Transcript Consumer Ed. – Ch. 3

Consumer Ed. – Ch. 3
Becoming a Smart
Consumer
Your Role as a Consumer
• Consumer
– Person or group that buys or uses goods
and services to satisfy personal needs
and/or wants
• Consumerism
– Educating buyers about their purchases to
make them demand better and safe
products
Where Does the $ Go?
Taxes/Social
Security
Housing/Household
17%
30%
Savings
3%
Entertainment
5%
14%
7%
Food
5%
19%
Medical
Clothing
Transportation
Income
• Disposal Income – money left after taxes
• Discretionary Income – money left after
necessities to spend on luxuries
Disposable
Income
Expenses
Discretionary
Income
After Taxes
After Bills
$ Left
What if…………..
• You receive a pay raise, how will each be
affected?
• You cancel your cell phone?
• Leave a full time job for a part time job?
• You get married?
Disposable
Expenses
Discretionary
Ability to consume depends on…
• Education – High school graduate vs. bachelors
degree vs. masters degree
• Occupation – CEO of a major company vs.
a small town
plumber
• Experience – First year worker vs. 30 years of work
• Health – Disability? Frequent truancy?
• Location – Inflation based on where you live!
• http://www.bankrate.com/calculators/savings/moving
-cost-of-living-calculator.aspx
Education Makes a Difference!
Education
Males
Females
High School
$28,307
$16,906
Some College
$32,641
$19,856
Bachelor’s
$50,056
$30,119
Advanced
$78,032
$42,744
Buying is Based Upon 3 Things
Consumers Should ask
Themselves:
• Do I really need this item?
• Is the value/worth of this item worth the
amount of time and effort I put into raising
the necessary funds to pay for it?
• Is there a better use of my income
elsewhere?
Consumer Decision Making
• Do I really NEED this item? Or do I really
WANT this item?
• Opportunity Cost – the cost, or sacrifice,
you made by choosing your item
(difference between your item and the
highest one below it)
• Rational Choice – Making a smart
consumer decision based upon
opportunity cost; no correct choice,
based on perceived value
Buying Principle or Strategies
• http://www.youtube.com/watch?v=vlDUUFhZvSA
• Gathering Information
– Analyzing Advertisement
• Does the ad appeal to just my emotions?
• What are the features of the product?
• Are their any hidden cost?
Gathering Information
• Comparison Shopping!
– Test out products
– Discuss brands & models w/ different
sellers
– How Much Time Should You Spend?
• Time gathering information shouldn’t exceed
perceived value of the product
• Use the Internet!
• Gathering Information
– Competitive Advertisement
• Ads that try to persuade their product over the
competitions.
– Ex: Nike vs. Adidas
– http://www.youtube.com/watch?v=IXDSWhobbfc&featur
e=related
– Informative Advertisement
• Ads that are strictly informative. Takes little effort
on the part of the consumer.
Use Advertising Wisely
• Competitive Advertising – attempts to
persuade their product is superior
• Informative Advertising – gives
information about a product
• Deceptive Advertising – false or
misleading info about a product
– Bait and Switch
– Puffing
Bait and Switch Exposed by News
Team!
http://www.youtube.com/watch?v=uiQLD-Xg1yU
Deceptive Sales
Practices Uncovered!
YouTube - State Issues
Warning To 'Deceptive'
Dealership
Comparison Shopping
• Where do you buy at?
– Newspapers, Phone calls, Internet, Visit
stores, etc.
– Negotiate!!!
– Warranties – promise by seller to repair
or
replace a product if faulty or
damaged w/in a certain period of time
Comparison Shopping (cont.)
• Brand Name – word, picture, or logo that distinguishes
it from other products
– Sold nationally or internationally;
– Backed by a major business
•Generic – difficult to determine the
producer; sold in large
quantities, cheaper
Consumerism
• Buyers need to be educated
• Consumer Rights – JFK, 1962
– Right to be safe
– Right to be informed
– Right to choose
– Right to be heard
– Right to redress (added by Nixon)
Faulty Product? No Problem!
1.
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8.
Report the problem immediately!
State the problem & propose a solution
Include all important details on your case
Describe action you took to solve the problem
Keep accurate records – Make Copies!
Give time to solve problem before reporting it
Type letter of complaint or E-Mail!
Keep Cool!
•
Ethical Behavior – respect rights of others