Organizational & Household Decision Making
Michael J. KalsherMGMT 4460/6962
Summer 2014
Chapter ObjectivesWhen you finish this chapter, you should understand
why:1.Marketers often need to understand consumers’
behavior rather than an individual consumer’s behavior.
2.Companies as well as individuals make purchase decisions.
3.Our traditional notions about families are outdated.4.Many important demographic dimensions of a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 (collective decision making) rather than a consumer’s behavior.
Roles In Collective Decision Making
Initiator: Brings up idea or identifies a need
Gatekeeper: Conducts information search and controls info flow
Influencer: Attempts to sway the outcome of the decision
Buyer: Purchaser
User: Consumes the product or service
Learning Objective 2 Companies as well as individuals make
purchase decisions.
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) marketing is VERY big business ($trillions)
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
(e.g., medical devices)
Hemodialysis Catheters
http://www.youtube.com/watch?v=fXeuB1P8sDs
What Influences Organizational Buyers? Internal stimuli External stimuli (Nature of the industry & the
organization)
Cultural factors Type of purchase (Level of risk and complexity)
Buyclass theory of purchasing: organizational buying decisions can be divided into 3 types that vary in complexity. Straight rebuy (Low risk; Habitual decision making e.g.,
approved vendors) Modified rebuy (Moderate risk; Limited problem solving) New task (High risk; Extensive problem solving)
Learning Objective 3 Our traditional notions about families are
outdated.
Learning Objective 4 Many important demographic dimensions of a
population relate to family and household structure.
The Modern Family Changes in family structure (nuclear vs.
extended) Changes in concept of household (any
occupied housing unit)
Family Size Depends on educational level, availability of
birth control, and religion Many women want smaller families The rate of voluntary childlessness is rising,
making DINKs (dual incomes no kids) a valuable market segment
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
Nonhuman Family Members Pets are treated like family members Pet-smart marketing strategies:
Name-brand pet products Lavish kennel clubs Pet accessories http://www.youtube.com/watch?v=Pi60Aj2EkyE
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
Variables Affecting Family Life Cycle
Age
Marital Status
Presence/Absence of Children
Ages of Children, if present
Learning Objective 5 Members of a family unit play different roles
and have different amounts of influence when the family makes purchase decisions.
Household Decisions
Consensual Purchase Decisions:
Agreement on purchase, but not necessarily on the details.
Accommodative Purchase Decisions:
Differing preferences/priorities prevent agreement and may lead to conflict
Resolving Decision Conflicts in Families: Contributing Factors
Interpersonal need Product involvement
and utility Responsibility Power
Who Makes Key Decisions in the Family?
Autonomic decisions: one family member chooses a product
Syncretic decisions: involve both partners Used for cars, vacations, homes,
appliances, furniture, home electronics, interior design, phone service
As education increases, so does syncretic decision making
Gender convergence Sheconomy
In General, Four Factors Determine Decision-Making Patterns Among Couples
Sex-role stereotypes
Spousal Resources
Experience
Socioeconomic Status
Heuristics in Joint Decision Making
Synoptic ideal: calls for both members of the couple to take a common view and act as joint decision makers
Heuristics simplify decision making: Find areas of agreement on salient, objective dimensions Task specialization (reduces “turf wars”) Concessions based on intensity of each spouse’s
preferences (pick your battles wisely)
Learning Objective 6 Children learn over time what and how to
consume.
Children as Decision Makers: They form three distinct markets
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) Important to “lock-in” brand loyalty
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 Culturehttp://www.youtube.com/watch?v=4CA11vk_X-A&feature=
relatedhttps://www.youtube.com/watch?v=DVvigQ_RFKc
Five Stages of Consumer Development
Parental Styles for Socializing Children
Authoritarian
Neglecting
Indulgent
Cognitive Development: New view stresses differences in information-processing abilities
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
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.