HOUSEHOLD PROCESSES How do other people (i.e., family members) influence our behavior?

1. HOUSEHOLD PROCESSESHow do other people (i.e., family members) influence our behavior?

2. Consumer Behavior In The News… Finding new markets for cell phones. • Over 78 % of consumers between age 19 and 64 own a cell phone. • Pre-teens seen as a MAJOR new market. • What are the drivers and barriers? • Drivers: • Barriers:

3. Consumer Behavior In The News… Finding new markets for cell phones. • Drivers and barriers to pre-teen market? • Drivers: parent’s safety concerns; kid’s desire for phone • Barriers: parent’s concern over misuse; parent as final decision maker • Solution?

4. Why study household decision making? • Basic purchasing and consuming unit • Significant decisions are often made by individuals jointly with other members of his/her household • Primary mechanism of cultural and social values and behavior patterns • Almost everyone in society is involved with a family

5. Households • Structure • Stage in Lifecycle • Roles & Decision Making • Children • How have households changed over time? • How does a household differ from a family?

6. The Changing Family-Household Structure • Changing Family Structure • Divorce: restricted buying power • More single parents • # of cohabitating singles  • Remarriage • Blended families: more complex • family decision making • Changing Roles • Working women • Children w/more dm • power Greater discretionary spending by children • Changing Household Structure • Smaller families • Later marriages: Fewer, but higher • quality purchases • # of single living alone  • # of children age 18 > living @ home 

7. Other changes • Sandwich generation? • Boomerang generation? • Nonhuman family members

8. All Households Families Married couples Children under 18 at home Children over 18 at home No children under 18 at home Single fathers Single mothers Other families Nonfamilies Men living alone Women living alone Other nonfamilies 110,140 77,705 60,969 24,286 5,318 31,365 1,523 7,473 7,741 32,434 10,898 16,278 5,258 100.0% 70.6 55.4 22.1 4.8 28.5 1.4 6.8 7.0 29.4 9.9 14.8 4.8 117,696 80,193 61,266 23,433 6,884 30,950 1,660 7,779 9,488 37,503 12,577 18,578 6,347 100.0% 68.1 52.1 19.9 5.8 26.3 1.4 6.6 8.1 31.9 10.7 15.8 5.4 6.9% 3.2 0.5 (3.5) 29.4 (1.3) 9.0 4.1 22.6 18.0 15.4 14.1 20.7 Family and Nonfamily Households: 2000-2010 20002010 Percent Number Percent Number Percent Change (000) (000) 2000-2010

9. Household Life Cycle • What was the “traditional” family life cycle? • What might today‘s household life cycle look like?

10. Consumption Patterns based on Lifecycle • Young bachelors and newlyweds? • Early 20s? • Single parents/older children? • Newlyweds? • Older couples/bachelors? • Families with young children?

11. Consumption Patterns based on Lifecycle • Young bachelors and newlyweds: exercise, go to bars/concerts/movies • Early 20s: apparel, electronics, gas • Single parents/older children: junk foods • Newlyweds: appliances • Older couples/bachelors: home maintenance services • Families with young children: health foods

12. Young Married with Children What about income and expenditure changes from childless to young child?

13. Marketing Strategy Based on the Household Life Cycle • Factors such as age, income, marital status, presence/absence of children, age of children heavily influence how an individual meets his/her needs. • So, it makes sense to combine stage in the HLC with one of these variables to aid in market segmentation and strategy formulation.

14. Household Life Cycle/Social Stratification Matrix

15. In-Class Exercise • You have just received a $10,000 inheritance from a long-lost relative who you had never met. You are planning to spend the money on two distinct purchases: an evening out at a restaurant and a vacation. • You may use all or just a portion of the money on these purchases. • Given your position in the HLC/Stratification matrix: • Select a restaurant • Select a vacation destination • Determine how much $ will be spent on each. • If you elect to not spend all your money on these activities, how will you use the balance of the inheritance? • What factors influenced your decision?

16. Roles • Initiator – first recognizes need • Information gatherer – has expertise and interest • Influencer – evaluates alternatives • Decision Maker – makes decision • Purchaser – actual purchaser • User – person who uses the product

17. Family Decision Making Husband/Wife Decision Roles for Services

18. 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

19. 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 (choose your battles)