Family or Household Decision Making

1. Family or Household Decision Making

2. Families and Households What’s the difference between a Family and Household? • families are related by blood or marriage • households are people living together, but not necessarily related

3. Types of Households/Families

4. Why is it Important for Marketers to know about Families and Households? • impart lifestyle and consumption values to their members • influential in consumption decisions • make several joint purchase decisions • prime target market for goods and services

5. Small bags of specialty potatoes for affluent couples without children. And with small kitchens Large bags for larger families

6. Family Life-cycle bachelor newly married, no kids young couple, kids < 6 young couple, kids >6 older married w/ dep. empty nesters, working retired widower - working, not working Changes Over Life-Cycle financial situation brands considered interests primary decision maker What is the Family Lifecycle (FLC)

7. Why is it of value to understand the family life cycle? The family life cycle concept attempts to explain consumer behavior patterns of individuals as they age, marry, have children, retire, and their discretionary income vary over their life span • At each stage members have new and constant needs for goods and servicesI.e consumption patterns change • Life cycle determines which product categories are bought but not how much is spent on each category • How do we keep customers through the FLC? (Automobile)

8. Family Life cycle and Travel summer travel, short overnight trips, and long overnight trips significantly differacross the family life stages • Young singles the most action motivated, • older marrieds the least motivated by action. • young marrieds with children were highly motivated to escape • older marrieds were not. • Young marrieds with children had most interest in rest and relaxation. • Young single travelers had the most ego motivation where • middle-aged singles were least motivated by ego.

9. Young singles placed much greater emphasis on outdoor experiences • older marrieds did not regard outdoor activities as important. • Older unmarrieds, young marrieds, and young singles thought cultural attractions were important. • For the older married and older unmarried segments, weather was very important in vacation destination selection. • Man-made attractions such as theme parks were important for divorced travelers with children and young married travelers with children.

10. number of people (children and adults) in the family, • the ages of the family members • Number of employed adults What are the Critical Consumption factors?

11. Stages of the family life cycle • 1) Bachelor Stage. (Young single people not living at home): • (a) Few financial burdens, • (b) Fashion/opinion leader led, • (c) Recreation orientated, • (d) Experiment with personal financial management • (e) men and women differ in consumer behaviour • - women more housing-related items and furniture, • men more on restaurants and cars • (f) buy: • basic kitchen equipment, • basic furniture, cars, holidays,

12. cars, fringes, cookers, life assurance, durable furniture, holidays, 2) Newly married couples (Young, no children) (DINKS) (a) Better off financially than they will be in the near future, (b) High levels of purchase of homes and consumer durable goods, (c) Establish patterns of personal financial management and control; (D) Buy:

13. necessities - washers, dryers, baby food and clothes, health foods vitamins, toys, books etc.; 3) Full nest I. (Youngest child under six): (a) Home purchasing at peak, (b) Liquid assets/saving low, (c) Dissatisfied with financial position and amount of money saved, (d) Reliance on credit finance, credit cards, overdrafts etc., (e) Child dominated household, (f) Buy

14. necessities - foods, cleaning material, clothes, bicycles, sports gear, music lessons, pianos, junk foods, holidays etc.; 4) Full nest II. (Youngest child six or over): (a) Financial position better, (b) Some wives return to work, (c) Child dominated household, (d) Buy

15. 5) Full nest III. (Older married couples with dependent children.: (a) Financial position still better, (b) More wives work, (c) School and examination dominated household, (d) Some children get first jobs; other in further/higher education, (e) Expenditure to support children's further/higher education, (f) Buy: new, more tasteful furniture, non-necessary appliances, boats, holidays, etc.

16. luxuries, home improvements e.g. fitted kitchens etc.; ) Empty nest I. (Older married couples, no children living with them, head of family still in labor force): (a) Home ownership at peak, (b) More satisfied with financial position and money saved, (c) Interested in travel, recreation, self-education, (d) Make financial gifts and contributions, (e) Children gain qualifications and move to Stage 1. (f) Buy

17. medical appliances or medical care, products which aid health, sleep and digestion, hobbies and pastimes, 7) Empty nest II. (Older married couples, no children living at home, head of family retired): (a) Significant cut in income, (b) Keep home, (d) Concern with level of savings and pension, (e) Assist children (f) Buy:

18. hobbies and pastimes, • 8) Solitary survivor I. (In labour force): • (a) Income still adequate but likely to sell family home and purchase smaller accommodation, • (b) Worries about security and dependence; • (c) Concern with level of savings and pension, • (d) Buy:

19. Prepaid funeral 9) Solitary survivor II. (Retired): (a) Significant cut in income, (b) Additional medical requirements, (c) Special need for attention, affection and security, (d) May Seek sheltered accommodation, (e) Possible dependence on 'others for personal financial, management and control. Buy:

20. Marketing Potatoes through the FLC • As a rule, families with children at home eat dinner at-home morefrequently than other demographicgroups. They also consume more potatoes per person than thosein families without children. • affluent groups tend to eat fewer potatoes than low- to moderate-income groups with the same demographics. Traditional Families - one parent works, one parent stays home, children live at home. • the mainstay of fresh potato marketing, but over time it has come to represent less and lessof the total population Two working parents, children present • Dinneris a hectic time.Parents and children arrive home about the same time. Kids are excited (and hungry); parents aretired (and hungry). Convenience concerns often override other factors in deciding what's for dinner. Dinnertime solutions need to be quick and easy.

21. Single parent families- single working parent, children present. This very busy parent needseasy, quick meal solutions. Dinner is just another thing on the "to do" list along with soccer practice,homework, etc. What sort of potato products should be marketed to families with children?

22. Households without children Half the U.S. population lives in a one- or two- personhousehold. Every demographic in this group has lower potato consumption than households withchildren and represents a significant (and currently missed) opportunity. Singles Singles have the lowest at-home potato consumption, with affluent singles showing evenlower consumption than low- to moderate-income singles. They eat out often, and represent asignificant portion of fry consumption in restaurants. Many in this group will be moving into the marriage, parenthood segment. Potato product ideas:

23. Double income, no kids • young married couples just establishing their households. Many canafford to eat out often and don't have cooking skills. Empty Nesters, children grown and out of home • Some in this group are still working, some areretired • almost all want a break from the years of dinner preparation. • They can afford to eat out ortake home upscale meals. • Often health and fitness conscious, this important group has positiveattitudes about potatoes. • Potato Product ideas: Married and Single active elderly • A small percentage of the population at present, • thisdemographic, along with empty nesters, is expected to grow dramatically in the next 20 years. • Potato product ideas:

24. How would a married couples choices with regards to: Groceries Vehicles be affected if they had children?

25. Household Decision Making • Households vary in consumption habits depending on stage where they are in family life cycle • Household decision making is also different from individual decision making • Family role structure orientation influences household decision making • Nature of good or service to be purchased and consumed influences household decision making

26. Types of Purchase Decisions Made by Families Consensual Decision Making Group Agrees on the Desired Purchase Differing Only in Terms of How It Will Be Achieved.

27. Accommodative Group Members Have Different Preferences and Can’t Agree on a Purchase That Will Satisfy Everyone

28. Family Decision Conflict Conflict Occurs When There is Not Complete Correspondence in Family Members’ Needs and Preferences. Some Specific Factors Determining the Degree of Family Decision Conflict Include the Following: Interpersonal Needs Person’s Level of Investment in the Group Product Involvement and Utility Degree to Which the Product in Question Will Be Used or Will Satisfy a Need Responsibility For Procurement, Maintenance, Payment, etc. Power One Family Member’s Influence Over the Others in Making Decisions

29. Husband-Wife Decision Making Who makes the Decisions? • Influence may depend on the good or service to be purchased, role structure orientation, stage of the decision making process • four categories: • husband-dominated; • wife-dominated • autonomous or unilateral; • joint decision

30. The Apparel Manufacturer Haggar Placed Menswear Ads in About a Dozen Women’s Magazines After Its Research Found That Women Exert Influence Over Men’s Clothing Choices

31. Four Factors Influencing Family Decision Making 1.Sex-role stereotypes - separation of decision-making for sex-typed products. 2 Spousal Resources - spouse contributing the greater resources (usually, but not always, money) has the greater influence 3. Experience - individual decisions are made more frequently when the couple has gained experience as a decision-making unit 4. Socio-Economic Status - middle class families make more joint decisions than either upper or lower class families.

32. Information Gatherer Initiator Gatekeeper Disposer Buyer Maintainer Influencer Decision Maker User Preparer Decision Roles

33. Consumption-related Roles • Initiators: initiate consumption behaviour • Information Gatherers: research alternatives • Gatekeepers: control flow of information to other members • Influencer(s): provide information about a good or service to other members • Deciders: have power to make final buying decision • Buyers: member(s) who actually make purchase • Preparers: transform product into useable form • Users: family members who use the good or service • Maintainers: responsible for maintenance of good • Disposers: responsible for disposal of good/service

34. Marketing Strategy Implications • Marketing communication: advertising message, media used, person targeted, product positioning • Product development: products, e.g. minivans and cars built specifically for families; vacations; services, e.g. insurance, hotel • Pricing decisions: e.g. discounts for bulk purchases • Distribution: changes in family lifestyle means changes in distribution, e.g. longer retail hours • Public policy regulations re marketing to children • Households can be targeted by advertising by lifestyle .

35. If a car is being purchased by a family for a teenager to drive to school, how will this influence: • The type of product • Method of financing • Price • Appropriate promotion message • The media As opposed to the family purchasing a car that the adult head of the household will use to commute to work?

36. Marketing to the Family When marketing to the family children must be a consideration. How would you reach families with your marketing message? • Magazines • children’s magazines are good avenues for reaching the youth and mom markets. • also family-oriented magazines aimed more at parents. Eg. Family Circle, Sesame Street Parents (5.4 million readers) Family Fun, Child, Parents, or Parenting magazine. Internet, e-mail and other technology • since kids are often the more technologically savvy members of the family • Web sites

37. Organizations • family-friendly organizations are good places in which to focus marketing efforts aimed at the family eg. • Religious institutions • Schools: primary, secondary, public and private; • their affiliated clubs and organizations, • Kids’ groups - Scouts, 4-H, etc. • YMCA or YWCA and other athletic clubs • Direct Mail

38. marketing to families employs strategies and practices that strongly appeal to parent customers and their children for the ultimate purpose of increasing sales. It involves looking at your sales and marketing processes from the viewpoint of a consumer who has money to buy, children beside them and is stretched for time. Family marketing has three components: • products • customer service • and environment.

39. For many households, a car purchase is a family event. It can be a pleasant one or a story that is retold with embarrassment and horror. Which do you think will lead to a repeat sale or referral? If you were the owner of a car dealership how would you make the purchase of a car a pleasant family event.

40. Provide a good play area. Construction play, a table for drawing, good books, creative activities like train sets, Lego tables, mazes and puzzles. Stay away from videos. Children who sit too long just build up their energy and compensate with over-active play. • Welcome families with broad smiles, make eye contact with the youngsters. • Take a few minutes to make the children comfortable by leading them to the play area or explaining where the toys are. Do not put parents into the position of apologizing for their children's behavior. • Make sure that the vending machine has packaged, healthy treats available, including fruit juice or water in bottles. • The bathroom should have a change table. • stop periodically to make sure the kids are engaged and happy. • Include them if old enough, in some of the discussions.

41. Since 1976, the real income (in constant dollars corrected for inflation) of Canadian families has remained relatively constant. How is this situation affecting the purchasing behaviour of Canadian Families? How should a firm use this information to develop a marketing strategy for • Shoes • Microwave ovens • Travel packages