CA2018 Organizational and household decision making_upload

*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.

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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

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Making

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* 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.

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* Initiator: the person who brings up the idea or identifies a need

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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

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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

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Buyer: the person who actually makes the purchase

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User: the person who actually consumes the product or service

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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

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3 Types of Organizational Buying Decisions Straight rebuy

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Habitual decision Automatic choice Occurring when inventory level reaches a pre-established reorder point Little or no ongoing information search or evaluation

Modified rebuy

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Limited decision making Repurchase a product or service with minor modifications Limited search for information

New task

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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

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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.

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* Why are our traditional notions about families outdated?

* How do many important demographic dimensions of a population relate to family and household structure?

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* 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.

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* 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

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* 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

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* 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

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* Children as Decision Makers: Consumers-in-Training

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* 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

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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

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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

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* 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?