Family or Household Decision Making

1. Family or Household Decision Making

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

3. Types of Households/Families

4. Why is it Important for Marketers to know about Families and Households? • Families/households impart lifestyle and consumption values to their members • The family/household is one of the most influential in consumption decisions • Households/families make several joint purchase decisions • As a unit, the family/household is a prime target market for goods and services

5. 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)

6. Why is it of value to understand the family life cycle? • At each stage members have new and constant needs for goods and servicesI.e consumption patterns change • How do we keep customers through the FLC? (Automobile) What are the Critical Consumption factors? • number of people (children and adults) in the family, • the ages of the family members • Number of employed adults

7. 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,

8. 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:

9. 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

10. 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

11. 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.

12. 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

13. 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:

14. 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:

15. 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:

16. How do the following overall demographics of the modern family affect marketers? • The under-25 married couple age group declined by one-third since 1980. • The 65+ group increased by 15% since 1980. • The 35 - 44 year age group grew 40% since 1980, and was 50% of the total in 2000. • The average marrying age for women is 24 and 26 for men. • number of unmarried adults is rising steadily • The average family size is 2.6 people, and birth rates are expected to continue to decline. I.e. family size is shrinking only 10% have 3 or more kids • family households headed by a single person have grown by over 25% in the last decade • Over a million couples divorce each year in USA.

17. 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 Household Decision Making

18. Types of Purchase Decisions Made by Families Family Decision Making Accommodative Group Members Have Different Preferences and Can’t Agree on a Purchase That Will Satisfy Everyone. Consensual Group Agrees on the Desired Purchase, Differing Only in Terms of How It Will Be Achieved.

19. Consensual Decision Making

20. Accommodative

21. 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

22. 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 Husband-Wife Decision Making Who makes the Decisions?

23. Autocratic Decisions Made by One Spouse or the Other Syncratic Decisions Decisions Made Jointly Sex Roles and Decision-Making Responsibility

24. 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.

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

26. 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 Consumption-related Roles

27. 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 . Marketing Strategy Implications

28. 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

29. 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

30. 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.

31. 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.

32. 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.

33. 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

34. For what kinds of products would the family-life cycle concept be most useful in estimating demand? Give some examples of the effects of the changing role of women on marketing practices (product, promotion, price, place)