Transcript Begin Chapter 3 notes

Bell Ringer #1 - Chapter 3
Create a list of disposable/need expenses and
another for discretionary/want expenses
using the items listed below.
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Electric Bill
Anniversary Present
Make – up
Gas for your car
Tickets to Football
Game
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New Jeans
Lunch at Runza
Rent Payment
Groceries
Lunch Money for
Child
Chapter 3
Your Role as a Consumer
Consumption, Income, and Decision Making
Video
Vocab:
• Consumer: any person or group that buys or
uses goods and services to satisfy personal needs
and wants.
• The ability to consume depends on available
income and how much of it a person chooses to
spend now or save.
INCOME
DISPOSABLE
DISCRETIONARY
• Income remaining for a person
to spend or save after all taxes
have been paid.
• Spend on:
▫ Food
▫ Clothing
▫ Shelter
▫ Bills associated with shelter
▫ ie. necessities
• Money income a person has
left to spend on extras after
necessities have been bought.
• Examples:
▫ Luxury items
▫ Entertainment
▫ “Non-necessities”
▫ Or – put into savings
Consumer decision making deals with
consumers’ choices about how to spend their
VSincome.
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What are four things that can make a
difference in a person’s earning
power?
1.
2.
3.
4.
Education
Occupation
Experience
Health
Decision Making as a Consumer
Involve three main considerations:
1. Scarce resources
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Income & time
Research the product – the time and money
you spend on the product ultimately cannot
be used for anything else.
2. Opportunity Cost –
see page 68 (figure 3.2)
▫ If you pick a high quality product over a
medium or low-quality, you will pay
more money.
▫ What features are important to you?
▫ Is it a need or want?
▫ Is it worth paying the extra money?
Chart in Motion
3. Rational Choice
—choosing the alternative that has the greatest
perceived value from among comparablequality products.
• Each person’s value system is different.
Figure 2
Activity—Rational Choice
• Choose a product you like and create two
advertisements. The first ad should emphasize
why buying this product is a rational choice. The
second ad should appeal to the fun or light side
of the product and the desire to buy it, even if it’s
not a rational purchase.
Example-Coke (thirst—rational & drink b/c
everyone else does–more fun)
Three Basic Buying Principles
1. Gathering information
2.Using advertising wisely
3.Comparison shopping
Gathering Information
• Shopping tips:
o You should obtain only as much information
as is worthwhile.
o Ask salespeople for accurate information.
o Use a standard search engine on the Internet, and
visit various sites in order to compare different
information.
o Read reviews other people have written about
different brands and models of the product
Before making purchases, especially of bigticket items, consumers should gather
information and compare products from
different sources.
Using Advertising Wisely
• competitive advertising: advertising
that attempts to persuade consumers that
a product is different from and superior to
any other
informative advertising:
• advertising that benefits
consumers by providing useful
information about a product
• Look at page 72-73
Be Aware of Deceptive Advertising
• Bait and Switch-- ad that attracts
consumers with a low-priced
product, then tries to sell them a
higher-priced product
FYI
Studies reveal that Americans are
bombarded with 3,000 to 5,000
advertising messages a day. The
assault is so overwhelming that
people scarcely notice most of
these messages.
Comparison Shopping
• getting information on the types and
prices of products available from
different stores and companies
• Warranty-the promise of a
manufacturer to repair or replace a
product within a certain period of
time if it is faulty
Comparison shopping
continued…
Brand name
Generic
• Word, picture, or logo
on a product that
helps consumers
distinguish it from
similar products.
• General name for a
product rather than a
specific brand name
given by the
manufacturer.
Decision Making Process – 5 Steps
1.
2.
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5.
Identify the Problem
List the Alternatives
Determine the Pros and Cons
Make the best Decision
Evaluate the Decision
With A Neighbor
• Share with a neighbor the big decision you wrote
about in your notes.
• Tell them what your alternatives were
• Tell them which decision you made
• Tell them how it turned out – would you make
the same decision again? What would you do
differently?
Decision Making Con’t
• People often make a chart or list to help them
make decisions.
• Let’s practice using the chart on the back of your
note sheet using the 5 steps.
▫ Identify the problem – Need to choose a college
▫ List the alternatives – UNL, UNK, SCC, Kansas
State, Harvard
Decision Making practice con’t
• Determine Pros and Cons
▫ List criteria –Tuition cost is $85 per credit hour or
less, Must have 2000 students or less, Must have
dorms and cafeteria plans, Must be within a 2
hour drive of Lincoln, Have a marching band
program, Have an abroad program for the Junior
and Senior year
▫ Check Alternatives and Criteria for pros and cons
UNL
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$85 per credit hour
Has 8,000 students
Has dorm/cafeterias for students
Less than a 2 hour drive
Has a top marching band program
No abroad studies programs
UNK
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$85 per credit hour
Has 1700 students
Less than a 2 hour drive from Lincoln
Has dorm/cafeteria programs
Has a marching band program
Has an abroad studies program
SCC
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$60 per credit hour
Has 1000 students
Less than a 2 hour drive from Lincoln
No dorm program has a cafeteria
No marching band program
No study abroad program
Kansas State College
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$125 per credit hour (out of state rate)
Has dorm/cafeteria plans
More than a 2 hour drive
Has 2,000 students
Has marching program
Has an abroad study program
Harvard
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$275 per credit hour
Has 3,500 students
Much more than a 2 hour drive
Has a dorm/food program
Has a marching band
Has a study abroad program
Decision Making Practice con’t
• Make the best Decision.
▫?
• Evaluate the Decision
▫ Best college experience ever!