Transcript Consumers PPT

The Engine That Runs The Economy
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A consumer is anyone
who buys or uses
products
Consumer Economics is
the study of the role
consumers play in an
economic system
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“Customer is always right!”
 If a company does not satisfy your needs you can go
take your business somewhere else.
 You choose where to get the products you want.
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Values-Your principles- the standards by which
you live your life
Goals- The things you want to accomplish in your
life
Needs- Things you can not live without
Wants- Things you would like to have but can live
without
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Life Values:
 The principles that are most important to you in life
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Work Values:
 Principles that are important to you at work
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Cultural Values:
 Principles that are important to you because of your
ethnic heritage or religion
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Social Values
 Principles that are important to you because of the
community in which you live.
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Demographic Values
 Principles that are important to you because of
WHERE you live.
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Values are NOT constant. They change through
out you life as you learn and grow.
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Different people have different values!!!
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Goals come from you
values, needs, wants and
your hopes and dreams.
Example: I hope one of
your goals is to graduate
from high school!!
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Most things in your life change as you age.
Your goals and values will change.
This is part of the LIFE CYCLE
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Long-term goals: things that you want to
achieve over a period of years during your lifespan (from birth to death)
Life-Span goals: long-term goals that you want
to reach during your life.
Short-term goals: things that you want to
accomplish with in a year
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What about the things that you have to give up?
Opportunity cost: The value of your next best
alternative whenever you make a choice.
Things may not “cost” the same to all people.
 Differs based on values
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A rational buying decision is a choice made in a n
organized logical matter.
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Choices made in this way will most likely fulfill
needs or wants.
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To make a rational buying decision you will use
the Decision Making Process
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Specify:
 Identify the need or
want that you are
trying to fulfill and
determine your
goals.
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Search:
 Plan specific steps to gather information
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Sift:
 Look at all you options. Look at opportunity cost.
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Select:
 Make a choice and act on it.
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Study:
 Evaluate the results.
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An Economic System is the way a nation uses
resources to produce goods and services.
The creation of goods and services is known as
Production.
Resources are the things that are used to create
other goods and services.
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Human resources:
 Skills, training and abilities that people have to
complete tasks that result in the production of goods
and services
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Nonhuman resources:
 Raw materials, tools, and manufactured products,
such as oil, tractors and lumber, that are used to make
goods and services.
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The study of how economic systems work.
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4 types:
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Traditional economy
Command economy
Market economy
Mixed economy
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In a Traditional Economy, the
ways to produce products are
passed from one generation to
the next. Parents teach children
how to produce goods and
services.
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In a command economy the
government owned most of
the resources and made most
of the economic decisions.
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This is the primary economic system.
Under a market economy, people rather than
government, own the resources and run the
business.
 The purpose of this type of economy is to earn a
profit.
 Profit = Price - Cost
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This is the United States!
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We are a mixture of Market and Command…
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WHY?
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Scarcity:
 Is the situation in which consumers’ wants are greater
than the resources available to satisfy those wants.
 Every society must decide how to allocate the scarce
resources
 These choices create the market forces of supply and
demand.
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Demand is the quantity of a good or service that
consumers are willing and able to buy at various
prices during a given period of time.
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Law of Demand says that consumers will demand
more of a product at a lower price than at a
higher price.
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When the relationship
between price and
quantity demanded is
shown on a graph it is
called the demand curve.
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Supply is the quantity of a product that
producers are willing and able to make available
for sale at various prices over a given period of
time.
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Law of Supply says that producers are willing to
offer more of a product for sale at a higher price
than at a lower price. As the price rises, the
quantity supplied increases.
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The relationship
between price and
quantity supplied,
shown on a graph is the
supply curve.
As the price goes up,
producers will supply
more of that product
for sale.
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The equilibrium price for a product is the price at
which the quantity supplied exactly equals the
quantity demanded.
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At the equilibrium price, consumers are willing
and able to buy the same amount of the product
as producers are willing and able to supply.
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Surplus results when the supply
exceeds the demand
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When prices come down the consumer
will buy more. However, the supplier is
not willing to supply more at the lower
price. This creates a shortage.
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Prices provide information that influences a
market economy.
When there is price competition there are 3
choices
 Lower the prices
 Convince customers to pay the higher price
 Stop offering the product for sale
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The main reason to run a business is to earn a
profit.
Companies can increase profits in
3 ways:
 Reduce Cost
 Change Price
 Increase Quantity Sold
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Competition is the contest among sellers to win
customers.
This exists when several companies offer similar
products for sale.
Competition forces businesses to serve
consumers
1.
Sell products consumers want to buy!!
2.
Sell products at a price consumers are willing to
pay!!
3.
Take in more money from sales than the
company spends to produce the products
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Brand Advertising
 This type of advertising causes you to
remember a particular brand name
 Usually done through Jingles and Slogans
 Old jingle
 New Pepsi Jingle
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Informative Advertising
 Designed to influence you to buy a product by
educating you about the products benefits.
 Often used for technical sales such as computers
or automobiles
 Google Ad
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Comparative Advertising
 Tries to win your favor by comparing its products to
the qualities of other competing produces.
 Often helps you learn the best qualities about a certain
product.
 Coke vs. Pepsi
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Defensive Advertising
 Used to counter attacks from
comparative ads.
 Trying to prove other claims wrong
 PC Defensive Ad
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Persuasive Advertising
 Designed to appeal to your emotions to influence you
to buy, but does not provide much useful information.
 Plays on “heart strings” or “Image”
 http://Audi Commercial
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Puffery
 Is innocent exaggeration. This IS LEGAL
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Factually Wrong
 ILLEGAL!!
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Top ten of 2009
Top ten of 2008
Informative / Persuasive?
Defensive Advertising?
I am a PC: Not alone!
Evian