What a Reference Group Is in Marketing

business people looking over a document together

Compassionate Eye Foundation / Getty Images

Few decisions are made in a vacuum. Where we live, where we work, the cars we drive, and the toothpaste we use often are 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 the traits of those with whom we share our lives. They could be colleagues, classmates, or neighbors. Likewise, they could be friends from the gym, fellow association members, or favored celebrities. If we can identify with them, they can be counted as a reference group.

Defining Reference Groups

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 admire or aspire to be like.

These include movie stars, elite athletes, and public authority figures. We may not know them, but we still follow them. Others are closer to our own orbits, such as 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. Nonvoters, 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.

Their Purpose

Reference groups help people navigate their way through financial decisions, relationships, child-rearing, recreation, and many other aspects of life. Peer pressure certainly can be a negative, but it also can be a positive.

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.

Types of Groups

Reference groups can be categorized in many ways. A key distinction is between formal and informal reference groups, the former consisting of clubs, organizations, and religious fellowships, while the latter often is comprised of friends or colleagues. In some cases, a reference group can be what is called an opinion leader, such as a rock star or famous politician, who attracts devotees.

Groups also can 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 groups are 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, by necessity, or simply by birth. Humans are social animals and likely will always be grouped and categorized. These groups can guide members in plotting their courses in life. At the same time, they can help others understand and predict future behaviors.