Consumer Behavior
Social Power

Social Power

There have been various studies conducted on the influences groups and individuals can have on someone. This ability, by groups or individuals, to alter the actions of others is called Social Power. As it relates to consumer behavior, the influence associated with social power can have a huge impact on the types of products consumer purchase, the activities completed, and the attributes expressed by the consumer. There are 5 different categories of social power that represent the different was groups or individuals can influence people including referent power, legitimate power, expert power, reward power, and coercive power. These different power bases can exert their influence both intentionally and unintentionally over others. The study of social power is important because the better you understand how groups and individuals affect each other; the better you understand how these influences have shaped our consumer behavior.
Referent Power
The first, and arguably, most important way of influencing people with social power, is referent power. Referent power is when a consumer likes the qualities of a group or individual and mimics their behavior to better identify with that group or person. Referent power can influence consumers both intentionally and unintentionally. An intentional way of using referent power to influence a consumer would be for a company to employ a sports celebrity to advertise products or services. This would influence consumers into buying certain products because they want to be like that athlete. An unintentional way groups or individuals can exert referent power is by offering superior or admirable products or services and making the consumer want to be a part of it.
Celebrity endorsements are one of the most obvious and effective ways companies can use referent power to influences the consumers they are advertising to. A study done by Tepper School of Business at Carnegie Mellon University, analyzed the effect Tiger Woods has the brands he endorses. When analyzing the effect on Nike golf balls from 2000-2010, they found that “the Nike golf ball division reaped additional profits of $60 million through the acquisition of 4.5 million customers who switched as a result of Tiger Woods’ endorsement.” (Economic value, 2010) Now this alone wouldn’t be enough prove the link between Tiger Woods advertisments and increase in sale but because the over 10 years the “result of Tiger Woods switching away from Titleist to Nike in 2000, we estimate that the Titleist golf ball division experienced a decline of revenue of 7.48%”(Economic value, 2010) , his referent power is undeniable.
Companies can also exert referent power without intentionally just by doing what they normally do, as long as consumers want to be associated with them. An example of a company uses referent power with intentionally exerting social power would be a yacht club or golf course. The golf course or yacht won’t specially target consumers but because they are associated with protégé and luxury, people with the means to, want to become members. People who are interested in joining are trying to emulate the current members, while at the same time hoping other people view them in the same regard. Weather intentional or unintentional, referent power is strong way groups or individuals can influence the action of others.
Legitimate Power
The social power that involves someone’s legitimate right to try to influence another person is called legitimate power. Your boss is the most common example of someone who uses legitimate power towards others because they legitimate authority over their employees. In terms of consumer behavior, the United States Armed Forces advertisements produce legitimate power because, as American citizens, they have the legitimate right to try and influence me. A church leader would also express legitimate power because, at their position, they can have an impact on the behavior of someone. Legitimate power tends to used more on the corporate side of business, rather than in direct interaction with consumers. Some groups have limited legitimate power but are able to be influential with the use of expert power.
Expert Power
When a company has superior expertise or experience in a field and can influence consumers, this is a result of expert power being exerted. Apple is said to derive much of their success from expert power because they are experts in making elegant hardware, easy to use software, and the technical qualifications their employees have. Steve Jobs, co-founder of Apple, had “expert power from his ability to know what customers want—even before they can articulate it” (Wasserman, 1994) Technological companies are known for having expert power rather than legitimate power because “many of these firms utilize a flat or matrix structure in which clear lines of legitimate power become blurred as everyone communicates with everyone else regardless of position.” (Wasserman, 1994) There are some companies that utilize both legitimate power and expert power including corporations in the health care industry.
Consumers will seek out corporations has that offer health care related services or information. This results in the companies exerting both legitimate power and expert power because they have expertise in the health care field but they also have a legitimate right to try and influence their consumers. With recent invention of internet health sites, people have been able to take proactive steps in knowledge of diseases but still rely on the expertise of a physician. “Historically, the power awarded the medical profession has enabled it to define what constitutes medical knowledge and the profession has controlled access to knowledge by favoring a didactic relationship in which patients are passive recipients of treatment. With the push for partnership in health management, however, the strength of this authority is under threat. Increased availability of information via the internet may also contribute to this challenge of authority, and that is one of the questions we addressed in this study.” The physician generally had both legitimate power and expert power but that has begun to get challenged with the prevalence of online health services.
Reward Power Many businesses operate some form of loyalty programs, which gives consumers an incentive to use their product or services. This ability to influence consumers’ purchases can be defined as reward power. Without the rewards offered via a loyalty program, the motivation to use that businesses products or services would not be overly strong. A “loyalty program” is defined as, “a program that allows consumers to accumulate free rewards when they make repeated purchases with a firm. Such a program rarely benefits consumers in one purchase but is intended to foster customer loyalty over time” (Yuping, 2007) These loyalty programs can include free products or services, money off services, or cash back on purchase. The use of reward power from these companies can keep them competitive and increase profits by fostering change in consumer purchasing behavior. A group that has the power to reward its members for their actions is also utilizing reward power. Many companies or individual are members to the various trade group for each type career to increase exposure to other members and receive support benefits. An example of this would be Florida Health Care Association because they represent a large portion of the long-term health care community. The association lobbies on behalf of items members for various causes; it informs their members of changes in regulations, and they offer awards to members for excellence in the field. These recognitions and awards by the group or association have an effect of the behavior of its members.
Coercive Power The final category of social power, and in my option the worst use of social power, is coercive power. When a group or individual has the right to sanction members for doing the wrong behavior it is considered coercive power. This can also be looked at as punishing members for them not doing what you want them to do. Coercive power isn’t as very popular in business because most corporations have legitimate power rather than coercive power. “However coercion has also been associated positively with generally punitive behavior and negatively associated to contingent reward behavior.” (Gioia & Sims, 1983) An example of this would be “the truth” anti-smoking campaign because it shows the effects of smoking on the body and promote the anti-smoke among people watching. It is like reward power but instead getting a reward, it focus on the negative things associated with continuing to smoke cigarettes.
Overview
The theory of social power is interesting and unique because it tries to measure how people are influenced by the groups and individuals around them. It is a unique subject that doesn’t even have to be done internationally for someone to influence another group or individual. Referent power seems to be the most commonly used and most effective category in social power because it gives you the most wide range of tool necessary to influence another person or group of people. When it comes to consumer behavior expert power and reward power are right behind referent power in effectiveness. Coercive power and legitimate power have lasting effect on consumer behavior because they affect the corporate persona on a company, therefore affecting its products or services. The better businesses understand the way social power works, the better they can use it to increase their sales and effectiveness.

References
Economic value of celebrity endorsement: Tiger woods’ impact on sales of Nike golf balls. (2010). Informally published manuscript, Tepper School of Business, Carnegie Mellon University, Pittsburgh, PA, Retrieved from http://www.andrew.cmu.edu/user/derdenge/TWExecutiveSummary.pdf
Donnelly, L. (2008). Ehealth as a challenge to ‘expert’ power: a focus group study of internet use for health information and management. Journal of the Royal Society of Medicine, 101(10), 501-506.
Gioia, D. A., & Sims , H. P. (1983). . Perceptions of managerial power as a consequence of managerial behavior and reputation. Journal of Management, (9), 7-16.
Wasserman, S. (1994). Strategic management. Upper Saddle River, NJ: Pearson Education.
Yuping, L. (2007). The long-term impact of loyalty programs on consumer purchase behavior and loyalty. Journal of Marketing, 74(4), 19-35.