layout: true background-image: url(figs/tcb-logo.png) background-position: bottom right background-attachment: fixed; background-origin: content-box; background-size: 10% --- class: title-slide .row[ .col-7[ .title[ # Consumer Behavior ] .subtitle[ ## Group Influences and Social Media ] .author[ ### Dennis A.V. Dittrich ] .affiliation[ ] ] .col-5[ ] ] --- .row[.col-7[ ![](img13/111.jpg) ] .col-5[ ### Other people and groups, especially those who possess some kind of social power, influence our decisions. **Reference group**: an actual or imaginary individual or group conceived of as having significant relevance upon an individual’s evaluations, aspirations, or behavior. ]] ??? This chapter opens with the story of Zachary. Zachary leads a secret life. During the week he is a stock analyst, but on the weekends, he’s out on the road with his Harley-Davidson. Zachary’s group of biker friends is an important part of his identity and this membership influences many buying decisions. The biker group is a reference group. A reference group is an actual or imaginary individual or group conceived of as having significant relevance upon an individual’s evaluations, aspirations, or behavior. --- ## Groups ![](img13/112.png) .col-7[ **Social identity theory**: each of us has several “selves” that relate to groups. **Minimal group paradigm** researchers show that even when they arbitrarily assign subjects to one group or another, people favor those who wind up in the same group. ] --- # What Are Sources of Power? .row[ .col-6[ **Social power**: capacity to alter the actions of others. * exists when the one person admires the qualities of another and tries to copy the referent’s behavior. * consumers voluntarily modify what they do and buy to identify with the referent. **Information power**: someone knows something others would like to know. **Legitimate power**: granted through true authority in a situation. * police officers have legitimate power ] .col-6[ **Expert power**: accrues to a person who is an expert in a particular field. * Due to their expertise, others will be influenced by them. **Reward power**: the influence held by a person who has the ability to offer a reward. **Coercive power**: opposite of reward power. * held by someone who has the ability to punish ]] --- ## Membership vs Aspirational Reference Groups .col-7[ Seeing the consumption activities of others acts as a form of social influence. **Membership reference groups**: people we know like our families, friendship groups, and colleagues. * People the consumer actually knows * Advertisers use “ordinary people” **Aspirational reference groups**: people the consumer doesn’t know but admire. * Advertisers use celebrity spokes people * successful businesspeople, * athletes, or * performers. ] ??? The cues we use to decide if we should identify with—and thus trust—others may be quite subtle. For example, people who simply eat the same things (what researchers term IFC —Incidental Food Consumption)—like, trust, and cooperate with one another more than those who don’t. --- # Positive vs Negative Reference Groups .col-7[ Reference groups can affect our decisions both positively and negatively. **Avoidance groups**: motivation to distance oneself from other people/groups * Sometimes we deliberately do the opposite if we want to distance ourselves from avoidance groups. **Antibrand communities**: coalesce around a celebrity, store, or brand—but in this case they’re united by their disdain for it ] ??? Many brands have been targeted by antibrand communities including Dunkin’ Donuts, Rachael Ray, and Starbucks. --- class: practice-slide # For Reflection .col-8[ Identify a set of avoidance groups for your peers. Can you identify any consumption decisions that you and your friends make with these groups in mind? ] ??? Responses will vary by student. Reference groups impact our buying decisions both positively and negatively. In most cases, we model our behavior to be in line with what we think the group expects us to do. Sometimes, however, we also deliberately do the opposite if we want to distance ourselves from avoidance groups. You may carefully study the dress or mannerisms of a group you dislike (e.g., “nerds,” “druggies,” or “preppies”) and scrupulously avoid buying anything that might identify you with that group. Rebellious adolescents do the opposite of what their parents desire to make a statement about their independence. In one study, college freshmen reported consuming less alcohol when they associated it with their avoidance groups. (15 minutes, Chapter Objective 11-1, AACSB: Reflective Thinking) --- # Consumers Do It in Groups .row[ .col-6[ People in larger groups have fewer constraints on behavior. **Deindividuation** occurs when our individual identities are submerged in the group. * we don’t stay out alone so we may behave differently. * At a costume party, we may act wilder than we would in our everyday lives. The change in our shopping behavior in groups is the reason some brands use home shopping parties. Why do we tend to conform to the pressure of groups? **Culture pressure**: different cultures encourage **conformity** to a greater or lesser extent. * Japanese society emphasizes collective well-being and group loyalty over individuals’ needs. ] .col-6[ **Fear of deviance**: Individuals may believe that the group will apply sanctions to punish nonconforming behaviors. **Principle of least interest**: the person who is **least committed** to staying in a relationship has the most power because that party doesn’t care as much if the other person rejects him. **Group unanimity**: as groups gain in power, compliance increases. Susceptibility to **interpersonal influence**: an individual’s need to have others think highly of him or her. ]] --- ## Brand Communities and Consumer Tribes .col-7[ **Brand Commuity**: a group of consumers who share a set of social relationships based upon usage or interest in a product **Consumer tribes** share emotions, moral beliefs, styles of life, and affiliated product **Brandfests** celebrated by community **Collective value creation** is the idea of experienced product users coaching new users in ways to maximize their enjoyment of the product, so that more and more people benefit from a network of satisfied participants. ] ??? Brandfests are held by many companies like Mini and Harley-Davidson. The festivals enable consumers to interact with others who share a similar brand passion. --- class: practice-slide # For Reflection .col-8[ For each type of social power source of influence, share an example of a time you experienced that form of influence. ] --- # Roles in Collective Decision Making .col-7[ Marketers often need to understand consumers’ behavior rather than a consumer’s behavior. Depending on the decision in question, the choice may include some or all group members and different group members may play different roles. **Initiator**: the person who brings up the idea or identifies the need. **Gatekeeper**: the person who conducts the information search and controls the flow of information available to the group. **Influencer**: the person who tries to sway the outcome of the decision. **Buyer**: the person who actually makes the purchase. **User**: those who will actually use the product. ] --- # Organizational Decision Making .row[ .col-5[ **Organizational buyers**: purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale. **Business-to-business (B2B) marketers**: specialize in meeting needs of organizations such as corporations, government agencies, hospitals, and retailers. ] .col-7[ Compared to Consumer Decision Making, Organizational Decision Making… * Involves many people * Requires precise, technical specifications * Is based on past experience and careful weighing of alternatives * May require risky decisions * Involves substantial dollar volume * Places more emphasis on personal selling ]] ??? # What Influences Organizational Buyers? Organizational buyers are influenced by several factors including * the psychological characteristics of those involved in the buying decision, * external stimuli such as the nature of the industry and the organization, * cultural factors, and * the level of risk and complexity involved in the decision. The level of complexity depends upon 1. Level of information required prior to the decision 2. Seriousness of decision and the evaluation of alternatives 3. Familiarity with purchase --- # Buyclass theory .col-7[ ...organizational buying decisions divided into three types, ranging from most to least complex. A **straight rebuy** is a habitual decision. A **modified rebuy** situation involves limited decision making. A **new task** involves extensive problem solving ] .center[Types of Organizational Buying Decisions] |Buying Situation| Extent of Effort| Risk| Buyer’s involvement| |---|---|---|---| |Straight rebuy| Habitual decision-making| Low| Automatic reorder| |Modified rebuy| Limited problem solving| Low to moderate| One or a few| |New task| Extensive problem solving| High| Many| .caption[Adapted from Patrick J. Robinson, Charles W. Faris, and Yoram Wind, __Industrial Buying and Creative Marketing__ (Boston: Allyn & Bacon, 1967).] ??? # B2B e-Commerce **Business-to-business (B2B) e-commerce**: Internet interactions between two or more businesses or organizations. **Prediction market**: a trend in organizational decision-making techniques. **Wisdom of crowds**: perspective (from a book by that name) that argues, under the right circumstances, groups are smarter than the smartest people in them. --- class: practice-slide # For Reflection .col-7[ Assume that you are a sales representative for a large company that markets laptop computers. List all the people that may be involved in making the decision to purchase from you. Try to match all the people to their possible decision roles as outlined on the previous slide. ] --- # Household Decisions .col-7[ Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions. Families make two types of decisions: 1. **Consensual purchase decisions** are those for which members agree on the desired purchase, differing only in terms of how it will be achieved. 2. **Accommodative purchase decisions** are those for which members have different preferences or priorities and they cannot agree on a purchase to satisfy the minimum expectations of all involved . ] --- ## Resolving Decision Conflicts in Families .row[ .col-6[ Decisions involve conflict among family members to the extent that * the issue is important or unusual or * if individuals have strong opinions about alternatives. The degree to which these factors generate conflict determines whether a consensual agreement or an accommodative agreement will resolve the conflict. .row[.col-2[ ] .col-7[ ![](img12/113.jpg) ]] ] .col-6[ The factors that determine how much conflict there will be include * **Interpersonal need**: the level of involvement of a person in the group. * **Product involvement and utility** the degree to which a person will use the product to satisfy a need. * **Responsibility** the degree to which a person has responsibility for procurement, maintenance, payment, and so on. * **Power**: the degree to which one family member exerts influence over the others. ]] --- ## Who Makes Key Decisions in the Family? .row[ .col-6[ When couples **first** marry, they tend to make more **joint decisions** but over time, they begin to specialize in decisions. In traditional views of family, men made the money and women spent it. * Wives still have the most say on grocery purchases, clothes, furniture, home electronics, and things for children. * Today, it is primarily the woman who manages the role of family financial officer, whether or not she is a primary breadwinner. ] .col-6[ **Autonomic decision**: one family member chooses a product **Syncretic decision**: involve both partners * Used for cars, vacations, homes, appliances, furniture, home electronics, interior design, phone service * As education increases, so does syncretic decision making ]] --- class: practice-slide # For Reflection .col-8[ What exposure have you had to family decisions made in your own family? Can you see the patterns discussed in the chapter in those decisions? Give an example. ] --- # Word-of-Mouth Communication .row[ .col-7[ Word-of-mouth communication is the most important driver of product choice. **Buzz building**: creating “buzz” around some idea, product, or promotion. Consumers weigh **negative word-of-mouth** more heavily than they do positive comments. **Serial reproduction**: examining how content mutates * Information changes as it is transmitted. * The farther from the original source, the more difference exists in the information transmitted. * Sometimes this transmission effect creates misinformation about products – especially online. ] .col-5[ ![](img13/114.png) ]] --- class: practice-slide # For Reflection .col-8[ Describe some ways in which marketers are using the internet to encourage positive word-of-mouth. ] ??? A virtual community of consumption is a collection of people whose online interactions are based upon shared enthusiasm for and knowledge of a specific consumption activity. Like the brand communities we discussed earlier, these groups form around a shared love for a product, whether it is Barbie dolls or Blackberry PDAs. However, members remain anonymous because they only interact with each other in cyberspace. --- # Opinion Leaders’ Influence .col-7[ Opinion leaders’ recommendations are more influential than others when we decide what to buy. **Two-step flow model of influence**: small group of influencers disseminates information because they can modify the opinions of a large number of other people. * The original framework describing opinion leadership. Consumers communicate the information vigorously to one another and they also participate in a two-way dialogue with the opinion leader as part of an **influence network**. **Information cascades**: occur when a piece of information triggers a sequence of interactions (much like an avalanche). * influentials share the information with those who are easily influenced and then those people continue to talk among themselves, resulting in information cascades. ] --- # Characteristics of Opinion Leaders .row[ .col-6[ Everyone knows people who are knowledgeable about products and whose advice others take seriously. **Opinion leaders** are valuable sources of information because they possess **social power**. They may have **expertise** but one source of influence is their **similarity** to the person being influenced. **Homophily**: the degree to which a pair of individuals is similar in terms of education, social status, and beliefs. ] .col-1[] .col-5[ * Experts * Unbiased evaluation * Socially active * Similar to the consumer * Among the first to buy ]] --- # The Market Maven .col-7[ Market mavens are actively involved in transmitting marketplace information of all types They are into shopping and aware of what’s happening in the marketplace They have overall knowledge of how and where to get products ] ??? People can also be influenced by a special type of opinion leader called the market maven. Researchers use a scale to identify market mavens. The scale includes items like “I like introducing new brands and products to my friends.” --- # The Surrogate Consumer .col-7[ **Surrogate consumer**: a marketing intermediary hired to provide input into purchase decisions. * Interior decorators, stockbrokers, professional shoppers, college consultants * Consumer relinquishes control over decision-making functions Marketers should not overlook influence of surrogates! ] ??? Surrogate consumers are opinion leaders we usually pay for advice. Their recommendations are very influential! Some examples include personal shoppers and interior designers. --- class: practice-slide # For Reflection .col-8[ What opinion leaders have influenced your purchase behavior? ] --- # How Do We Find Opinion Leaders? .col-7[ The **self-designating method**: simply ask individuals whether they consider themselves to be opinion leaders * Easy to apply to large group of potential opinion leaders * Inflation or unawareness of own importance/influence **Key informant method**: key informants identify opinion leaders ] ??? Companies want to use opinion leaders to spread word-of-mouth communication about their brands, but how do they find the opinion leaders? The most common technique is simply to ask individual consumers whether they consider themselves to be opinion leaders. The problem is that just because we transmit advice about products does not mean that other people take the advice. For someone to be a true opinion leader, others must follow the advice given. --- # Sociometric Methods .col-7[ **Sociometric methods**: trace communication patterns among group members * use this method to better understand referral behavior and * to locate strengths and weaknesses in terms of how one’s reputation flows through a community. * Systematic map of group interactions * Most precise method of identifying product-information sources, but is very difficult/expensive to implement **Network analysis**: focuses on communication in social systems * Referral behavior/network, tie strength * Bridging function, strength of weak ties **Tie strength** the nature of the bond between people * ranges from strong primary to weak secondary. * Even weak ties can be influential. ] --- .row[ .col-6[![](img13/116.jpg) .caption[Courtesy of Toyota Motor Sales U.S.A., Inc.] ] .col-6[ ### Social media changes the way we learn about and select products. **Horizontal revolution**: communications no longer just flow top-down from companies and established media; they also flow across regular users via social media. **Social media platforms** enable a culture of participation, they offer * **synchronous** communications (those that occur in real time, as when you text back and forth with a friend) and * **asynchronous** communications (those that don’t require all participants to respond immediately). **Fear of missing out** (FOMO): becoming so enmeshed in your social networks that you feel the need to check them constantly. ]] --- class: practice-slide # For Reflection .col-8[ Have you ever used social medua to post something negative about an organization or product? What organizations or products have you posted negative word-of-mouth about? ] --- ## Successful Online Social Networks and Communities .col-7[ An **online community** is the collective participation of members who together build and maintain a site. **Standards of behavior**: Rules that specify what members can and can’t do on the site. **Member contributions** * 80/20 rule: most members of an online community are lurkers **Degree of connectedness** * Powerful groups are cohesive; members identify strongly with them and are highly motivated to stay connected. ] ??? Standards of behavior: Rules that specify what members can and can’t do on the site. Some of these rules are spelled out explicitly (e.g., if you buy an item on eBay, you agree that you have entered into a legal contract to pay for it), but many of them are unspoken. A simple example is discouragement of the practice of flaming when a POST CONTAINS ALL CAPITAL LETTERS TO EXPRESS ANGER. Member contributions: A healthy proportion of users need to contribute content. If not, the site will fail to offer fresh material and ultimately traffic will slow. Participation can be a challenge, though. Remember the 80/20 rule we discussed way back in Chapter 1? It applies to online consumption as well. The fact is that most members of an online community are lurkers. That’s kind of a creepy term, but it just means they absorb content that others post rather than contributing their own. Researchers estimate that only 1 percent of a typical community’s users regularly participate, and another nine percent do so only intermittently. The remaining 90 percent just observe what’s on the site. Although they don’t contribute content, they do offer value to advertisers that simply want to reach large numbers of people. But what happens when we want to engage consumers more actively? How can a site convert lurkers into active users? The easier it is to participate, the more likely it is that the community can generate activity among a larger proportion of visitors. In part, this means ensuring that there are several ways to participate that vary in ease of use. Facebook is an example of an online community that has figured out how to offer several forms of participation. Members can post status updates (easy), make comments, upload pictures, share notes and links, play social games, answer quizzes, decorate their profiles, upload videos, and create events (a bit harder), among other forms of participation. Degree of connectedness: Powerful groups are cohesive; this means the members identify strongly with them and are highly motivated to stay connected. Online groups may be even more cohesive than physical groups, even though many of the members will never meet one another in person. For example, compared to the “six degrees of separation” norm we discussed, researchers estimate that Facebook’s members on average have only four degrees of separation from each other. Although some users have designated only one friend and others have thousands, the median is about 100 friends. --- # Social Games .row[ .col-7[ ...are multiplayer, competitive, goal-oriented activities with defined rules of engagement and online connectivities among a community of players. **Leaderboards** indicate how each player is doing relative to others. **Badges** show the community the challenges the player has mastered. **Mode**: the way players experience the game world * player’s activities are highly structured, * single-player or multiplayer, * played in close physical proximity to other players (or by virtual proximity), * real-time or turn-based. ] .col-5[ **Game platform**: Hardware system, e.g. PlayStation, Xbox, PC, Smartphone **Milieu**: visual nature of the game, such as science fiction, fantasy, horror, and retro. **Genre**: includes simulation, action, and role-playing ![](img13/117.jpg) ]] ??? A **game platform** refers to the hardware systems on which the game is played. Platforms include game consoles (consoles are interactive, electronic devices used to display video games, such as Sony’s PlayStation3, Microsoft’s Xbox 360, and Nintendo’s Wii), computers (including both online games and those that require software installation on the player’s computer hard drive), and portable devices that may include smartphones or devices specifically for game play such as the Sony PSP or Nintendo DS. **Mode** refers to the way players experience the game world. It includes aspects such as whether a player’s activities are highly structured, whether the game is single-player or multiplayer, whether the game is played in close physical proximity to other players (or by virtual proximity), and whether the game is real-time or turn-based. **Milieu** describes the visual nature of the game, such as science fiction, fantasy, horror, and retro. The **genre** of a game refers to the method of play. Popular genres include simulation, action, and role-playing. Simulation games depict real-world situations as accurately as possible. There are several subgenres, including racing simulators, flight simulators, and “Sim” games that enable players to simulate the development of an environment. Among social games, simulations include the highly popular FarmVille, Pet Resort, and FishVille. Action games consist of two major subgenres: first-person shooters (FPS), where you “see” the game as your avatar sees it, and third-person games. In role-playing games (RPGs), the players play a character role with the goal of completing some mission. Perhaps the best-known RPG started its life as a tabletop game: Dungeons and Dragons. Players adopt the identity of a character in the game story and go about completing tasks and collecting points and items as they strive to accomplish the intended goal. --- class: practice-slide # For Reflection .col-8[ What social games do you play? How have they influenced your purchase behavior? ] --- .row[ .col-7[ # Digital Word-of-Mouth **Viral marketing**: an organization motivates visitors to forward online content to their friends; the message quickly spreads much like a cold virus moves among residents of a dorm. * Haul videos: feature a proud fashionista describing clothing items she just bought * Unboxing videos: illustrate in painstaking detail exactly how to remove electronics products from their boxes and assemble them for use ] .col-5[ ![](img13/118.jpg) ]] --- class: practice-slide #For Reflection .col-8[ Give an example of viral marketing. ] ??? Viral marketing refers to the strategy of getting visitors to a website to forward information on the site to their friends in order to make still more consumers aware of the product—usually by creating online content that is entertaining or just plain weird. Viral marketing for oil? Pretty slick. WD-40 quadrupled visitors to its fan club website by offering 1,000 AM/FM radios in the shape of oilcans to individuals who signed up 10 other members. --- # Digital Opinion Leaders .col-7[ **Influencer marketing model** basically replicates the “cool kid” phenomenon we all experienced in high school. **Power users** have a strong communications network that gives them the ability to affect purchase decisions for a number of other consumers, directly and indirectly. **Impression**: a view or an exposure to an advertising message. **Influence impressions**: Impression generated by power users, i.e. **Mass connectors** * Only 6% of social media users are responsible for about 80% of brand mentions. ] --- # Review .col-7[ Other people and groups, especially those that possess social power, influence our decisions. Marketers often need to understand consumers’ behavior rather than a consumer’s behavior. The decision-making process differs when people choose what to buy on behalf of an organization rather than for personal use. Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions. Word-of-mouth communication is the most important driver of product choice. Opinion leaders’ recommendations are more influential than others when we decide what to buy. Social media changes the way we learn about and select products. ]