1. 11-1 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter 11 Organizational and Household Decision Making CONSUMER BEHAVIOR, 9e Michael R. Solomon

2. 11-2 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.

3. 11-3 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter Objectives (continued) Our traditional notions about families are outdated.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.

4. 11-4 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.

5. 11-5 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Roles In Collective Decision Making Initiator Gatekeeper Influencer Buyer User

6. 11-6 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.

7. 11-7 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

8. 11-8 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall What Influences Organizational Buyers? Internal stimuli External stimuli Cultural factors Type of purchase

9. 11-9 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Table 11.1 Types of Organizational Buying Decisions Buyclass theory: organizational buying decisions divided into three types, ranging from most to least complex: Buying SituationExtent of EffortRiskBuyers Involved Straight rebuyHabitual decision making LowAutomatic reorder Modified rebuyLimited problem solving Low to moderateOne or a few New taskExtensive problem solving HighMany

10. 11-10 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

11. 11-11 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall The Modern Family Changes in family structure Changes in concept of household (any occupied housing unit)

12. 11-12 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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.

13. 11-13 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

14. 11-14 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

15. 11-15 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

16. 11-16 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

17. 11-17 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Variables Affecting FLC Age Marital Status Children in the Home Ages of Children in the Home

18. 11-18 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

19. 11-19 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Resolving Decision Conflicts in Families Interpersonal need Product involvement and utility Responsibility Power

20. 11-20 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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?

21. 11-21 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Factors Affecting Decision-Making Patterns Among Couples Sex-role stereotypes Spousal Resources Experience Socioeconomic Status

22. 11-22 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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 spouse’s preferences

23. 11-23 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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)

24. 11-24 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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, family, and teachers Television and toys Culture

25. 11-25 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 11.2 Five Stages of Consumer Development

26. 11-26 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Parental Styles for Socializing Children Authoritarian Neglecting Indulgent

27. 11-27 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall 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

28. 11-28 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Marketing Research and Children Difficulty assessing children’s 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

29. 11-29 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Discussion Do you think market research should be performed with children? Why or why not?

30. 11-30 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Figure 11.3 Sketches Used to Measure Children’s Perception of Commercials

31. 11-31 Copyright © 2011 Pearson Education, Inc. publishing as Prentice Hall Chapter Summary The purchase decisions made by many may differ from those made by individuals. Buying for one’s self is different than buying for one’s 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.