Chapter 10

Organizational and
Household Decision Making
Chapter Objectives
When you finish this chapter, you should
understand why:
1. Marketers often need to understand
consumers behavior rather than a
consumers behavior.
2. Companies as well as individuals make
purchase decisions.
3. Our traditional notions about families are
outdated.

Chapter Objectives (continued)
4. Many important demographic dimensions
of a population relate to family and
household structure.
5. Members of a family unit play different
roles and have different amounts of
influence when the family makes
purchase decisions.
6. Children learn over time what and how to
consume.
Learning Objective 1
Marketers often need to understand
consumers behavior rather than a
consumers behavior.
Roles In Collective Decision Making
Initiator
Gatekeeper
Influencer
Buyer
User
For Reflection
Assume that you are a sales representative
for a large company that markets laptop
computers.
List all the people 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.
Learning Objective 2
Companies as well as individuals make
purchase decisions.
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.
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
What Influences Organizational Buyers?
Internal stimuli
External stimuli
Cultural factors
Type of purchase
Types of
Organizational Buying Decisions
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
For Reflection
Summarize the buyclass model of
purchasing. How do decisions differ within
each class?
Learning Objective 3
Our traditional notions about families are
outdated.
For Reflection
How does the changing nature of the
family affect marketing mix decisions
marketers make to target families and
family members?
Learning Objective 4
Many important demographic dimensions
of a population relate to family and
household structure.
The Modern Family
Changes in family structure
Changes in concept of household (any
occupied housing unit)
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

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
Nonhuman Family Members
Pets are treated like family members
Pet-smart marketing strategies:
Name-brand pet products
Lavish kennel clubs
Pet accessories
Family Life Cycle
Factors that determine how couples spend money:
Whether they have children
Whether both spouses work
Family life cycle (FLC) concept combines trends in
income and family composition with change in demands
placed on income
Variables Affecting FLC
Age
Marital Status
Children in the Home
Ages of Children in the Home
For Reflection
For the following products, discuss how
having children or not might affect the
choices a couple makes. What do such
variations mean for marketers?
Groceries
Cars
Vacations

Learning Objective 5
Members of a family unit play different
roles and have different amounts of
influence when the family makes purchase
decisions.
Household Decisions
Consensual
Purchase Decisions
Accommodative
Purchase Decisions
Resolving Decision Conflicts in Families
Interpersonal need
Product involvement
and utility
Responsibility
Power
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
Factors Affecting Decision-Making
Patterns Among Couples
Sex-role stereotypes
Spousal Resources
Experience
Socioeconomic Status
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
For Reflection
What exposure have you had to family
decisions made in your own family? Can
you see the patterns discussed in the
chapter in those decisions? Give an
example.
Learning Objective 6
Children learn over time what and how to
consume.
Children as Decision Makers
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)
Consumer Socialization
Consumer socialization is the 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


Five Stages of Consumer Development
Parental Styles for Socializing Children
Authoritarian
Neglecting
Indulgent
Cognitive Development
Limited: Below age 6, children do not use
storage and retrieval strategies
Cued: Between ages 6 and 10, children
use these strategies, but only when
prompted
Strategic: Children ages 10 and older
spontaneously employ storage and
retrieval strategies
For Reflection
How do the stages of cognitive
development relate to a childs ability to
comprehend marketing messages?
How can marketing messages be adapted
to meet the appropriate stage of cognitive
development?
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.