Organizational Decision Making ,Household Decision Making ,Organizational Buyers, Business-to-Business (B2B) Marketers ,Roles in Decision Making ,Influence in Decision Making ,Family Life Cycle , Factor Affect Family Conflict ,Who Makes Key Decisions in the Family?

1. ORGANIZATIONAL AND
HOUSEHOLD DECISION MAKING

3. 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.

4. ROLES IN DECISION MAKING
 INITIATOR IDEA
 GATEKEEPER INFORMATION
 INFLUENCER OUTCOME OF DECISION
 BUYER PURCHASE
 USER CONSUME

5. FOR REFLECTION
 Assume that you are a sales representative for a large
company that markets laptop computers.
 List all the people 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.

6. ORGANIZATIONAL DECISION MAKING
 Decisions become very important due to great responsibility
for others
 Buyer’s perception of purchase situation is affected by
expectations of supplier, organizational climate of own
company, and buyer’s assessment of own performance
 Organization’s members share information and develop
“organizational memory”

7. COMPARED TO CONSUMER DECISION MAKING,
ORGANIZATIONAL DECISION MAKING…
 Involves many people
 Requires precise, technical specifications
 Is based on past experience and careful weighing of
alternatives
 May require risky decisions
 Involves substantial dollar volume
 Places more emphasis on personal selling

8. COMPARED TO CONSUMER DECISION MAKING,
ORGANIZATIONAL DECISION MAKING…
 Similarities
 Emotions do guide decisions
 Brand loyalty
 Long-term relationships
 Aesthetic concerns
 Branding and product image

9. HOW DO ORGANIZATIONAL BUYERS
OPERATE?
 INTERNAL STIMULI
Buyer’s
unique psychological
characteristic, such as
willingness to make
risky decision, job
experience, & trainings
 EXTERNAL STIMULI
Nature of the
organization for which
he works as well as the
overall economic &
technological
environment in which
the industry operates
INFLUENCE IN DECISION MAKING

10. INFLUENCE IN DECISION MAKING
 CULTURAL FACTOR
Different norm for
doing business in
different countries Ex :
American less to be
informal in interaction
that European / Asian
 TYPE OF
PURCHASE The
more complex, novel,
or risky the decision,
the more effort he
devotes to information
search & to evaluating
alternatives.

11. BUY CLASS
THEORY ORGANIZATIONAL BUYING DECISIONS DIVIDED
INTO THREE TYPES, RANGING FROM MOST TO LEAST
COMPLEX:
Level of information gathered prior to decision
Seriousness of evaluation of alternatives
Buyer familiarity with purchase
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

12. ORGANIZATIONAL VS HOUSEHOLD
(DIFFERENCE)
 ORGANIZATIONAL
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
 HOUSEHOLD
1. Involves a few peoples
2. Based on brands,
promotions, aftersales
service
3. Based on past experience,
referrals, and brand
familiarity.
4. Involves non-substantial
dollar volume (bargaining
power : low)
5. Places more emphasis on
promotion

14. FAMILY SIZE
 Depends on educational level, availability of birth
control, and religion
 Women want smaller families
 The rate of voluntary childlessness is rising, making
DINKs a valuable market segment

15. 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

16. 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

17. FAMILY LIFE CYCLE
 Variables Affecting FLC
Age
Marital Status
Children in the Home
Ages of Children in the Home

18.  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
FAMILY LIFE CYCLE
Bachelor
Newlyweds Empty Nest
Solitary
Survivor
Full Nest

19.  #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
FAMILY LIFE CYCLE

20.  #Newly Married Couples
 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
FAMILY LIFE CYCLE

21.  #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
FAMILY LIFE CYCLE
 #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

22.  #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,
non-necessary appliances,
holidays
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

23.  #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
FAMILY LIFE CYCLE

24.  #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
FAMILY LIFE CYCLE

25. HOUSEHOLD DECISION MAKING
Accommodative
Group Members Have
Different
Preferences and
Can’t Agree
on a Purchase That
Will Satisfy Everyone.
Types of Purchase Decisions Made by
Families
Consensual
Group Agrees on the
Desired
Purchase, Differing
Only in
Terms of How It Will
Be Achieved.

26. Interpersonal Needs
Product Involvement
and Utility
Responsibility
Power
Person’s Level of Investment in the Group
Degree to Which the Product in Question Will Be Used
or Will Satisfy a Need
For Procurement, Maintenance, Payment, etc.
One Family Member’s Influence Over the Others in
Making Decisions
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:

27. 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
 Car Buying Decision Making

28. FACTOR AFFECT DECISION MAKING
 Sex-role stereotypes
 Spousal Resources
 Experience
 Socioeconomic Status

29. HEURISTICS IN JOINT DECISION MAKING
 Synoptic ideal: the couple takes a common view
and act as joint decision makers
 Heuristics simplify decision making:
 Salient, objective dimensions
 Task specialization
 Concessions based on intensity of each spouse’s
preferences

30. CHILDREN AS DECISION MAKER
PRIMARYMARKET
kids spendtheir
own money
INFLUENCEMARKET
parents buy what
their kids tell
them to buy
(parentalyielding)
FUTUREMARKET
kids “grow up”
quickly and
purchase items
that normally
adults purchase
(e.g.,
photographic
equipment, cell
phone)

31. 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 CUL
TURE

32. 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: BelowAge6, ChildrenDoNot EmployStorageand
Retrieval Strategies
 Cued: Between 6 and 12, Children Employ These
Strategies -- When Prompted.
 Strategic: 12 and Older, Children Spontaneously Employ
These Strategies tests hypotheses about cause-

33. 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

34. LESSON LEARNED
 Organizational The roles are often distributed over many
individuals, departments, or functions. The marketing
needs for each roles differ and varies throughout the
stages of decision making. Personal selling works best
since the dollar value is significant.
 Household Decision making process are more relaxed
and not following a strict procedure. Impulsive buying on
low involvement items. Smaller dollar value per
household justifies mass one-directional marketing
approach. The marketing needs for each stages on
family life cycles differ and affecting the priorities in
households.

35. LESSON LEARNED
 •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.