Family or Household Decision Making Types of Households/Families Why is it Important for Marketers to know about Families and Households? 1. impart lifestyle and consumption values to their members 2. influential in consumption decisions 3. make several joint purchase decisions 4. prime target market for goods and services What is the Family Lifecycle (FLC) Family Life-cycle Changes Over Life-Cycle bachelor financial situation newly married, no kids brands considered young couple, kids < 6 interests young couple, kids >6 primary decision older married w/ dep. maker empty nesters, working retired widower - working, not working Why is it of value to understand the family life cycle? The family life cycle concept attempts to explain consumer behavior patterns of individuals as they age, marry, have children, retire, and their discretionary income vary over their life span At each stage members have new and constant needs for goods and services I.e consumption patterns change Life cycle determines which product categories are bought but not how much is spent on each category Basic strategy is how to keep customers through the FLC? (e.g. Automobile) Household Influences for Marketing Strategy Structure of Household Unit Stage of the Household Household Life Cycle Purchase and Marketing Consumption Strategy Behavior Household Decision Processes Choose your vacation Family Life cycle and Travel Travel locations, arrangements etc. differ significantly across the family life stages Young singles the most action motivated, older marrieds the least motivated by action. young marrieds with children were highly motivated to escape older marrieds were not. Young marrieds with children had most interest in rest and relaxation. Young single travelers had the most ego motivation where middle-aged singles were least motivated by ego. Young singles placed much greater emphasis on outdoor experiences older marrieds did not regard outdoor activities as important. Older unmarrieds, young marrieds, and young singles thought cultural attractions were important. For the older married and older unmarried segments, weather was very important in vacation destination selection. attractions such as theme parks were important for divorced travelers with children and young married travelers with children. What are the Critical Consumption factors? number of people (children and adults) in the family, the ages of the family members Number of employed adults Stages of the family life cycle 1) Bachelor Stage. (Young single people not living at home): (a) Few financial burdens, (b) Fashion/opinion leader led, (c) Recreation orientated, (d) Experiment with personal financial management (e) men and women differ in consumer behaviour - women more housing-related items and furniture, -men more on restaurants and cars (f) buy: basic kitchen equipment, basic furniture, cars, holidays, 2) Newly married couples (Young, no children) (DINKS) (a) Better off financially than they will be in the near future, (b) High levels of purchase of homes and consumer durable goods, (c) Establish patterns of personal financial management and control; (D) Buy: cars, fringes, cookers, life assurance, durable furniture, holidays, 3) Full nest I. (Youngest child under six): (a) Home purchasing at peak, (b) Liquid assets/saving low, (c) Dissatisfied with financial position and amount of money saved, (d) Reliance on credit finance, credit cards, overdrafts etc., (e) Child dominated household, (f) Buy necessities - washers, dryers, baby food and clothes, health foods vitamins, toys, books etc.; 4) Full nest II. (Youngest child six or over): (a) Financial position better, (b) Some wives return to work, (c) Child dominated household, (d) Buy necessities - foods, cleaning material, clothes, bicycles, sports gear, music lessons, pianos, junk foods, holidays etc.; 5) Full nest III. (Older married couples with dependent children.: (a) Financial position still better, (b) More wives work, (c) School and examination dominated household, (d) Some children get first jobs; other in further/higher education, (e) Expenditure to support children's further/higher education, (f) Buy: new, more tasteful furniture, non-necessary appliances, boats, holidays, etc. Empty nest I. (Older married couples, no children living with them, head of family still in labor force): (a) Home ownership at peak, (b) More satisfied with financial position and money saved, (c) Interested in travel, recreation, self-education, (d) Make financial gifts and contributions, (e) Children gain qualifications and move to Stage 1. (f) Buy luxuries, home improvements e.g. fitted kitchens etc.; 7) Empty nest II. (Older married couples, no children living at home, head of family retired): (a) Significant cut in income, (b) Keep home, (d) Concern with level of savings and pension, (e) Assist children (f) Buy:medical appliances or medical care, products which aid health, sleep and digestion, hobbies and pastimes, 8) Solitary survivor I. (In labour force): (a) Income still adequate but likely to sell family home and purchase smaller accommodation, (b) Worries about security and dependence; (c) Concern with level of savings and pension, (d) Buy: hobbies and pastimes, 9) Solitary survivor II. (Retired): (a) Significant cut in income, (b) Additional medical requirements, (c) Special need for attention, affection and security, (d) May Seek sheltered accommodation, (e) Possible dependence on 'others for personal financial, management and control. Buy: Prepaid funeral Small bags of specialty Large bags for larger potatoes for affluent families couples without children. And with small kitchens Marketing Potatoes through the FLC Traditional Families - one parent works, one parent stays home, children live at home. eat dinner at-home more frequently than other demographic groups. also consume more potatoes per person than those in families without children. affluent groups tend to eat fewer potatoes than low- to moderate- income groups with the same demographics. the mainstay of fresh potato marketing, but over time it has come to represent less and less of the total population Two working parents, children present Dinner is a hectic time. Parents and children arrive home about the same time. Kids are excited (and hungry); parents are tired (and hungry). Convenience concerns often override other factors in deciding what's for dinner. Dinnertime solutions need to be quick and easy. What sort of potato products would they be interested in? Single parent families- single working parent, children present. Dinner is just another thing on the "to do" list along with soccer practice, homework, etc. needs easy, quick meal solutions. What sort of potato products should be marketed to families with children? Households without children Half the U.S. population lives in a one- or two- person household. Every demographic in this group has lower potato consumption than households with children and represents a significant (and currently missed) opportunity. Singles Singles have the lowest at-home potato consumption, with affluent singles showing even lower consumption than low- to moderate- income singles. They eat out often, and represent a significant portion of fry consumption in restaurants. Many in this group will be moving into the marriage, parenthood segment. Potato product ideas: Double income, no kids young married couples just establishing their households. Many can afford to eat out often and don't have cooking skills. Empty Nesters, children grown and out of home Some in this group are still working, some are retired almost all want a break from the years of dinner preparation. They can afford to eat out or take home upscale meals. Often health and fitness conscious, this important group has positive attitudes about potatoes. Potato Product ideas: Married and Single active elderly A small percentage of the population at present, this demographic, along with empty nesters, is expected to grow dramatically in the next 20 years. Potato product ideas: Household Decision Making Households vary in consumption habits depending on stage where they are in family life cycle Household decision making is also different from individual decision making Family role structure orientation influences household decision making Nature of good or service to be purchased and consumed influences household decision making Types of Purchase Decisions Made by Families Consensual Decision Making Group Agrees on the Desired Purchase Differing Only in Terms of How It Will Be Achieved. Accommodative Group Members Have Different Preferences and Can’t Agree on a Purchase That Will Satisfy Everyone Family Decision 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 Degree to Which the Product in Question Will and Utility Be Used or Will Satisfy a Need Responsibility For Procurement, Maintenance, Payment, etc. One Family Member’s Influence Over the Power Others in Making Decisions Husband-Wife Decision Making Who makes the Decisions? Influence may depend on the good or service to be purchased, role structure orientation, stage of the decision making process four categories: husband-dominated; wife-dominated autonomous or unilateral; joint decision The Apparel Manufacturer Haggar Placed Menswear Ads in About a Dozen Women’s Magazines After Its Research Found That Women Exert Influence Over Men’s Clothing Choices Four Factors Influencing Family Decision Making 1. Sex-role stereotypes - separation of decision-making for sex-typed products. 2 Spousal Resources - spouse contributing the greater resources (usually, but not always, money) has the greater influence 3. Experience - individual decisions are made more frequently when the couple has gained experience as a decision-making unit 4. Socio-Economic Status - middle class families make more joint decisions than either upper or lower class families. Information Gatherer Initiator Gatekeeper Disposer Buyer Decision Roles Maintainer Influencer User Decision Maker Preparer Consumption-related Roles Initiators: initiate consumption behaviour Information Gatherers: research alternatives Gatekeepers: control flow of information to other members Influencer(s): provide information about a good or service to other members Deciders: have power to make final buying decision Buyers: member(s) who actually make purchase Preparers: transform product into useable form Users: family members who use the good or service Maintainers: responsible for maintenance of good Disposers: responsible for disposal of good/service Marketing Strategy Implications Marketing communication: advertising message, media used, person targeted, product positioning Product development: products, e.g. minivans and cars built specifically for families; vacations; services, e.g. insurance, hotel Pricing decisions: e.g. discounts for bulk purchases Distribution: changes in family lifestyle means changes in distribution, e.g. longer retail hours Public policy regulations re marketing to children Households can be targeted by advertising by lifestyle . If a car is being purchased by a family for a teenager to drive to school, how will this influence: The type of product Method of financing Price Appropriate promotion message The media As opposed to the family purchasing a car that the adult head of the household will use to commute to work? Marketing to the Family When marketing to the family children must be a consideration. How would you reach families with your marketing message? Magazines children’s magazines are good avenues for reaching the youth and mom markets. also family-oriented magazines aimed more at parents. Eg. Family Circle, Sesame Street Parents (5.4 million readers) Family Fun, Child, Parents, or Parenting magazine. Internet, e-mail and other technology since kids are often the more technologically savvy members of the family Web sites Organizations family-friendly organizations are good places in which to focus marketing efforts aimed at the family eg. Religious institutions Schools: primary, secondary, public and private; their affiliated clubs and organizations, Kids’ groups - Scouts, 4-H, etc. YMCA or YWCA and other athletic clubs Direct Mail marketing to families employs strategies and practices that strongly appeal to parent customers and their children for the ultimate purpose of increasing sales. It involves looking at your sales and marketing processes from the viewpoint of a consumer who has money to buy, children beside them and is stretched for time. Family marketing has three components: products customer service and environment. For many households, a car purchase is a family event. It can be a pleasant one or a story that is retold with embarrassment and horror. Which do you think will lead to a repeat sale or referral? If you were the owner of a car dealership how would you make the purchase of a car a pleasant family event. Provide a good play area. Construction play, a table for drawing, good books, creative activities like train sets, Lego tables, mazes and puzzles. Stay away from videos. Children who sit too long just build up their energy and compensate with over-active play. Welcome families with broad smiles, make eye contact with the youngsters. Take a few minutes to make the children comfortable by leading them to the play area or explaining where the toys are. Do not put parents into the position of apologizing for their children's behavior. Make sure that the vending machine has packaged, healthy treats available, including fruit juice or water in bottles. The bathroom should have a change table. stop periodically to make sure the kids are engaged and happy. Include them if old enough, in some of the discussions.
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