Chapter 12 Organizational and Household Decision Making CONSUMER BEHAVIOR, 8e Michael Solomon.
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Transcript of Chapter 12 Organizational and Household Decision Making CONSUMER BEHAVIOR, 8e Michael Solomon.
Chapter 12
Organizational and Household Decision Making
CONSUMER BEHAVIOR, 8eMichael Solomon
Prentice-Hall, cr 2009
12-2
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. The decision-making process differs when people choose what to buy on behalf of a company versus a personal purchase.
• Many important demographic dimensions of a population relate to family and household structure.
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Chapter Objectives (cont.)
• Our traditional notions about families are outdated.
• 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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Organizational versus Consumer Decision Making
Differences:
• Involves many people
• Requires precise, technical specifications
• Is based on past experience and careful weighing of alternatives (impulse buying is rare)
• May require risky decisions are often risky
• Involves substantial dollar volume
• Places more emphasis on personal selling
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Organizational versus Consumer Decision Making (cont.)
Similarities
• Emotions do guide decisions
• Brand loyalty
• Long-term relationships
• Aesthetic concerns
• Branding and product image
• Intel Inside
• Aflac
Click to view Quicktime video on AFLAC’s branding strategy to organi- zational buyers
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What Influences Organizational Buyers?
• Internal stimuli• Buyer’s psychological characteristics
• External stimuli• Nature of buyer’s organization, economic, and
technological environment of industry
• Cultural factors• Different norms for doing business in different
countries
• Type of purchase• The more complex or risky the decision, the more
evaluation is needed
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Buyclass Framework
• Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex:
Buying Situation Extent of Effort Risk Buyers Involved
Straight rebuy Habitual decision making
Low Automatic reorder
Modified rebuy Limited problem solving
Low to moderate One or a few
New task Extensive problem solving
High Many
Table 12.1
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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
• Influencer: sways outcome of decision
• Buyer: actually makes the purchase
• User: winds up using product
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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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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 predict product success:
• Employees collectively select factors for product success
• Knowledgeable “outsiders” (industry experts, consumers) predict success
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B2B E-Commerce
• B2B e-commerce: Internet interactions between two or more businesses
• Roughly half of B2B e-commerce consists of auctions, bids, and exchanges among numerous suppliers/purchasers
• Example: Dell Computer uses Web site to deliver technical support, product information, order status, and customer service to corporate customers
Click photo for Dell.com
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The Modern Family
• Before 1900s: extended family
• 1950s: nuclear family (mother, father, and children)
• Today, many households:
• Married couples less than 50% of households
• Majority of adult women live without spouse
• Unmarried opposite sex couples
• Same-sex couples
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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
• 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
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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
• Perma-pets
• Neopets Inc.
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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
• As we age, our preferences/needs for products and activities tend to change
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FLC Models
• Useful models take into account the following variables in describing longitudinal changes in priorities and demand for product categories:
• Age
• Marital status
• Presence/absence of children in home
• Ages of children
• Such factors allow use to identify categories of family-situation types
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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
• Families with young children: health foods
• Single parents/older children: junk foods
• Newlyweds: appliances
• Older couples/bachelors: home maintenance services
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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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Household Decisions (cont.)
Specific factors that determine how much family decision conflict there will be:
• Interpersonal need
• Product involvement and utility
• Responsibility
• Power
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Sex Roles and Decision-making Responsibilities
Who makes key decisions in a family?
• Autonomic decision: one family member chooses a product
• Wives still make decisions on groceries, toys, clothes, and medicines
• 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
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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, participation in family maintenance activities
Four factors in joint versus sole decision making:
• Sex-role stereotypes
• Spousal resources
• Experience
• Socioeconomic status
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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
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Heuristics in Joint Decision Making
• Synoptic ideal: Husband and wife to take a common view and to act as joint decision makers
• Heuristics simplify decision making:
• Salient, objective dimensions
• Task specialization
• Concessions based on intensity of each spouse’s 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
• Children’s purchasing behavior is influenced by:
• Parents
• Television (“electric babysitter”)
• Sex roles
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Five Stages of Consumer Development
Figure 12.2
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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
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Marketing Research and Children
• Little real data on children’s preferences/influences on spending patterns is available
• Kids tend to:
• Be undependable reporters of own behavior
• Have poor recall
• Not understand abstract questions
• Two areas where researchers have been successful:
• 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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Sketches Used to Measure Children’s Perception of Commercials
Figure 12.3