This document discusses household structures and consumption behaviors. It begins by defining different household types such as family households and non-family households. It then describes the household life cycle model and the different stages households typically go through, such as young singles, young married couples with and without children, middle-aged singles and couples with children at home or empty nests, and older singles and couples. Each life cycle stage is associated with unique consumption needs and purchasing behaviors. The document provides details about characteristics and expenditures for each life cycle stage.

1. Chapter Thirteen
Household structure and
consumption behaviour
13-1

2. Chapter 13
Household structure and
consumption behaviour
1. Nature of Australian households
2. Stages in the household life cycle
3. Households also undertake purchase-
related decision making
4. The link between household and consumer
socialisation
5. Trends relating to household consumption
13-2

3. Household types
• Household designates a variety of distinct social
groups
• Family household
– Two or more related persons, who live and eat
in private residential accommodation
• Non-family household
– Householders who either live alone or with
others to whom they are not related
13-3

4. 13-4

5. Changes in household structure
(the average size of household and family units)
13-5

6. The Household Life Cycle
Most households follow much more complex and varied
cycles today. Therefore, researchers have developed
several models of the household lifecycle (HLC)
(HLC).
Each HLC stage presents unique needs and wants as
well as financial conditions and experiences.
HLC provides marketers with relatively homogeneous
household segments that share similar needs with
respect to household-related problems and purchases.
13-6

7. Household lifecycle
• Young (under 35) • Older (over 64)
–Single I – Single III
– Young married – Empty nest II
– Full nest I
– Single parent I
• Middle-aged (35–64)
– Single II
– Delayed full nest II
– Full nest II
– Single parent II
– Empty nest I
13-7

8. Stages in the household lifecycle
(shows stages with children at home)
13-8

9. Young single stage
• Two subgroups
– Living at home
– Independent
13-9

10. Household Life Cycle
Single I
Young (18-34) unmarried
individuals. In 2003, there were
roughly 66.5 million people in this
age group, with 69% of men and
60% of women being single.
Single I is basically the
unmarried members of the
younger Gen X and older Gen Y.
Great market for activities such
as going to to bars, movies, and
concerts.
13-10

11. Young married: no children
stage
• High level of disposable income
• Often DINKs
13-11

12. Household Life Cycle
Young Couples: No Children
Decision to marry or live together
brings about a new HLC stage.
Most in this group have dual incomes
and are relatively affluent.
Spend heavily on theater tickets,
expensive clothes, luxury vacations,
restaurant meals, and alcoholic
beverages.
Can afford nice cars, stylish
apartments, and high-quality home
appliances.
13-12

13. Full nest I: young married with children
stage
• One partner stops
working
• About 61% keep dual
income
• Discretionary funds
are redirected to baby
needs
13-13

14. Household Life Cycle
Full Nest I: Young Married with Children
The addition of the first child creates many changes in
lifestyle and consumption.
This stage yields new purchases of baby clothes, furniture,
food, and health care products.
13-14

15. Household Life Cycle
Full Nest I: Young Married with Children (cont.)
Income and expenditure change from childless to young child.
30
20
10
0
-10
-20
-30
-40
-50
Income Food at Meals Out Alcoholic Adult Health Care Pets & Toys Education Personal
Home Beaverages Apparel Care
Products
Percent Change
13-15

16. Single parent I: young solo parent
stage
• One in three marriages end in
divorce
• A higher proportion of divorced
males remarry
• Quite often a defacto relationship
prior to remarriage
• Latest statistics
13-16

17. Household Life Cycle
Single Parent I: Young Single Parents
Birth or adoption by singles is
increasingly common. Roughly 1/3
of children are born to unmarried
mothers.*
Divorce also continues to be a
significant part of American society.
This type of family situation creates
many unique needs in the areas of
child care, easy-to-prepare foods,
and recreation.
*As many as 40% may actually be born to cohabiting unmarried parents.
13-17

18. Middle-aged single II stage
• Small group of the population
• High disposable income
• Short on time
• Travel often
13-18

19. Household Life Cycle
Middle-Aged Single
The middle-aged single category (age 35 to 64) include never
middle-
married and divorced with no child-rearing responsibilities.
!
The middle-aged singles have
middle-
higher incomes than young
singles
singles.
Often live in nice condos, frequent
expensive restaurants, own luxury
cars, travel often, and are a major
market for gifts.
13-19

20. Delayed full nest I: older married with
young children stage
• Many have delayed having children until their
thirties
• They have a high income and have acquired more
capital and possessions
• They outspend all groups on childcare, mortgage
repayments, home and garden maintenance, and
household furnishings
• High non-child spending e.g. food, alcohol,
entertainment and savings
13-20

21. Household Life Cycle
Delayed Full Nest I:
Older Married with Young Children
Many baby boomers delayed having children until their mid-30s,
resulting in a large number in this stage.
Major difference between this segment and the younger new
parents is income
income.
Spend heavily on child care,
mortgage payments, home
maintenance, lawn care, and
household furnishings.
Want only the best for their child
and willing and able to pay for it.
13-21

22. Full nest II: middle-aged married, with
children at home stage
• Older children
• Heavy consumer of
lessons and clothing
• Need larger homes
• Some advertisers try to
attract the attention of
teenagers of these
households
13-22

23. Household Life Cycle
Full Nest II:
Middle-Aged Married with Children at Home
A major difference between this group
and delayed Full Nest I is the age of
the children.
Children are generally over age 6 and
are becoming more independent,
creating new consumption needs.
Families with children age six + are
the primary consumers of lessons of
all types, dental care, soft drinks,
presweetened cereals, and a wide
variety of snacks.
13-23

24. Single parent II: middle-aged single
with children at home stage
• Financially burdened
group
• Older children take on
significant household
responsibilities
• Typically female
(5 times male number)
13-24

25. Household Life Cycle
Single Parent II:
Middle-Aged Single with Children at Home
This group often faces serious financial pressures. The single
parent often lacks some or all of the financial, emotional, and
time support that the presence of a spouse generally provides.
This group is inclined to use
time-saving alternatives such
as ready-to-eat food, and eat
at fast-food restaurants.
13-25

26. Empty nest I: middle-aged married
with no children at home stage
• Typically dual
income
• Time poor, cash rich
• Spend on dining out,
holidays, services
13-26

27. Household Life Cycle
Empty Nest I:
Middle-Aged Married with No Children
Includes married couples whose children have left home, couples
who chose to not have children, and second marriage households
in which children are not living with the parent.
Typically dual income and busy.
Spend on dining out, expensive
vacations, second homes, luxury
cards, time-saving services.
Prime market for financial services
and upscale children’s products
About $35 billion/yr. spent on
grandchildren by baby boomers!.
13-27

28. Older single III stage
• Typically female
• Growing segment as
baby boomers age
• Requirements for
services, assistance
with financial decision
making, and seek
security
13-28

29. Household Life Cycle
Older Single
There are more than 15 million
older singles in the U.S., and
this group is growing rapidly.
Roughly 3/4 of all older singles
are female and roughly 2/3 of all
older singles live alone.
Being older, single, and generally
retired, this group has unique
needs for housing, socialization,
travel and recreation.
13-29

30. Empty nest II: older married couple
stage
• Either still working or
fully retired
• Financial situation in
decline
• Unique needs for
health care, housing,
food and recreation
13-30

31. Household Life Cycle
Empty Nest II: Older Married Couples
There are about 10 million households in
this segment, and it is expected to grow
rapidly over the next 10 years as the Baby
Boomers age.
Most couples in the over-64 age group are
either fully or partially retired.
The younger members are healthy, active,
and often financially well-off.
They have ample time and are a big market
for RVs, cruises, and second homes. They
also spend a lot of money on grandchildren.
13-31

32. Household life cycle and social
class
• A useful segmentation is household
lifecycle and social class
• People from different social classes
have similar problems but seek
varying solutions
13-32

33. Marketing Strategy Based on the
Household Life Cycle
HLC can be an important segmentation variable.
The purchase and consumption of many products are
driven by the HLC, with each stage posing unique
problems and opportunities.
The stage in the HLC causes many of the problems or
opportunities individuals confront as they mature, but it
does not provide solutions.
13-33

34. Marketing Strategy Based on the
Household Life Cycle
Factors such as income, occupation, and education
heavily influence how an individual meets his/her needs.
So, it makes sense to combine stage in the HLC with
one of these variables to aid in market segmentation and
strategy formulation.
13-34

35. Household life cycle/social
stratification matrix
13-35

36. Household Decision Making
Family Purchase Roles
Determinants of Family Purchase Roles
Conflict Resolution
Marketing Strategy and Family Decision Making
Consumer Socialization and Marketing to Children
13-36

37. Family Decision Making
Family decision making is the process by which decisions
that directly or indirectly involve two or more family members
are made.
Family purchases are often compared to organizational buying
decisions. However, with family purchasing, there is usually
less explicit criteria, and most family purchases directly affect
the other members of the family.
Most important, many family purchases
are inherently emotional and affect the
relationships between the family
members.
13-37

38. Household decision making
Five distinct roles:
1. Information gatherer
2. Influencer
3. Decision maker
4. Purchaser
5. User
13-38

39. Targeting communications at
‘influencers’ and ‘information gatherers’
13-39

40. Family Decision Making
The Nature of Family Purchase Roles
Marketers must determine who in the family plays which
role before they can affect the family decision process.
Family decision making has been categorized as
husband-
husband-dominant
wife-
wife-dominant
joint,
joint or
individualized
13-40

41. Family Decision Making
The Nature of Family Purchase Roles (cont.)
Studies of family decisions have focused on direct
influence and ignored indirect influence
Different family members often become involved at
different stages of the decision process.
In addition, family decisions also allow different
members to make specific subdecisions of the overall
decision.
13-41

42. Family Decision Making
Determinants of Family Purchase Roles
How families interact in a purchase decision is largely
dependent on the
culture and subculture in which the family exists
the role specialization of different family members
the degree of involvement each has in the product area of
concern, and
their personal characteristics of the family members
13-42

43. Determinants of household
purchases
• Different members at different stages
• Different attributes are considered by each
member
• Involvement is often removed
– E.g. clothes for children, BBQ for dad
• Who is doing the ‘purchasing’
– Product category
– Likely conflicts
– Resolution etc.
13-43

44. Family-member influence at various
stages of the decision-making
process
13-44

45. Conflict resolution
Approaches used to resolve purchase
conflicts:
1. Bargaining
2. Impression management
3. Use of authority
4. Reasoning
5. Playing on emotions
6. Additional information
13-45

46. Family Decision Making
Conflict Resolution (cont.)
One study revealed six basic approaches that individuals use to
resolve purchase conflicts1.
Approach Description
Bargaining Trying to reach a compromise.
Impressions Misrepresenting the facts in order to win.
Management
Use of Authority Claiming superior expertise or role appropriateness (the
husband/wife should make such decisions).
Reasoning Using logical argument to win.
Playing on Using the silent treatment or withdrawing from the
Emotion discussion.
Additional Getting additional data or a third-party opinion.
Information
1C. Kim and H. Lee, “A taxonomy of Couples Based on Influence Strategies,” Journal of Business Research, June 1996, pp. 157-68.
13-46

47. Family Decision Making
Conclusions on Family Decision Making
1. Different family members are often involved at different
stages of the decision process.
2. Different family members often evaluate different
attributes of a product or brand.
3. The direct involvement of family members in each
stage of the decision process represents only a small
part of the picture.
13-47

48. Family Decision Making
Conclusions on Family Decision Making (cont.)
4. Participants at each stage of the decision process and
the method by which conflicts are resolved are
primarily a function of the product category and
secondarily a function of the characteristics of the
individual family members and the family as a whole.
5. Overt conflicts in decision making are less common
than agreement.
13-48

49. Marketing Strategy and Family Decision Making
Effective marketing strategy requires a thorough
understanding of the family decision-making process.
Marketers can use a family decision making grid to detail
each members influence at each stage of the process.
13-49

50. Managerial framework for evaluating the
household decision-making process
13-50

51. Targeting parents in an ad
13-51

52. Consumer socialisation
• Young people acquiring skills, knowledge and
attitudes relevant to their functioning as consumers
in the marketplace
• Consumer socialisation and advertising
– Advertising standards
• Role of the household in socialisation
13-52

53. Consumer Socialization
The family provides the basic framework in which
consumer socialization occurs.
Consumer socialization is the process by which young
people acquire skills, knowledge, and attitudes relevant
to their functioning as consumers in the marketplace.
Must understand both the content and the process of
consumer socialization
socialization.
Consumer socialization content refers to what children learn
with respect to consumption.
Consumer socialization process refers to how they learn it.
13-53

54. Consumer Socialization
Piaget’s Stages of Cognitive Development
Stage Description
Stage 1 The period of sensorimotor intelligence (0-2 yrs.)
- behavior is primarily motor
- the child does not yet “think” conceptually, though
cognitive development is seen
Stage 2 The period of preoperational thoughts (3-7 yrs.)
- Characterized by the development of language and
rapid conceptual development
Stage 3 The period of concrete operations (8-11 yrs.)
- the child develops the ability to apply logical
thought to concrete problems
Stage 4 The period of formed operations (12-15 yrs.)
- the child’s cognitive structures reach their greatest
level of development, and the child becomes able
to apply logic to all classes of problems.
13-54

55. Consumer Socialization
The Content of Consumer Socialization
Consist of three categories:
1. Consumer skills—are those capabilities necessary for
skills
purchases to occur such as understanding money,
budgeting, product evaluation, etc.
2. Consumption-related preferences—are the knowledge,
Consumption- preferences
attitudes, and values that cause people to attach differential
evaluations to products, brands, and retail outlets.
3. Consumption-related attitudes
Consumption- attitudes—are cognitive and
affective orientations toward marketplace stimuli such as
advertisements, salespeople, warranties, etc.
13-55

56. Consumer Socialization
The Process of Consumer Socialization
Consumer socialization occurs primarily through family, as well
as through a number of avenues including advertising and friends.
Parents socialize their children through the following:
1. Instrumental training
training—occurs when a parent or sibling
specifically and directly attempts to bring about certain
responses through reasoning or reinforcement.
2. Modeling
Modeling—occurs when a child learns appropriate, or
inappropriate, consumption behaviors by observing others.
Mediation—occurs when a parent alters a child’s initial
3. Mediation
interpretation of, or response to, a marketing or other stimulus.
13-56

57. Consumer Socialization
The Supermarket as a Classroom
Stage I: Observing
Stage II: Making Requests
Stage III: Making Selections
Stage IV: Making Assisted Purchases
Stage V: Making Independent Purchases
13-57

58. Marketing to Children
Children are a very large market. Spending by children aged
5 – 14 is estimated at $35 billion, and they influence about
$220 billion of their parents’ purchases!
However, marketing to children is fraught with ethical
concerns, including:
The limited ability of younger children to process
information and to make informed purchase decisions.
Marketing activities, particularly advertising, can produce
undesirable values in children, resulting in inappropriate
diets, and cause unhealthy levels of family conflict.
13-58

59. Household trends over the next 25 years
• Single households to double
• Average household size down*
– 2.6 (1996)
– 2.2 (2021)
• Families without children more than ‘with children’
by 2016*
• One-parent families up by 30% to 66%*
* Reference ABS: 3236.0 - Household and Family
Projections, Australia, 2001 to 2026
13-59

60. The importance of the family pet:
ownership in 1998
13-60

61. Pets are regarded as family members
13-61

62. Computers and Internet use in
households
• Large number of household have Internet
access
• Opinion of being ‘online’ and video games
is now more favourably accepted by
experts
13-62

63. Households and the purchase of
services
• High use of services
• Food
– Eating-out more frequent
– Fast food frequently purchased
13-63

64. Implications
• As marketers you will need to consider:
– Will these trends continue?
– What will be the ramifications for the
product/service market under your
management?
– When is the ‘household’ the decision-maker …
as opposed to ‘individuals’
13-64

65. Summary
• Household is the basic consuming unit
• Family households pass on cultural and social class values
and behaviour patterns
• Family household - 2 or more related persons living together
• Non-family households - 2 or more unrelated persons
• HLC is classified into stages - relatively predictable
• HLC variables - age, marital status (household head)
presence of children
• Household decision making - who buys,who decides, and
who uses products purchased and used by and for the
household
13-65

66. Summary (cont.)
• Marketing managers must take into account each
household decision process for each product
category
• Role specialisation
• Trends—services, role of pets, etc.
• Consumer socialisation—how children become
socialised, learn how to be consumers
– Purchasing skills, e.g. shopping, budgeting
– Indirect skills, e.g. symbols of quality, prestige
– Families assist by teaching, providing role
models, etc.
13-66