Organizational and Household Decision Making in Consumer Behavior

1. 12 - 1 Chapter 12 Organizational and Household Decision Making By Michael R. Solomon Consumer Behavior Buying, Having, and Being Sixth Edition

2. 12 - 2 Opening Vignette: Amanda Why is Amanda nervous? What difficulties has Amanda had since moving in with Orlando? Why does Orlandos occupation convince Amanda that he is capable of more? What did Amanda do to help Orlando prepare the hors doeuvres?

3. 12 - 3 Epicurious

4. 12 - 4 Organizational Decision Making Collective Decision Making A process in which more than one person is involved in the purchasing process for products or services to be used by multiple consumers Organizational Buyer A person who purchases goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale Business-to-Business Marketers: Specialize in meeting the needs of organizations such as corporations, government agencies, hospitals, and retailers The organizational buyers perceptions of the purchase situation is influenced by: Expectations of the supplier Organizational climate of his own company Assessment of his own performance

5. 12 - 5 Organizational Decision Makers In the Information Age, organizational decision makers must stay on top of clients complex needs.

6. 12 - 6 Advertising to Organizational Buyers Advertisements targeting organizational buyers such as this CDW ad for technology equipment often try to assuage the concerns of the risk associated with purchase. This ad states, At CDW, we know that every day, youre asked to do the impossible. From personal account managers to custom configuration, you can count on us for brand name products, the way you need them, when you need them.

7. 12 - 7 Organizational Decision Making Versus Consumer Decision Making Factors which distinguish organizational and industrial purchase decisions from individual consumer decisions: Purchase decisions frequently involve many people Products are often bought according to precise technical specifications that require a lot of product category knowledge Impulse buying is rare Decisions are often risky The dollar volume of the purchase is substantial More emphasis on personal selling than advertising

8. 12 - 8 How do Organizational Buyers Operate? Type of Purchase: The type of item to be purchased influences the organizational buyers decision-making process Buying Center: A group of people who make the more complex organizational decisions The Buyclass Framework: Straight rebuy: A habitual decision Modified rebuy: Involves limited decision making New task: Involves extensive problem solving

9. 12 - 9 Organizational Buying Decision Types

10. 12 - 10 How Organizational Buyers Operate Decision Roles: Initiator: The person who brings up the idea or need. Gatekeeper: The person who conducts the information search and controls the flow of information available to a group. Influencer: The person who tries to sway the outcome of the decision. Buyer: The person who actually makes the purchase. User: The person who winds up using the product or service. B2B E-Commerce Refers to Internet interactions between 2 or more businesses or organizations

11. 12 - 11 The Family Defining the Modern Family Extended Family: Consists of three generations living together and often includes grandparents, aunts, uncles, and cousins. Nuclear Family: A mother and a father and one or more children Just What Is A Household? Family Household: Contains at least two people who are related by blood or marriage. Family Size Fertility rate: Determined by the number of births per year per 1,000 women of childbearing age.

12. 12 - 12 Household Decision Making Interpersonal need product involvement and utility responsibility power

13. 12 - 13 Family Structures Family structures continue to evolve, but some basic conflicts remain the same. This Italian ad for an antacid product says, Certain things are hard to swallow.

14. 12 - 14 Meeting Family Size Needs Folgers Coffee addresses an important need by allowing single people to brew one cup of coffee at a time.

15. 12 - 15 The Sandwich Generation This insurance ad reminds us that people in the sandwich generation often must care for their parents in addition to their children.

16. 12 - 16 Nontraditional Family Structures POSSLQ Persons of Opposite Sex Sharing Living Quarters Voluntarily Childless: Women of childbearing age who choose to have no children Whos Living at Home? Boomerang Kids: Children between the ages of 18 and 34 that return home to live with their parents. Animals Are People Too! Nonhuman Family Members

17. 12 - 17 Dog Condoms? This Spanish public service ad promotes pet sterilization via a fake ad for dog condoms.

18. 12 - 18 Two Brides

19. 12 - 19 The Family Life Cycle Family Life Cycle (FLC) Concept that combines trends in income and family composition with the changes in demands placed upon this income to segment households. FLC Models Focuses on longitudinal changes in priorities which is valuable in predicting demand for specific product categories over time. Four variables are necessary: (1) Age (2) Marital Status (3) Absence or Presence of Children (4) Ages of Children Life-Cycle Effects on Buying

20. 12 - 20 Ethan Allen This ad by a furniture manufacturer specifically refers to stages in the family life cycle.

21. 12 - 21 Family Life Cycle Figure 12.1

22. 12 - 22 The Intimate Corporation: Family Decision Making Household Decisions Consensual Purchase Decision: Members agree on desired purchase Accommodative Purchase Decision: Members have different preferences or priorities and cannot agree on a purchase Factors determining the degree of family decision conflict: Interpersonal need Product involvement and utility Responsibility Power

23. 12 - 23 This Kudos advertisement tries to explain that the product will satisfy two members of the household for different reasons. What type of family decision have the mother and son made? Discussion Question

24. 12 - 24 Sex Roles and Decision-Making Responsibilities Autonomic Decision When one family member chooses a product Syncratic Decision When the family jointly makes a decision There is a shift in decision making toward more compromise and turn- taking. Spouses typically exert significant influence on decision making.

25. 12 - 25 Identifying the Decision Maker Family Financial Officer (FFO): The individual who keeps track of the familys bills and decides how much surplus funds will be spent. Four Mother Types (LeoShe): June Cleaver, the Sequel Tug of War Strong Shoulders Mothers of Invention

26. 12 - 26 Who Buys the Pants? Although many men still wear the pants in the family, its women who buy them.

27. 12 - 27 Leo Mother Types Figure 12.2

28. 12 - 28 United Kingdom Households

29. 12 - 29 Identifying the Decision Maker Four Factors Determine the Degree to Which Decisions will be Made Jointly by One or the Other Spouse Sex-role stereotypes Spousal resources Experience Socioeconomic Status Kin-Network System: Ties among family members, both immediate and extended.

30. 12 - 30 Women Manage Many Tasks Women often manage many tasks within the family that pull them in many directions.

31. 12 - 31 Heuristics in Joint Decision Making Synoptic Ideal: Calls for the husband and wife to take a common view and act as joint decision makers Frequently observed decision-making pattern: (1) Areas of common preference based on salient, objective dimensions rather than subtler, hard-to- define cues. (2) Couple agrees on a system of task specialization . (3) Concessions are based on the intensity of each spouses preferences.

32. 12 - 32 Children As Decision Makers: Consumers-In-Training Primary Market: Kids spending their own allowance on their own wants and needs. Influence Market: Parental Yielding: Occurs when a parental decision maker is influenced by a childs request and surrenders. Future Market: Kids eventually grow up to be adults.

33. 12 - 33 Kids Influence on Household Purchases

34. 12 - 34 Kids.us

35. 12 - 35 Consumer Socialization Consumer Socialization The process by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace. Influence of Parents: Parents influences in consumer socialization are both direct and indirect. Television: The Electric Babysitter: The more children are exposed to television, the more they will accept images depicted as real.

36. 12 - 36 Figure 12.3 Five stages of consumer development by earliest age at onset and median age at onset Source: Adapted from James U. McNeal and Chyon-Hwa Yeh, Born to Shop, American Demographics (June 1993): 36. Reprinted by permission of American Demographics, Inc.

37. 12 - 37 Consumer Socialization (cont.) Sex Role Socialization: Children pick up on the concept of gender identity as early as age one or two. Cognitive Development Stage of Cognitive Development: The ability to comprehend concepts of increasing complexity Preoperational Stage of Development: A stage of cognitive development Alternative three-segment approach: (1) Limited (2) Cued (3) Strategic

38. 12 - 38 Marketing Research and Children Product Testing: A particularly helpful type of research with children. Involves watching kids play with toys or involving them in focus groups Message Comprehension: Children differ in their ability to process product- related information Ethical issues must be considered when directing advertising appeals at children

39. 12 - 39 Product Testing Lego did research to learn how boys and girls play with their building toys.

40. 12 - 40 Appealing to parents and kids http://disney.go.com/park/homepage/today/flash/index.html?clk=1004398 http://family.go.com/ http://disney.go.com/buzzlightyear/

41. 12 - 41 Ads that directly target children must deal with a number of ethical issues. This ad solicits children to directly contact the organization. The girl in the picture is captioned as saying, My name is Nina, I am 4 years old and I have three close friends and live in a house with 6 rooms. How does this ad target the weaknesses of the cognitive capabilities of children in this age range? Discussion Question