Organizational and Household Decision Making Chapter 12 Organizational and Household Decision Making

Organizational Decision-Making Organizational Buyers are people who purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale. These individuals buy from Business-to-Business Marketers, who specialize in meeting the needs of organizations such as corporations, government agencies, hospitals and retailers. Approximately, $2 trillion dollars worth of products and services change hands among organizations.

Organizational Purchase Situation Expectations of the Supplier Organizational Climate of the Buyer’s Firm Buyer’s Assessment of His/ Her Own Performance Influences on the Organizational Purchase Situation

Organizational Decision-Making Vs. Consumer Decision-Making Purchase Decisions Frequently Involve Many People Products Are Often Bought According to Specifications Impulse Buying is Rare Decisions Are Often High-Risk Organizational Decision-Making Vs. Consumer Decision-Making Dollar Volume of Purchase is Often Substantial More Emphasis on Personal Selling Decisions Are Guided by Long-Term Relationships

Influences on the Organizational Buyer Behavior Process Type of Purchase The Buyclass Framework Influences on the Organizational Buyer Behavior Process Level of Information That Must be Gathered Seriousness of Consideration of All Possible Alternatives Buyer’s Familiarity With The Purchase

Types of Organizational Buying Situations New Task Modified Rebuy Straight Rebuy Extent of Risk and Effort Involved

Organizational Decision Roles Initiator Gatekeeper Decision Roles Influencer User Buyer

Trends in Organizational Buying Behavior Building Strong, Lasting Bonds With Suppliers Trends in Organizational Buying Behavior Consolidating Vendors Emphasis on the User, Not on the Buyer Shift From Technology to Marketing Orientation

Defining the Modern Family The Extended Family was once the most common family unit and consisted of three generations living together. The Nuclear Family - a mother, father, and one or more children - became the modern family. However, this is no longer a realistic view of the family. Today, a Family Household is defined as containing at least two people who are related by blood or marriage.

Age and Size of the Family 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 will be 50% of the total by the year 2000. The average marrying age for women is 24 and 26 for men. The average family size is 2.6 people, and birth rates are expected to continue to decline.

Family Households Another factor affecting marketers is that family households headed by a single person have grown by over 25% in the last decade. Over a million couples divorce each year. The number of unmarried adults is steadily rising. Single men and women are different markets. Middle-aged adults have been termed “The Sandwich Generation” because they must attend to those above them and below them in age. Children that have left home and return to the nest are called Boomerang Kids. Nontraditional family structures continue to rapidly increase.

Effects of Family Structure on Consumption Age The Family Life Cycle (FLC) Combines Trends in Income and Family Composition With the Changes in Demands Placed Upon This Income. Four Variables are Necessary to Describe These Changes: Marital Status Presence or Absence of Children in the Home Children’s Ages (if any)

Family Life Cycle: An Updated View

Family Decision Making Types of Purchase Decisions Made by Families Family Decision Making Accommodative Group Members Have Different Preferences and Can’t Agree on a Purchase That Will Satisfy Everyone. Consensual Group Agrees on the Desired Purchase, Differing Only in Terms of How It Will Be Achieved.

Family 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 Needs Person’s Level of Investment in the Group Product Involvement and Utility Degree to Which the Product in Question Will Be Used or Will Satisfy a Need Responsibility For Procurement, Maintenance, Payment, etc. Power One Family Member’s Influence Over the Others in Making Decisions

Sex Roles and Decision-Making Responsibility Autocratic Decisions Made by One Spouse or the Other Syncratic Decisions Decisions Made Jointly Factors Influencing Joint or Individual Family Decisions Spousal Resources Experience Sex-Role Stereotypes Socioeconomic Status

Children as Decision Makers: Consumers in Training Children are recognized as consumers that deserve attention. Kids ages 4 - 12 spend or influence their parents to spend about $140 billion a year. Children are particularly influential in purchasing the following products: Fruit snacks Frozen novelties Kids’ beauty aids and fragrances Toys Parental Yielding occurs when a parental decision maker is influenced by a child’s request and “surrenders”.

Consumer Socialization Consumer Socialization is defined as the process by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace. Influence of Parents: Authoritarian parents - restrictive with a negative view about advertising. Neglecting parents - detached from kids and exercise little control over what their children do. Indulgent parents - less restrictive and want children to learn about buying. Influence of Television: The “Electronic Babysitter” that teaches children about a culture’s values, myths, and idealized images.

Cognitive Development Kids Can Be Segmented By Age in Terms of Their Stage of Cognitive Development, or Ability to Comprehend Concepts of Increasing Complexity. Children Differ in Abilities to Store and Retrieve Information From Memory: Below Age 6, Children Do Not Employ Storage and Retrieval Strategies. Limited Cued Between 6 and 12, Children Employ These Strategies -- When Prompted. Strategic 12 and Older, Children Spontaneously Employ These Strategies. Tests hypotheses about cause- and-effect relationships.

Market Research and Children Despite children’s buying power, relatively little data on their preferences or influences on spending patterns is available. Children are difficult subjects to research. A particularly helpful types of research with children is Product Testing. Many serious ethical issues are raised when advertisers try to appeal directly to children. Kids’ cognitive defenses are not yet developed enough to filter out commercial appeals.