Miguel ngel Fernndez Delgado 201145141 Full Time, MBA 2nd Experiential Exercise Business 8001 Consumer Behavior

r Dr. Lyle R. Wetsch November 15th, 2011

Household decision making

Theory Review from Solomon book
A conventional definition of Household refers to a house and its occupants regarded as a unit. Then, a Family Household contains at least two people who are related by blood or marriage. As people are living together, they have to satisfy not only their individual product needs, but also collective purchases take place, especially in families. Individually, the consumer addresses their purchases as a response to a problem and typically it has four stages: 1) Problem recognition, 2) Information search, 3) Evaluation of alternatives, and 4) Product choice. The amount of effort put into a purchase decision differs with each purchase, because some purchases are more important than others. According to M. Solomon, Household decision making is the process of the consumer decision making that involves more than one person on the purchasing for products or services that multiple consumers use. Fig. 1. Stages in consumer decision making Source: Solomon (2011) This turns into a more complex decision process than the individual decision making, since different persons have to agree to best purchase they face factors of conflict among them

because of: interpersonal need, product involvement and utility, responsibility and power. (Seymour, D and Lessne, G in Solomon 2011). Depending on the nature of the decision, some or all members may be involved, and one person may play any number (or even all) of these roles. These roles include: Roles (Webster, F and Wind, Y. in Solomon 2011): Initiator: The person who brings up the idea or need. Information gatherer the person who gathers information on a product or service. Gatekeeper: The person who conducts the information search and controls the flow of information available to a group. Influencer: The person who tries to sway the outcome of the decision. Decision maker the person who holds the singular or joint power to deter-mine whether or not to buy a product or service. Buyer: The person who actually makes the purchase. May use the product. Preparer the person who processes the product or directs the service into a form that can be consumed by others. User: The person who winds up using the product or service. Maintainer the person who is responsible for the maintenance and upkeep of a product or service. Disposer the person who discards or discontinues the use of a product or service.

This dynamic may end on a consensual purchase decision, where the group agrees on the desired purchase, differing only in terms of how they will make it happen. The other end may be an accommodative purchase decision, where members cannot agree on a purchase that will satisfy everyones needs. (Davis, H. in Solomon 2011) Other outcomes are possible when the decision making is based on gender roles and responsibilities and these include the autonomic decision, when one family member is responsible for choosing a product, for example, men often have sole responsibility for selecting a car, whereas decorating choices fall to women. On the other hand, syncretic decision, occurs when decision involve two partners. Sullivan, G. and OConnor P. found four factors that appear to determine the degree to which decisions will be made jointly or by one or the other spouse: Gender-role stereotypes: Traditional gender role stereotype for gender type products

Spousal resources: The greater the income, the greater the influence the spouse has. Experience: Less experience tend to consensus decisions while more experience to individual. Socioeconomic Status: Middle- class families make more joint decisions than do either higher- or lower- class families.

Household patterns described in Solomon

Women working outside the home cause men participation in housekeeping activities. In Canada 1/3 of husbands do food shopping by them. However, sole responsibility for food is nearly 80%t of the wives versus about 20% percent of the husbands. (Pollegato, R. in Solomon 2011) Heuristics serve couple to agree on a system of task specialization and concessions are based on the intensity of each spouses preferences Families with young children are more likely to consume health foods, such as fruit, juice, and yoghurt, while single parents and older children buy more junk food. According to a study conducted by Roper Starch Worldwide, wives tend to have more to say when buying groceries, childrens toys, clothes, and medicine. Syncretic decisions are common for vacations, homes, appliances, furniture, home electronics, and phone services. As the couples education increases, more decisions are likely to be made together. (Crispell, D. in Solomon 2011) In traditional families (especially low education), the man makes the money and the woman spends it. Each spouse specializes in certain activities. Modern gender families share participation in family maintenance activities. Husbands assume more responsibility for laundering, housecleaning, grocery shopping, parenting, and so on, while the wife shares in traditionally male tasks, such as home maintenance and garbage removal.

Importance of Household decision making for marketing

Overall, marketers need to figure out who makes buying decisions in a family because this information tells them who to target and whether they need to reach one or both spouses to influence a choice. For example in China the family purse is controlled by the woman, so it would not make sense target man in advertising since he doesnt have the final decision.

Fig. 2. Who controls the purse in Chinese households? Source: The Atlantic-Doing business in China series
http://www.youtube.com/watch?v=x3iU8Ifmzd4

Exercise Assignment
1) Interview five international students from various countries. Have the students make a list of 10 products/service categories that are considered to be typical family purchases. 2) Have them indicate whether decisions to purchase products in each category are likely to be made primarily by the wife, or the husband, or jointly.

Methodology
1) Create a list of the categories on typical family purchases based on a research or statistic to facilitate the interview. In order to classify the typical family purchases in a household I looked into the internet for any helpful study, paper or statistic to create a list of categories for products and services that are consumed in households.

From this initial research I found two studies that helped me to create an initial category list: 1) Consumer Expenditures in 2007 elaborated by U.S. Department of Labor with U.S. Bureau of Labor Statistics in April 2009. Url: http://www.bls.gov/cex/csxann07.pdf 2) Survey of Household Spending 2009: Data Quality Indicators Statistics Canada, June 2011. Url: http://www.statcan.gc.ca/pub/62f0026m/62f0026m2011001-eng.pdf These reports show how the income of spent in different product categories in US and Canadian households. The figure above illustrates the typical expenditures of a consumer unit in the US with the percentage it represents from the paycheck.

Fig. 3. Where does the money go? Source: U.S. Department of Labor

From these reports I came up with the following list of categories for the interview:
1 Food at home 2 Food away form home 3 House Keeping supplies 4 Housing 5 Clothing 6 Medical Care 7 Health Insurance 8 Transportation 9 Gifts 10 Vacation 11 Hobbies -Entretainment 12 Alcoholic Breverages 13 Education Expenses 14 Tobacco 15 Club Memberships 16 House Repairs 17 Public Services

Fig. 4. Categories list- Self Elaboration. 2) Select 5 internationals to interview. The sampling of the people was by convenience and I decided to interview 5 of my acquaintances at the MUN Library. The nationalities were the following: a) b) c) d) e) Russia Canada China Panama Mexico

3) Gather the data in a spreadsheet. All the internationals were asked to answer the following questions: 1) How many people live in your household, including you? 2) Indicate whether if your dad or mom are the source of your household income

3) If both of your parents work, indicate who provides the largest income to the household. 4) Mention 10 products/services that are considered typical family purchases. 5) For each product/service mentioned, indicate whether the decision are likely to be made primarily by your Mom, Dad or Jointly? 6) Indicate if there is any preference of brands in each product. Each International provided their inputs and the answers were tabulated in a excel spreadsheet as shown in the figure below.
WHO TAKES THE DECISION?

Categories/Country Russia Canada China Food at home MOM MOM BOTH Food away form home BOTH House Keeping supplies MOM MOM BOTH Clothing MOM MOM INDIVIDUAL Transportation DAD BOTH INDIVIDUAL Vacation BOTH BOTH BOTH Hobbies -Entretainment DAD Alcoholic Breverages DAD DAD Education Expenses BOTH BOTH BOTH Tobacco DAD BOTH Club Memberships INDIVIDUAL House Repairs DAD DAD DAD Public Services INDIVIDUAL BOTH TOTAL 10 10 10

Panama MOM MOM MOM DAD BOTH BOTH DAD DAD DAD DAD 10

Mexico MOM MOM MOM INDIVIDUAL DAD BOTH DAD BOTH DAD

DAD 10

TOTAL 5 3 5 4 5 5 2 4 5 3 2 4 3

Figure 5- Tabulation of the results for the decision maker in each country 4) Analyze the data and put in graph or chart. This part was a about classifying the products in different categories and put it into a table in excel. Then In a similar table tabulate the decision makers and make a count on them to determine the percentage of decision taken by the each spouse in each country and convert this count into pie charts.

Count/Country MOM DAD BOTH INDIVIDUAL Total

COUNT ON EACH DECISION HOLDER % Russia Canada China 30% 30% 0% 40% 20% 20% 20% 40% 60% 10% 10% 20% 100% 100% 100%

Panama 30% 50% 20% 0% 100%

Mexico 30% 40% 20% 10% 100%

Russia
INDIVIDUAL 10%
MOM 30%

China
INDIVIDUAL 20%

MOM 0%

DAD 20%

BOTH 20%

DAD 40%

BOTH 60%

Figure 6- Data count for each decision maker and pie charts. The pie charts with all the tables are included in the Annexes of this document.

Findings
5) Point similitudes Wife has decision in 3 categories in Russia, Canada, Panama and Mexico. Husband has decision in at least 2 categories Canada and China. Jointly decisions are at least 2 in all the countries. 6) Point differences Wife has no final decision making in the Chinese marriage. Husband has decision more decision making in Mexico, Panama and Russia. Jointly decisions dominate in China with 60%, while in Canada are 40%. Individual refers to product categories where each one takes his own decision. 7) Primarily Decision maker by categories Food at home decision is taken primarily by the wife in all the countries. The Chinese couple decides depending who has the time to visit the supermarket.

Food away from home decision is taken primarily by the wife in Panama and Mexico, whereas in China is a Joint decision. Housekeeping supplies decision is taken primarily by the wife in all the countries. The Chinese couple decides depending who has the time to visit the supermarket. Clothing decision is taken primarily by the wife in Russia and Canada, whereas in Mexico and China there the decision is individual. Transportation decision making in transportation is made primarily by the husband in all the countries, unless China. Vacation decision is a jointly decision in all countries. It is important to mention that in none of the countries the wife was the higher earner and that in Canada and Panama wife does not contribute with income. Alcoholic Beverages decision is made by the husband in all the countries, who is also likely to be the final consumer. In the Chinese family nobody drinks alcohol. Education Expenses is a jointly decision in all the countries, unless Panama where the husband has the decision making. Tobacco is consumed by the husband in Mexico and Russia and in Canada is purchased by both. Club Membership in Canadian household is decision of each one, whereas in Panama husband choose where the family must go for this purposes. House Repairs is mainly done by husband in all the countries, where he decides what to do. Public Services in China is a jointly decision while in Mexico the husband is takes the approval. 8) Primarily decision maker by country Russia: 40% of the decisions are made by the husband while 30% by the wife. Canada: 30% of the decision is made by the wife ant 40% are made jointly. China: 60% of the decisions are made jointly, while 0% is made by the wife. Panama: 50% of the decisions are made by the husband and 30% by the wife. Mexico: 40% of the decisions are made by the husband and 30% by the wife

9) Brands mentioned by each international Russia: Levis, Guinness, Marlboro, MUN. Canada: Marlboro, Canadian, Ford, Chevy, IWorks, MUN. China: All was Generic. Panama: Charmin, Abuelo, Skoda, MUN. Mexico: Palmolive, Renault, Chrysler, Jos Cuervo, Marlboro. 10) Application of Theory to the findings

The results of this experiential exercise reinforce the following concepts and patterns described in Solomon book. a) The household decision making involves more than one person on the purchasing process. b) Syncretic decision, occurs when decision involve two partners. Syncretic decisions are common for vacations, homes, appliances, furniture, home electronics, and phone services. c) Consensual purchase decision, where the group agrees on the desired purchase.
WHO TAKES THE DECISION? Canada China Panama BOTH BOTH BOTH BOTH BOTH DAD

Categories/Country Vacation Education Expenses

Russia BOTH BOTH

Mexico BOTH BOTH

As shown in the table, Vacation and Education expenses are good examples of a decision that involves the family members. Vacation results fulfill the prediction of being a syncretic decision. Vacation can be also considered a consensual decision and in the case of Mexico, the interviewed mentioned sons are considered on the vacation decision process. d) Autonomic decision, when one family member is responsible for choosing a product. e) Gender-role stereotypes: Traditional gender role stereotype for gender type products. f) Responsibility for food is nearly 80%t of the wives. g) Heuristics serve couple to agree on a system of task specialization and concessions are based on the intensity of each spouses preferences. h) According to a study conducted by Roper Starch Worldwide, wives tend to have more to say when buying groceries, childrens toys, clothes, and medicine.

Categories/Country Food at home House Keeping supplies Clothing Transportation Alcoholic Beverages House Repairs

Russia MOM MOM MOM DAD DAD DAD

WHO TAKES THE DECISION? Canada China Panama MOM BOTH MOM MOM BOTH MOM MOM INDIVIDUAL BOTH INDIVIDUAL DAD DAD DAD DAD DAD DAD

Mexico MOM MOM INDIVIDUAL DAD DAD

As shown in the table, food and housekeeping supplies are an autonomic decision for wives in all the countries, except for China. These results are also related to the traditional gender role stereotypes and the heuristics of task specialization for woman. Also, this proves that the food responsibility is taken by the wives and verifies Roper study where wives buy groceries and clothes for the family. Similarly, transportation, alcoholic beverages and house repairs are an autonomic decision for husbands in all the countries, except China. These results are also related to gender role stereotypes and heuristics of task specialization for man, especially regarding house repairs and car purchase decision. i) In traditional families (especially low education), the man makes the money and the woman spends it. j) Modern gender families share participation in family maintenance activities. k) The greater the income, the greater the influence the spouse has.
STATISTICS Canada 4 a X DAD X

Categories/Country Household members Dad work Mom work Highest income Same income

Russia 5 a a X a

China 3 a a DAD X

Panama 4 a X DAD X

Mexico 5 a a DAD X

According to these results, Canada and Panama represent a traditional family where the husband makes the money and wife spend. In the Canadian family the husband only makes the decision of Alcoholic Beverages and House Repairs alone. In the case of Panama, the husband takes most of the decisions alone, and this can be explained because he is providing all the household income. On the other hand, the families from Russia, China and Mexico seem to be less traditional respect to the income.

l) Middle- class families make more joint decisions than do either higher- or lower- class families
COUNT ON EACH DECISION HOLDER % Russia Canada China 20% 40% 60%

Count/Country BOTH

Panama 20%

Mexico 20%

China and Canada families have the major count in joint decision, so they are more likely to be middle class family.. m) Families with young children are more likely to consume health foods
Categories/Country Food at home Russia LOCAL MILK WHAT PRODUCTS DO YOU BUY? AND COMMENTS Canada China BEEF RICE Panama EGGS Mexico TORTILLA

All the households have children members, none of the food products reported correspond to junk food.

11) Compare findings with other research papers. In order to broad this exercise I decided to compare my findings with another study. Using Jstor I found a paper form 1958, called Do Husbands or Wives Make the Purchasing Decisions? by Wolgast, Elizabeth H. This study was conducted over all United States. The following table of results shows clearly that the husband has the predominant decision for a car purchase while wife does for savings, money and bills. For furniture and goods the decision is taken by both.

As shown in the next table, this study asked the same questions to both, wife and husband and the answers for both are almost the same. This proof the veracity of this study.

12) Conclusions. This experiential exercise shows that most of the concepts and research form the book applies to our reality, even in different countries. For such reason marketers should target wives and husbands for different product categories, in order to influence the real decision maker and avoid the mistake of targeting the user, initiator or any other role that does not have the power. For jointly decisions, marketers must mix the communications in order to give the message to decision makers, husband and wife. It is also important no to assume the same decision makers for all the countries, because some slightly differences are likely to occur due to cultural differences among nations. With this in mind, a marketing campaign for the same product in a different country might be targeted slightly or completely different according to local household decision makers. References: Solomon, M., Zaichowsky, J., and Polegato, R. (2011), Consumer Behaviour, Buying, Having and Being. Canada: Pearson/Prentice Hall Wolgast E.(1958). Do Husbands or Wives Make the Purchasing Decisions? Journal of Marketing (23),151-158. Retrieved from http://www.jstor.org/pss/1247832 Consumer Expenditures in 2007. (2009) U.S. Bureau of Labor Statistics Retrieved from http://www.bls.gov/cex/csxann07.pdf

Survey of Household Spending 2009. (2011) Statistics Canada Retrieved from http://www.statcan.gc.ca/pub/62f0026m/62f0026m2011001-eng.pdf

Who controls the purse in Chinese households?.(n.d.) The Atlantic Retrieved from http://www.youtube.com/watch?v=x3iU8Ifmzd4

Annexes Charts with the results.

Data Collection
Categories/Country Household members Dad work Mom work Highest income Same income Russia 5 a a X a STATISTICS Canada 4 a X DAD X China 3 a a DAD X Panama 4 a X DAD X Mexico 5 a a DAD X

Household information chart

WHAT PRODUCTS DO YOU BUY? AND COMMENTS

Categories/Country Food at home Food away form home House Keeping supplies Clothing Transportation Vacation Hobbies -Entretainment Alcoholic Beverages Education Expenses Tobacco Club Memberships House Repairs Public Services

Russia LOCAL MILK GENERIC -DETERGENT LEVI'S JEANS GAS & CAR CHINA GUINESS BEER MUN MARLBORO WATER HEATHER CELL PHONE

Canada BEEF TIDE DETERGENT ON SALE FORD & CHEVY ONTARIO CANADIAN BEER MUN MARLBORO I WORKS PLUMBING

China Panama Mexico RICE EGGS TORTILLA HOLIDAYS RESTAURANT RESTAURANT GENERIC - BLEACH CHARMIN - TOILET PAPER PALMOLIVE DISH SOAP GENERIC DOCKERS PUBLIC TRANSPORTATION SKODA RENAULT & CHRYSLER GREAT WALL CANADA OAXACA BOOKS MOVIES RUM ABUELO TEQUILA JOSE CUERVO CHINA U OF PETROLEUM MUN MUN MARLBORO LOCAL WINDOWS PAINT CABLE TV INTERNET

Products mentioned by category and country

WHO TAKES THE DECISION?

Categories/Country Russia Canada China Food at home MOM MOM BOTH Food away form home BOTH House Keeping supplies MOM MOM BOTH Clothing MOM MOM INDIVIDUAL Transportation DAD BOTH INDIVIDUAL Vacation BOTH BOTH BOTH Hobbies -Entretainment DAD Alcoholic Beverages DAD DAD Education Expenses BOTH BOTH BOTH Tobacco DAD BOTH Club Memberships INDIVIDUAL House Repairs DAD DAD DAD Public Services INDIVIDUAL BOTH TOTAL 10 10 10

Panama MOM MOM MOM DAD BOTH BOTH DAD DAD DAD DAD 10

Mexico MOM MOM MOM INDIVIDUAL DAD BOTH DAD BOTH DAD

DAD 10

TOTAL 5 3 5 4 5 5 2 4 5 3 2 4 3

Decision taker by Category and Country

Count/Country MOM DAD BOTH INDIVIDUAL Total

COUNT ON EACH DECISION HOLDER % Russia Canada China 30% 30% 0% 40% 20% 20% 20% 40% 60% 10% 10% 20% 100% 100% 100%
Count of decision taker by country

Panama 30% 50% 20% 0% 100%

Mexico 30% 40% 20% 10% 100%

Household Decision makers by country

Russia
INDIVIDUAL 10% MOM 30%

BOTH 20%

DAD 40%

Russia

Canada
INDIVIDUAL 10% MOM 30%

BOTH 40%

DAD 20%

Canada

China
INDIVIDUAL 20%

MOM 0%

DAD 20%

BOTH 60%

China
INDIVIDUAL 0%

Panama
BOTH 20%

MOM 30%

DAD 50%

Panama

Mexico
INDIVIDUAL 10% MOM 30%

BOTH 20%

DAD 40%

Mexico

Holder decision among countries

100% 10% 90% 80% 70% 60% 50% 50% 40% 30% 20% 30.00% 10% 0% Russia Canada 30.00% 20% 0.00% China 30.00% 30.00% 40% 20% 60% 40% % 20% 40% INDIVIDUAL BOTH DAD MOM 10% 20% 20% 20% 0% 10%

Panama

Mexico

Comparative chart among countries