Chapter 12
Organizational and
Household Decision Making
CONSUMER
BEHAVIOR, 8e
Michael Solomon
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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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• Our traditional notions about families are outdated.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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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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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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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 organizational buyers
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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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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
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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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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Five Stages of Consumer Development
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Figure 12.2
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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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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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Discussion
• Do you think market research should be performed
with children? Why or why not?
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Sketches Used to Measure Children’s
Perception of Commercials
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Figure 12.3
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