Another social factor that impacts consumer behavior is reference groups. A reference group is the group whose perspective an individual takes on in forming values, beliefs, attitudes, or opinions, and even overt behavior. One considers this group as a point of reference when evaluating how they would view their own existence in the world. Reference groups can be very small just a few close friends or fairly large, like a sports team, fan club, or even a political party. For example an aspiring politician may choose a clothing carefully so as to gain the respect of the members of a political party. Reference groups influence consumer behavior in different ways. First, they have defined the actual items or services considered acceptable when we belong to a specific group. The housing, clothing, or car, for example, deemed appropriate for a member of that group. These are known as associative reference groups. Second, they set levels of aspiration, offering cues of what lifestyle and related purchasing patterns we should strive to achieve. These are the domain of aspirational reference groups. Third, they also highlight what behaviors are undesirable, these are known as dissociative reference groups. There are two types of associative reference groups, those are groups to which we belong. Primary groups with whom you interact on a regular basis, like a class that you attend. Then there are secondary reference groups, these are groups with whom you don't have much face-to-face contact. Most MBA students aspire to have the success of the founders of Google. If we know what they read, if you read certain books or took specific online courses, that can impact our desire to take those very online courses since the Google founders and aspirational reference group first. We'd want to do what they did to be successful. Dissociative groups are those to which we do not desire to belong. In my case, I'm somewhat scared, I'm very scared of heights. A group of rock climbers would be a dissociative reference group for me. Now, how can we describe reference groups? First, we have to think of their degrees of contact. As we discussed earlier, a primary reference group is a group with which you have face-to-face contact. These groups tend to have much more influence on us. A secondary reference group is a group with which you do not have direct contact. Traditionally, we've believed that secondary groups, such as online groups, don't have as much influence on how consumers behave. However, in recent times, as more people spend more time online, the impact of online groups has become even more significant, leading to, in some instances, negative outcomes. In some cases, such as bodily injury or even death, as an outcome of online behavior. Marketers have made use of online influencers to impact goods and services consumers purchase, such as clothing and make-up. Social media influencers, as they are known, can make hundreds of thousands of dollars depending on their follower count and outreach success. I think I'm in the wrong field the highest paid social media influencer to date is guess who? I'll give you a minute. That's 22-year-olds, social media mogul and makeup business owner, Kylie Jenner, who can make more than $1 million, one million per sponsored posts that she shares with her 164 million followers on Instagram. Even micro influencers or social media users with anywhere say between 50-100,000 followers, they can make as much as a few thousand dollars per post and reach between $40 -100,000 per year. You need a side gig that's it. Next, reference groups can be described based on their level of formality, or groups organized and have formal rules regarding membership. Third homophily that means how similar are group members. Of course, though, the more homophilous the group is, the greater the influence, greater similarity means greater influence. Next, you could describe reference groups in terms of what's known as density. Dense groups are those in which group members all know each other, there's a great deal of familiarity. For instance, here in Champaign, Illinois, the home of University of Illinois, there's a very small group of individuals from the Caribbean, where I'm from, I believe we have a group of about 30 individuals who know each other very well. We knew each other lives, we know each others families and so on, we have each others phone numbers, we're all in a WhatsApp group together and share good and bad news. We have fairly dense group, and that means we have influence over how group members behave. Also, you can describe a reference group based on degree of identification. How much do you identify with the group? That Caribbean group I identify very strongly with them because they represent my roots where I'm from. Finally, we could discuss the tie strength of reference groups. Are group members connected in a close, intimate relationship, is there a frequent interpersonal contact? Those variables impact the strength of a reference group and will ultimately impact how much influence a reference group has on your behavior as a consumer.
