for its employees.

2. What hard benefits do members get from belonging to the Peetniks program?

Answer: Members receive convenience, discounted shipping, and special limited-edition merchandise.

END OF CHAPTER MATERIAL


PART 3 CASE ANSWERS Case 3-1 Does Culture Affect Sales? A Hawaiian PerspectiveQuestions:

1. What should Mr. Smith evaluate prior to entry into the Hawaiian market?

Prior to entry into the Hawaiian market, Mr. Smith should look at the demographics, psychographics and geographic issues that are unique to Hawaii.

For the instructor, this can lead to an active discussion on how demographics comes into play in determining the age distribution, income and birthrate in the state. The instructor should then lead the class into the understanding of the importance of psychographics. Consumer behavior is a blending of different academic disciplines such as anthropology, sociology, psychology and history. This is a great way for the instructor to tie in the relevance of how students taking other classes can benefit from understanding the makeup of a culture as they delve into the makeup of the consumer’s decision making process.

2. Does racial diversity contribute to the consumer’s view of a product?

This is a great question in getting each student in the class involved in their own ethnicity. How has their race affected the way they look at life and how they purchase a product or service? The ethnic population is shifting. The Hispanic population will make up 20% of the U.S. population and Asian Americans in the U.S. will be 24 million, 7% of the U.S. Population and the African American population will be 45 million people or 13% of the U.S. population. (Kerin, Marketing, pg. 77) For the instructor, discussing how the population shift is taking place will determine how consumers taste will change. When a population is diverse, there will be a greater offering of products to the consumer. A discussion can also be developed evaluating how views will change in regards to the value of home life, the family structure and where the shift in population will take place.

3. If Mr. Smith plans on marketing to all of the Hawaiian Islands, what key points should he evaluate?

Mr. Smith needs to understand that each of the islands of Hawaii has a different ethnic mix. Each island has nuances that have to be understood as it relates to the ethnic groups that migrated to Hawaii. The Chinese first came to work the sugar cane and pineapple fields, then the Japanese, Portuguese, Puerto Ricans, Koreans and the last migration were the Filipinos. This would be a good time to discuss how customs, norms and values are key ingredients in evaluating how a group thinks and reacts to their environment.

The instructor should also discuss how culture covers all aspects of how a person dresses, the food he/she eats, and also how the home environment comes into play when the consumer is ready to purchase a product. If Mr. Smith can develop a brand image that


fits the needs of the Hawaii market through ads, and developing a clear picture of how it fits the Hawaiian lifestyle and is unique from his competition he has a better chance of success in the market.

4. Besides evaluating the demographics and geographics of the Hawaiian Market, what other considerations should be evaluated?

As a business coming into Hawaii, Mr. Smith should also consider the attitudes of the population as a whole. What shifts have taken place in Hawaii that affects the way products such as cabinets are viewed in Hawaii? As in the other 49 states, each state has differences in how the home is viewed. Do the homeowners in Hawaii value home ownership or is home ownership a view that the population does not want. Another consideration is the family structure. Is the island of Hawaii a state where there is extended families and children coming back to live? Have the students do research on this. This will open their eyes to how culture is unique and different in different parts of the United States. Note: Hawaii has the highest cost of living and one of the highest prices on real estate compared to the other 49 other states (U.S. Census Bureau). With the added income in each family unit, there is a strong view that the renovation in the kitchen is something that the consumer wants.

Case 3-2 Busy Being RetiredQuestions:

1. Do you think that society expects retired people to stay busy? Explain and give examples.

Society does seem to expect retired people to stay busy and being active is even linked with being healthy. One good example of this is to see all of the activities that are conducted at retirement homes. They even have event/activity coordinators whose job it is to oversee the activities.

2. Do you have examples of busy retired people in your own family? Are these family members expected to be available to help out as needed? If so explain what you’ve seen in your own family. What is the downside if any of expecting retired people to be busy all of the time?

Regardless of personal experience students should agree that many working parents do expect their parents (their children’s grandparents) to act as babysitters when needed, pick the kids up when they have to work late and possibly even join them on vacations and other outings.

3. What do you think are the marketing implications for a retired group of people that are busy all the time?


Marketing Implications – good marketers will acknowledge this busy group and offer products to simply life while still making it enjoyable. Images of solitary elderly people doing sedentary activities will not fly with this group.

4. Look at television commercials and magazine ads that feature older consumers. What types of activities are they engaged in? Ask someone much older than you (a parent or grandparent) what types of ads they recall seeing that feature older consumers. Compare how they have changed from period to the next.

Current ads show active vibrant seniors enjoying cruises, shopping and even dancing. They look happy and fit. Catalogs like Chico’s routinely feature fashionably chic older ladies with silver hair wearing the latest fashions. Older commercials and ads will typically show chubby grandparents, moving slowly and doing sedentary activities, if they are shown at all.

Case 3-3 On the Cutting Edge with FiskarsQuestions:

1. How did enlisting Fiskateers help the brand?

As the Fiskars product development managers reviewed passionate and insightful comments from their evangelists and fans, they realized this community could be a valuable focus group. Rather than developing products in the corporate headquarters, Fiskars could incorporate the Fiskateers’ feedback for new product ideas and improvements. In addition, these brand enthusiasts and evangelists are likely to spread WOM and will convince others to pick up the hobby (and thus need to buy the scissors).

2. How can a company like Fiskars gain the most out of a WOM program? What obstacles may have to be overcome internally?

With online WOM marketing, success occurs when conversations are generated about the brand. Companies can learn from consumers freely sharing their experiences. However, businesses interested in WOM to increase brand awareness must first overcome any fears they have about surrendering one-way communication control associated with advertising or other non-interactive tools. To assure success with a WOM program, a company’s culture must willingly accept criticism and appreciate that listening to what consumers say can help the company respond better to consumer preferences and needs and stay competitive. There are reasons why consumers buy your brand. So if they choose it over other brands, their opinions are valuable for mining ideas for new products. Should negative comments arise in conversations, management can take responsive action to address consumer concerns.

3. How do you measure WOM success?

Success with WOM is measured by the conversation level it generates, proving that the company and its brands are relevant and top-of-mind with consumers. In addition, return


on investment (ROI) needs to be monitored. Did the WOM campaign result in increased sales?

There are many ways to measure WOM success on the web. Blogs and forums allow you to listen in on the conversation, tags provide insight on associations, and viral content sheds light on global reach. In general, with online and offline WOM, success occurs when ongoing conversations are generated about your brand and companies learn from consumers freely sharing their experiences. When brands appreciate the power of consumer engagement and rely on it to help guide decision making, there’s no better testament to the value of WOM for any organization.

4. Why do people, in particular young women, want to be part of an online interest group such as Fiskars’ fanpage?

Many women like to bond and share information with other women, especially if they share a common interest and hobby. In the case of Fiskars, they enjoy “meeting” fellow scrapbookers and sharing information with them. Scrapbooking is also a creative hobby, so it can be more enjoyable if the women can share their tips and best practices with each other – motivated by being a valuable helpful resource and recognized as an “expert”, or getting ideas from others, helping others sharing ideas for projects or informing others about the best (local) stores for particular, unusual supplies. Young women in particular are part of the online generation and naturally gravitate towards the Facebook version of sharing information, which would be the Fiskars’ fanpage.

Case 3-4 Spaceport America ConsumersQuestions:

1. What types of ethical issues about marketing space exploration might concern you as a consumer? How would you help NASA create ethical standards for marketing space? Explain.

Answers vary depending on the students’ ethical standards or image of ethical standards in space exploration. Ethical issues you might encounter in discussion include the commercial privatization of space. The students’ answers should correspond to what they believe the spaceport will bring to America.

2. After someone has traveled to space and returned, why would someone want to repeat the experience? How will Spaceport America continue to thrive in customer relationships? Explain how Spaceport America could extend their satisfaction of experienced space consumers, and create continuing relationships.

Take a unique look at spaceport travel including memorabilia, maybe even different flight time or during lunar changes (Lunar Eclipse). Spaceport America will need to ensure that their advertising does not focus on just one travel consumption. They will need to incorporate sponsors that support different images into consumer behaviors creating a need for further space travel consumption. They could bring in more people


through scholarships or company sponsored programs including “Make-A-Wish.” Creating social responsibility awareness in the chance of a lifetime experience.

3. Go to the following website: http://www.spaceportamerica.com/. What type of customer relationship is Spaceport America targeting? What could they be doing differently to build interest for you as a consumer? Explain.

Answers will vary. They are targeting risk-taking individuals who are interested in touring space and finding new frontiers. They are also targeting businesses that will support space travel. The website seems very scientific and not average American friendly. Building customer relationships depends on creating awareness and a sense of belonging in a community. It is hard to determine how people will feel about these changes because the product, space travel, is so new. The answers will vary on how to build interest for space travel to the individual student. Some ideas could involve the incorporation of national brands that target certain consumers or the development of social media campaigns targeted to younger demographics.

4. There is a video on YouTube about the development of the Spaceport to create market awareness. What type of relationship are they building with space consumers? What type of image is Spaceport America creating to appeal to consumers? Do you believe space exploration should be marketed through social media?

The video is creating a relationship with the scientific community and the space enthusiasts traveler. It would be beneficial to target the average consumers looking to travel into space. The average American watching this video would not believe Spaceport America was for them. Consumers like advertisements to make decisions for them. Using emotional appeals to gain attention and awareness of the different target markets would be an interesting advertising approach. Incorporating more marketing appeals to the average consumer will help Spaceport America build consumer relationships in all target markets.

Case 3-5 Love Me Do: How the Beatles Became THE BEATLESQuestions:

1. Discuss the various reference groups that have influence over Maxwell’s appreciation (or lack of appreciation as the case may be) of The Beatles and their music.

First of all, Maxwell’s Granddad and Mother appear to form a primary group because they are members of his family and, as such, have a stronger set of social ties with Maxwell. There also appears to be a secondary group that Maxwell deals with, his friend Lucy and the online group of Beatles Rock Band fans, which may provide some influence. The social ties are not as strong here, and the influence may not be as strong as Maxwell would find with the primary group. This secondary group may also comprise an informal group as there may not be any formal application or membership


requirements. Additionally, the online community may in fact comprise an aspirational group if Maxwell desires to “join” the group.

2. Discuss the importance of word-of-mouth marketing as part of what has made The Beatles into THE BEATLES.

Word-of-mouth (WOM) marketing is the transmission of information from consumer to consumer. In this case, the WOM is intergenerational. Granddad transmitted information about the Beatles to his daughter who has in turn, along with Granddad, transmitted that information to Maxwell. For Maxwell, Granddad may be an opinion leader because of influence over others. This organic form of WOM quite probably mirrors quite a bit of reality in terms of passing along music from generation to generation. It is also possible that Apple studios and the makers of Rock Band have attempted to amplify this word-of-mouth through online gaming communities, discussion sites, etc.

3. What part might culture have to play in the generational transcendence of The Beatles and their music?

Culture gives meaning to objects, defining what the object means to the people within that culture. The meaning of the Beatles was developed during the turbulent sixties where they became a beacon of love and hope against a turbulent background of activism, war, and social unrest. Culture also gives meaning to activities. When one listens to the Beatles, they are engaging in consuming that meaning as well as consuming the meaning of the activity itself. In this sense, how one listens to the Beatles is as important as listening to the Beatles. Furthermore, one can consume the Beatles in many ways other than listening to the Beatles, further turning them into THE BEATLES. Finally, culture facilitates communication between strangers, between friends, and even between family members from different generations, paving the way for the meaning of the Beatles to transcend the sixties generation and move into ever newer generations.

4. Lucy plans for the two to join an online community focused on The Beatles: Rock Band. How might this constitute a subculture?

Like a culture, microculture consists of a group of people who share similar values and tastes as well as ways of thinking and behaviors. The microculture, however, is encapsulated within the larger culture of which it is a part. The Beatles: Rock Band community fits just such a description though it is possible that it actually spans different national cultures. Even so, it is a smaller part of the gaming culture that permeates much of popular culture. Additionally, its members have roles they are expected to fulfill. This is also, most likely, a street microculture in that it would not appear that ethnicity, religion, gender, etc. have any bearing on the formation of this particular microculture. Instead, street microcultures can grow out of any consumer activity that brings people together to engage in a common activity.


5. Despite The Beatles’ popularity, why is it that some consumers are turned off by their music?

Any number of reasons may lead a consumer to be turned off by the music of The Beatles. For instance, individuals who are susceptible to interpersonal influence may not like The Beatles because a good friend or an aspirational group may not like The Beatles. These reference groups may not carry the same “love and peace” values expressed by the group and may instead prefer a more aggressive and militaristic set of values as perpetuated in hard core punk or speed metal. Additionally, the individual may belong to a different microculture that appreciates country music or some other genre of music other than sixties pop rock. As such, that individual may not have even encountered The Beatles as a consumption object. Ultimately, the reason a person is turned off (or turned on, for that matter) by The Beatles’ music may have a lot to do with the group or culture that the individual belongs to in addition to their appreciation of the music by itself.

ONLINE CASE ANSWERS Visit www.login.cengage.com to access the online case studies for CB.

1. Why did a brand community develop around the Newton?

Answer: Undoubtedly, the Newton’s ties to Apple greatly influenced the resulting brand community. When the Newton was introduced, Apple already had a strong brand community for the Macintosh in place so that the Newton was an extension of an already thriving brand. While the Newton remained with Apple, it was able to develop a relatively small but highly loyal customer base, which likely consisted largely of existing Apple fans. Due to this customer base being very technologically savvy and to Apple’s initial desire to promote the Newton, it was a natural move for devoted Newton users to start conversing with one another in various online formats, thus giving birth to the brand community.

2. Why did the Newton brand community thrive after Apple abandoned the Newton?

Answer: Because Newton fans were already communicating with one another online before Apple dropped the Newton, they were easily capable of continuing to do so afterward. The feeling among many members that the community was threatened by the discontinuation of the Newton seemed to strengthen their commitment to the Newton and its community. Rumors of a conspiracy involving Microsoft’s Bill Gates and Steve Jobs also supported this commitment by fostering the sentiment that the Newton was David in a battle with Goliath. The Newton’s discontinuation also appeared to make existing users feel that they were part of a special group with its own set of rituals and traditions for which they held sole responsibility.

3. Could the Newton brand community have existed without the Internet? Why or why not?


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Answer: It is highly doubtful that the Newton brand community could have existed without the Internet. Even though the community seemed large, most individuals were probably scattered across the United States and other parts of the world. Contact with a significant number of other Newton fans would not have been possible without the Internet. This development has widespread implications for all brand communities. The critical mass of consumers needed to develop an online brand community is almost certainly much smaller than that needed for a physical brand community due to the constraint of communication in the latter. This means that a group of relatively few brand devotees spread across many geographic areas may be sufficient to generate a brand community.

REVIEW QUESTIONS

(*) Indicates material on prep cards.

1. [LO1] What are the differences between primary and secondary reference groups? What primary and secondary groups do you belong to?

Answer: A primary group includes members who have frequent, direct contact with one another. Social ties tend to be very strong in a primary group, and the family is a great example of this type of group. A secondary group is similar to a primary group, but contact between members is not as frequent as in a primary group. The social ties are weaker than in a primary group, but they are still present.

Students will usually list their families as representing a primary group. They may also mention their fraternities or sororities, especially those students who are living far from home. Possible answers for secondary groups will likely include various clubs to which students belong. Perhaps there is a church-based group or an international group to which they belong. The focus here is to prompt students to consider the differences between primary and secondary groups. The key issue is the degree of contact and influence that group members have on students.

2. *[LO1] What are the differences between formal and informal reference groups? What formal and informal groups do you belong to?

Answer: Formal groups have some type of formal membership process. They also generally have specific rules and expectations for membership. Informal groups do not have official membership or application processes, and they usually do not have explicitly stated rules or expectations for membership.

Students may have formally become members of fraternities or sororities. They may become official members of certain campus organizations and may also be registered members of political parties. They may also be official members of various sporting groups (e.g., FCA). There are many examples of informal groups to which students may belong. They may report that there is a group of friends who meet regularly to play sports or even hang out at a bar. The intent of this question is to focus on the formal membership process. Is the student a formal member of the group or not? What type of application/membership process is involved? The key is to prompt students to realize that both formal and informal groups can impact their behavior as consumers.


3. [LO1] How do reference groups influence value?

Answer: Reference groups can influence both hedonic and utilitarian value by affecting how consumers view various products. As the text mentions, a tattoo can mean one thing to one group and something totally different to another group. By wearing the “brand,” consumers can perceive a great deal of value simply because the tattoo “means” something to them. A military veteran can perceive value from his or her tattoos because of the meaning associated with them, even if other consumers don’t understand the significance. You would have to be a part of the group to really understand the meaning, importance, and value of the tattoo.

Groups can influence the value associated with other products as well. In a negative way, gang membership can be reflected by certain colors or styles of clothing or even by the way clothing is worn. Even though consumers who aren’t in the gang may not realize the significance at all, the clothing means something and is of value to the member. A more positive example would be a college letter jacket. To the athlete, the letter jacket contains value that is probably far greater than the amount of money spent on the jacket. However, not everyone will understand the importance, meaning, or value of the jacket. Someone would need to understand what the jacket signifies to relevant groups to understand its value.

There are many different ways to answer this question. The focus here is to prompt students to consider how groups influence the perceived value that comes from product ownership. Most of the time, you must be a member (whether formal or informal) to understand this value.

4. [LO2] What are the various power bases of reference groups?

Answer: Several different power bases are found in reference groups. Referent power exists when a consumer desires to be referred to as part of the group. As such, they will emulate group behavior and express references to the group in daily conversation. Legitimate power exists when a group or person holds actual power over another and can, in some cases, control the other’s behavior. For example, a fraternity may legitimately hold power over its members due to specific rules, expectations, and bylaws. Expert power is held when a group holds knowledge that consumers or group members themselves desire to have. For example, a consumer may seek advice from the Better Business Bureau on whether to do business with a company. Reward power exists when a group can give members or consumers something of value based on their behavior. For example, the Chamber of Commerce may award a member as “businessperson of the year.” Finally, coercive power exists when a group can impose sanctions on their members because of their actions. For example, the AAUP may sanction a university for various reasons, or an accrediting body may place some type of sanction on its members.

5. [LO2] How are coercive and legitimate power related to one another?

Answer: Coercive power and legitimate power are related to one another because sanctions are often stated officially in some type of membership document. The sanctions emerge from the legitimate position of those who hold power within the group.


6. *[LO2] How do the various power bases emerge in an online social networking setting? Or, do they?

Answer: It is most likely that students will refer to expert and referent power in this question. Reward power might be mentioned as well. Many groups center around certain issues where some group members may be considered experts. Members may also feel good to be referred to as a member of a group, whether it’s just for fun or if it’s serious. Reward power emerges when group members vote for each other for some type of online award, or congratulate each other on accomplishments.

7. [LO3] Distinguish between the informational, utilitarian, and value-expressive influence of reference groups.

Answer: Informational influence exists when consumers use the behaviors and attitudes of reference groups as information that affects consumer decision making. Utilitarian influence exists when a consumer conforms to group expectations in order to receive a reward or avoid punishment from a group. Value-expressive influence exists when a consumer internalizes a group’s values or chooses group membership based on their own values that may be reflected in the membership.

8. [LO3] How does the value-expressive influence emerge for you in one of the reference groups to which you belong?

Answer: Student answers will vary. Students usually have some strong values that affect their choice of reference group membership. For example, the text uses the example of a person being strongly opposed to drunk driving and joining Mother’s Against Drunk Drivers. Similarly, a student may feel strongly about environmental issues and join a group such as the Greenpeace Student Network.

9. [LO3] How does informational influence emerge in one of the social networking groups that you belong to?

Answer: Because most groups revolve around specific interests, consumers gain much information from belonging to these groups. This is particularly the case for fan pages on Facebook.

10. *[LO4] How does WOM influence consumers? Why isn’t all WOM equally influential? What type of WOM has the greatest impact on consumers?

Answer: WOM greatly influences consumers. Quite simply, consumers are influenced heavily by other consumers. All types of WOM are not equally influential for many reasons. For example, organic WOM is usually more effective than amplified WOM, and negative WOM tends to be more influential than positive WOM. Consumers often tell more people about bad events than good events. In general, consumers tend to believe other consumers more than they believe advertisements, which is a major reason why WOM is so influential.

11. [LO4] How does the Internet help consumers to spread word-of-mouth?

Answer: Online social networks have become very popular. Most students spend a great deal of time networking with others on various websites and chat rooms. Today,


information can be spread to literally millions of consumers simply by posting on these websites. The www.facebook.com and www.twitter.com websites are great examples of this phenomenon.

12. [LO4] What role do social networks play in word-of-mouth?

Answer: As in the previous question, social networks such as www.facebook.com and www.twitter.com are very powerful in spreading WOM. There are too many social networks to even discuss in this question, but the intent is to prompt students to consider how information can be disseminated by these popular sites.

13. [LO5] How do households influence consumer behavior? How does your household influence you?

Answer: Households represent primary reference groups that have a major influence on individual behavior. There are many different responses that might be presented for this question. Students may have been influenced by their parents in their decision to attend your school. They might also have been heavily influenced when purchasing their cars or leasing their apartments by their family or household. The focus here is to prompt students to consider the many ways in which their households influence their decision making and behavior. It should be stressed that the household does not necessarily refer to the family; however, the family will probably be brought up frequently in student responses.

14. [LO5] How does sex orientation influence the ways in which household decisions are reached?

Answer: Families that have traditional SROs will largely look for the male head of household to make major decisions. Families with more contemporary SROs will look equally to both the male and female partners. It should be noted that females have been given more emphasis in decision making in recent years. It is also likely that students will bring up the issue of homosexual relationships. SROs will be different for these students, and there may be differences in opinions as to which partner has the most decision-making influence.

INTERACTIVE/APPLICATION EXERCISES

15. Ask a group of friends what reference groups they consider to be most influential in their lives. Compare these to groups that are influential to you. Are they the same? If not, in what ways are they different? Ask the same question to members of a different demographic group, like your parents. Are the groups that they mention also influential to you?

Answer: As with most activity questions, answers will vary. It is likely that parents and friends will be mentioned frequently. College students may refer to fraternity or sorority members as well. After these groups are mentioned, there will probably be a great deal of variety (e.g., church group, recreational sports groups). Parental input will probably differ in some ways. The focus of this activity is to reveal to students that reference group influence does change.


16. Locate two advertisements that use references groups to target you as a consumer. What types of reference groups are they using? Are they effective? Why or why not?

Answer: There will be many different answers here. Anti-smoking ads will probably include reference groups, as will many “anti-behavior” ads. Alcoholic beverage ads frequently show groups of consumers together having a good time. MBA programs may include statements such as “Be a [X] graduate”. The focus of this question is to prompt students to consider how reference groups can be used in marketing communications.

17. Write down the various power bases that you think your parents or immediate family members hold over you. In what ways do you yield to the power they exert? Or, do you resist the power they try to exert over you? If so, explain.

Answer: Although all of the power bases can apply to this question, the expert, reward, and coercive bases will most often apply. Parents and family members often have knowledge about specific products that can be used in consumer-related decisions (expert), parents can reward their children for various deeds (reward), and parents can punish their children in various ways (coercive).

18. *Ask a group of classmates if they belong to any Facebook groups. How many do they belong to? Which groups are they? Are any of them for a company or a brand? Do you belong to any? What benefits do you (or your classmates) get from participating in these groups?

Answer: There are many examples of Facebook groups that students might belong to, and answers will vary greatly.

19. Follow some Twitter tweets or Facebook posts. In what ways do you see consumers influencing each other? What trends do you see?

Answer: There are many ways in which this question can be answered. Message boards on these sites can be very active, and consumers can be influenced greatly by the content of these boards. Twitter is especially good for tracking trends of what is important.

20. *Discuss with students the issue of sex role orientation as it pertains to household decision making. What differences emerge in student feelings about sex role orientation? How does this affect their behavior?

Answer: There will be variance in this answer. Some students will prefer the traditional SRO, while others will prefer a “modern” SRO. Depending largely on their living arrangements, student SROs will impact their behavior. This is another interesting question for classroom discussion.

GROUP ACTIVITY

As the professor, visit the following website ahead of time, sign up to become a Bzz Agent, and present your experiences to the class. You can bring in samples of your programs and share your profile with your students. This is an activity that students really enjoy. Bring up the Bzz Agent website in class (www.bzzagent.com), and navigate it during class. You may assign them a semester-long homework assignment from this activity to become a Bzz Agent. Students will


receive free merchandise (books, lattés, jeans), and they will have an opportunity to bzz other students in class.

Students generally enjoy feeling the excitement of introducing new products before the rest of the world sees them, and you can have students provide an analysis of the companies they were able to “bzz”.

CHAPTER VIDEO CASE

To view the video case Teen Power: A Force to be Reckoned With, go to the CB companion website login.cengage.com to select this video.4

Cell phones, surfing gear, X-treme sports, video games—these are just some of the lucrative markets where companies focus major marketing dollars on some very important consumers—teenagers. Understanding youth trends and dynamics in the constantly changing teen market remains an ongoing challenge for companies needing to know how best to spend those dollars.

That’s where Teen Research Unlimited (TRU) comes in. Started by youthful entrepreneur Peter Zollo in 1982, TRU was the first company to specialize in teen-focused market research. It keeps companies in touch with teen thinking, making it possible for them to forecast trends and remain a step ahead of the competition. Based in Northbrook, Illinois, TRU has worked closely with many of the world’s leading youth brands and advertising agencies, playing a key role in groundbreaking advertising and marketing campaigns, and the development of successful products and services. TRU has worked with over half a million teenagers nationwide to assemble data for use in advertising campaigns, product development, store designs, and other strategic business activities. Last year TRU conducted more than 1,000 focus groups and personal in-depth interviews in addition to several major quantitative studies. TRU also applies its expertise to teen advocacy on important social issues and high-risk youth behaviors such as anti-tobacco and drug use, sexual assault, life safety, education, crisis management, and skin cancer.

So how does TRU gather its data and help its clients create effective marketing strategies? When a burgeoning fashion retailer needed ethnographic research to learn more about their target consumer, they asked TRU to help them. TRU spent months scouring malls, sitting down with shoppers, and carrying out a comprehensive national quantitative analysis to gain a well-rounded view of the client and its competitors. At project completion, TRU was able to provide its client with a strategically sound, actionable plan that built on previous strengths, addressed areas requiring improvement, and set a benchmark for future measurements.

In another study a leading manufacturer of backpacks and luggage hired TRU to explore “personal carrying device” trends. To meet the client’s research objective, TRU devised a series of in-home interviews focused on which bags people own, when they use them, and what they use them for. These interviews, as well as “intercepts” on snowy Chicago train platforms and the sunny Santa Monica pier, were videotaped to reveal an “on-the-street” take on emerging trends.

The only full-service marketing-research firm dedicated solely to understanding teens, TRU’s initial vision remains in place today: to develop an unparalleled expertise in the teenage market, and to offer clients virtually unlimited methods for researching teens. And with more

4 From Gitman & McDaniel. Teen Power: A Force to be Reckoned With from The Future of Business 6e, pg. 428-429. Copyright (c) 2008 South-Western, a part of Cengage Learning, Inc. Reproduced by permission. www.cengage.com/permissions


businesses than ever focused on marketing to teenage consumers—Abercrombie & Fitch, PepsiCo, Nintendo, and Nokia are just some of TRU’s prestigious clients—companies count on TRU’s research to remain in touch with what teenagers want.

Ask your students:1. What makes TRU’s research so important?

Answer: TRU keeps companies in touch with teen thinking, making it possible for them to forecast trends and remain a step ahead of the competition.

2. In what way is the company unique?Answer: The company plays a key role in groundbreaking advertising and marketing campaigns as well as the development of successful products and services.

3. How does TRU help its customers understand their target market and create effective marketing strategies?Answer: TRU spends months souring malls, sitting down with shoppers, and carrying out national quantitative analyses. Their initial vision remains in place today: to develop an unparalleled expertise in the teenage market and to offer clients virtually unlimited methods for research teens. Sources: Adapted from the video “Teenage Research Unlimited,” http://www.swlearning.com; Parija Bhatnagar, “More Cheese for the ‘Mall Rats,’” CNN/Money, February 4, 2005; Ruth Laferla, “Teenagers Shop for Art of the Deal,” New York Times, September 22, 2005; Mary Ellen Podmolik, “Teen Stores Leading the Herd,” Chicago Tribune, January 14, 2006, p. 1; TRU corporate Website http://www.teenresearch.com, April 26, 2006.

PART 3 VIDEO CASE

To view the Part 3 video case, go to the CB companion website login.cengage.com to select this video.

Fantasy InnTime: This video is between 5-7 minutes long.Concepts Illustrated in the Video

Consumer culture Subculture Cultural norms Tradition Etiquette/manners Reference groups

Synopsis

Vanessa, a Junior Account Executive is scouting out locations to hold an upcoming event. She meets with Ivan, the General Manager of the Fantasy Inn. Vanessa is coordinating an upcoming event with people from around the world. Cultural sensitivity is a prime concern for her event. She’ll be serving foods that are both vegan and palal along with other dietary needs. She’s asked


Ivan about alcohol and if the bar can be closed off—not to offend anyone. Ivan tries to convince Vanessa that he’s been working on similar events for the past twelve years and the Inn has experience with these types of needs. He’ll require a $1,500 deposit to hold the room for her. Vanessa would like to meet with the Chef first to ease her nerves.

Teaching Objectives for the Video Case

Understand how culture provides the true meaning of objects and activities

Understand the different types of reference groups that influence consumers and how reference groups influence value perceptions

Critical Thinking Questions – Suggested Answers If you were Vanessa, what would you do if faced with a similar situation? Where could

you get information on different cultures?

Answer: Answers will vary whether or not they would give the deposit before meeting with the Chef and the sources of information.

Explain the concept of consumer culture. How does it impact a business dinner in the United States?

Answer: Consumer culture can be thought of as commonly held societal beliefs that define what is socially gratifying. Culture ultimately determines what consumption behaviors are acceptable. This would be an important point when serving guests from around the world. If hosting a dinner with Muslims, the American business would want to avoid serving pork and alcohol.

What would the expected cultural norm be for the upcoming business dinner that Vanessa’s company is hosting?

Answer: The Fantasy Inn would need to determine if males and females could serve the meal. Also, the location of the bar area needs to be taken into consideration and also the mixing of the foods. Vegan and Palal should not be mixed together. Ultimately, Vanessa needs to give the Fantasy Inn the parameters for the dinner and what countries will be represented.


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