11-1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter 11 Organizational and Household Decision Making CONSUMER BEHAVIOR, 9e.

11-1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall

Chapter 11

Organizational and Household Decision Making

CONSUMER BEHAVIOR, 9eMichael R. Solomon

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Chapter Objectives

When you finish this chapter, you should understand why:

• Marketers often need to understand consumers’ behavior rather than consumer behavior, since in many cases more than one person decides what to buy.

• Companies as well as individuals make purchase decisions.

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Chapter Objectives (continued)

• Our traditional notions about families are outdated.

• Many important demographic dimensions of a population relate to family and household structure.

• Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.

• Children learn over time what and how to consume.

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Organizational Decision Making

• Organizational buyers: purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale.

• Business-to-business (B2B) marketers: specialize in meeting needs of organizations such as corporations, government agencies, hospitals, and retailers.

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Roles In Collective Decision Making

Initiator

Gatekeeper

Influencer

Buyer

User

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Discussion

Assume that you are a sales representative for a large company that markets gauze bandages for use in hospitals.

• List all the people (by position, such as doctors or nurses) that may be involved in the decision making.

• Try to match all the people to their possible decision roles as outlined on the previous slide.

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Compared to Consumer Decision Making, Organizational Decision Making…

• Involves many people

• Requires precise, technical specifications

• Is based on past experience and careful weighing of alternatives

• May require risky decisions

• Involves substantial dollar volume

• Places more emphasis on personal selling

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What Influences Organizational Buyers?

• Internal stimuli

• External stimuli

• Cultural factors

• Type of purchase

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Table 11.1 Types of Organizational Buying Decisions

• Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex:

Buying Situation Extent of Effort Risk Buyers Involved

Straight rebuy Habitual decision making

Low Automatic reorder

Modified rebuy Limited problem solving

Low to moderate One or a few

New task Extensive problem solving

High Many

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Crowd Power in Organizations

• Prediction market: groups of people with knowledge about an industry are jointly better predictors of the future than are any individuals

• Two ways to approach predictions:

• Employees collectively select factors for product success

• Knowledgeable “outsiders” (industry experts, consumers) predict success

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The Modern Family

• Changes in family structure

• Changes in concept of household (any occupied housing unit)

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Discussion

• In identifying and targeting newly divorced couples, do you think marketers are exploiting these couples’ situations?

• Are there instances in which you think marketers may actually be helpful to them?

• Support your answers with examples.

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Family Size

• Depends on educational level, availability of birth control, and religion

• Women want smaller families

• The rate of voluntary childlessness is rising, making DINKs a valuable market segment

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Sandwich Generation

• Sandwich generation: adults who care for their parents as well as their own children

• Boomerang kids: adult children who return to live with their parents

• Spend less on household items and more on entertainment

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Nonhuman Family Members

• Pets are treated like family members

• Spending on pets has doubled in the last decade

• Pet-smart marketing strategies:

• Name-brand pet products

• Designer water for dogs

• Lavish kennel clubs, pet classes/clothiers

• Pet accessories in cars

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Family Life Cycle

• Factors that determine how couples spend money:

• Whether they have children

• Whether the woman works

• Family life cycle (FLC) concept combines trends in income and family composition with change in demands placed on income

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Variables Affecting FLC

Age

Marital Status

Children in the Home

Ages of Children in the Home

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Household Decisions

Families make two types of decisions:

• Consensual purchase decision: members agree on the desired purchase, differing only in terms of how it will be achieved

• Accommodative purchase decision: members have different preferences or priorities and they cannot agree on a purchase to satisfy the minimum expectations of all involved

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Resolving Decision Conflicts in Families

• Interpersonal need

• Product involvement and utility

• Responsibility

• Power

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Who Makes Key Decisions in the Family?

• Autonomic decision: one family member chooses a product

• Syncretic decision: involve both partners

• Used for cars, vacations, homes, appliances, furniture, home electronics, interior design, phone service

• As education increases, so does syncretic decision making

• Who plays the role of family financial officer?

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Factors Affecting Decision-Making Patterns Among Couples

Sex-role stereotypes

Spousal Resources

Experience

Socioeconomic Status

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Heuristics in Joint Decision Making

• Synoptic ideal: the couple takes a common view and act as joint decision makers

• Heuristics simplify decision making:

• Salient, objective dimensions

• Task specialization

• Concessions based on intensity of each spouse’s preferences

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Children as Decision Makers

Children make up three distinct markets:

• Primary market: kids spend their own money

• Influence market: parents buy what their kids tell them to buy (parental yielding)

• Future market: kids “grow up” quickly and purchase items that normally adults purchase (e.g., photographic equipment, cell phones)

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Consumer Socialization

• Consumer socialization: process by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace

• Children’s purchasing behavior is influenced by

• Parents, family, and teachers

• Television and toys

• Culture

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Figure 11.2 Five Stages of Consumer Development

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Parental Styles for Socializing Children

Authoritarian

Neglecting

Indulgent

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Cognitive Development

• Limited: Below age 6, children do not use storage and retrieval strategies

• Cued: Between ages 6 and 11, children use these strategies, but only when prompted

• Strategic: Children ages 11 and older spontaneously employ storage and retrieval strategies

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Marketing Research and Children

• Difficulty assessing children’s preferences/influences on spending patterns because kids tend to

• Be undependable reporters of own behavior

• Have poor recall

• Not understand abstract questions

• Researchers do study kids for

• Product testing

• Advertising message comprehension

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Discussion

• Do you think market research should be performed with children? Why or why not?

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Figure 11.3 Sketches Used to Measure Children’s Perception of Commercials

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Chapter Summary

• The purchase decisions made by many may differ from those made by individuals.

• Buying for one’s self is different than buying for one’s company.

• Our traditional notions of family are outdated.

• Family members play different roles and varying levels of influence.

• Children learn over time how to consume.