Chapter 12 Organizational and Household Decision Making

12-2 Organizational Decision Making Organizational buyers: purchase goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale.

12-3 Organizational Decision Making versus Consumer Decision Making Organizational Decision Making: Typically involves many people (committees) Requires precise, technical specifications Is based on past experience and careful weighing of alternatives (impulse buying is rare) Involves high-risk decisions Involves substantial dollar volume Places more emphasis on personal selling

12-4 Organizational versus Consumer Decision Making (cont.) Similarities Emotions do guide decisions Brand loyalty Long-term relationships Aesthetic concerns can be important

12-5 Buyclass Framework Buyclass Theory: organizational buying decisions occur as three different types, ranging from most to least complex: Buying SituationExtent of EffortRelative RiskBuyers Involved Straight rebuyHabitual decision making LowOne or None Modified rebuyLimited problem solving Low to moderateOne or a few New taskExtensive problem solving HighMany

12-6 Decision Roles In collective decisions, one may play any (or all) of the following roles: Initiator: bring up idea or identifies need Gatekeeper: conducts information search and “presents” information to other decision-makers Influencer: sways outcome of decision Buyer: actually makes the purchase User: winds up using product

12-7 The Modern Family Before 1900s: extended family 1950s: nuclear family (mother, father, and children) Today: Married couples constitute less than 50% of households Majority of adult women live without spouse Unmarried opposite sex couples (co- habitation) is 5-10% of all couples Same-sex couples Friends, workers and the Web are the “new family”

12-8 Family Size Depends on educational level, availability of birth control, and religion Marketers keep an eye on fertility and birth rates Worldwide, women want smaller families (especially in industrialized countries) Contraception/abortion are more readily available Divorce is more common Older people now pursue “non-grandchildren” activities (i.e. travel, education, work) Some countries want people to have more children (Europe)

12-9 Sandwich Generation Sandwich generation: middle-aged adults who care for their parents as well as their own children Boomerang kids: adult children who return to live with their parents Roommates and “failed- relationship” kids are most likely to boomerang Spend less on household items and more on entertainment

12-10 Pets as Family Members Pets are treated like family members Spending on pets has doubled in the last decade Pet Owner Psychology and Characteristics Pet-smart marketing strategies: Name-brand pet products Designer water for dogs Lavish kennel clubs, gyms, pet classes/clothiers Pet accessories in cars Perma-pets (a very bizarre idea!..) Pet Therapists

12-11 Family Life Cycle Factors that determine how couples spend money: Whether they have children Age of children; whether at home or emancipated Whether the woman (or man) works Family Lifestyles and attitudes towards money Life Stage of family members The Family life cycle (FLC) concept combines trends in income and family composition with change in demands placed on income

12-12 Life-Cycle Effects on Buying FLC model categories show marked differences in consumption patterns Young bachelors and newlyweds: exercise, go to bars/concerts/movies Early 20s: apparel, electronics, gas expenditures high Families with young children: health foods Single parents/older children: junk foods Newlyweds and New Home Owners: appliances Older couples/bachelors: home maintenance services, travel, “edutainment”, insurance

12-13 Household Decisions Families make two types of decisions: Consensual purchase decisions: members agree on the desired purchase, perhaps differing only in terms of how it will be achieved Accommodative purchase decision: members have different preferences or priorities and they cannot agree on a purchase to satisfy the minimum expectations of all involved Frequently result in multilaterally undesirable compromises or no decision at all

12-14 Household Decisions (cont.) Specific factors that determine how much family decision conflict there will be when making “joint” decisions: Interpersonal need Product involvement and utility Responsibility for ownership and/or payment Relationship power

12-15 Sex Roles and Decision-making Responsibilities Who makes key decisions in a family? Autonomic decisions: when one family member makes decisions for the family Wives still make decisions on groceries, toys, clothes, and medicines Syncretic decisions: when both partners “jointly” make decisions Typically happens with cars, vacations, homes, appliances, furniture, home electronics, interior design, phone service Increases with education and household income increases

12-16 Identifying the Decision Maker “Family Financial Officer (FFO)” In traditional families, the man makes the money and the woman spends it If spouses adhere to modern sex-role norms, then different results Four factors in joint versus sole decision making: Sex-role stereotypes Spousal resources Experience with purchase or with each other Socioeconomic status

12-17 LeoShe Mother Types June Cleaver: traditional, stay-at-home mom Tug of War: work but not happy about it Strong Shoulders: lower income but optimistic and strong Mother of Invention: enjoy working and being mothers

12-18 Heuristics in Joint Decision Making Synoptic Ideal: Husband and wife take a common view and act as joint decision makers Heuristics simplify or encourage decision making: Agree on salient, objective dimensions Task specialization Concessions based on intensity of each spouse’s preferences (bargaining process)

12-19 Children as Decision Makers Children make up 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)

12-20 Consumer Socialization Consumer socialization: process by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace Occurs at different rates in different cultures Children’s purchasing behavior is influenced by: Parents Television and web (“electric babysitter”) Sex roles Peers Teachers

12-21 Cognitive Development Marketers segment children by their stage of Cognitive Development ability to comprehend concepts of increasing complexity Three segments often used today: Limited: Below age 6, children do not use storage and retrieval strategies Cued: Between ages 6 and 12, children use these strategies, but only when prompted Strategic: Children age 12 and older spontaneously employ storage and retrieval strategies

12-22 Marketing Research and Children Kids tend to: Be undependable reporters of own behavior Have poor recall Be flippant Be overly influenced by other kids Not understand abstract questions