*Class 20
Organizational &
Household Decision
Making
CA 2018 Consumer Insight
A.Kwanta Sirivajjanangkul
A.Panitta Kanchanavasita
Albert Laurence School of Communication Arts
Department of Advertising
2013
*Consumers as Decision Makers
Decision Making
• Basic sequence of steps we undergo when we make
decisions
Buying and
Disposing
• How the particular situation in which we find ourselves
affects these decisions and how we go about evaluating
the results of our choices
Group Influence
and Opinion
Leadership
• An overview of group processes and discusses the
reasons we are motivated to conform to the
expectations of others when we choose and display our
purchases
Organizational
and Household
Decision Making
• The purchase decisions in conjunction with others,
especially coworkers or family members
* Chapter outline
1.
2.
3.
Organizational Decision Making
* How organizational decision making differs from consumer
decision making?
* Three types of decision making
* Buyclass Theory of Purchasing
Family
* Family and Modern Family
* Family Life Cycle
* Family Decision Making
Children as Decision Makers: Consumers-in-Training
1
Making
1
* Why do marketers often need to understand
consumers’ behavior rather than consumer
behavior?
1
* Organizational buyers: are people who purchase
goods and services on behalf of companies for
their use in manufacturing, distribution, or resale.
Business-to-business (B2B) marketers: are people
who must satisfy the needs of organizations such
as corporations, government agencies, hospitls,
and retailers.
1
* Initiator: the person who brings up the idea or identifies a need
*
Gatekeeper: The person who conducts information search and
controls flow of information available to the group. In organizational
contexts, the gatekeeper identifies possible vendors and products fro
the rest of the group to consider
*
Influencer: The person who tries to sway the outcome of the
decision. Some people may be more motivated than others to get
involved, and participants also possess different amount of power to
get their point across
*
Buyer: the person who actually makes the purchase
*
User: the person who actually consumes the product or service
1
How does organizational decision making
compare to consumer decision making
1.
Purchase decisions companies make frequently involve many
people
* actual buying, direct and indirect influencers,
employees who use products
2.
3.
4.
5.
6.
Organizations use precise technical specifications that require a lot
of knowledge about product category
Impulse buying is rare. Buyers are professionals, they base their
decisions on past experience and they carefully weigh alternatives
Decisions often are risky
Business-to-business marketing often involves more on personal
selling than advertising or other forms of promotion.
Big volume of purchase
1
3 Types of Organizational Buying Decisions
Straight
rebuy
•
•
•
•
Habitual decision
Automatic choice
Occurring when
inventory level reaches a
pre-established reorder
point
Little or no ongoing
information search or
evaluation
Modified
rebuy
•
•
•
Limited decision making
Repurchase a product or
service with minor
modifications
Limited search for
information
New task
•
•
•
•
•
Extensive problem
solving
No similar decision on
this product or service
High risk
Buying center with
specialist to evaluate the
purchase
A lot of information
searching and gathering
1
Buyclass Theory of Purchasing
Straight
rebuy
Modified
rebuy
New task
• Level of information
• Seriousness for
alternative
considerations
• Degree of familiarity
of purchase
1
B2B E-Commerce: internet interactions
between two or more businesses or
organizations. This includes exchanges of
information, products, services, or payments.
2
2
* Why are our traditional notions about
families outdated?
* How do many important demographic
dimensions of a population relate to
family and household structure?
2
* Family and Modern Family
* Unintentional family: groups of unrelated people who meet regularly
for meals and who spend holidays together
* Extended family: consists of three generations who live together and it
often includes grandparents, aunts, uncles, and cousins.
* Nuclear family: consists of a mother, a father, and one or more children.
2
* Family Life Cycle
Factors for Life-Cycle
Effects on Buying:
1. Age
2. Marital Status
3. The presence or
absence of
children in the
home
4. The ages of
children, if
present
2
* Family Decision Making
Families make two basic types of decisions:
*Consensual purchase decision: members agree on the desired purchase;
they disagree only in terms of how they will make it happen
* Family will most likely engage in problem solving until they find the way to
satisfy everyone in the group
* Accommodative purchase decision: group members have different
preferences or priorities and they can’t agree on a purchase to satisfy
everyone’s needs
* They use bargaining and compromise to achieve agreement on what to buy
or who gets to use it
* Conflict occurs when there is incomplete correspondence in family members’
needs and preferences
2
* Family Decision Making
Specific factors on how much family decision conflict:
*Interpersonal need: a person’s level of investment in the
group
*Product involvement and utility: the degree to which a
person will use the product to satisfy a need
*Responsibility: for maintenance, payment and so on
*Power: the degree to which one family member exerts
influence over the others
3
* Children as Decision Makers:
Consumers-in-Training
3
* Children make up 3 distinct markets
* Primary Market: Kids spend a lot on
their own wants and needs that include
toys, apparel, movies, and games
* Most children choose their
own brands of toothpastes,
shampoo
* Influence Market: Parental yielding
occurs when a parental decision maker
“surrenders” to a child’s request
* Yielding drives many product
selections because 90% of
these requests are for a
specific brand
* Future Market: Kids have a way of
growing up to be adults
* so savvy marketers try to lock
3
Consumer Socialization
*Consumer
Socialization: is a process by
which young people acquire skills,
knowledge, and attitudes relevant
to their functioning in the
marketplace
* Parents’ Influence: they
deliberately try to instill their own
values about consumption in their
children.
* Parents also determine the degree to
which their children come into contact
with other sources such as TV and
peers.
* Television and the Web:
Electric Babysitters
3
Consumer Socialization
* The Process of Consumer Socialization
* Infants: 0-2 years  observing and making request
* Kid 2-5 years making selections and purchase with helps of parents
and grandparents
* Kid 4-8 years  buying things on their own
Parents exhibit different styles when they socialize their children:
1.
2.
3.
Authoritarian parents: hostile, restrictive, and emotionally uninvolved. They do not
have warm relationships with their children, they censor types of media their children see
Neglecting parents: are detached from their children, and the parents don’t exercise
much control over what their children do
Indulgent parents: communicate more with their children about consumptions
related matters and are less restrictive. They believe that children should be allowed to
learn the marketplace without much interference
3
* Cognitive Development
* 3 Developmental Stages
1. Limited: Children who are younger
than age 6
* Do not employ storage and retrieval
strategies
2. Cued: Children between the ages
of 6 and 12
* Employ these strategies but only when
prompted
3. Strategic: Children 12 and older
* Spontaneously employ storage and
retrieval strategies
Any Question?