10 Days of Christmas…Consumerism: Day 6

Screen Shot 2014-12-21 at 12.10.52 PM

Image from Lisa Larter

It’s day 6 in our crash course of consumer psychology, and we’ve gotten into a lot of great work on social influence and contagion. Until now, we’ve ignored some inherently social marketplace phenomena: word of mouth advertising and customer reviews. These days, customer reviews and review sites like Yelp help consumers make purchasing decisions, or select products and services better suited to their needs. Customer reviews are supported by the concept of word of mouth, or hearing about something from someone else.

Word of mouth is powerful for several reasons. We know from social psychology that other people are often swayed by expertise or experience, and people writing product or service reviews have generally used the product or service.1 We are also persuaded more often by those familiar to us than by unfamiliar people, something researchers have dubbed “tie strength.”2 But as we’ve reviewed in past articles, complete strangers’ product choices can influence us also, so word of mouth can come from a large range of sources. And, boy, is it influential!

Research has shown that this product feedback we receive from others has both short and long-term consequences, with word of mouth affecting future decisions, as well as those made in the moment.3 In fact, researchers have found that word of mouth advertising has longer carryover effects and higher response elasticities than traditional marketing efforts.4 Basically, this means that word of mouth is more influential over time, and yields more customers per effort, than traditional marketing. As you can see, word of mouth is very desirable for businesses, and it works better on us as consumers.

Customer reviews of products or services are one expression of this type of word of mouth feedback. While browsing merchandise, you can get educated opinions and specifics about the product, as well as warnings or issues with service. Unsurprisingly, these reviews often play a role in our product decisions. For instance, book sales on Amazon and Barnes and Noble online bookstores are directly related to both the number and type of positive reviews left by other customers.5 In another study, researchers found that participants were about 20% more likely to choose recommended products than non-recommended products.6 But, luckily for companies, brand loyalty moderates the effect of product reviews, such that consumers are less likely to be swayed by reviews when they already like a brand or product.7

It’s been a wonderful journey through social influence within the consumer realm. Tomorrow, we’re turning to conceptualizations of brands as people. So, obviously, you won’t want to miss that 😉

  1. Petty, R. E., Cacioppo, J. T., & Goldman, R. (1981). Personal involvement as a determinant of argument-based persuasion. Journal of Personality and Social Psychology, 41(5), 847.
  2. Bansal, H. S., & Voyer, P. A. (2000). Word-of-mouth processes within a services purchase decision context. Journal of Service Research, 3(2), 166-177.
  3. Bone, P. F. (1995). Word-of-mouth effects on short-term and long-term product judgments. Journal of Business Research, 32(3), 213-223.
  4. Trusov, M., Bucklin, R. E., & Pauwels, K. (2009). Effects of word-of-mouth versus traditional marketing: findings from an internet social networking site. Journal of Marketing, 73(5), 90-102.
  5. Chevalier, J. A., & Mayzlin, D. (2006). The effect of word of mouth on sales: Online book reviews. Journal of Marketing Research, 43(3), 345-354.
  6. Senecal, S., & Nantel, J. (2004). The influence of online product recommendations on consumers’ online choices. Journal of Retailing, 80(2), 159-169.
  7. Ahluwalia, R., Burnkrant, R. E., & Unnava, H. R. (2000). Consumer response to negative publicity: the moderating role of commitment. Journal of Marketing Research, 37(2), 203-214.
Advertisements

10 Days of Christmas…Consumerism: Day 4

SEM

Structural equation model from Dholakia, Bagozzi, & Pearo, 2003

In the digital age, when so much holiday shopping occurs online, how are consumers socially influenced? The answer is: surprisingly a lot. The average adult in the US spends 5 of their waking hours online. But what are we doing online? We’re on social media, we’re reading and commenting on news articles and discussing that internet content with others. Consider the last time you were with a friend and you brought up an article you saw online, or a post from Instagram. This is part of the way that content goes viral, this word of mouth advertising from trusted others. Word of mouth moves even faster on the internet, with websites like Yelp and Amazon at our fingertips, reviewing products and services from plumbers to stereos.

Social influence is the highest in virtual contexts when people are engaged in relationships, in real life or within a brand community. This is because we’re most influenced by our ingroup members (people we consider part of our social circle, or group within society, e.g. all people of one race, all people of one social class or all alumni of the same college).1 When we’re engaged in virtual brand communities, we form social bonds with that group, creating an ingroup of people and increasing identification with the brand.2 Brand communities can also invoke peer pressure, like pressure to conform in some undesired group discussion, and establish community norms, created and maintained by the moderators and high profile members of the those communities.2 Check out the graphic for a depiction of the incredibly complex process of creating web content through social influence.

Brands themselves have social influence, especially if they are “identity signaling brands.” An identity signaling brand is something that announces you to the world and says, “This reflects who I am as a person.” Not surprisingly, while people tend to stick with the status quo and purchase the same things as others, in identity signaling domains that include displays of wealth or social class, they want to be seen as unique.3 But we all also vary on our need for uniqueness, with some individuals needing to stand out from others, and some preferring to fit in through their choices as consumers.4 For instance, when shopping for a car, someone with a high need for uniqueness may buy a Smart Car (rare here in America), while someone with a low need for uniqueness may buy a Honda (quite common in America). Someone who sees his or her car as an identity signal may be more likely to want to purchase an expensive and rare car, like a Bugatti, to show others that they are different.

It is the job of marketers to be persuasive, and to increase demand for products within the community. And, meanwhile, it is human nature to be influenced by the words and actions of others, as well as our own desires to fit in or stand out. Beware before you engage in social activities based around brands this holiday season! Harnessing the power of peers and the power of consumer goods is a potent combination.

  1. Cialdini, R. B., & Goldstein, N. J. (2004). Social influence: Compliance and conformity. Annual Review of Psychology, 55, 591-621.
  2. Algesheimer, R., Dholakia, U. M., & Herrmann, A. (2005). The social influence of brand community: evidence from European car clubs. Journal of Marketing, 69(3), 19-34.
  3. Berger, J., & Heath, C. (2007). Where consumers diverge from others: Identity signaling and product domains. Journal of Consumer Research, 34(2), 121-134.
  4. Tian, K. T., Bearden, W. O., & Hunter, G. L. (2001). Consumers’ need for uniqueness: Scale development and validation. Journal of Consumer Research, 28(1), 50-66.