In the marketplace – Reference Group influence

We see the occurrence of this in the marketplace when an individual conforms to the group norm by keeping a new product or adopting a new style, but maintains his or her independence by purchasing a different color or brand. This situation is known as reactance whereby the individual is motivated to resist further reduction in his or her set of free behaviors and to avoid compliance with the inducing agent, in this case his or her reference group. It is possible, therefore, that too obvious an attempt to force compliance with a group may have the opposite effect on consumers and thus they may strike out in an independent direction to avoid going along with the group.

In order for psychological reactance to occur two elements must be present. First, a consumer must expect a measure of freedom to act in a given situation. Second, some threat must arise that infringes upon that important freedom. Sources of such threats may range from social influence attempts by other people to impersonal barriers to action (such as product unavailability), or they may even be self imposed simply because the individual by entering into the process of a decision, arrives at a point beyond which there will be an unwanted reduction in freedom. When an individual’s freedom to engage in a specific behavior is threatened, the threatened behavior becomes more attractive. Studies of retail advertisements in which limits are placed on the consumer have shown increased attraction from the consumer. For example, in sales of limited duration, ads for one day sales resulted in greater purchase likelihood than ads for sales of longer duration. Another retail ad study showed that limits on soft drink purchase quantity (e.g. limit to per customer limiting to four per customer) were capable of increasing attraction to the advertised product. Reactance theory may help explain situations as per the following.

When the Coca-Cola Company launched new coke and abandoned their standard product recipe many consumers were outraged because it threatened their freedom to obtain the familiar and constant product they had grown accustomed to

Home shopping network (HSN) sells products on cable television channels. Consumers must phone in their orders within a short period (5 – 15 minutes) during which a product is offered. This time barrier may promote reactance and therefore result in increased attraction and sales. An extension of this idea within a retail store would be K-mart’s blue light special.

Reference groups may also influence shopping / purchasing patterns. A study of in store shopping behavior indicated that multiple shopping parties made many more changes in shopping plans than single shoppers. Compared to single shoppers less than half as many parties of three or more persons purchased as many items as planned However, group influence worked both ways; compared with single shoppers, lager proportions of parties of three or more bought both more and less than planned.

Another experiment was conducted to determine whether small, informal groups influence the formation of brand loyalty. In this study, consumers from preexisting reference groups selected a loaf of bread from four identical loaves marked with different letters representing fictitious brands. Based on the individual’s choices, it was concluded that informal groups had definite influence on their members toward conformity behavior with respect to brands of bread preferred. Moreover, the extent and degree of brand loyalty within a group as closely related to the behavior of the informal leader. A replication of this experiment however produced findings which were contrary. Evidence that group influence was not established was used to support the argument that products low in visibility complexity and perceived risk and high in testability are not likely to be susceptible to personal influence.

The research approaches described above generally suggest that the responses of others establish norm to which subjects comply. A recent study, however suggests that such normative effects may have been too readily inferred from observations of unanimous or consensus behavior among group members. In effect, people may use the product evaluation of others as a source of information about products; that is the infer from such evaluations that the product is, indeed, a better product. Such a situation probably occurs regularly in shopping activities and in social groups. Thus, rather than having a situation whereby the basis for group agreement is normative, it may be that members go along with the group because, as a result of observing the group’s reaction, they perceive the product differently.