Chapter 12 Organizational and Household Decision Making

1. Chapter 12Organizational and Household Decision Making

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

3. Organizational Decision Making versus Consumer Decision Making Organizational Decision Making: • Typically involves many people (committees) • Requires precise, technical specifications • Is based on past experience and careful weighing of alternatives (impulse buying is rare) • Involves high-risk decisions • Involves substantial dollar volume • Places more emphasis on personal selling

4. Organizational versus Consumer Decision Making (cont.) Similarities • Emotions do guide decisions • Brand loyalty • Long-term relationships • Aesthetic concerns can be important

5. Buyclass Framework • BuyclassTheory: organizational buying decisions occur as three different types, ranging from most to least complex:

6. 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 and “presents” information to other decision-makers • Influencer: sways outcome of decision • Buyer: actually makes the purchase • User: winds up using product

7. The Modern Family • Before 1900s: extended family • 1950s: nuclear family (mother, father, and children) • Today: • Married couples constitute less than 50% of households • Majority of adult women live without spouse • Unmarried opposite sex couples (co-habitation) is 5-10% of all couples • Same-sex couples • Friends, workers and the Web are the “new family”

8. Family Size • Depends on educational level, availability of birth control, and religion • Marketers keep an eye on fertility and birth rates • Worldwide, women want smaller families (especially in industrialized countries) • Contraception/abortion are more readily available • Divorce is more common • Older people now pursue “non-grandchildren” activities (i.e. travel, education, work) • Some countries want people to have more children (Europe)

9. Sandwich Generation • Sandwich generation: middle-aged adults who care for their parents as well as their own children • Boomerang kids: adult children who return to live with their parents • Roommates and “failed-relationship” kids are most likely to boomerang • Spend less on household items and more on entertainment

10. Pets as Family Members • Pets are treated like family members • Spending on pets has doubled in the last decade • Pet Owner Psychology and Characteristics • Pet-smart marketing strategies: • Name-brand pet products • Designer water for dogs • Lavish kennel clubs, gyms, pet classes/clothiers • Pet accessories in cars • Perma-pets (a very bizarre idea!..) • Pet Therapists

11. Family Life Cycle • Factors that determine how couples spend money: • Whether they have children • Age of children; whether at home or emancipated • Whether the woman (or man) works • Family Lifestyles and attitudes towards money • Life Stage of family members • The Family life cycle (FLC) concept combines trends in income and family composition with change in demands placed on income

12. 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 expenditures high • Families with young children: health foods • Single parents/older children: junk foods • Newlyweds and New Home Owners: appliances • Older couples/bachelors: home maintenance services, travel, “edutainment”, insurance

13. Household Decisions Families make two types of decisions: • Consensual purchase decisions: members agree on the desired purchase, perhaps 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 • Frequently result in multilaterally undesirablecompromises or no decision at all

14. Household Decisions (cont.) Specific factors that determine how much family decision conflict there will be when making “joint” decisions: • Interpersonal need • Product involvement and utility • Responsibility for ownership and/or payment • Relationship power

15. Sex Roles and Decision-making Responsibilities Who makes key decisions in a family? • Autonomic decisions: when one family member makes decisions for the family • Wives still make decisions on groceries, toys, clothes, and medicines • Syncreticdecisions: when both partners “jointly” make decisions • Typically happens with cars, vacations, homes, appliances, furniture, home electronics, interior design, phone service • Increases with education and household income increases

16. 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, then different results Four factors in joint versus sole decision making: • Sex-role stereotypes • Spousal resources • Experience with purchase or with each other • Socioeconomic status

17. 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

18. Heuristics in Joint Decision Making • Synoptic Ideal: Husband and wife take a common view and act as joint decision makers • Heuristics simplify or encourage decision making: • Agree on salient, objective dimensions • Task specialization • Concessions based on intensity of each spouse’s preferences (bargaining process)

19. 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)

20. Consumer Socialization • Consumer socialization: process by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace • Occurs at different rates in different cultures • Children’s purchasing behavior is influenced by: • Parents • Television and web (“electric babysitter”) • Sex roles • Peers • Teachers

21. 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

22. Marketing Research and Children • Kids tend to: • Be undependable reporters of own behavior • Have poor recall • Be flippant • Be overly influenced by other kids • Not understand abstract questions