Transcript Chapter 4
Chapter 4 Consumer Purchasing & Protection Factors That Influence Buying Decisions Recognize the factors that influence your buying habits. See Figure 4.1, p. 91. – Economic Quality Cost – Social Stylish Consider what others have – Personal Consider your own income Likes/dislikes (preferences) Trade-offs and Buying Decisions Buying based on cost of item – Sacrifice quality – Sacrifice time How to purchase the item – Cash (may add stress with less in savings) – Credit (may cost more with finance charges) – Order Postage May be costly if you have to return it Four Phases to Research-Based Purchasing 1. 2. 3. 4. Research before you shop Weigh alternatives Make the purchase Review the purchase Before You Shop Lay a good foundation by researching what you want to purchase 1. Identify your needs—You don’t always need Brand A and Brand B may cost less 2. Gather information 3. Become aware of the marketplace—find out if products are reliable and be aware of return policies Phase 1: Gather Information Ask friends for recommendations Consult consumer publications such as Consumer Reports Write down information for easy comparison Gathering info. falls into three categories: 1. Costs—are costs different at different stores? 2. Options—what brands are available? 3. Consequences—how will the purchase affect my budget? Common Consumer Myths I can return my car within three days of purchase It says I’ve won, so it must be true If I lose my credit cards I’m liable for the purchases People cannot take money directly from your bank accounts without your written authorization An auto lease is just like a rental. If I have problems, I can just bring it back. You can’t repossess my car. It’s on private property. A store has to give you a refund if you request one Advertisements that you see or hear on TV, newspapers, magazines and radio are accurate or they would not be in the reputable media. Alternatives to Purchasing Renting Borrowing Doing without Phase 2: Weighing the Alternatives What are my personal values How much time do I have for research? What amount can you spend? – Higher price does not always mean higher quality. – Would it be better to finance larger purchases? Is it worth the convenience to have the item immediately? What are the pros and cons of a particular item? When Should You Comparison Shop? When item is expensive When you purchase item often When you are using Internet, advertisements or mail-order catalogs (easy to compare) When different sellers offer different prices and services When product quality or price varies greatly Phase 3: Making the Purchase When should you negotiate the price? – Real estate or cars – Be sure you are dealing with the person who can negotiate (manager or owner) Decide on credit or cash – Credit—type of loan Costs extra (interest) May require a down payment – Cash—lose interest and safety net Know the Real Price—what’s included? Phase 4: After the Purchase How to maintain and care for your purchase requires same research as the purchase itself. What should you do if you are dissatisfied? Consider changes in your needs, lifestyle, values, goals and financial resources. Smart Buying Strategies 1. 2. 3. 4. 5. 6. Timing Purchases Store Selection Brand Comparison Label Information and Research Price Comparison Warranty Evaluation Timing Purchases Bargains occur at certain times of the year – Seasonal – Sales like back-to-school (event sales) – Holiday sales Supply and Demand – Wait a few months before buying a popular new item to purchase it when there is a decreased demand – Stores have clearance sales to reduce supplies Store Selection Quality Price Store hours & location Store selection – Cooperative Non-profit organization owned & operated by its owners (Sam’s) Few customer services – Retail (Wal Mart) – Convenience (Quik Trip) – Direct selling Mail Order TV Online & home shopping Brand Comparison National Brands – Offer consistent quality – Readily available Store-brands (generic) – Usually sold by chain stores – Quality is usually good – Less expensive (less advertising) When comparing brands consider price and quality Avoid impulse buying—make a list of what you need before you go shopping Label Information Labels include advertising Federal law requires they include factual information – Must indicate the common name of the product – Must include name of manufacturer – Net weight of the product – List ingredients in decreasing order of weight – Have nutrition information Label Information Food labels must include: – Calories per serving – Amounts of nutrients – Open dating to indicate shelf life if product is perishable Appliance labels much include: – Information about operating costs – Energy-efficiency Price Comparison Unit pricing – Use of standard unit of measurement to compare the prices of packages that are different sizes – Unit pricing is usually displayed with the product in the store – Calculate the unit price by dividing the price of the item by the unit of measurement – Lowest unit price may not be the best for you, for example, perishables may spoil if bought in bulk Discount coupons Manufacturers’ rebates – Partial refund of the price of a product – Usually have to submit a form, the original receipt and the UPC symbol (bar code) Guideline for Comparing Prices More convenience usually means higher prices (trade-off) Ready-to-use products are usually priced higher Large packages are usually the best buy Buying items “on sale” may not always be the best buy Warranty A written agreement from the manufacturer States the conditions under which the product can be returned, replaced or repaired Required by federal law for products costing $15 or more Must be made available to customers before the purchase is made Often printed directly on the package Types of Warranties Implied – Unwritten guarantees that cover certain aspects of a product or its use – Guarantees that a product is fit for its intended use Express – Usually written – Two types Full—product will be fixed or replaced at no charge Limited—may cover only parts or buyer must cover some of the costs like shipping Service Contracts Must be offered to you when you buy a product Are separately purchased & cost extra Sometimes called extended warranties— but aren’t really warranties Generally offered on large, expensive items such as appliances and cars Quick Check What are three economic factors that influence what people buy? Suppose that you are considering buying a new laptop. What steps might you take before you shop and as you weigh your alternatives? What are at least five strategies followed by smart shoppers?