HOUSEHOLD PROCESSES

How do other people (i.e., family members)

influence our behavior?

Consumer Behavior In The News…Consumer Behavior In The News…

Finding new markets for cell phones.Finding new markets for cell phones.

Over 78 % of consumers between age 19 and 64 Over 78 % of consumers between age 19 and 64 own a cell phone.own a cell phone.

Pre-teens seen as a MAJOR new market.Pre-teens seen as a MAJOR new market.

What are the drivers and barriers?What are the drivers and barriers?

Drivers:Drivers:

Barriers:Barriers:

Consumer Behavior In The News…Consumer Behavior In The News…

Finding new markets for cell phones.Finding new markets for cell phones.

Drivers and barriers to pre-teen market?Drivers and barriers to pre-teen market?

Drivers: Drivers: parent’s safety concerns; kid’s desire parent’s safety concerns; kid’s desire for phonefor phone

Barriers: Barriers: parent’s concern over misuse; parent parent’s concern over misuse; parent as final decision makeras final decision maker

Solution?Solution?

Why study household decision making?

Basic purchasing and consuming unit Significant decisions are often made by individuals jointly with other members of his/her householdPrimary mechanism of cultural and social values and behavior patternsAlmost everyone in society is involved with a family

HouseholdsStructureStage in LifecycleRoles & Decision MakingChildren

How have households changed over time?How does a household differ from a family?

Changing Roles• Working women• Children w/more dm power

Changing Family Structure• Divorce: restricted buying power• More single parents• # of cohabitating singles • Remarriage• Blended families: more complex family decision making

Changing Household Structure• Smaller families• Later marriages: Fewer, but higher quality purchases• # of single living alone • # of children age 18 > living @ home

Greater discretionary spending by children

The Changing Family-Household Structure

Other changesSandwich generation?Boomerang generation?Nonhuman family members

Family and Nonfamily Households: 2000-2010Family and Nonfamily Households: 2000-2010Family and Nonfamily Households: 2000-2010Family and Nonfamily Households: 2000-2010

All Households

FamiliesMarried couples

Children under 18 at homeChildren over 18 at homeNo children under 18 at home

Single fathersSingle mothersOther families

NonfamiliesMen living aloneWomen living aloneOther nonfamilies

110,140

77,70560,96924,286

5,31831,365

1,5237,4737,741

32,43410,89816,278

5,258

100.0%

70.655.422.1

4.828.5

1.46.87.0

29.49.9

14.84.8

117,696

80,19361,26623,433

6,88430,950

1,6607,7799,488

37,50312,57718,578

6,347

6.9%

3.20.5

(3.5)29.4(1.3)9.04.1

22.6

18.015.414.120.7

100.0%

68.152.119.9

5.826.3

1.46.68.1

31.910.715.8

5.4

Percent Number Percent Number Percent Change

(000) (000) 2000-2010

2000 2010

Household Life CycleWhat was the “traditional” family life cycle?What might today‘s household life cycle look like?

Consumption Patterns based on Lifecycle

Young bachelors and newlyweds?Early 20s?Single parents/older children?Newlyweds?Older couples/bachelors?Families with young children?

Consumption Patterns based on Lifecycle

Young bachelors and newlyweds: exercise, go to bars/concerts/moviesEarly 20s: apparel, electronics, gasSingle parents/older children: junk foodsNewlyweds: appliancesOlder couples/bachelors: home maintenance servicesFamilies with young children: health foods

What about income and expenditure changes from childless to young child?

Young Married with Children

-50

-40

-30

-20

-10

0

10

20

30

Income Food atHome

Meals Out AlcoholicBeaverages

AdultApparel

Health Care Pets & Toys Education PersonalCare

Products

Percent Change

Marketing Strategy Based on the Marketing Strategy Based on the Household Life CycleHousehold Life Cycle

Factors such as age, income, marital status, presence/absence of children, age of children 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.

Stage of Household

<$10,000

<$25,000 <$30,000 <$50,000 <$100,000 <$500,000 Student

Single I (Under 35, no kids) 1Single-Parent I (Young w/children)

2 11

Single II (35-64, single, no kids) 12 3Single III (Older single) 4Young Married (no kids; both work)

5

Full Nest I (Married w/young kids)

6 7

Full Nest II (Middle- aged w/older kids)

8

Empty Nest I (Middle-aged married w/no kids)

9

Empty Nest II (Older married w/out kids @ home)

10

Household Life Cycle/Social Stratification Matrix

In-Class Exercise

You have just received a $10,000 inheritance from a long-lost relative who you had never met. You are planning to spend the money on two distinct purchases: an evening out at a restaurant and a vacation.You may use all or just a portion of the money on these purchases.Given your position in the HLC/Stratification matrix:

Select a restaurantSelect a vacation destinationDetermine how much $ will be spent on each. If you elect to not spend all your money on these activities, how will you use the balance of the inheritance?

What factors influenced your decision?

Roles

Initiator – first recognizes needInformation gatherer – has expertise and interestInfluencer – evaluates alternativesDecision Maker – makes decisionPurchaser – actual purchaserUser – person who uses the product

Family Decision MakingFamily Decision Making

Husband/Wife Decision Roles for ServicesHusband/Wife Decision Roles for Services

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 partnersUsed for cars, vacations, homes, appliances, furniture, home electronics, interior design, phone serviceAs education increases, so does syncretic decision making

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 dimensionsTask specializationConcessions based on intensity of each spouse’s preferences (choose your battles)