Chapter 12

Organizational and Household Decision Making

By Michael R. Solomon Consumer Behavior Buying, Having, and Being Sixth Edition

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Opening Vignette: Amanda

• • • Why is Amanda nervous?

What difficulties has Amanda had since moving in with Orlando?

Why does Orlando’s occupation convince Amanda that he is capable of more?

• What did Amanda do to help Orlando prepare the hors d’oeuvres?

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Epicurious

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Organizational Decision Making

• • • •

Collective Decision Making

– A process in which more than one person is involved in the purchasing process for products or services to be used by multiple consumers

Organizational Buyer

– A person who purchases goods and services on behalf of companies for use in the process of manufacturing, distribution, or resale

Business-to-Business Marketers:

– Specialize in meeting the needs of organizations such as corporations, government agencies, hospitals, and retailers

The organizational buyer’s perceptions of the purchase situation is influenced by:

– – –

Expectations

of the supplier

Organizational climate

of his own company

Assessment

of his own performance

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Organizational Decision Makers

• In the Information Age, organizational decision makers must stay on top of clients’ complex needs.

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Advertising to Organizational Buyers

• • Advertisements targeting organizational buyers such as this CDW ad for technology equipment often try to assuage the concerns of the risk associated with purchase.

This ad states, “At CDW, we know that every day, you’re asked to do the impossible. From personal account managers to custom configuration, you can count on us for brand name products, the way you need them, when you need them.”

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Organizational Decision Making Versus Consumer Decision Making

• – – – –

Factors which distinguish organizational and industrial purchase decisions from individual consumer decisions:

– – Purchase decisions frequently involve many people Products are often bought according to precise technical specifications that require a lot of product category knowledge Impulse buying is rare Decisions are often risky The dollar volume of the purchase is substantial More emphasis on personal selling than advertising

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How do Organizational Buyers Operate?

• •

Type of Purchase:

– The type of item to be purchased influences the organizational buyer’s decision-making process –

Buying Center:

•

A group of people who make the more complex organizational decisions The Buyclass Framework:

– – –

Straight rebuy:

A habitual decision

Modified rebuy:

Involves limited decision making

New task:

Involves extensive problem solving

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Organizational Buying Decision Types

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How Organizational Buyers Operate

• •

Decision Roles:

– –

Initiator:

The person who brings up the idea or need.

Gatekeeper:

The person who conducts the information search and controls the flow of information available to a group.

–

Influencer:

The person who tries to sway the outcome of the decision.

– –

Buyer:

The person who actually makes the purchase.

User:

The person who winds up using the product or service.

B2B E-Commerce

– Refers to Internet interactions between 2 or more businesses or organizations

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The Family

• • •

Defining the Modern Family

–

Extended Family:

Consists of three generations living together and often includes grandparents, aunts, uncles, and cousins.

–

Nuclear Family:

A mother and a father and one or more children

Just What Is A Household?

–

Family Household:

Contains at least two people who are related by blood or marriage.

Family Size

–

Fertility rate:

Determined by the number of births per year per 1,000 women of childbearing age.

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Family Structures

• Family structures continue to evolve, but some basic conflicts remain the same. This Italian ad for an antacid product says, “Certain things are hard to swallow.”

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Meeting Family Size Needs

• Folger’s Coffee addresses an important need by allowing single people to brew one cup of coffee at a time.

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The “Sandwich Generation”

• This insurance ad reminds us that people in the “sandwich generation” often must care for their parents in addition to their children.

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VIDEO: DDB Worldwide

Click image to play video.

• DDB Worldwide, as the advertising agency in charge of revamping J.C. Penney’s image, had to address the special challenge of reaching working moms.

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Nontraditional Family Structures

• • • •

POSSLQ

– Persons of Opposite Sex Sharing Living Quarters

Voluntarily Childless:

– Women of childbearing age who choose to have no children

Who’s Living at Home?

–

Boomerang Kids:

Children between the ages of 18 and 34 that return home to live with their parents.

Animals Are People Too! Nonhuman Family Members 12 - 16

Dog Condoms?

• This Spanish public service ad promotes pet sterilization via a fake ad for dog condoms.

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Two Brides

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The Family Life Cycle

• • •

Family Life Cycle (FLC)

– Concept that combines trends in income and family composition with the changes in demands placed upon this income to segment households.

FLC Models

– Focuses on longitudinal changes in priorities which is valuable in predicting demand for specific product categories over time.

– Four variables are necessary: • • • •

(1) Age (2) Marital Status (3) Absence or Presence of Children (4) Ages of Children Life-Cycle Effects on Buying 12 - 19

Ethan Allen

• This ad by a furniture manufacturer specifically refers to stages in the family life cycle.

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Family Life Cycle

Figure 12.1

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The Intimate Corporation: Family Decision Making

•

Household Decisions

–

Consensual Purchase Decision:

desired purchase – Members agree on

Accommodative Purchase Decision:

Members have different preferences or priorities and cannot agree on a purchase – Factors determining the degree of family decision conflict: •

Interpersonal need

• • •

Product involvement and utility Responsibility Power

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Discussion Question

• • This Kudos advertisement tries to explain that the product will satisfy two members of the household for different reasons.

What type of family decision have the mother and son made?

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Sex Roles and Decision-Making Responsibilities

• • • •

Autonomic Decision

– When one family member chooses a product

Syncratic Decision

– When the family jointly makes a decision

There is a shift in decision making toward more compromise and turn taking.

Spouses typically exert significant influence on decision making.

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Identifying the Decision Maker

• •

Family Financial Officer (FFO):

– The individual who keeps track of the family’s bills and decides how much surplus funds will be spent.

Four Mother Types (LeoShe):

–

June Cleaver, the Sequel

–

Tug of War

–

Strong Shoulders

–

Mothers of Invention

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Who Buys the Pants?

• Although many men still wear the pants in the family, it’s women who buy them.

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Leo Mother Types

Figure 12.2

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United Kingdom Households

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Identifying the Decision Maker

• •

Four Factors Determine the Degree to Which Decisions will be Made Jointly by One or the Other Spouse

–

Sex-role stereotypes

– –

Spousal resources Experience

–

Socioeconomic Status

Kin-Network System:

– Ties among family members, both immediate and extended.

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Women Manage Many Tasks

• Women often manage many tasks within the family that pull them in many directions.

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Heuristics in Joint Decision Making

• •

Synoptic Ideal:

– Calls for the husband and wife to take a common view and act as joint decision makers

Frequently observed decision-making pattern:

– (1) Areas of common preference based on salient, objective dimensions rather than subtler, hard-to define cues.

– – (2) Couple agrees on a system of

task specialization

.

(3) Concessions are based on the intensity of each spouse’s preferences.

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Children As Decision Makers: Consumers-In-Training

• • •

Primary Market:

– Kids spending their own allowance on their own wants and needs.

Influence Market:

–

Parental Yielding:

Occurs when a parental decision maker is influenced by a child’s request and “surrenders.”

Future Market:

– Kids eventually grow up to be adults.

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Kids’ Influence on Household Purchases 12 - 33

Kids.us

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Consumer Socialization

• • •

Consumer Socialization

– The process “by which young people acquire skills, knowledge, and attitudes relevant to their functioning in the marketplace.”

Influence of Parents:

– Parents’ influences in consumer socialization are both direct and indirect.

Television: “The Electric Babysitter”:

– The more children are exposed to television, the more they will accept images depicted as real.

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Five Stages of Consumer Development

Figure 12.3

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Consumer Socialization (cont.)

• • •

Sex Role Socialization:

– Children pick up on the concept of gender identity as early as age one or two.

Cognitive Development

–

Stage of Cognitive Development:

The ability to comprehend concepts of increasing complexity –

Preoperational Stage of Development:

A stage of cognitive development

Alternative three-segment approach:

– – – (1) Limited (2) Cued (3) Strategic

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Marketing Research and Children

• •

Product Testing:

– A particularly helpful type of research with children.

– Involves watching kids play with toys or involving them in focus groups

Message Comprehension:

– Children differ in their ability to process product related information – Ethical issues must be considered when directing advertising appeals at children

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Product Testing

• Lego did research to learn how boys and girls play with their building toys.

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Children’s Perceptions of Commercials Figure 12.4

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Discussion Question

• • • Ads that directly target children must deal with a number of ethical issues. This ad solicits children to directly contact the organization.

The girl in the picture is captioned as saying, “My name is Nina, I am 4 years old and I have three close friends and live in a house with 6 rooms.” How does this ad target the weaknesses of the cognitive capabilities of children in this age range?

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