What is a reference group?

A reference group is a category of people with shared traits that companies use to hone their business strategy. People within a reference group have some sort of distinguishing factor that separates them from the general population. Individuals use reference groups as a way to assess their own success and status within society. Reference groups influence people’s behavior through peer interaction and social perception, impacting the norms, values and desires of the average consumer.

Reference groups can be either comparative or normative. Comparative reference groups are the groups of people that customers compare themselves to, whether positively or negatively. They include celebrities and public figures who lead a different lifestyle than the target consumer group. Normative reference groups are the groups consumers are already a part of and interact with regularly in their daily life.

Related: What is Social Impact? A Primer for Business Owners

Why are reference groups important in business and when should they be used?

Reference groups are one of the key concepts used in marketing and sales. Companies take advantage of reference groups to give their products, services or brand more social clout among a particular group. Reference groups give business owners insight into what factors make products trendy or desirable. Any time a business selects a target market or focuses on a particular audience, they rely on reference groups to attract customers based on their shared interests and values.

Benefits of using reference groups

By connecting with the general social trends of a reference group, businesses affirm to their target audience that buying their products or associating with their brand is the normal, cool or smart thing to do. Sponsorships, recommendations and testimonials from the right reference groups can contribute to a brand’s popularity by showing the average consumer that key influencers within their social group support that company.

Different audiences have different reference groups that influence their behavior, so it’s important to understand what traits your core demographic values. For example, a punk clothing line appealing to young adults involved in alternative culture would leverage different public figures to sell their line compared to a professional clothing line targeting a conservative audience. Using the right reference groups gives you social authority among your customers and helps you adjust your messaging to their unique values.

Types of reference groups with examples

Businesses can use reference groups in several different ways. All reference groups have influence over consumer behavior and how individual customers perceive themselves and make purchasing decisions. Reference groups draw on different reactions from social groups to influence their behavior. There are some main types of reference groups based on how they influence others, including:

Aspirational

Aspirational reference groups are people who a particular audience respect, admire and want to be like. Businesses use aspirational reference groups to use exclusivity and excellence to sell their products. People generally want to be associated with prestigious figures, and they may feel connected to people in an aspirational reference group by using the same products.

Celebrity spokespeople are a common example of businesses using aspirational reference groups to sell their products. For example, if a famous chef endorsed a line of cookware, they would likely attract customers who are interested in food and want to be seen as knowledgeable about the culinary arts.

Membership

Membership reference groups include people’s immediate social group and the groups that influence their daily lives, such as family, neighbors or religious communities. Membership reference groups help people feel accepted as part of a group. An example of membership reference groups is selling cell phones with the perspective that everyone at someone’s school or work has one.

Dissociative

Dissociative reference groups are groups that consumers don’t want to be associated with. They help consumers feel special by implying that an inferior or oppositional group wouldn’t use certain products.

Dissociative reference groups should be used carefully to ensure that you aren’t alienating potential customers. One infamous example of dissociative reference groups was an ad for Dr. Pepper Ten, which had the tagline “Not for women.” While the campaign meant to target male customers with a “manly” light beverage, it caused controversyfor actively excluding women and enforcing gender roles.