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Chapter 12 Organizational and Household Decision Making

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Chapter 12 Organizational and Household Decision Making

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    1. Chapter 12 Organizational and Household Decision Making

    2. Prentice-Hall, cr 2009 12-2

    3. Prentice-Hall, cr 2009 12-3 Chapter Objectives (cont.) Our traditional notions about families are outdated. 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.

    4. Prentice-Hall, cr 2009 12-4 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.

    5. Prentice-Hall, cr 2009 12-5 Organizational versus Consumer Decision Making Differences: Involves many people Requires precise, technical specifications Is based on past experience and careful weighing of alternatives (impulse buying is rare) May require risky decisions Involves substantial dollar volume Places more emphasis on personal selling

    6. Prentice-Hall, cr 2009 12-6 Organizational versus Consumer Decision Making (cont.) Similarities Emotions do guide decisions Brand loyalty Long-term relationships Aesthetic concerns Branding and product image Intel Inside Aflac

    7. Prentice-Hall, cr 2009 12-7 What Influences Organizational Buyers? Internal stimuli Buyer’s psychological characteristics External stimuli Nature of buyer’s organization, economic, and technological environment of industry Cultural factors Different norms for doing business in different countries Type of purchase The more complex or risky the decision, the more evaluation is needed

    8. Prentice-Hall, cr 2009 12-8 Buyclass Framework Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex:

    9. Prentice-Hall, cr 2009 12-9 Decision Roles In collective decisions, one may play any (or all) of the following roles: Initiator: bring up idea or identifies need Gatekeeper: conducts information search Influencer: sways outcome of decision Buyer: actually makes the purchase User: winds up using product

    10. Prentice-Hall, cr 2009 12-10 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.

    11. Prentice-Hall, cr 2009 12-11 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 predict product success: Employees collectively select factors for product success Knowledgeable “outsiders” (industry experts, consumers) predict success

    12. Prentice-Hall, cr 2009 12-12 B2B E-Commerce B2B e-commerce: Internet interactions between two or more businesses Roughly half of B2B e-commerce consists of auctions, bids, and exchanges among numerous suppliers/purchasers Example: Dell Computer uses Web site to deliver technical support, product information, order status, and customer service to corporate customers

    13. Prentice-Hall, cr 2009 12-13 The Modern Family Before 1900s: extended family 1950s: nuclear family (mother, father, and children) Today, many households: Married couples less than 50% of households Majority of adult women live without spouse Unmarried opposite sex couples Same-sex couples

    14. Prentice-Hall, cr 2009 12-14 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

    15. Prentice-Hall, cr 2009 12-15 Family Size Depends on educational level, availability of birth control, and religion Marketers keep an eye on fertility rate and birth rate Worldwide, women want smaller families (especially in industrialized countries) Contraception/abortion are more readily available Divorce is common Older people now pursue non-grandchildren activities Some countries want people to have more children

    16. Prentice-Hall, cr 2009 12-16 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

    17. Prentice-Hall, cr 2009 12-17 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 Perma-pets Neopets Inc.

    18. Prentice-Hall, cr 2009 12-18 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 As we age, our preferences/needs for products and activities tend to change

    19. Prentice-Hall, cr 2009 12-19 FLC Models Useful models take into account the following variables in describing longitudinal changes in priorities and demand for product categories: Age Marital status Presence/absence of children in home Ages of children Such factors allow use to identify categories of family-situation types

    20. Prentice-Hall, cr 2009 12-20 Life-Cycle Effects on Buying FLC model categories show marked differences in consumption patterns Young bachelors and newlyweds: exercise, go to bars/concerts/movies Early 20s: apparel, electronics, gas Families with young children: health foods Single parents/older children: junk foods Newlyweds: appliances Older couples/bachelors: home maintenance services

    21. Prentice-Hall, cr 2009 12-21 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

    22. Prentice-Hall, cr 2009 12-22 Household Decisions (cont.) Specific factors that determine how much family decision conflict there will be: Interpersonal need Product involvement and utility Responsibility Power

    23. Prentice-Hall, cr 2009 12-23 Sex Roles and Decision-making Responsibilities Who makes key decisions in a family? Autonomic decision: one family member chooses a product Wives still make decisions on groceries, toys, clothes, and medicines 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

    24. Prentice-Hall, cr 2009 12-24 Identifying the Decision Maker Family financial officer (FFO) In traditional families, the man makes the money and the woman spends it If spouses adhere to modern sex-role norms, participation in family maintenance activities Four factors in joint versus sole decision making: Sex-role stereotypes Spousal resources Experience Socioeconomic status

    25. Prentice-Hall, cr 2009 12-25 LeoShe Mother Types June Cleaver: traditional, stay-at-home mom Tug of War: work but not happy about it Strong Shoulders: lower income but optimistic and strong Mother of Invention: enjoy working and being mothers

    26. Prentice-Hall, cr 2009 12-26 Heuristics in Joint Decision Making Synoptic ideal: Husband and wife to take a common view and to act as joint decision makers Heuristics simplify decision making: Salient, objective dimensions Task specialization Concessions based on intensity of each spouse’s preferences

    27. Prentice-Hall, cr 2009 12-27 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)

    28. Prentice-Hall, cr 2009 12-28 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 Television (“electric babysitter”) Sex roles

    29. Prentice-Hall, cr 2009 12-29 Five Stages of Consumer Development

    30. Prentice-Hall, cr 2009 12-30 Cognitive Development Marketers segment children by their stage of cognitive development: ability to comprehend concepts of increasing complexity Three segments often used today: Limited: Below age 6, children do not use storage and retrieval strategies Cued: Between ages 6 and 12, children use these strategies, but only when prompted Strategic: Children age 12 and older spontaneously employ storage and retrieval strategies

    31. Prentice-Hall, cr 2009 12-31 Marketing Research and Children Little real data on children’s preferences/influences on spending patterns is available Kids tend to: Be undependable reporters of own behavior Have poor recall Not understand abstract questions Two areas where researchers have been successful: Product testing Advertising message comprehension

    32. Prentice-Hall, cr 2009 12-32 Discussion Do you think market research should be performed with children? Why or why not?

    33. Prentice-Hall, cr 2009 12-33 Sketches Used to Measure Children’s Perception of Commercials

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