Chapter 12

Organizational and Household Decision Making

By Michael R. Solomon

Consumer Behavior
Buying, Having, and Being
Sixth Edition
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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 buyers 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, youre
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 buyers 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
Folgers 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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Nontraditional Family Structures
POSSLQ
Persons of Opposite Sex Sharing Living Quarters
Voluntarily Childless:
Women of childbearing age who choose to have no
children
Whos 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

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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
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 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 12 - 19
 The Intimate Corporation:
Family Decision Making
Household Decisions
Consensual Purchase Decision: Members agree on
desired purchase
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 familys
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,

its women who buy them.
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Leo Mother Types

Figure 12.2 12 - 25
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
spouses 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 childs
request and surrenders.
Future Market:
Kids eventually grow up to be adults.
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Kids Influence on Household Purchases

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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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Figure 12.3 Five stages of consumer development by earliest age at onset and median age at onset
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Source: Adapted from James U. McNeal and Chyon-Hwa Yeh, Born to Shop, American Demographics (June 1993): 36. Reprinted by permission of American Demographics, Inc.
 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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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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