1. Chapter 12 Organizational and Household Decision Making
CONSUMER BEHAVIOR, 8e Michael Solomon

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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3. 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Our traditional notions about families are outdated.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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4. 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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5. 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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6. 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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7. 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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8. 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
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Table 12.1

9. 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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10. 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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11. 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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12. 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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13. 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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14. 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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15. 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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16. 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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17. 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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18. 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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19. 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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20. 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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21. 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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22. 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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23. 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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24. 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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25. 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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26. 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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27. 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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28. 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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29. Five Stages of Consumer Development
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Figure 12.2

30. 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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31. 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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32. Discussion
Do you think market research should be performed with children? Why or why not?
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33. Sketches Used to Measure Children’s Perception of Commercials
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Figure 12.3