What is a Reference Group?

Reference Groups
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What Is a Reference Group and Why is it Important to Your Marketing?
Few decisions are made in a vacuum. Where we live,  where we work, the cars we drive and the toothpaste we use are often the results of what we hear and who we speak to. It may not be scientifically derived, but anecdotal information heavily influences our choices. It stands to reason, then, that businesses will market goods and services based on traits of those with whom we share our lives.

They could be colleagues, classmates, or neighbors. They could likewise be friends from the gym, fellow associate members or favored celebrities. If we can identify with them, they can be counted as a reference group.

What Defines a Reference Group?
Marketing professor Lars Perner of the University of Southern California contends that three factors determine identification with a reference group. There are some people, for example, that we may aspire to be like: movie stars, elite athletes, and public authority figures. We may not know them but follow them still. Others are closer to our own orbit, i.e. people we associate with because of what we hold in common: age groups, religious faiths, and political affiliations. Finally, reference groups are determined on the basis of disassociation. Many adolescents, for example, actively seek to identify apart from their parental ties. Non-voters, in the same way, refrain from civic participation because they feel alienated from the prevailing political system.

Aspiration, association and disassociation each contribute to the consumer profile.

What Is the Purpose of a Reference Group?
Reference groups help people navigate their way through life—financial decisions, relationships, child-rearing, and recreation, to name a few. Peer pressure can work for ill, for sure, but it can also work for good.

Reference groups also help businesses, advertisers, and social scientists better determine patterns of behavior to sell products or craft policies. Case in point: a company that sells chewing tobacco is more likely to place an ad in a hunting magazine than in an urban nightlife periodical because its customers and prospects tend to be rural, middle-aged males. 

Are There Different Types of Reference Groups?
Reference groups can be categorized in myriad ways. One distinction made is between formal and informal reference groups, the former consisting of clubs, organizations and religious fellowships while the latter is often comprised of friends or colleagues. In some cases, a reference group can be an individual (sometimes called an opinion leader), such as a rock star or famous politician, who attracts devotees. Groups can also be divided into primary and secondary status, depending on how much influence they carry with a given person. Other paradigms include informational, normative and identification reference groups. Informational is based on knowledge attained; normative, on expectations met, such as when company employees conform to a dress code; and identification, on a desire to belong.

Belonging to a reference group can be by choice or by necessity or simply by birth. Humans are social animals and, as such, will likely always be grouped and categorized. These groups can guide their members in plotting courses in life. At the same time, they can help others understand and predict future behaviors.