Chapter 11

Organizational and Household Decision Making

CONSUMER BEHAVIOR, 9e
Michael R. Solomon

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Chapter Objectives
When you finish this chapter, you should understand why:

Marketers often need to understand

consumers behavior rather than consumer behavior, since in many cases more than one person decides what to buy.

Companies as well as individuals make

purchase decisions.

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Chapter Objectives (continued)

Our traditional notions about families are

outdated.

Many important demographic dimensions of

a population relate to family and household structure.

Members of a family unit play different roles

and have different amounts of influence when the family makes purchase decisions.

Children learn over time what and how to

consume.
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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) marketers:

specialize in meeting needs of organizations such as corporations, government agencies, hospitals, and retailers.

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Roles In Collective Decision Making

Initiator Gatekeeper Influencer Buyer User
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Discussion
Assume that you are a sales representative for a large company that markets gauze bandages for use in hospitals.

List all the people (by position, such as

doctors or nurses) that may be involved in the decision making.

Try to match all the people to their possible

decision roles as outlined on the previous slide.
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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

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What Influences Organizational Buyers?

Internal stimuli External stimuli Cultural factors Type of purchase

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Table 11.1 Types of Organizational Buying Decisions

Buyclass theory: organizational buying decisions
divided into three types, ranging from most to least complex:
Buying Situation Straight rebuy Modified rebuy New task Extent of Effort Habitual decision making Limited problem solving Extensive problem solving Risk Low Low to moderate High Buyers Involved Automatic reorder One or a few Many

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Crowd Power in Organizations

Prediction market: groups of people with

knowledge about an industry are jointly better predictors of the future than are any individuals

Two ways to approach predictions: Employees collectively select factors for

product success Knowledgeable outsiders (industry experts, consumers) predict success
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The Modern Family

Changes in family structure Changes in concept of household (any

occupied housing unit)

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Discussion

In identifying and targeting newly divorced

couples, do you think marketers are exploiting these couples situations?

Are there instances in which you think

marketers may actually be helpful to them?

Support your answers with examples.

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Family Size

Depends on educational level, availability of

birth control, and religion

Women want smaller families The rate of voluntary childlessness is rising,

making DINKs a valuable market segment

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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
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Nonhuman Family Members

Pets are treated like 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
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Family Life Cycle

Factors that determine how couples spend

money: Whether they have children Whether the woman works

Family life cycle (FLC) concept combines

trends in income and family composition with change in demands placed on income

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Variables Affecting FLC

Age Marital Status Children in the Home Ages of Children in the Home

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Household Decisions
Families make two types of decisions:

Consensual purchase decision: members

agree on the desired purchase, 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
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Resolving Decision Conflicts in Families

Interpersonal need Product involvement

and utility

Responsibility Power

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Who Makes Key Decisions in the Family?

Autonomic decision: one family member

chooses a product

Syncretic decision: involve both partners Used for cars, vacations, homes,
appliances, furniture, home electronics, interior design, phone service As education increases, so does syncretic decision making

Who plays the role of family financial officer?

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Factors Affecting Decision-Making Patterns Among Couples

Sex-role stereotypes Spousal Resources Experience Socioeconomic Status
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Heuristics in Joint Decision Making

Synoptic ideal: the couple takes a common

view and act as joint decision makers

Heuristics simplify decision making: Salient, objective dimensions Task specialization Concessions based on intensity of each
spouses preferences

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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)

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Consumer Socialization

Consumer socialization: process by which

young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace

Childrens purchasing behavior is

influenced by Parents, family, and teachers Television and toys Culture
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Figure 11.2 Five Stages of Consumer Development

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Parental Styles for Socializing Children

Authoritarian

Neglecting

Indulgent

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Cognitive Development

Limited: Below age 6, children do not use

storage and retrieval strategies

Cued: Between ages 6 and 11, children use

these strategies, but only when prompted

Strategic: Children ages 11 and older

spontaneously employ storage and retrieval strategies

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Marketing Research and Children

Difficulty assessing childrens preferences/

influences on spending patterns because kids tend to Be undependable reporters of own behavior Have poor recall Not understand abstract questions

Researchers do study kids for Product testing Advertising message comprehension

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Discussion

Do you think market research should be

performed with children? Why or why not?

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Figure 11.3 Sketches Used to Measure Childrens Perception of Commercials

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Chapter Summary

The purchase decisions made by many may

differ from those made by individuals.

Buying for ones self is different than buying

for ones 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.

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