Journal of Retailing 89 (3, 2013) 338351

Group Buying: A Strategic Form of Consumer Collective

Jeff Jianfeng Wang
a,
, Xin Zhao
b
, Julie Juan Li
a
a
College of Business, City University of Hong Kong, 83 Tat Chee Ave., Kowloon, Hong Kong
b
University of Nebraska-Lincoln, CBA 323, P.O. Box 880492, Lincoln, NE 68588-0492, United States
Abstract
Existing literature on collective consumption focuses on passionate consumers of particular brands. This research examines group buying (GB),
a multi-phase consumer collective activity, that creates value prior to, during and after the acquisition of products and services. Through a two-
year, multi-sited, qualitative study, we examine both retailers and consumers motivations for participating in GB. GB is essentially a consumer
collective that centers on consumer needs across brands, activities and lifestyles. This consumer collective is not initiated by brand afliation or a
consumption subculture, but by the need to discover desirable brands and obtain optimal products and services at favorable prices. Furthermore,
GB empowers consumers to better protect their rights in an under-regulated market.
2013 New York University. Published by Elsevier Inc. All rights reserved.
Keywords: Group buying; Consumption collective; Retail consumer behavior; Retail strategy
Consumer collectives have been a vibrant market force over
the years. In various forms, such as consumption subcultures
(Schouten and McAlexander 1995), marketing tribes (Cova and
Cova 2002) and brand communities (Muniz and OGuinn 2001),
consumers have joined together to participate in a range of activ-
ities. Such group endeavors create value for both the consumers
and the rms they patronize. Existing research on consumer
collectives focuses on the post-purchase stage of consumption
and examines the development of communities after consumers
acquire products and services or become devoted to partic-
ular brands (e.g., Muniz and OGuinn 2001; Schau, Muniz,
and Arnould, 2009; Schouten and McAlexander 1995). It is
unknown whether consumer collectives exist in the early stages
of consumption, and if so, how the collective process of prod-
uct acquisition creates value for consumers and rms at those
stages.
This research contributes to the literature on consumption
collectives by focusing on product acquisition as opposed
to post-purchase consumption behaviors. Whereas previous
research focuses mainly on consumers brand allegiance (e.g.,
Schouten and McAlexander 1995), we study consumers who
lack brand knowledge at the stage of product acquisition. In
particular, we examine group buying (GB), a strategic form

Corresponding author. Tel.: +852 3442 7981.

E-mail addresses: jeffwang@cityu.edu.hk (J.J. Wang),
xinzhao@unl.edu (X. Zhao), julieli@cityu.edu.hk (J.J. Li).
of product acquisition that has emerged as a factor in global
retailing over the past decade. GB is an acquisition mechanism
employed by groups of consumers to obtain volume discounts
on desired goods and services.
GB has been widely adopted in various forms, includ-
ing online auctions such as Mereta.com and Mobshop.com.
Today, it has become an attractive business model with great
potential as seen by the appeal of Groupon and LivingSo-
cial. We study GB in the context of urban China. China
has evolved rapidly from a centrally planned economy to a
consumer-driven market (Zhao and Belk 2008). The surg-
ing popularity of GB in China provides a unique context for
understanding how consumer collectives create value at dif-
ferent stages of consumption (Schau et al., 2009). From its
humble start in online forums, GB has attained remarkable
success in China (Areddy 2006; Montlake 2007). Shanghai-
based Liba.comreportedly has 1.6 million members and attracts
300,000 unique visitors per day (Tang 2008). By October
2011, there had emerged around 4,000 GB web sites in China
(http://tech.sina.com.cn/i/2011-10-18/04196191328.shtml).
In consumer markets, GB can be seen in three forms: (1)
consumer-initiated groups formed for the purchase of specic
products/brands; (2) intermediary GB groups organized by
individuals or companies for purposes of making a prot; and
(3) company-organized GB activities to promote their own
brands and/or products. We narrow our focus to the category of
consumer-initiated GB. In this form of GB, consumers join by
connecting with each other on internet forums. They propose
0022-4359/$ see front matter 2013 New York University. Published by Elsevier Inc. All rights reserved.
http://dx.doi.org/10.1016/j.jretai.2013.03.001
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 339
to buy certain products or services, such as smartphones or
wedding photographs, and communicate with others who are
interested in that same product or service. After extensive
discussion and evaluation, they collectively decide upon a brand
and model to purchase and form an ad hoc purchase team. They
then negotiate with retailers for price and services in exchange
for the volume sale. Such collective acquisition practices give
consumers unprecedented strength in a market dominated by
powerful manufacturers and retailers and largely devoid of
legal protections for consumers.
We take a discovery-oriented approach and address three
questions: (1) Why do consumers engage in GB? (2) Why do
retailers participate in and support GB? (3) What are GBs long-
term benets to consumers? We examine the motivations for
consumers to buy in groups and the long-term benets that
accrue to them. We show that GB is an acquisition-oriented
consumer collective that can extend to later stages of consump-
tion. We also discuss how the acquisition-oriented community
benets retailers and provides opportunities for themto leverage
their marketing strategies. In the following sections, we begin
with a review of consumption collectives and previous theoret-
ical accounts of GB. In the research method section, we detail
the methods used, the research team, research sites, and the pro-
cesses of data collection and analysis. We divide ndings into
two parts: motivations and outcomes, in which we offer themes
that cover consumers and rms perspectives. Lastly, we con-
clude with this studys contributions to consumption collective
literature and its managerial implications.
Conceptual background
Group buying
Extant researchonGBdescribes the phenomenonas anonline
auction activity and focuses on its pricing mechanisms such as
timing and quantity (e.g., Anand and Aron 2003; Chen, Xilong,
and Xiping 2007; Kauffman and Wang 2002). Kauffman and
Wang (2001) study the dynamic pricing model (GBdiscounts) in
which selling prices drop as more buyers participate. Chen et al.
(2009) suggest that in order to increase demand, auction inter-
mediaries need to provide means for bidders to cooperate and
share information. Focusing on online auctions, these studies
fall short of capturing the complexity and unique characteristics
of GB.
The extant literature also fails to explain the mechanism of
GB in several regards. First, conceptualizing GB as an auto-
matic pricing mechanism does not account for the bargaining
that occurs between consumers and rms. GB in China involves
active negotiation between buyers and sellers in terms of not
only price, but also product quality, accessories and options, and
after-sales services. In addition, it involves a variety of consumer
motivations that have not been addressed in previous research.
These motivations may be a result of Chinas unique market
constraints, such as the lack of transparency and consumer pro-
tection (Tang 2008). They may also be attributed to the collective
nature of Chinese culture and society. Second, previous litera-
ture on GB regards the completion of online auctions as an end
point. The focus is on the transaction, rather than on the rela-
tionship and consumer experiences at the acquisition stage. It is
unclear how the product acquisition phase helps to create value.
We will showthat groupbuyers engage ina varietyof commu-
nal practices before, during and after purchases that are far more
complex and long-tailed than mere price comparison. We argue
that GB is not simply a buying method but a mechanism that
empowers consumers to utilize information sharing and nego-
tiating power. Third, existing studies examine only one party
among the GB participants. We adopt a dyadic perspective to
explore the motivations and outcomes of GBfor both consumers
and rms. GB is a cooperative approach that leverages group
cohesion to benet not only individual consumers, but also par-
ticipating rms through signicantly increased sales volumes
and reputational enhancement. GB has evolved into a vibrant
business model that calls for a deeper understanding beyond the
economic incentives that previous works have focused on. We
situate our discussions of GB within previous work on varied
consumption collectives.
Consumption collectives
Previous research focuses primarily on how consumption
communities develop around strong brands and has concep-
tualized these consumption collectives in terms of subculture
of consumption (Schouten and McAlexander 1995), marketing
tribe (Cova and Cova 2002), and brand community (Muniz and
OGuinn 2001; Schau et al. 2009). A subculture of consump-
tion is comprised of a group of consumers who share a common
interest in particular brands that they have acquired and used,
such as Harley-Davidson (Schouten and McAlexander 1995).
Through consumption activities, participants form relationships
that allow them to share experiences and provide mutual sup-
port. Their identity, motives, and commitment evolve as they
engage in group-based activities.
A marketing tribe, another form of consumption collective,
is characterized by uidity, and occasional gatherings and dis-
persal (Cova and Cova 2002; Maffesoli 1996). Tribal marketing
is more inuential than marketing institutions in shaping tribe
members behaviors. Unlike traditional tribes, these neo-tribes
are not bound by physical co-presence but exhibit a local sense
of identication, religiosity, syncretism, and group narcissism
(Cova and Cova 2002, p. 597). Through shared consumption
practices, these tribal consumers strive to create, maintain, and
recreate social links within their self-selected tribes. Consumer
tribes represent a uidformof social solidaritythat maymanifest
in different morphologies in different markets, and at different
consumption stages.
Brand communities are the most well-researched of all con-
sumption collectives (e.g., Muniz and OGuinn 2001; Schau
et al. 2009). A brand community is marked by three elements
developed through shared consumption practices over time: con-
sciousness of kind; rituals and traditions; and a sense of moral
responsibility (Muniz and OGuinn 2001). A brand community
creates value through various communal practices such as social
networking, impression management, community engagement,
and brand use (Schau et al. 2009). These practices work together
340 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
as a process of collective value creation. Theyendowparticipants
with cultural capital, produce a repertoire for insider sharing,
generate consumption opportunities, evince brand community
vitality, and build value.
In sum, previous literature on consumption collective locates
consumer agency at the post-purchase stage and focuses on
particular brands. It is unknown howcollective consumer behav-
ior is practiced at the pre-, during- and post-purchase stages.
Whereas members of brand communities have pre-existing rela-
tionships with particular brands, GB consumers usually have
no clear brand preferences at the beginning of the GB stage.
However, GB consumers often have compelling needs to pur-
chase certain products/services within a specied period of time.
GB enables them to evaluate a variety of brands and attribute
bundles before they collectively make a choice. GBenables par-
ticipants to evaluate products and brands prior to acquisition and
to negotiate with sellers during the purchase phase. After the pur-
chase, group buyers may form post-acquisition communities to
engage in additional consumption activities or unite to protect
their rights if service problems arise. This research examines
this multi-phase consumer collective as exemplied by GB.
Method
We took an ethnographic approach (Arnould and Wallendorf
1994; Ekstrom 2006; Sunderland and Denny 2007) to under-
stand the motivations and outcomes of GB for consumers and
rms. Our research team was diverse in gender, training and
background (Sherry 2006). Two authors were rigorously trained
in ethnography and have conducted extensive eldwork in both
China and U.S. These two authors were joined by an established
expert in the area of marketing strategy to enrich and expand the
data analysis from a consumer focus to a managerial and strate-
gic perspective. The gender differences in our research team
also help to incorporate meanings from both male and female
perspectives.
Data were collected over a two-year period between May
2007andDecember 2009, andinvolvedtrips tomultiple research
sites. The research was conducted in four cities, including Bei-
jing, Shanghai, Shenzhen and Guangzhou. These research sites
were selected based on the following considerations: (1) They
were the places where GBinitially became popular in China; (2)
Consumers in these cities had easy access to the internet, and
to both domestic and global brands; (3) Retailers in these loca-
tions were active promoters of GB; (4) These cities are located
in northern, middle and southern China, and hence can cover
regional variations.
In our eldwork, we observed and engaged in GB activi-
ties, interviewed participants, and talked to both retailers and
individuals who promoted and organized GB. We attended two
GB events: one for Toyota vehicles in Shenzhen, and one for
electronic appliances in Beijing, during which we observed
events as they unfolded and interviewed participants on site. This
approach enriched the understandings derived from interview
data and compensated for possible omissions in the interviews
(Arnould and Wallendorf 1994; Sunderland and Denny 2007).
In addition, we closely monitored online forums and frequently
visited two websites (Beijing Tuangou under sina.com and
Teambuy.com.cn) that were used most often by our informants to
initiate and form purchase teams. These two websites provided
rich information about GBinvolving multiple product categories
and a wide variety of domestic and global brands. Instead of
interrupting the discussions by posting questions, we took a non-
participatory approach in our online exploration, and observed
the discussions as they occurred (Kozinets, 2002, 2006). Partic-
ipants in these online forums used pseudonyms and this allowed
them to express their feelings openly. We contacted participants
to request individual interviews through email and via the online
forums. We followed the GB process from the initial post to the
end of the transaction and on to discussion of post-purchase
activities.
We used purposive sampling (Belk, Sherry, and Wallendorf
1988) and informants were recruited through personal connec-
tions, online forums, and market research rms. Informants
included both male and female consumers from many walks
of life, including college students, university professors, ofce
clerks, business owners, managers, IT and nance special-
ists, and housewives and stay-at-home moms. Their monthly
incomes ranged from 2,000RMB to 15,000RMB, representing
a cross-section of the middle class to upper-middle class in con-
temporary China. Their ages ranged from 18 to 41, reecting
the age range of the most avid GB participants in urban China.
In total, we interviewed 30 consumers, six organizers and 11
retail managers (see Table 1), all of whom participated fre-
quently in GBin a wide variety of product and service categories,
including automobiles, electronics, appliances, home decorating
materials, furniture and cosmetics.
The interviews lasted between 60 and 90 min. They were
conducted in Mandarin and began with general questions about
the participants GB experiences (Denzin and Lincoln 2000;
McCracken 1988). Informants were asked to describe previous
GBevents they had participated in; their roles in the process; and
their general reections about the process. We discussed various
topics about the motivations and benets that consumers sought
through GB and asked informants to compare GB with other
shopping experiences. We continuously probed for new infor-
mation and deeper meanings (Arnould and Wallendorf 1994).
All interviews were recorded and transcribed. The data collec-
tion continued until theoretical saturation was reached (Belk
et al. 1988). Our data include eld notes, transcripts of depth
interviews, photographs of retail arenas where GBs took place,
GB promotional materials, and records of online discussions by
GB participants.
We took a discovery-oriented approach to developing theo-
ries (Strauss and Corbin 1998). The analysis proceeded through
an ongoing, iterative process as we sought to understand and
theorize about this consumption phenomenon (Spiggle 1994;
Sunderland and Denny 2007). The authors analyzed the data
independently by using NVivo computer software to code and
link relevant and important details, working in part-to-whole
format (Richards 1999). This software facilitated coding and
retrieving of text and helped researchers manage open-ended
data and develop an organizing system. We rst developed open
codes for each interview and applied concepts to label interview
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 341
Table 1
Characteristics of informants.
Informant Age Sex Household income
a
Occupation Location
Consumers:
Ting 32 F 12,000 IT specialist Guangzhou
Yan 33 F 15,000 Senior clerk Guangzhou
Kun 35 F 10,000 Assistant manager Guangzhou
Min 32 M 12,000 Sales manager Guangzhou
Dian 21 M 8,000 University student Guangzhou
Jiao 38 F 10,000 Finance specialist Guangzhou
Ying 31 M 9,000 Project supervisor Guangzhou
Wen 39 F 9,000 Accountant Guangzhou
Lan 40 F 9,000 Logistic supervisor Shenzhen
Yi 39 M 8,000 Senior manager Shenzhen
Qiang 18 M 3,500 Student Shenzhen
Yan 26 F 8,500 Customer service Shenzhen
Qin 32 F 9,000 Finance supervisor Shenzhen
Yu 25 M 6,500 Unemployed Shenzhen
Chang 38 F 16,000 Manager Shenzhen
Wei 39 F 5,000 Accounting clerk Shenzhen
Juan 33 F 4,000 Accounting clerk Shanghai
Li 23 F 4,500 Salesman Shanghai
Liang 29 M 15,000 Manager Shanghai
Hui 27 F 18,000 Supervisor Shanghai
Chang 33 M 4,500 Logistic clerk Shanghai
Mei 40 M 22,000 Senior clerk Shanghai
Feng 26 F 2,500 Beauty consultant Shanghai
Yuan 38 M 6,500 Vice president Beijing
Na 35 F 8,000 Nurse Beijing
Ping 28 F 3,000 Secretary Beijing
Lin 22 M 7,000 University student Beijing
Hua 37 M 15,000 Professor Beijing
Nan 34 F 12,000 Housewife Beijing
Xuan 24 F 7,000 University student Beijing
Organizers:
Yin 34 M Organizer (home remodeling) Shenzhen
Huang 28 F Organizer (car accessories) Shenzhen
Shen 37 M Organizer (cellphone) Shanghai
Yuan 33 M Organizer (apartment) Shanghai
Guo 33 M Organizer (cellphone) Shanghai
Gang 41 F Organizer (auto) Shanghai
Retailers:
Fang 25 F Retailer (auto) Shenzhen
Rong 40 M Retailer (building material) Shenzhen
Xian 33 F Retailer (auto) Shanghai
Yao 29 F Retailer (furniture) Shanghai
Ting 35 M Retailer (electronic appliance) Shanghai
Xu 35 M Retailer (computer) Shanghai
Xiang 25 F Service (movie theatre) Shenzhen
Cheng 28 M Retailer (auto) Shenzhen
Zhao 34 F Retailer (auto) Shenzhen
Chen 33 M Retailer (auto) Shenzhen
Wen 40 F Service (theme park) Shenzhen
a
Household income in RMB per month (US$ 1 =7 RMB).
quotes. We then categorized concepts into specic theoretical
themes. We went back and forth between emerging themes and
original data to make sure our analyses were consistent. Indi-
vidual interviews were cross-analyzed and compared (within
consumer data as well as between consumer and retailer data)
to assure general thematic consistency. We started our analy-
sis without an a priori hypotheses and developed constructs and
theoretical themes through an iteration process (Arnould and
Wallendorf 1994). The authors then compared and discussed
their respective analysis results and logged emerging themes. In
this process, convergent themes were extracted from the depth
interviews and the general patterns of the interviews became
apparent.
Findings
In this section, we show why consumers and rms engage in
GB and how GB creates value at different consumption stages.
342 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
Table 2
Comparison between group buying collective and brand community.
Brand community Group buying collective
Consumption stage Post-purchase stage, focusing on consumption and usage Pre- and during-purchase stage, focusing on purchase,
may extend to consumption stage
Collective focus One particular brand, especially a strong brand Price, quality, authenticity, and after-sale service of
branded goods/services
Market environment The rise of branded goods, development of consumer culture,
community-oriented social life
Information asymmetry, unbalanced power between
consumers and rms, lack of legal protection
Strategic orientation Communal consumption experiences Grass-roots consumer empowerment
Geographic orientation Non-geographically bound, imagined community Local, geographically bound, face-to-face community
Temporal orientation Long-term, stable, developed over time Mostly transient, unstable, may extend over time
Participant Admirers/devotees of a brand Potential consumers of a brand
Role of the leader Share experiences and knowledge of a particular brand with fellow
brand users
Organize GB trips, coordinate among group members,
negotiate with sellers
Benets for consumers Gain knowledge and enjoy experiences with a particular brand Find good-value products and protect consumer rights
Shared consciousness Shared way of thinking, shared knowing of belonging, intrinsic
connection, collective sense of difference from non-users
Shared attitudes toward retailers, shared concerns
regarding goods/services/prices/brands, shared
understanding of market conditions
Rituals and traditions Brand history, shared brand experiences/stories Pre-purchase discussions, on-site purchase negotiations,
after-sale feedback
Moral responsibility Integrate and retain members, assist members in proper uses of brand Everyone is of the collective and the collective can
benet everyone
Themes are illustratedwithinterviewquotes andtheninterpreted
with references to the theoretical accounts of consumption col-
lectives. The emergent framework is developed through study
of three groups of GB participants: consumers, group leaders
and retailers. Consumers and retailers motivations to partic-
ipate in GB as well as GBs long-term impact on consumers
are discussed in detail. Our ndings demonstrate that GB col-
lectives differ from brand communities in multiple dimensions.
GB constitutes an acquisition collective that is initiated at the
pre-purchase stage, and it can extend to purchase and post-
purchase stages. While members of a brand community are
devoted consumers of a particular brand (Muniz and OGuinn
2001), members of GB often lack brand knowledge prior to
product acquisition. GB enables participants to create an acqui-
sition collective dedicated to a common goal: to buy a desired
product with an optimal set of attributes at a good price within a
specic time frame. Amore detailed comparison between brand
community and GB collective is provided in Table 2.
Consumers motivations
Value creation through collective bargaining
GB forges a collective of determined shoppers who seek to
lower acquisition costs by buying in volume. For consumers,
the most compelling reason to participate in GB is nancial,
specically getting better pricing due to discounts negotiated
between the buying group and the retailer. Low price, however,
is not GBs only goal. Instead of targeting low-cost and low-
quality products and services, GB consumers seek high-quality
ones at a desirable price. After collectively deciding on their
preferred brand and product model, GB provides a mechanism
for consumers to negotiate for additional services, better terms
andoptimal packages that are unavailable toindividual shoppers.
In the acquisition process, value is created through the col-
lective bargaining between the GB collective and the retailer.
In our eldwork, we nd two dominant types of negotiation
mechanisms. One form relies on the skill and ability of a sole
representative of the buying group. This representative is often
the most knowledgeable and experienced participant in the buy-
ing group, and sometimes s/he is also the GB leader. The
other type of negotiation involves all participants, who approach
a retailer and bargain together. Informants stated that they
had experienced dismissal or embarrassment when negotiating
individually with retailers. When consumers bargain together,
retailers tend to be more willing to concede on both price and
service options. Retailers understand that group buyers will buy
together or leave together; thus ordinary promotional techniques
(e.g., only the rst 10 buyers get a free gift) are ineffective with
buying groups. Juan (F33, accountant) says:
What attracts me most is the price: I can buy good quality
products at a good price. In GB, I make sure the quality is
better than or at least as good as those in the retail market.
This is the basic need of our group buyers and we initiate GB
because of it. We are gatekeepers of quality and price and
others who join us are also assured about it. When we select
a product and buy it through GB, we denitely get the value
for money.
Notably in GB, value created is not merely low price. Rather,
it is the perceived benet of purchasing desirable products and
services at a reasonable price, or the value for money that is
mentioned by this informant. GB collectives create an oppor-
tunity for consumers to purchase good quality products at a
good price. Participants in GB often seek out product packages
that are better than or as good as those offered elsewhere on the
market. Collective choices are seldom targeted at the cheapest
products or services but a lower price per quality and attribute
set. In contrast to a brand community that focuses on a partic-
ular brand (Muniz and OGuinn 2001), GB participants are not
admirers of a particular brand but potential consumers of any
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 343
brand. They search and identify branded goods with optimal
price, high quality, and authenticity.
GB also provides a mechanism for the negotiation of addi-
tional services where retailers are willing to provide added
accessories or other non-price benets in order to lure group
buyers. A retail manager said (Ting, M35):
They have a higher demand for service, unlike individual
customers, who only care about price and leave if they dont
get the price theywant. Groupbuyingcustomers are different;
they have higher demand for services and they are really
better customers than the common consumers.
As indicated here, GB participants often demand additional
add-ons or services such as extended warranties for electronics
or free oil changes in the case of automobile buying groups. GB
participants not only value lower price but also seek out services
that enhance the value of their purchase and consumption expe-
rience. Whereas individual consumers may disregard or defer
concern about such things and focus only on obtaining the low-
est possible purchase price, group buyers are better informed
and understand the value and importance of post-purchase ser-
vices. This approach is appreciated by retailers who consider
group buyers better customers who truly understand the overall
value of the purchase.
GB participants often enjoy a great sense of triumph when
they succeed in closing a good deala combination of quality
and optimal service add-ons. There is a sense of excitement
in acquisition through GB, as stated by Jiao (F38, nancial
specialist):
I like group buying more and more. Whenever I have time, I
buy something, anything. It depends on what I need. When
I dont have the need, I still check it out often. Its just a lot
cheaper.
GBcreates value by enhancing enjoyment of the buying expe-
rience. As shown here, the more this consumer acquires products
through GB, the more willing she is to participate in GB, even if
she has no immediate consumption needs. With an emphasis on
price, the psychological focus of shopping shifts from spending
to saving (Miller 1998). Purchases are experienced as a negation
of expenditure and evaluated according to the perceived amount
of money saved. The perception of paying less for an item helps
turn a consumers focus away from the amount of money spent
and towards a hypothetical amount not spent. The value of the
commodity is then measured by how much is saved rather than
howmuchis expended. We alsondthat GBis oftenexperienced
as a way to identify oneself as a savvy, thrifty consumer, similar
to participation in consumption blogs, in which young bloggers
compete with each other to offer shopping advice about smart
deals (Zhao and Belk 2007). GB participants express a sense of
pride in their choices and see themselves as experts at saving
money.
Value creation through collective product/brand evaluation
GB creates value at the pre-purchase stage by introducing
consumers to potential brands and by enhancing consumers
experiences of product search and brand evaluation. In this
process, consumers who lack brand knowledge and experience
are guided by other group members toward particular brands
and are shown the benets and advantages of the selected brand
over other brands. Unlike a brand community, which is estab-
lished around a strong brand by experienced consumers of
the brand (Muniz and OGuinn 2001; Schau et al. 2009), GB
collectives may develop around a brand that is unfamiliar or
even unknown to consumers. GB collectives function from pre-
acquisition stage and may extend to later stages. GB creates
value by providing needed product and brand information. Dis-
cussion forums and chat rooms provide a platform for group
buyers to exchange information and to communicate with each
other. Such shared information about products and brands is
considered by many to be more trustworthy than online product
reviews in general. Hence GB helps consumers reduce risk and
uncertainties in making purchase decisions. Hui (F27, Super-
visor) felt relieved when she chose the product that had been
recommended by other GB buyers:
Group buying is different fromindividual buying because it is
supported by a group of people. There must be good reasons
and good value for so many people to buy a product. There
is some comfort in being part of a group and thinking that if
you buy with a group, you will feel safe.
Like Hui, many group buyers have little or no knowledge
of the target brand before the purchase. Participating in the GB
acquisition collective helps them discover the optimal attributes
in the product category that they purchase. Hui did not start with
strong interest in a particular brand but she gradually learned
about several brands from other more experienced GB mem-
bers. As her quote indicates, she believed that the target product
was good because it is supported by a group of people and
there had to be good reasons for so many people to buy a prod-
uct. Collective choice is understood to be better informed than
individual judgment. Collective power is thought to be stronger
than individual capability. GB consumers rely on such collec-
tive opinions to evaluate brands and make decisions. Even if a
product may not completely align with individual taste or pref-
erence, GBbuyers are usually satised because they believe that
they have made a collectively approved choice. This advantage
is suggested in the following quote:
I think one advantage (of GB) is that we (group buyers) can
have a better understanding of a product before buying it. We
discuss its authenticity, quality, functions and price. This is
different from shopping individually when I pick up some-
thing, simply look at it and then buy it. Group buying enables
us to know more and to have a full grasp of the product in
advance. (Yu, M25, Unemployed)
GB helped this informant develop a better understanding of
the product before the purchase. Individual buyers may have
insufcient knowledge of a product and may have difculty
making an optimal choice especially if they have to make a
decision within a time limit. Group buyers jointly search and
evaluate information collected from a wide variety of sources.
The information relates to a wide range of attributes includ-
ing quality, functionality, price and authenticity. The collective
344 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
experience and expertise of a group of motivated buyers helps
to screen irrelevant or inaccurate information. In addition to
positive and negative information, group buyers evaluation,
embracing, endorsement and explanation clarify the target pur-
chase and increase members condence (Kozinets et al. 2010).
In our eldwork, we found that group members even divided into
taskforce units to investigate specics of more complex prod-
ucts such as housing and automobiles. Such shared intelligence
is particularly valuable in a developing market inltrated with
substandard products and knockoff brands. It is presumed to be
more trustworthy than product reviews provided by retailers or
manufacturers and it alters the information asymmetry between
buyers and sellers. GB shifts the balance from rm-dominated
informationcontrol toa consumer-sharedinformationexchange.
It enhances consumers ability to access, disseminate and under-
stand product-related information.
Value creation through the group leader
Another mechanism by which GB creates value is through
the group leader. The group leader is a key individual who orga-
nizes the purchase transaction and coordinates delivery to group
buyers. Some even take the initiative to facilitate after-purchase
services. The GB leader organizes potential buyers of selected
brands and connects them with the sellers. S/he responds to
group members questions, and collects and distributes infor-
mation among GB participants. S/he also serves as the groups
representative and initiates negotiations with sellers, hastening
the GB process. Group buyers regard the leader a powerful ally
when they need to face merchants. The importance of group
leader is clearly recognized by retail managers, as articulated by
Ting (M35, retailer):
The group leader will provide service, such as explaining
pricing and other things. The group will discuss my offer,
especially the group organizer. He will help to persuade other
group members. The purchase group is usually quite familiar
with the transaction procedures, such as logistics and retail
processes. The group leader is more experienced and can
inform others what they need to do in the process. He can
even help other members to solve their problems. They really
reduce our workload a lot.
As shown in this quote, a group leader creates value by
providing needed information, explaining the transaction pro-
cedure, and by resolving problems that may arise in the product
acquisitionprocess. Retailers oftenprefer tocommunicate witha
group leader as s/he is generally more experienced than ordinary
consumers. The group leader can help to explain the retailers
offer and persuade GB participants to proceed with the transac-
tion. The group leader is often an opinion leader with extensive
product experience who can inuence other group members
decisions. As a link between consumers and merchants, the
group leader also helps to quickly resolve many common service
problems before they reach the retailer. Ting (M35, Retailer) fur-
ther stresses the importance of someone within the group taking
charge:
If I were a consumer, I would want the lowest price. But
most of the customers dont know how low it can go. There
are many customers like that because they are unfamiliar with
the electronics industry. So it is necessary to organize a group
with some experienced ones to take charge.
As this store manager observed, good group leaders con-
tribute knowledge not only about the selected product and brand
but also about the overall market sector. In our eldwork, one
group leader often organized GB events for mobile phones
because he had worked in the mobile phone department at a
nationwide electronics chain for many years. His past experi-
ence enabled him to provide quick and accurate responses to
GB participants inquiries about cellphone brands and models.
His internal connections and insider information about discounts
allowed him to obtain good prices and after-purchase services.
Several group leaders had connections with particular retailers
and were able to leverage their relationships for the benet of the
group. Like opinion leaders, group leaders have a combination
of knowledge and expertise in a product class (Feick and Price
1987). Moreover, some have experiences and connections with
business and thus function as facilitators between consumers
and rms.
Inadditiontoknowledge andconnections, groupleaders must
possess communication skill, as this is critical to the success of
any GBevent. Prior to purchase, leaders need to attract potential
buyers by posting eye-catching offers and then distributing use-
ful information to address participants questions and concerns.
Good group leaders serve as market mavens who possess accu-
rate information about products, places to shop, and other facets
of the market, and who will expend time and effort initiating
discussions and responding to requests from consumers (Feick
and Price 1987). Moreover, group leaders negotiation skills are
essential in getting an optimal deal for the buying group.
Some GB organizers attain rock-star status on their forums
and people join the groups led by these star organizers to ensure
they can acquire high quality product/service bundles at low
prices. Group buyers not only acknowledge their expertise in
selecting the top products but also appreciate their devotion.
These leaders take actions if products are not delivered on time
or buyers are not satised with the merchandise. They help buy-
ers investigate problems and advise themwhen issues arise. On a
baby-product GBforum, some leaders are givenmedalsshown
next to their user namesto signify their status. Fellow buy-
ers post more than 200 messages to applaud these star leaders
contributions:
They (star leaders) have good heart. They try their best to help
us when there is any problem with the product. They dont
have to do that since there is no contract or legal obligation.
But they just do it. We trust them. They dont do it for money.
They make this forum a wonderful baby-product GB forum.
They are the best!
These star leaders gradually build reputations on the forum
and many people join their buying group specically because
of their credibility. Good group leaders also create value for GB
participants by screening out inferior products and obtaining
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 345
optimal quality, price and overall value for fellow buyers. Firms
appreciate rock-star organizers because they are professional
and knowledgeable, and they can bring in enormous numbers
of buyers. Whats more, their understanding of the transaction
process helps smooth out the transaction process for both the
rms and the buyers.
Some group leaders derive special incentives from transac-
tions that they organize. When they steer business to a particular
retailer, they may be rewarded with special perks or commis-
sions. Participants generally acknowledge that the group leader
spends time and effort, and bears responsibility for completion
of the deal. When we asked group leaders whose interests they
represented, one (Guo, M33) said:
Of course I am on the side of buyers because we are all con-
sumers. I can achieve certain status in online forums. When
you stand on their behalf, people highly regard of your char-
acter and you can have better development. You make people
believe you are honest and willing to answer their questions.
Everyone has a sense of pride. After all, we are not business
people. We are individuals. We are here to help others.
This leader regards it important to build and sustain his cred-
ibility among GB participants. While he receives benets from
the retailer, he acquires reputation, status, and social capital from
the buyers. The group leaders legitimacy is established by his
knowledge and ability to negotiate pricing and provide superior
service. When participants are satised with a leader, they post
positive comments that help the group leader attract future buy-
ers. At a macro level, leaders enable GBto gain scale, legitimacy
and credibility. This is an important advancement since the early
days of GB when purchases were randomly and sporadically
organized by consumers. The leaders knowledge, persistence
and connection also increase the success rate of GB.
Firms motivations
Value creation through reducing cost
GB also creates value for rms and retailers. GB multiplies
sales and facilitates rms nancial exibility by speeding up
cash ows. One manager (Ting, M35) at a nation-wide electron-
ics retailer said:
For me, if you (group buyers) buy 100 items, the total amount
is probably over a million. I denitely save a lot of time when
I serve a team of 100 customers compared to serving 100
individual customers. It also saves my working process and
enables me to sell the merchandise much faster. Cash ow is
also important to me, including prots. Small amounts add
up to a great prot with quick turnover. Recently, people
in a condo complex organized a group buying for over 100
households. The sale was about 2M RMB. We (his retail
store) opened one hour earlier than usual [just for this team],
and nished the transaction within half an hour.
As this example illustrates, retailers can make substantial
prots bysellinglarge quantities of goods togroupbuyers evenat
below-retail prices. GB can even help them earn bonuses from
manufacturers for meeting or exceeding their sales quotas. In
addition, GB enables retailers to service more customers and
generate sales more quickly, as GBparticipants are prepared and
determined to purchase. A manager of an American car dealer
(Fang, F25) said: we really like that group buyers come to us.
If we participate in exhibitions or promotions outside (of the
store), it costs us a lot of money and labor. The cost of attract-
ing group buyers is less than that of conventional advertising and
marketing activities and mainly consists of communication with
potential buyers. Firms can concentrate their resources and use
narrowcasting to target group buyers. It is also cost-effective to
serve group buyers who have already acquired extensive knowl-
edge about their target purchases. Salespeople need not expend
effort and time introducing and comparing brands and models
with group buyers. That is probably how an electronics retailer
completed RMB 2 million in sales in just half an hour. Several
managers mentioned that they arranged specic times or special
events to service group buyers.
Value creation through building brand awareness
Brand awareness is dened as consumers ability to identify
a brand within the category and to make a purchase in sufcient
detail (Kotler and Keller 2009). GBis a door opener for small- or
medium-size rms in that it provides tremendous opportunities
for little-known brands and products to access large markets.
Hence GB can create value for brands before their brand com-
munities are formed. Group buyers actively search options and
compare brands, and this can help lesser-known rms reach a
large consumer base. One manager of a furniture store (Yao,
F29) said:
Second-tier rms are eager to enter the national or certain
regional markets. To let consumers know about them, they
are willing to participate in GB. But GB has little impact on
big-name rms. They already have a big market share. For
these rms, GB doesnt really increase their sales but rather
completes the sales at one time. Consumers will still buy
these big-name brands if they buy on their own.
GB is helpful to build brand awareness especially for mid-
size and lesser-known rms. These rms are exible in pricing
and are willing to work with group buyers. Their competitive
disadvantage is that they are under-represented in conventional
distribution channels or have limited presence in mainstream
media. GB helps them become visible to a large number of con-
sumers. By contrast, well-known brands are less interested in
participating in GB because it might harm their brand image
or inhibit sales in conventional distribution channels. More-
over, these rms give retailers little discounting exibility and
thus group buyers cannot succeed with price negotiations. Sev-
eral retailers mentioned that big, powerful manufacturers with
sophisticated distribution systems are concerned about hurting
their distribution partners interests by embracing GB.
For retailers, GBcan enhance their visibility and reputations.
In addition to evaluating products, group buyers also evaluate
retailers. Store managers who actively engage in discussions
with group buyers and address their questions are noted. GB
enables retailers to reach out and attract potential buyers. One
346 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
manager at a European car dealer in Shanghai (Xian, F33) dis-
cussed GBs impact on her store:
Actually if only judging on the surface, obviously it doesnt
have as much prot as individual purchase. But group buying
helps raise the stores visibility and customer awareness. For
example, if you want to buy our car in Shanghai, you will
probably visit the shops close to where you live. But through
group buying, you know online that there is such kind of
shops in other areas as well. In this way, it raises our stores
recognition. Most customers like to shop in nearby stores that
are convenient and familiar to them. But they (group buyers)
come to us that are far from their homes, some travelled tens
of miles. It certainly increases the recognition of our store.
GB creates opportunities for retailers, particularly those at
less desirable locations toincrease their customer bases andbuild
their reputations by participating in GB websites. Group buyers
value relationships more than convenience, and they may choose
to do business with a given retailer regardless of location. While
retailers still rely on their physical stores as a business platform,
they use GB websites for communication purposes. Physical or
geographical limitations are largely irrelevant in GB.
Long-term benets for consumers
Group buyer community
Prior to purchase, GB connects consumers who have sim-
ilar needs and interests. After the purchase, group members
may stay connected and share their consumption experiences.
As an acquisition collective, GB participants share product and
brand information, bargain with retailers and demand services.
The common experiences of defeating retailers help to create a
sense of camaraderie, and group members often maintain their
networks. GBhence prepares consumers for the development of
a long-term and stable community. Liang (M29, manager), who
bought a Japanese car through GB, said:
Our group doesnt end with the purchase. The car needs
maintenance. I will denitelycommunicate more about main-
tenance. This is verycommoningroupbuyingforums. People
discuss cars and share usage experiences. Youcant talkabout
this with friends in real life since they dont know about it.
But you can sure talk with fellow group buyers.
As shown here, this informant plans to continue his connec-
tions with fellow group members and to evolve the purchase
group into a consumption group. A GB community starts at the
pre-purchase stage, strengthens during the collective negotia-
tions of the acquisition stage, and extends to the post-acquisition
stage. The community is not established by the act of con-
sumption, but by the act of product search at the stage of
pre-acquisition, and it often extends to more purchases and the
acquisition of accessories and services. In the post-purchase
phase, group members share experiences and help each other
solve problems that may arise during the course of product
ownership and use. These community-based practices endow
participants with cultural capital (e.g., knowledge and skills)
that differentiate them from individual customers (Muniz and
OGuinn 2001; Schau et al. 2009; Schouten and McAlexander
1995). Nan (F34, housewife) bought an apartment through GB
and she said:
My main consideration is that we will become a small col-
lective in the future. We now talk on the internet that we
will organize an owner association of our own. Although we
havent moved in yet, we will have this owner association
rst. We have had several activities, had dinners together and
travelled twice already. Now we are buying the remodeling
materials for the apartment together. I really think its good
to have these friends, have various ideas, talk freely and turn
into a small collective.
According to her, a small collective is an important out-
come of GB. Through online communication and face-to-face
interaction, a strong and cohesive in-group identity is gradually
developed that leads to trust and cooperation among team mem-
bers (Hosfede 2001). Participants often identify their purchasing
teams as zuzhi (closely tied Party organization or work unit).
Such a notion resonates with Turners (1969/1995) concept of
communitas, which is described as unstructured communities
whose members are equal. Inside communitas, people feel soli-
darity and togetherness, and they achieve common goals through
collective efforts. When describing the group concept, several
informants proudly quoted a popular GBslogan: wowei renren,
renren weiwo (one for all; all for one). This emphasizes a basic
principle of GB: everyone is of the collective and the collective
can benet everyone.
This informant articulated the essence of the group-buyer
community. Even before they moved into their apartments, GB
members had already organized activities and made plans to
make additional group purchases. Notably, their purchase activ-
ity was not limited to one product or a single brand. This
informants group was formed to buy apartments and contin-
ued with the formation of an owners association, reecting the
members long-term commitment and willingness to formalize
their GB community. In this instance, we see the transformation
of the collective from a buying group to an owners association.
The collective is thus dynamic: its purposes and practices evolve
as the dominant needs of members develop. Hence, the collective
is stage-based and lasts across the pre-acquisition, acquisition,
and post-acquisition stages. The shared experiences of product
acquisition facilitate the development of community that does
not rely upon strong brands.
Some group buyers express enduring involvement and strong
attachment to their communities. They engage in a broad array of
practices and fully enjoy the companionship of fellow members
even after the initial purchase. Na (F35, nurse) had participated
in a GBcommunity (for baby products) for more than four years.
She said:
I have great fun with group buying. After we (group buyers)
buy something, we will arrange a SDwhen it reaches a certain
amount of purchase. Then we will have a SZ. In this way, we
can gather together and have a lot of fun and enjoy a good
time. SD is a dinner, while SZ is an event for sharing the
booty.
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 347
This community originated when a group of young moms
organized to buy baby products together. Because of their com-
mon interests, the team gradually morphed into a large and
thriving community. Unlike a brand community, a GB com-
munity develops around its members needs. Participants share
responsibilities for GB and voluntarily help with the trans-
actions and distributions. As this GB community grew, rules
were formalized and webmasters were selected to monitor par-
ticipants activities and screen posts. Misleading posts were
removed to protect against fraud. Those who violated the rules
were sanctioned with actions ranging from a verbal warning
to suspension of buying privileges to permanent expulsion from
the community. Clearly, governance that supports the behavioral
expectations of the community is enforced (Schau et al. 2009).
Moreover, members practices produce a repertoiresuch as
shared insider jargonthat enhance group experiences and rein-
force members engagement with the community (Schau et al.
2009). Like brand community, mature GB collectives practice
the rituals by which the meaning of the community is reproduced
and transmitted among members (Muniz and OGuinn 2001).
Schau et al. (2009) suggest that hosting online and real-
world interaction spaces is a sign of a communitys vitality.
Therefore, we visited this informants GB community website
multiple times. It had some four-thousand regular participants,
and we found numerous posts expressing the members sincere
gratitude and strong feelings about the community. Community
members are clearly attuned to the collective benets as well
as their own self interests. They share a clear group conscious-
ness, and the relationships among members are highly valued
(Muniz and OGuinn 2001). This collective identity takes on
greater meaning as members share their thoughts and feelings,
participate in activities together and jointly organize purchases.
They also share a moral responsibility, and a sense of altruism
is appreciated and praised within the community. Volunteers
and organizers are greatly appreciated; seless contributions are
applauded by fellowmembers. Some members posted messages
to express their devotion to the community. One online post
expressed a strong sense of belonging and a great attachment:
Regardless of what Ive bought at Beijing Group Buying,
I always feel each item is a great deal. I have such a deep
attachment to it and I have closely followed it ever since
I joined. People here are responsible and warmhearted and
they treat everybody as a family member. From organizers to
volunteers, they always care about people and manage things
with good will. This is the spirit of Beijing Group Buying! I
want to say sincerely I like youBeijing Group Buying!
This community began with sporadic group purchases and
coalesced into a cohesive and closely knit consumption com-
munity. The community has its own title and a theme focused
on raising children. Most products bought are for children or
new mothers. This post illustrates the intimate feelings shared
by community members. It is not only the purchasing activ-
ity that keeps members in the community, but also their shared
passion and strong commitment. Such emotional engagement
strengthens members attachment and commitment to the com-
munity (Schau et al. 2009). In sum, GBcollectives are dynamic:
their membership, popularity, and cohesion evolve over
time.
Consumer empowerment
Another important outcome of GB is consumer empower-
ment. United as a group, consumers can adopt strategies and
tactics to deal with powerful corporations and assert some con-
trol in a risk-lled marketplace. Thanks to their collective power,
group buyers actively defend their rights as consumers and stand
together in confronting unethical retailers and manufacturers.
Notwithstanding established regulations and laws, Chinese con-
sumers tend to back off and accept defeat when their rights are
violated. They rarely take consumer issues to court (Ho 2000).
The lack of independent consumer protection organizations or
government watchdog agencies has motivated consumers to
develop grassroots groups to protect their own interests (Cohen
2003). GB is one such means of dealing with problems such as
low quality merchandise, market fraud and deceit. GB is espe-
cially useful in protecting consumer rights in certain burgeoning
but under-regulated markets, such as the housing market. Due
to the markets rapid growth, policies and laws to protect home-
owners have not kept pace. Qin (F32, nancial supervisor)
discussed this:
If you buy it through group buying, you know each other.
Because we all purchased the apartment in the same way, if
something goes wrong, we can discuss it together. We can
unite. We all bought through group buying and we will cer-
tainly solve the problemin the same way. If I buy it by myself,
I still dont know anyone. I just know myself, dont I? I still
have to deal with it by myself if anything happens.
With the support of the GB group, this informant is prepared
to challenge the developer if problems arise. She will protect her
rights in the same way that she bought the apartment. Because
fellow group buyers have already established a bond, they can
unite and ght together if their rights are violated. She makes
a clear distinction between ghting on her own and ghting as
a member of a group. In Chinese consumers minds, power-
ful merchants and their strong guanxi (utilitarian relations) are
not constrained by laws and regulations. This is especially true
for powerful business players such as housing developers and
real estate companies. So when justice is unavailable under the
laws of the land, ordinary consumers use group power to protect
themselves. This shared understanding of the institutional envi-
ronment is a newdimension to the consciousness of kind (Muniz
and OGuinn 2001). Besides emphasizing on we-ness, GB
members understand the marketplace that binds their purchase
and consumption. They realize they cannot rely on central power
(laws and regulations) to maintain order (Cova and Cova 2002).
In addition to this common understanding, they also have to
know the tactics for actions. Wei (F39, accountant) talked about
unity as a key to their actions:
[The company] gave us (the group buyers) the wrong par-
king space and changed the oor plan, so we had to ask for
our money back. This shows unity is strength. We thirty peo-
ple will all sign it. We will all write appeals if we must. So
348 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
everyone is united behind the actions. If we are able to ght
for it at our best, it is benecial to everyone. Thats why I
said unity is strength.
The slogan unity is strength emphasizes the power of col-
lective efforts when facing a strong adversary. Here, a strong
moral responsibility marks GB members sense of duty to
the collective. It then produces collective action and con-
tributes togroupcohesion(Muniz andOGuinn2001). Unethical
merchants are targeted as opponents by group buyers, who
constitute a collective that represents a counterpower to insti-
tutional power (Cova and Cova 2002). She further related
that her team had acted in advance to protect themselves:
For example, now it is time to examine the apartment. There
are different people (fellowgroup buyers) on our website and
they have already told you how to examine and measure the
apartment. Someone (one of the group buyers) even slipped
into the apartment and measured it. We (the buying group)
discussed what to do if the size of the apartment is different
from contract. What if the height is not enough? That guy
measured the height and said it was not enough. But he was
not sure if the thickness of the ceiling needed to be included.
Another issue is the cost of examining the apartment. Any-
way, we often talk about things like this and try to nd the
best solution.
Housing inspection requires professional knowledge that
most consumers do not possess. In this informants example, the
apartments size and height are not only difcult to measure but
the developers are likely to nd excuses to dismiss customers
complaints. Inadequate legal enforcement pushes consumers to
seek other rectication means. GB empowers consumers in sev-
eral ways. At the outset they share information and communicate
with each other about the purchase. They can continue to rely
on their collective and unied efforts to pressure the developer
about any problems or discrepancies. They are aware of and pre-
pared for possible problems in advance and they openly discuss
strategies to deal with them.
In Chinas rapidly evolving but problematic consumer mar-
kets, GB enables consumers to address the imbalance of power
that often exists and protect their own interests. Through GB,
consumers jointly claim rights and benets that are otherwise
impossible to obtain. Group buyers realize that while individ-
ual efforts are limited, collective acts give them considerable
power vis--vis merchants. If GB consumers are dissatised,
they express their opinions on the internet. They not only solicit
solutions but also caution other consumers. On their virtual
spaces, consumers become masters of the media and exploit the
channel, denouncing incompetent or unethical rms and recom-
mending trustworthy ones, until their joint voices inuence the
rms sales and reputation. From a macro-marketing perspec-
tive, GB collectives inform and empower the consumer mass
in an under-regulated market. Their collective supervision and
grassroots publicity make up for inadequacies that exist in con-
sumer markets and may facilitate market development in the
long-term.
Discussion
This research makes the following contributions. First, it
examines GBas a strategic formof consumer collective that tran-
scends the pre-, during- and post-acquisition stages. While GB
has some similarities tobrandcommunities (Muniz andOGuinn
2001; Schau et al. 2009), it possesses unique properties that
set it apart from other consumption collectives. The value cre-
ated by GB is manifest from pre-purchase information sharing,
to during-purchase negotiation, to post-purchase consumption
activities. Second, this study integrates both consumers and
rms perspectives in understanding GB. We show that GB is a
complex phenomenon and not merely a pricing mechanism as
has been conceptualized by previous research. The underpinning
is value co-creation between consumers and rms (Vargo and
Lusch 2004). We now discuss GBs implications for consumers
(consumer collectives) and for rms (marketing strategies) in
more detail.
Implications for consumer collective
GB shares several dimensions with other types of consump-
tion collectives, particularly with brand communities. Similar to
brand communities, GB members engage in a variety of prac-
tices such as social networking and community engagement
(Schau et al. 2009). For example, explicit rules and principles
are developed by group buyers. This knowledge is used to guide
transactions and make the community sustainable. Members
share a general understanding of what to say and do within
the community. The collective practices endow group buyers
withcultural capital that differentiates themfromindividual con-
sumers (Schau et al. 2009). As group buyers become attached or
committed to the community, there is also an emotional engage-
ment (Schau et al. 2009). In a mature GB community, members
share a collective consciousness and a moral responsibility just
as in a brand community (Muniz and OGuinn 2001). All these
commonalities demonstrate GB collective as another form of
consumer collective.
However, there are some interesting departures from pre-
viously studied consumption collectives. First, GB collective
essentially centers on consumer needs that cross brands, activ-
ities and lifestyles. It enables consumers to create value in
all consumption stages: pre-acquisition, acquisition and post-
acquisition. In the pre-purchase stage, group buyers may be
unfamiliar with the product/service category and have no clear
brand preferences. They engage in GB to discover optimal
attribute bundles and select a brand/model together with fel-
lowbuyers. GBdoes not necessarily begin with brand afliation
or interest in a subculture of consumption activities. It begins at
a need state in pre-acquisition and buyers collectively gure out
how to best satisfy their needs. In this process, they gradually
learn about products and generate preferences.
At the time of purchase, the team executes in local and face-
to-face fashion. They use their collective expertise, knowledge
and voice to negotiate with sellers. The group is ad hoc and
often dissolves after the completion of purchase. But the buying
group enhances participants experiences and prepares them for
J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351 349
additional purchases. They build social ties with each other and
solidify their identities as group members. They share strong
bonds because they are all in-group from pre- to post-purchase
stages. Therefore, the buying group provides an opportunity to
evolve into a more stable, long-term community, and this hap-
pens when team members share an enduring need. Therefore, a
collective can evolve from a loosely connected and temporary
form (e.g., group) to a more tightly knit and long lasting one
(e.g., community).
Second, this research shows the role of leaders in con-
sumer collectives. In GB, group leaders function as liaisons
between consumers and rms for the benet of both parties.
Their knowledge and experience allowthemto organize and per-
suade consumers to participate in GB. Their connections with
retailers help themget insider information and facilitate transac-
tions. Group leaders are both organizers and representatives in
interactions with rms. They not only unite consumers but also
mediate dialogue between consumers and rms. Group leaders
can be important assets for rms, enabling them to initiate and
build relationships with group buyers.
Last, this research sheds light on new dimensions of con-
sumer collectives: consumer interest protection and consumer
empowerment. In Chinas under-regulated market, GB empow-
ers consumers to safeguard their rights. Informants disseminate
information that is recognized as useful, unbiased and trust-
worthy. The risk of product deception and hard-sell is reduced
with GB. Through collective actions that inuence rms sales
and reputations, consumers are able to work around inadequate
lawenforcement in consumer markets. Notably, GBparticipants
act in unison and take advantage of their group strength. Some
informants say that when they shop alone, salespeople may rec-
ommend products that are not appropriate or do not suit their
needs, but rather maximize retailers prots. When shopping as
a group, their collective expertise, knowledge and voice help
to eliminate such distractions and gain value for GB members.
The GB collective provides an important source of consumer
agency in under-developed markets. As a collective, group buy-
ers enhance their disadvantaged position vis--vis rms. They
jointly claim rights and benets otherwise impossible to obtain.
Firms, on the other hand, realize and respond to this empowered
consumer collective. Over time, GB as a strategic purchasing
collective may facilitate the development of a transparent, equi-
table market.
Implications for marketing strategy
Retail success depends largely on being able to recognize
trends and changes in consumer markets and understanding
how to create value for consumers. Firms participation in GB
reects a core value of market orientation: putting the customer
at the top of the organizational chart and embracing ideas that
meet customers needs (Kohli and Jaworski 1990; Matsuno et al.
2002). Participation in GBenables rms to create superior value
for customers. At the same time, customers contribute value
through volume purchases, word of mouth, and customer satis-
faction (Jaworski and Kohli 1993). With knowledge about what
customers desire, rms can tailor their offerings to the
specic needs of customers and thus differentiate themselves
from competitors.
Many rms have responded positively to GBand actively pro-
moted themselves as being GB-friendly. Lesser-known brands
that are exible about channel distribution and sales mecha-
nisms have realized benets by adapting to the demands of GB
customers. For those who lack brand recognition and market
share, GB offers an opportunity to gain visibility and enhance
brand awareness. Some rms, however, are bound by strict rules
about pricing and incentives and cannot effectively respond to
group buyers demands. These rms often have complex distri-
bution systems, and, as a result, retailers have limited ability to
work with group buyers. Our ndings suggest that rms need to
reassess their standardization strategies and be more responsible
and exible in the face of new trends in retailing.
Group buyers acquire extensive product knowledge prior to
purchase and save retailers labor and time in consultation and
service. When they approach retailers, they are already deter-
mined to buy and are not simply window shopping. For these
reasons, as well as the volume they represent, they can be a boon
for retailers, and special promotional programs can be developed
to satisfy group buyers particular needs.
The GB phenomenon calls for rms to shift their focus from
product/brand management to customer relationship manage-
ment (Sheth 2005). GB-related websites provide a platform for
dialogue between customers and rms. This kind of interaction
has evolved fromthe physical market environment to an internet-
enabled market environment (Varadarajan, Yadav, and Shankar
2008), and these virtual forums enable rms to communicate
with potential buyers. Firms can facilitate consumer-initiated
communication by providing customers with avenues to connect
and guide their preferences. These interactions help rms rene
their knowledge about customer needs and demands. More-
over, rms can identify group leaders on the internet and use
them to interface with consumers. Group leaders possess exper-
tise and credibility among group constituents, and they can be
of great value in transmitting messages and persuading fellow
buyers. Firms can connect and collaborate with group leaders
by sharing information, praise and criticism, suggestions and
ideas about products, services and policies (Ramani and Kumar
2008). Group leaders can increase the speed and effectiveness
of rm-customer interactions.
This research also highlights the importance of the cus-
tomer experience (Grewal, Levy, and Kumar 2009; Payne and
Frow 2005; Prahalad and Ramaswamy 2004; Verhoef et al.
2009). Group buyers enjoy the pre-purchase sharing and the
buying process. Some have participated in GB tours that com-
bine fun and education with the purchase experience (Haytko
and Baker 2004). Increasingly, the goal of consumers is access
to desirable experiences and not just consumption of products
(Prahalad and Ramaswamy 2004). Marketing activities need to
be conducted with customers rather than simply for customers
(Ramani andKumar 2008). Firms candeal withandbetter under-
stand customers by entering their consumption communities.
The existence, number and diversity of practices by customers
offer additional methods for assessing their community vitality
(Schau et al. 2009). Firms can enhance customer value through
350 J.J. Wang et al. / Journal of Retailing 89 (3, 2013) 338351
practices that are network-based (Schau et al. 2009). In this way,
rms can understand customer experiences and practices and
create value together with customers.
GB reects an increasingly popular trend in the marketplace:
joint efforts by consumers and rms to co-create value through
personalizedexperiences (PrahaladandRamaswamy2004). The
co-creation experiences are characterized by increasing com-
plexity of consumer-rm interactions. In fact, rms are likely
to collaborate with customers to co-create the entire marketing
program and consumers are both operand and operant resources
(Vargo and Lusch 2004). Above all, consumers are at the cen-
ter; they initiate GBand demand more fairness and better service
fromthe exchange process. Consumers are eager to become con-
nected, involved and empowered in todays market. They have
emerged as a signicant inuence in the market by voicing their
demands, complaints, and satisfactions in unity. Todays market
is not just a place for transactions but a forum for customer-
rm and customer-customer interactions. It is up to the rms to
understand and fully take advantage of this new reality.
Acknowledgements
We thank the editors and reviewers for their excellent guid-
ance and constructive comments. This research was supported
by a Strategic Research Grant (7002633) by City University of
Hong Kong.
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