Consumer Decisions in the Economy Chapter 1, 1.4 and 1.5
What is a consumer anyway? • A person who buys and uses goods and services (in other words, you and me!) • what are some problems and concerns people have as consumers?
About consumers • Businesses wouldn’t be around without them • standard of living not always based on how much money you make • have a responsibility to make informed decisions
A thought for all you consumers • if standard of living isn’t based on pay, what is it based on? • why is it important to be an informed consumer?? • where can you go to get help with or information about consumer problems???
Consumer, inform thyself There are five types of organizations who advise and test: • product-testing • media sources • government agencies • business sources • personal contacts
PRODUCT-TESTING ORGANIZATION • Test products and services • paid by manufacturers to test safety • may also develop and update performance standards • Underwriter Laboratories, Inc. • Association of Home Appliance Manufacturers (AHAM) • Factory Mutual Approved Mark • American Gas Association
Media Sources (print, broadcast & internet) • Goal is to report scientific, technical, educational information about products and services. • information is objective • can be nonprofit • Consumer Reports • Good Housekeeping • may also find specialty magazines for certain products such as cars, travel or financial investments (ie. Money, Wall Street Journal)
Media Sources con’td • Encompasses radio and t.v. • goal is to inform public about safety, care and use of products • some are shows designed to help consumer issues
Government Agencies • United States Department of Agriculture (USDA) • Federal Trade Commission (FTC) • Food and Drug Administration (FDA) • Consumer Product Safety Commission (CPSC) • National Highway Traffic Safety Commission (NHTSC) All make information available to consumers
BUSINESS SOURCES • Advertising • Product labels • Customer service departments • Better Business Bureau
ADVERTISING • Most popular source • Tell you what it is, how it’s made, what it will do • Can be word-of-mouth (most effective)
PRODUCT LABELS • Tell you what it is, size, care of, when and where it was made
CUSTOMER SERVICE DEPARTMENT • Provide booklets of info • May help improve buying skills • Answer questions on potential purchases and returns
BETTER BUSINESS BUREAU • Supported by member businesses • Self regulate ethical practices in advertising and selling products • Goal is to develop a more informed consumer • Provides information only, no recommendations
PERSONAL CONTACTS • The most often used source of all? Word of mouth.
Remember the decision making process? • SPECIFY. Identify need or wants. • SEARCH. Gather information and know choices available. • SIFT. Determine desired satisfaction and evaluate alternatives (how much are you willing to pay? Quality? Will you wait for it to go on sale?) • SELECT. Make your choice. • STUDY. Evaluate the results of your choice.
Comparison Shopping • Look at price, quality and services of one product as they compare to another product.
Comparison Shopping cont’d • Always look at unit price as it is the truest measure of comparison Ex. 8oz./$0.50 12 oz./$0.65
Cont’d • Per unit, each item is: $0.0625/oz. $0.0542/oz These are actually the cheaper chips!
Comparing Quality • Consider which item will last longer • Will it cost you more in the long run to buy 2 of the lesser quality item?
Comparing Services • Can you think of some differences between the services these 2 stores offer?
Compare Sales • There are 3 types: • Promotional • Clearance • Special Purchase
Compare Brands • National brands can be counted on for uniform quality • Store brands (aka private label brands) are often found at a lower cost • Generic brands (which are actually unbranded) are not advertised or have pretty packaging and are thus often the least expensive choice.
Things to remember • Take your time • Time your purchases • Avoid being impulsive
Where to shop? • Traditional retailers (ie. department stores, discount stores, specialty stores, supermarket, convenience stores) • Contemporary retailers (specialty superstores like Home Depot, or superstore like Target Homeland, or Costco) • Non store shopping (go online! Mail order and even vending machines count as non store shopping).