Family or Household Decision Making

Families and Households

families are related by blood or marriage

households are people living together, but not necessarily related

What’s the difference between a Family and Household?

Types of Households/Families

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

Why is it Important for Marketers to know about Families and Households?

What is the Family Lifecycle (FLC)

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-Cyclefinancial

situationbrands

considered interestsprimary decision

maker

At each stage members have new and constant needs for goods and services I.e consumption patterns change

How do we keep customers through the FLC? (Automobile)

Why is it of value to understand the family life cycle?

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?

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,

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 andcontrol; (D) Buy: cars, fringes, cookers, life assurance, durable furniture,

holidays,

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 necessities - washers, dryers, baby food and clothes, health

foods vitamins, toys, books 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) Buynecessities - foods, cleaning material, clothes, bicycles,

sports gear, music lessons, pianos, junk foods, holidays etc.;

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.

) Empty nest I. (Older married couples, no children living withthem, 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 luxuries, home improvements e.g. fitted kitchens etc.;

7) Empty nest II. (Older married couples, no children living athome, 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:medical appliances or medical care, products which aid

health, sleep and digestion, 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: hobbies and pastimes,

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: Prepaid funeral

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 kidsfamily households headed by a single person have grown by over 25% in the last decade Over a million couples divorce each year in USA.

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

AccommodativeAccommodativeGroup Members Have Different Preferences and Can’t Agree

on a Purchase That Will Satisfy Everyone.

AccommodativeAccommodativeGroup Members Have Different Preferences and Can’t Agree

on a Purchase That Will Satisfy Everyone.

Types of Purchase Decisions Made by Families

Types of Purchase Decisions Made by Families

ConsensualConsensualGroup Agrees on the DesiredPurchase, Differing Only in

Terms of How It Will Be Achieved.

ConsensualConsensualGroup Agrees on the DesiredPurchase, Differing Only in

Terms of How It Will Be Achieved.

Family Decision MakingFamily Decision Making

Consensual Decision Making

Accommodative

Family Decision ConflictFamily 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 NeedsInterpersonal Needs

Product Involvementand Utility

Product Involvementand Utility

ResponsibilityResponsibility

Person’s Level of Investment in the GroupPerson’s Level of Investment in the Group

Degree to Which the Product in Question Will Be Used or Will Satisfy a Need

Degree to Which the Product in Question Will Be Used or Will Satisfy a Need

For Procurement, Maintenance, Payment, etc.For Procurement, Maintenance, Payment, etc.

PowerPower One Family Member’s Influence Over the Others in Making Decisions

One Family Member’s Influence Over the Others in Making Decisions

Husband-Wife Decision Making

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-dominatedautonomous or unilateral; joint decision

Who makes the Decisions?

Sex Roles and Decision-Making ResponsibilitySex Roles and Decision-Making Responsibility

Autocratic Decisions

Made by One Spouse or the

Other

Syncratic Decisions

Decisions Made

Jointly

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 influence3. Experience - individual decisions are made more frequently when the couple has gained experience as a decision-making unit4. Socio-Economic Status - middle class families make more joint decisions than either upper or lower class families.

Four Factors Influencing Family Decision Making

DecisionRoles

DecisionRoles

Initiator

InformationGatherer

Gatekeeper

Influencer

DecisionMaker

Buyer

Preparer

User

Maintainer

Disposer

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

Marketing Strategy ImplicationsMarketing communication: advertising message,

media used, person targeted, product positioningProduct development: products, e.g. minivans and

cars built specifically for families; vacations; services, e.g. insurance, hotel

Pricing decisions: e.g. discounts for bulk purchasesDistribution: changes in family lifestyle means

changes in distribution, e.g. longer retail hoursPublic policy regulations re marketing to children Households can be targeted by advertising by

lifestyle .

Magazineschildren’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

Marketing to the FamilyWhen marketing to the family children must be a consideration. How would you reach families with your marketing message?

Organizationsfamily-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

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.

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.

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.

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 ovensTravel packages

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)