Organizational & Household Decison Making

Magister Manajemen Universitas Indonesia Consumer Behavior

Decision Making ORGANIZATIONAL & HOUSEHOLD

FRISCA LISTYANINGTYAS OSCAR JEREMIAH

Group 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

ORGANIZATIONAL Decision Making

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.

Roles in Decision Making

INITIATOR

GATEKEEPER

INFLUENCER

BUYER

USER

IDEA

INFORMATION

OUTCOME OF DECISION

PURCHASE

CONSUME

Influence in Decision Making

INTERNAL STIMULI

Buyer’s unique psychological characteristic, such as willingness to make risky decision, job experience,

& trainining

EXTERNAL STIMULI

Nature of the organization for which he works as well as the overall economic & technological environment in which the

industry operates

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 hos

alternatives.

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

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 familarity. 4. Less risky decisions in financial term 5. Involves non-substantial dollar volume (bargaining power : low) 6. Places more emphasis on promotion

Case Study : Procurement Customer Portal

Requirement

Internal Analysis

Vendor Identification

Request for

Proposal

Proof of Concept

Contract

Initiator

Gatekeeper

Influencer

Buyer

Decision Maker

CONTENTS



Buyclass Theory

In difference


Modern Family

Family Life Cycle



Car Buying Case Study




Market Research

Kidzania Case Study

Lesson Learn

HOUSEHOLD Decision Making

The Modern Family

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

CHANGE

FAMILY STRUCTURE CONCEPT OF HOUSEHOLD

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

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

Bachelor

Newlyweds Full Nest Empty Nest

Solitary Survivor

#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

#Newly Married Couples

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

• 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

#Full Nest 2

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, 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

• 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

#Empty Nest 2

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

Family Life Cycle

11-20


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.

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

Product Involvement and Utility

Responsibility

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.

Power One Family Member’s Influence Over the

Others in Making Decisions


11-22

Sex-role stereotypes

Spousal Resources

Experience

Socioeconomic Status

Factor Affect Decision Making

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?

CONTENTS



Buyclass Theory

In difference


Modern Family

Family Life Cycle





Market Research

Kidzania Case Study

Lesson Learn

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Children as Decision Maker P

RIM

AR

Y M

AR

KET

kids spend their own money

INFL

UEN

CE

MA

RK

ET

parents buy what their kids tell them to buy (parental yielding)

FUTU

RE

MA

RK

ET

kids “grow up” quickly and purchase items that normally adults purchase (e.g., photographic equipment, cell phone)

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 :

11-26


Authoritarian parents

Neglecting parents

Indulgent parents TELEVISION CULTURE

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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 12 and Older, Children

Spontaneously Employ These Strategies tests hypotheses about cause-

and-effect relationships.

Below Age 6, Children Do Not Employ Storage and Retrieval

Strategies.

Between 6 and 12, Children Employ These Strategies --

When Prompted.

• 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

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Market Research

11-29

Sketches Used to Measure Children’s Perception

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Case Study : Kidzania

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Kidzania : • Experiental Marketing for Kids • Kids are future market for some

brands • Building brand awareness for kids

Case Study

• 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.

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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.

Organizational & Household Decison Making

Business

Transcript of Organizational & Household Decison Making