Chapter 10 Organizational and Household Decision Making 10-1 Copyright © 2013 Pearson Education,...

Chapter 10Organizational and

Household Decision Making

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CONSUMER BEHAVIOR, 10eMichael R. Solomon

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Chapter Objectives

When you finish this chapter, you should understand why:

1. Marketers often need to understand consumers’ behavior rather than a consumer’s behavior.

2. Companies as well as individuals make purchase decisions.

3. Our traditional notions about families are outdated.

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Chapter Objectives (continued)

4. Many important demographic dimensions of a population relate to family and household structure.

5. Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.

6. Children learn over time what and how to consume.

Learning Objective 1

• Marketers often need to understand consumers’ behavior rather than a consumer’s behavior.

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Roles In Collective Decision Making

Initiator

Gatekeeper

Influencer

Buyer

User

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For Reflection

Assume that you are a sales representative for a large company that markets laptop computers.

• List all the people 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.

Learning Objective 2

• Companies as well as individuals make purchase decisions.

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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.

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Compared to Consumer Decision Making, Organizational Decision Making…

• Involves many people

• Requires precise, technical specifications

• Is based on past experience and careful weighing of alternatives

• May require risky decisions

• Involves substantial dollar volume

• Places more emphasis on personal selling

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What Influences Organizational Buyers?

• Internal stimuli

• External stimuli

• Cultural factors

• Type of purchase

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Table 10.1 Types of Organizational Buying Decisions

• Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex:

Buying Situation Extent of Effort Risk Buyers Involved

Straight rebuy Habitual decision making

Low Automatic reorder

Modified rebuy Limited problem solving

Low to moderate One or a few

New task Extensive problem solving

High Many

For Reflection

• Summarize the buyclass model of purchasing. How do decisions differ within each class?

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Learning Objective 3

• Our traditional notions about families are outdated.

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For Reflection

• How does the changing nature of the family affect marketing mix decisions marketers make to target families and family members?

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Learning Objective 4

• Many important demographic dimensions of a population relate to family and household structure.

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The Modern Family

• Changes in family structure

• Changes in concept of household (any occupied housing unit)

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Family Size

• Depends on educational level, availability of birth control, and religion

• Women want smaller families

• The rate of voluntary childlessness is rising, making DINKs a valuable market segment

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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

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Nonhuman Family Members

• Pets are treated like family members• Pet-smart marketing strategies:

• Name-brand pet products• Lavish kennel clubs• Pet accessories

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Family Life Cycle

• Factors that determine how couples spend money:• Whether they have children• Whether both spouses work

• Family life cycle (FLC) concept combines trends in income and family composition with change in demands placed on income

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Variables Affecting FLC

Age

Marital Status

Children in the Home

Ages of Children in the Home

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For Reflection

• For the following products, discuss how having children or not might affect the choices a couple makes. What do such variations mean for marketers?• Groceries• Cars• Vacations

Learning Objective 5

• Members of a family unit play different roles and have different amounts of influence when the family makes purchase decisions.

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Household Decisions

Consensual Purchase Decisions

Accommodative Purchase Decisions

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Resolving Decision Conflicts in Families

• Interpersonal need

• Product involvement and utility

• Responsibility

• Power

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Who Makes Key Decisions in the Family?

• Autonomic decision: one family member chooses a product

• 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

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Factors Affecting Decision-Making Patterns Among Couples

Sex-role stereotypes

Spousal Resources

Experience

Socioeconomic Status

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Heuristics in Joint Decision Making

• Synoptic ideal: the couple takes a common view and act as joint decision makers

• Heuristics simplify decision making:• Salient, objective dimensions• Task specialization• Concessions based on intensity of each

spouse’s preferences

For Reflection

• What exposure have you had to family decisions made in your own family? Can you see the patterns discussed in the chapter in those decisions? Give an example.

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Learning Objective 6

• Children learn over time what and how to consume.

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Children as Decision Makers

• 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)

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Consumer Socialization

• Consumer socialization is the 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, family, and teachers• Television and toys• Culture

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Figure 10.2 Five Stages of Consumer Development

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Parental Styles for Socializing Children

Authoritarian

Neglecting

Indulgent

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Cognitive Development

• Limited: Below age 6, children do not use storage and retrieval strategies

• Cued: Between ages 6 and 10, children use these strategies, but only when prompted

• Strategic: Children ages 10 and older spontaneously employ storage and retrieval strategies

For Reflection

• How do the stages of cognitive development relate to a child’s ability to comprehend marketing messages?

• How can marketing messages be adapted to meet the appropriate stage of cognitive development?

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Chapter Summary

• The purchase decisions made by many may differ from those made by individuals.

• Buying for one’s self is different than buying for one’s company.

• Our traditional notions of family are outdated.

• Family members play different roles and varying levels of influence.

• Children learn over time how to consume.