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Market choices driven by reference groups. An evolutionary approach
1Department of Mathematics and Mathematical Economics, Warsaw School of Economics, Al. Niepodłeglości 162, Warsaw, 02-554 Poland.
Journal of Evolutionary Economics
|February 7, 2017
Summary
Reference group influence can temporarily boost a brand's market share, but only if the group is large and most members follow the majority. Otherwise, the impact is minimal.
Area of Science:
- Consumer Behavior
- Marketing Analytics
- Social Psychology
Background:
- Understanding the impact of social influence on consumer choices is crucial for market dynamics.
- Reference groups significantly shape individual purchasing decisions and brand preferences.
Purpose of the Study:
- To analytically determine the extent of reference group influence on brand market share.
- To identify the conditions under which reference group influence becomes significant.
Main Methods:
- Analytical modeling of consumer behavior within reference groups.
- Simulation of market share dynamics based on group size and conformity probability.
Main Results:
- A larger reference group size and higher probability of conforming to the majority can lead to temporary, modest brand prevalence.
- These effects are contingent on substantial group size and high conformity rates; otherwise, the market share impact is negligible.
Conclusions:
- Reference group influence is a conditional factor in market share determination.
- Marketing strategies should consider group dynamics and conformity levels for potential impact.
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