Consumers Rule

1
Organizational and Household Decision
Making Chapter 12
2
Organizational Decision Making

• Collective decision making
• Organizational buyers buy from B2B marketers
• Decisions become very important due to great
  responsibility for others
• Buyers perception of purchase situation is
  affected by expectations of supplier,
  organizational climate of own company, and
  buyers assessment of own performance
• Organizations members share information and
  develop organizational memory

3
Organizational vs. Consumer Decision Making

• Organizational buying is different
• Involves many people
• Precise, technical specifications (require a lot
  of product knowledge)
• Past experience and careful weighing of
  alternatives (impulse buying is rare)
• Decisions are often risky (to ones career)
• Substantial dollar volume
• More emphasis on personal selling

4
Organizational vs. Consumer Decision Making

• Similarities
• Emotions do guide decisions
• Brand loyalty
• Long-term relationships
• Aesthetic concerns
• Branding and product image
• Intel Inside

5
How Do Organizational Buyers Operate?

• Organizational buyers are influenced by
• Internal stimuli
• Buyers psychological characteristics
• External stimuli
• Nature of buyers organization
• Overall economic/technological environment of
  industry
• Cultural factors
• Different norms for doing business in different
  countries

6
Type of Purchase

• The more complex, novel, or risky the decision,
  the more effort the buyer will devote to
  information search/evaluating alternatives
• Fixed set of suppliers for routine purchases
  reduces information search in evaluating
  alternatives

7
The Buyclass Framework

• Buyclass theory of purchasing dimensions
• Level of information gathered prior to decision
• Seriousness of evaluation of alternatives
• Buyer familiarity with purchase

Table 12.1 Corporate Buying Strategies
8
Decision Roles

• In collective decisions, one may play any (or
  all) of the following roles
• Initiator
• Gatekeeper
• Influencer
• Buyer
• User

9
B2B E-Commerce

• Internet interactions between two or more
  businesses
• Exchanges of information, products, services, or
  payments
• Internet provides online catalog of products and
  services
• Roughly half of B2B e-commerce consists of
  auctions, bids, and exchanges among numerous
  suppliers/purchasers

10
The Family

• As traditional family living arrangements have
  waned, siblings, close friends, other relatives,
  and intentional families continue to provide
  support
• Consuming homemade food is symbolic of family
  structure and expressing affection
• Discussion Is the family unit dead?

11
Defining the Modern Family

• Extended family and nuclear family
• Just what is a household?
• Family household contains at least two people
  related by blood/marriage
• Divorces and separations are accepted in our
  culturemarital breakups are ever-present theme
  in books, music, and movies
• Adult females are staying home with
  family/children more (especially among
  best-educated/highest achieving women)

12
Family Size

• Depends on educational level, availability of
  birth control, and religion
• Marketers keep an eye on fertility rate and birth
  rate
• Worldwide, women want smaller families
  (especially in industrialized countries)
• Contraception/abortion are more readily available
• Divorce is common
• Older people now pursue non-grandchildren
  activities
• Some countries want people to have more children

13
Nontraditional Family Structures

• Any occupied housing unit is a household
• Same-sex households are increasingly common
  marketers target them as unit
• POSSLQ living arrangement
• Rise of single-person households
• Singles spend more on rent, alcohol, reading
  materials, health care, and tobacco/smoking

14
Nontraditional Family Structures (Contd)

• Voluntarily childless women and childless couples
  are attractive market segments
• Discuss the pros and cons of the voluntarily
  childless movement. Are followers of this
  philosophy selfish?
• Two-income couples without children are better
  educated and have more professional/managerial
  occupations

15
Whos Living at Home?

• Traditional extended family is alive and well
• Sandwich generation
• Many adults are caring for parents as well as
  children
• Boomerang kids
• Living with parents longer or are moving back in
• Spend less on housing/staples and more on
  entertainment

16
Nonhuman Family Members

• We often treat companion animals as family
  members
• Spending on pets has doubled in the last decade
• Pet-smart marketing strategies
• Name-brand pet products
• Designer water for dogs
• Lavish kennel clubs, pet classes/clothiers
• Pet accessories in cars
• Perma-pets
• Neopets Inc.

17
The Family Life Cycle

• Factors that determine how a couple spends
  time/money
• Whether they have children
• Whether the woman works
• Using FLC concept to segment households
• As we age, our preferences/needs for products and
  activities tend to change
• Pivotal events alter role relationships and
  trigger new stages of life that alter our
  priorities

18
FLC Models

• Useful models take into account the following
  variables in describing longitudinal changes in
  priorities and demand for product categories
• Age
• (Relaxed) marital status
• Presence/absence of children in home
• Ages of children
• Such factors allow use to identify categories of
  family-situation types (e.g., Full Nest I vs.
  Delayed Full Nest)

19
Life-Cycle Effects on Buying

• FLC model categories show marked differences in
  consumption patterns
• Young bachelors and newlyweds are most likely to
  exercise, go to bars/concerts/movies
• Those in early 20s apparel, electronics, gas
• Families with young children health foods
• Single parents/older children junk foods
• Newlyweds appliances (e.g., toaster ovens)
• Older couples/bachelors home maintenance services

20
Household Decisions

• In every living situation, group members seem to
  take on different roles similar to those within a
  company
• Consensus purchase decision vs. accommodative
  purchase decision
• Factors determining family decision conflict
• Interpersonal need
• Product involvement and utility
• Responsibility
• Power

21
Sex Roles and Decision-making Responsibilities

• Autonomic decision vs. syncratic decisions
• Wives tend to have most say buying groceries,
  toys, clothes, and medicines
• Both make decisions for cars, vacations, homes,
  appliances, furniture, home electronics, interior
  design, and long distance phone services
• As education increases, so does syncretic
  decision making
• Even after death, spouses seem to still consider
  the one who has died when making household
  decisions

22
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 more modern sex-role norms,
  there is shared participation in family
  maintenance activities
• Women seem to be gaining ground in almost all
  areas of decision making
• Women often struggle with the juggling lifestyle

23
LeoShe Mother Types
Figure 12.2
24
Identifying the Decision Maker (Contd)

• Cultural background plays a big role in
  determining whether husbands or wives are
  dominant in the family unit
• Coca-Colas campaign to Latin American women
  (Mom knows everything)
• Butterfly contraception program in India
• Four factors in joint vs. sole decision making
• Sex-role stereotypes
• Spousal resources
• Experience
• Socioeconomic status

25
Identifying the Decision Maker (Contd)

• As women work outside the home, men are
  participating more in housekeeping activities
• Women are still primarily responsible for the
  continuation of the familys kin-network system

26
Heuristics in Joint Decision Making

• Synoptic ideal vs. muddling through
• Heuristics
• Salient, objective dimensions
• Task specialization
• Concessions based on intensity of each spouses
  preferences

27
Children as Decision Makers

• Boom in Helsinki phone market among little kids
• Mobile parenting
• Children make up three distinct markets
• Primary market
• Influence market
• Parental yielding
• Future market

28
Consumer Socialization

• The process by which young people acquire skills,
  knowledge, and attitudes relevant to their
  functioning in the marketplace
• Sources of knowledge include friends, teachers,
  family, and the media

29
Influence of Parents

• Direct and indirect parental influences
• Deliberate attempt to instill own consumption
  values
• Determine exposure to informational sources (TV,
  salespeople, peers)
• Cultural expectations regarding involvement of
  children in purchase decisions
• Grown-ups as models for observational learning
• Passing down of brand loyalty
• Steps involved in turning kids into consumers
  (see Figure 12.3)
• Parental styles that affect socialization
  authoritarian, neglecting, and indulgent

30
Television The Electric Babysitter

• Advertisings influence begins at early age
• Many marketers start to push their products on
  kids to encourage them to build a habit at an
  early age
• Kids are also exposed to idealized images of what
  it is like to be an adult
• Discussion Are marketers robbing kids of their
  childhood?

31
Sex-Role Socialization

• Children pick up on gender identity at an early
  age
• Toy companies perpetuate gender stereotypes
• Children rehearse adulthood roles via toys as
  props
• Toys R Us Girls World Boys World
• Male and female play patterns
• Smartees line of dolls and Working Woman Barbie

32
Marketing Research and Children

• Relatively little real data on childrens
  preferences/influences on spending patterns is
  available
• Kids tend to
• Be undependable reporters of own behavior
• Have poor recall
• Not understand abstract questions
• Product testing
• Message comprehension
• Children may not understand persuasive intent of
  ads
• FTC action to protect children (1990 Childrens
  Television Act)
• Discussion Do you think market research should
  be performed with children? Why or why not?