Organizational & Household Decison Making


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Understanding how organization and household make decision. Whats the different and the benefit of knowing this behavior.

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Organizational & Household Decison Making

  1. 1. Magister Manajemen Universitas Indonesia Consumer Behavior Group 2 FRISCA LISTYANINGTYAS OSCAR JEREMIAH ORGANIZATIONAL & HOUSEHOLD Decision Making
  2. 2. CONTENTS Organization Decision Making Characteristic (Roles, Influence) Buyclass Theory In difference Household Decision Making Modern Family Family Life Cycle Decision Making (Roles, Pattern, Heuristic) Factor Affect Family Conflict Car Buying Case Study Children as Decision Makers Consumer Socialization Cognitive Development Market Research Kidzania Case Study Lesson Learn
  3. 3. ORGANIZATIONAL Decision Making
  4. 4. Definition 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.
  6. 6. Influence in Decision Making INTERNAL STIMULI EXTERNAL STIMULI Buyer’s unique psychological characteristic, such as willingness to make risky decision, job experience, & trainining Nature of the organization for which he works as well as the overall economic & technological environment in which the industry operates CULTURAL FACTOR TYPE OF PURCHASE Different norm for doing business in different countries Ex : American less to be informal in interaction that European / Asian The more complex, novel, or risky the decision, the more effort he devotes to information search & to evaluating hos alternatives.
  7. 7. BuyClass Theory 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
  8. 8. Organizational vs Household (difference) ORGANIZATIONAL HOUSEHOLD 1. Involves many people 2. Requires precise, technical specifications 3. Based on past experience and careful weighing of alternatives 4. May require risky decisions 5. Involves substantial dollar volume (bargaining power : high) 6. Places more emphasis on personal selling 1. Involves a few peoples 2. Based on brands, promotions, aftersales service 3. Based on past experience, referrals, and brand familarity. 4. Less risky decisions in financial term 5. Involves non-substantial dollar volume (bargaining power : low) 6. Places more emphasis on promotion
  9. 9. Case Study : Procurement Customer Portal Requirement Initiator Internal Analysis Gatekeeper Vendor Identification Influencer Request for Proposal Buyer Proof of Concept Contract Decision Maker
  10. 10. CONTENTS Organization Decision Making Characteristic (Roles, Influence) Buyclass Theory In difference Household Decision Making Modern Family Family Life Cycle Decision Making (Roles, Pattern, Heuristic) Factor Affect Family Conflict Car Buying Case Study Children as Decision Makers Consumer Socialization Cognitive Development Market Research Kidzania Case Study Lesson Learn
  11. 11. HOUSEHOLD Decision Making
  12. 12. The Modern Family CHANGE FAMILY STRUCTURE INDONESIA • Usually in the form of extended family where several generation of family lived in one household • Family had a great impact on purchase decision making • Urban families started to consist on nuclear family due to limited living space • Family sizes tends to decrease as the parents’ education level increases CONCEPT OF HOUSEHOLD
  13. 13. 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
  14. 14. Family Life Cycle • Affected by: age, marital status, career, disposable income, and presence or absence of children • Started with bachelor stage, newlyweds, full nest, and continues to empty nest or even solitary survivors Newlyweds Full Nest Empty Nest Bachelor Solitary Survivor
  15. 15. Family Life Cycle #Newly Married Couples #Bachelor Stage • Young single people not living at home • Low income but high discretionary income • Decisions influenced by the individuals peer reference group • Few financial burdens • Fashion and opinion leaders • Recreation oriented • Buy: basic kitchen equipment, basic furniture, cars, clothes, holidays, and products for grooming • • • • • Young, no children Better off financially than they will be in the near future High income but likely to have high mortgage commitment High level of purchase of homes durable goods Buy: cars, white goods, furniture, holidays, life insurance
  16. 16. Family Life Cycle #Full Nest 1 • • • • • • Youngest child under six Income low, high debts Home purchasing at peak Liquid assets / savings row Reliance on credit Child dominated household • Spending dominated by children’s needs • Buy: necessities #Full Nest 2 • • • • • • • Youngest child six or over Income improving Lower mortgage burden Improvement in financial position, some wives return to work Still child dominated household Children and children’s needs exert considerable influence on household spending Buy: necessities
  17. 17. Family Life Cycle #Full Nest 3 • Older married couples with dependent children • Older children at work, other in further / higher education • Financial position better • More wives at work • School and exam dominated household • Expenditure to support children’s education • Buy: more tasteful furniture, nonnecessary appliances, holidays
  18. 18. Family Life Cycle #Empty Nest 1 • Older married couple, no children at home, breadwinner still works • Income at highest level • Low expenses • Home ownership at peak • Interested in travel, recreation, self education • Satisfied with financial position and money saved • Buy: luxuries, home improvements #Empty Nest 2 • • • • • • • Older married couple, no children at home, breadwinner retired Significant cut in income Concern with level of pensions and savings Some spending on hobbies and past times Buy medical appliances or medical care Product to aid health, sleep, and digestion Assist children and grandchildren
  19. 19. Family Life Cycle #Solitary Survivor • Widow / widower but still in labor force • Income still adequate but likely to sell family home and purchase smaller accommodation • Concern with the level of savings and pension • Some spending on hobbies and pastimes • Worried about securities and dependence
  20. 20. Household Decision Making Types of Purchase Decisions Made by Families Consensual Accommodative Group Agrees on the Desired Purchase, Differing Only in Terms of How It Will Be Achieved. Group Members Have Different Preferences and Can’t Agree on a Purchase That Will Satisfy Everyone. 11-20
  21. 21. Factor Affect Family Conflict Conflict Occurs When There is Not Complete Correspondence in Family Members’ Needs and Preferences. Some Specific Factors Determining the Degree of Family Decision Conflict Include the Following: Interpersonal Needs Person’s Level of Investment in the Group Product Involvement and Utility Degree to Which the Product in Question Will Be Used or Will Satisfy a Need Responsibility For Procurement, Maintenance, Payment, etc. Power One Family Member’s Influence Over the Others in Making Decisions
  22. 22. Factor Affect Decision Making Sex-role stereotypes Spousal Resources Experience Socioeconomic Status 11-22
  23. 23. Case Study : Car Buying Decision Making 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 Who plays the role of family financial officer?
  24. 24. CONTENTS Organization Decision Making Characteristic (Roles, Influence) Buyclass Theory In difference Household Decision Making Modern Family Family Life Cycle Decision Making (Roles, Pattern, Heuristic) Children as Decision Makers Consumer Socialization Cognitive Development Market Research Kidzania Case Study Lesson Learn
  25. 25. parents buy what their kids tell them to buy (parental yielding) FUTURE MARKET kids spend their own money INFLUENCE MARKET PRIMARY MARKET Children as Decision Maker kids “grow up” quickly and purchase items that normally adults purchase (e.g., photographic equipment, cell phone) 11-25
  26. 26. 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 :  Authoritarian parents  Neglecting parents  Indulgent parents TELEVISION CULTURE 11-26
  27. 27. Cognitive Development Kids Can Be Segmented By Age in Terms of Their Stage of Cognitive Development, or Ability to Comprehend Concepts of Increasing Complexity. Children Differ in Abilities to Store and Retrieve Information From Memory: Limited Cued Strategic Below Age 6, Children Do Not Employ Storage and Retrieval Strategies. Between 6 and 12, Children Employ These Strategies -When Prompted. 12 and Older, Children Spontaneously Employ These Strategies tests hypotheses about causeand-effect relationships. 11-27
  28. 28. Market Research • Difficulty assessing children’s preferences/influences on spending patterns because kids tend to • Be undependable reporters of own behavior • Have poor recall • Not understand abstract questions • Researchers do study kids for – Product testing – Advertising message comprehension 11-28
  29. 29. Sketches Used to Measure Children’s Perception 11-29
  30. 30. Case Study : Kidzania 11/11/2013 30
  31. 31. Case Study Kidzania : • Experiental Marketing for Kids • Kids are future market for some brands • Building brand awareness for kids 11/11/2013 31
  32. 32. Lesson Learned Household Organizational The roles are often distributed over many Decision making process are more relaxed and not following a strict procedure. individuals, departments, or functions. Impulsive buying on low involvement The marketing needs for each roles differ items. and varies throughout the stages of Smaller dollar value per household decision making. justifies mass one-directional marketing Personal selling works best since the approach. dollar value is significant. The marketing needs for each stages on family life cycles differ and affecting the priorities in households. • It’s important for understanding organizational decision making behavior because we have to know who is the best person that has to be approached. (Who is the decision maker, who’s the influencer, etc) • In household, by understanding decision making behavior will help marketer for segmenting market and know how to target that market. 11/11/2013 32