MOS 3321 Final Exam Textbook Notes (Organized by Learning Objectives)

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Western University
Management and Organizational Studies
Management and Organizational Studies 1021A/B
Mark Cleveland

CB Chapter 12 Household Decision Making 12/15/2012 5:51:00 PM LO 1 Notions and Trends of Demographics LO 2 Many purchasing decisions are made by more than one person  Different roles in the purchase decision stage LO 3 Members of a family unit play different roles/influences LO 4 How do children learn what they want and how to consume? LO 1  With high divorce rates and extended families, the traditional family is mostly dead; except for the 35% of females who can afford to work from home  Age of families o The 35-64 age group has the highest number of marriages o People are waiting longer to get married  Family Size o Slipped down to average of 3 people o Total fertility rate (TFR) = 1.6 below sustainability o Increasing one people households o Child free couples (gay or not) are attractive targets for marketers  Who’s living at home? o Sandwich generation o More boomerang kids are living at home o Young men are more likely to live at home than female  The family life cycle o TWO IMPORTANT factors in determining how a couple spend their money  Do they have children?  Does the woman work outside the home? o A lifecycle approach predicts what we buy at what age LO2 – Decision Roles and Dynamics  Initiator – the person who brings up the idea or need  Info gatherer  Gatekeeper – conducts the info search and controls the flow of info available to the group  Influencer – tries to sway the outcome of the decision  Decision maker – the final say  Buyer – who actually buys it  Preparer – person who processes the product into a usable form  User – the person to actually use it  Maintainer  Disposer Two types of basic household decisions  Consensual purchase decision o Group agrees, only differs in terms of making it happen o Engage in problem solving to find way to satisfy entire group o Assigns family members to certain duties o  Accommodative purchase decision o When group members have different preferences and cannot agree o Use of bargaining, coercion, and compromise is important Four factors that indicates conflict  Interpersonal need  Product involvement and utility  Responsibility  Power Family Identity – defines the household both to members and to outsiders, family rituals, narratives. Ex: father takes son to see movie every week. GENDER ROLES AND DECISION-MAKING RESPONSIBLIITY TWO TYPES OF DECISIONS: one indie, one involves two Autonomic decision: when a family member is responsible for choosing a product; ex: father chooses the car Syncretic decisions: choosing a vacation for destination, involves two people ***Concept Gender Convergence: more similarities between men & women LO 3 Identifying the Decision Maker  Researchers want to know whot he FFO is (Family Financial Officer)  Four factors determine who calls the shots o Gender-role stereotypes beliefs o Spousal resources o Experience o Socioeconomic status (middle class fam make more joint decisions than lower or higher class familities) Differences in shopping styles (Working wives vs Stay at Home)  Working wives: prefer convenience-based, pragmatic orientation towards food shopping  At home wives: interested in accessibility, availability and one stop shopping Kin-network system: rituals performed to maintain ties with family members LO 3 Heuristics in Joint Decision Making  Synoptic ideal calls for man and wife to share a common view  Heuristics, used to simplify decisions to avoid conflict  Couple agrees on task specialization, common preferences are based on objective dimensions instead of hard to define cues  Likelihood of one partner conceding depends on how passionately each person desires a certain course LO 4 Children as Decision Makers  Stats: children between age 4 – 12 collectively spend or influence spending billions of dollars a year  Children make up 3 distinct markets 1. Primary Market a. Children spending their own allowance money on toys, food, clothes 2. Influence Market  Parental yielding occurs when they surrender to a child’s request  Kids have memorized about 300-400 brand names by age of 10  Depends on how strict the parents are 3. Future market  locking brand loyalty at a young age is key Consumer Socialization of Young People  process which young people acquire skills, knowledge and attitudes relevant to their functioning in the marketplace  two primary socialization sources: family, media Influence of parents  Serve as models of observation learning  Passing down of preferences  Most children request items at age of 5, and buy things on their own at age 8  Parental Styles o Authoritarian – acts as censor o Neglecting parents – detached, no control o Indulgent parents – less restrictive Influence of TV and the Web  Kids spend more than 6 hours a day watching tv  Food ads really work on them Gender Role Socialization  Girls are more interested in creativity and relationships  Boys are more interested in competition and battle Cognitive Development  Marketers segment kids by stages of development set by Jean Piaget  Stage 1 – Limited, under age of 6, no storage and retrieval strategies  Stage 2 – Cued, 6-12, employ only when prompted  Stage 3 – Strategic age 12 – over use them all the time Why this is relevant? o Children in stage 1 can’t tell between reality and fake on tv messages o They cannot grasp symbolic meanings Marketing Research on Children  Most useful testing is product testing  Message comprehension helps Ethics  Canadian Advertising Foundation Broadcast Code for Advertising to Children provides industry guideines in areas o Product claims o Sales pressure techniques o Endorsements o Scheduling o Safety o Social values Chapter 13 Income and Social Classes 12/15/2012 5:51:00 PM LO 1 Both Personal & Social Conditions Influence Spending LO 2 Grouping Social Classes on Consumers  Is income a reliable indicator of social class?  What contributes to social class? LO 3 Conspicuous Consumption and Social Class  Nouveau-riche are most likely to be conspicuous consumption  Some seek status by mocking fashionable products LO 1 INCOME PATTERNS  Average family income went from 50,000 to 69,000 because of two reasons o Shift in women’s roles o Increase in education attainment  Bachelor degreed families earn almost 5x more than high school grads in a year ATTITUDES TOWARDS MONEY  Consumer demand depend on both willingness and ability to buy  As ncome levels rise, typical household change the way it spends o biggest change = more on shelter and transportation, less on food and clothing o due to increased house ownership and an extra car for the wife  Two types of frugal consumers: o Spend Thrifts: just enjoys saving money o Tightwads: spending money is an unpleasant experience  More tightwads than spend thrifts, especially in men, old people, and those with more education SEGMENTING GROUPS BASED ON ATTITUDES (Walmart) 1. Brand Aspirationals: People with low incomes who are obsessed with brand names, such as kitchenaid 2. Value-price shoppers: Those who like low prices and cannot afford much more 3. Price-sensitive affluents: wealthier shoppers who love deals Money has psychological meanings: social resource for our need for acceptance. Love freedom, sex appeal BEHAVIOURAL ECONOMICS  Economic psychology: concerned with the human side of economic decisions – George Katona  Consumer beliefs about what the future holds are an indicator of consumer confidence  Overall saving rate is influenced by three things o Pessimism or optimism about personal circumstances o National and world events o Cultural differences in attitudes toward saving  Curated by The Conference Board of Canada o Rising gas prices dampening consumer confidence o Most people, specially young cdns remain more optimistic than rest of the world LO 2 SOCIAL CLASS Social Class – determined by variables such as income, family background, and occupation  How just how much money is spent, but HOW it is spent PECKING ORDER  Social standing determines people’s access to resources such as education, housing and consumer goods  People try to improve ranking by moving up social ladder  People in the same social class usually o Have the same circle of friends, common tastes o Have similar occupations, lifestyles o Homogamy: they marry each other  Karl Marx o “Haves” control resources and use labor of others to maintain their position o “Have nots” depend on their own labour to survive, so these people have the most to gain by changing the system  Max Weber: its not so one-dimensional o Some ranking involves prestige and status o Some on power or party o And some on wealth, property (class)  Social Stratification o Refers to the creation of aritificial divisions o It happens online as well: through reputation economy  Achieved vs Abscribed status SOCIAL MOBILITY  Refers to the passage of individuals from one social class to another  Horizontal Mobility – status roughly equal o Ie: nurse to a kindergarten teacher  Downward Mobility – teacher to homeless  Upward Mobility – less common because middle and upper class tend to produce children at lower than replacement rate, unless the lower class. There are less and less white collar because of that CLASS STRUCTURE IN CANADA  The most obvious change are the groups (ethnic and religious) that do occupy different positions within the structure at different times  Coleman’s view of American Class Structure Upper Classes Upper-Upper (0.3%) – inherited wealth Lower Upper 1.2% - newer social elite, drawn from current professions Upper-Middle 12.5% - rest of university grad managers and professionals: lifestyle centres on private clubs, causes, and the arts Middle Classes Middle Class 32% : avg pay white collar workers and their blue collar friends; live on the btter side of town, try to do the proper things Working Class 38%: Avg pay blue collar workers, lead working- class lifestyle whatever the income, school, background and job Lower Class “lower but not lowest” 9% Working, not on social assistance, living just above poverty; behavior judged crude, trashy, Real lower lower 7% On social assistance, visibly poverty- stricken, usually out of work, bums, common criminals CLASS STRUCTURES AROUND THE WORLD China – cultural revolution, gov’t seized the smallest possessions as evidence of bourgeois consciousness - but because costs are low, they can enjoy all the middle class comforts with income below the poverty line in NA - love of branded goods, highly sensitive to cues that communicate social standing - yuppies, new money Japan  single women living at home are spending on small luxuries to help them forget about the anxiety for the future Middle East  Few women work, so they have leisure time to shop for luxury brands  It is a real experience, but brands must stay respectful of culture UK  Is extremely class conscious, hereditary peers still dominate good schools and governments  Chavs – lower class group, have a lot of disposable income to spend on fashion, obsesses with David Beckham  Presumed to be tacky India  Higher end global brands are prized by affluent consumers  Super luxury malls hires a lot of guards to keep the destitute outside  Credit card spending going up 30% per year BLURRING SOCIAL CLASS LINES  A lot of luxury brand collabs to cater to the mass class  BRIC to overtake Europe in 20 years COMPONENTS OF SOCIAL CLASS  Occupation prestige o Quite consistent across cultures o Leads to other things like use of leisure time, allocation of family resources, aesthetic preferences, and political orientation  Income o Not a very good indicator, because how we spend is more telling o People don’t just spend to show off their taste, they will also be spending more on healthcare soon  Educational Attainment HOW INCOME RELATES TO SOCIAL CLASS  Problem; even if a family adds one or more wage earners and increases its household income, each additional job is likely to be lower status than the primary wage-earner’s job  WHICH ONE IS A BETTER INDICATOR?  Social class better to predict low-moderate purchases that have symbolic meanings  Income predicts major non-symbolic purchases  BOTH social class and income predict expensive symbolic products LO 3 HOW SOCIAL CLASS AFFECTS PURCHASE DECISIONS CLASS DIFFERENCES IN WORLDVIEW  Worldview (the world of a social class) is one way to differentiate among social classes  Short term goals, vs long term goals of higher class Higher Class Working-class - Long term goals - Short term - More potent, sets - Sees sport teams as heros themselves up for long term - feel more powerless over their success own fates important reactors - Affluenza- rich but (at the mercy of the economy) unhappy - family oriented, more conservative SFI Consulting Business Intelligence divides consumers into three groups based on their attitude toward luxury  Luxury is functional – they buy things that will last and have enduring value. They conduct a lot of research beforeahand  Luxury is a reward: younger people demonstrate their success  Luxury is an indulgence: smallest of three include younger consumers, willing to pay a premium for goods that express its individuality and make others take notice. More emotional approach towards spending, more impulsive Nouveau Riches: just recently achieved wealth, don’t have the training yet to learn how to use it Taste Culture: differentiates people in terms of their aesthetic and intellectual preferences, people use codes to codify the clusters of things people like to determine their culture  Restricted codes – focus on the content of the objects not on relationships among objects  Elaborated codes – more complex and depend on more sophisticated worldview Habitus: economic capital, taste, a status marketing force, that causes consumption preferences to cluster together, social capital, = people who ake up golf because they did so much business on golf courses Cultural capital: a set of distinctive and socially rare tastes and practices, knowledge of refined behavior that admits a person into the realm of upper class STATUS SYMBOLS  Main purpose of lux goods is to show off your wealth  Compare standard of living with yout neigbours and see if you can beat them  Invidious distinction – to inspire envy in others through display of wealth or power  Consipcuous consumption: refers people’s desire to provide prominent, visible evidence of their ability to afford luxry goods. HOW DO YOU MEASURE SOCIAL CLASS?  Blishen’s Index of Status characteristics and the Index of Social Position by Hollingshead  Problems with measurement: nuclear families are no more, increasing anonymity for the society, o Status Crystallizati
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