Chapter 4 Section 4-1

1. Chapter 4Section 4-1 Consumer Purchasing

2. Why do you buy what you buy? • What was the last thing that you purchased? • What was the last article of clothing? • Was it to satisfy a want or a need? • Because of our high standard of living a large portion of the populations income is spent on wants and desires rather than on basic needs.

3. Look at your sheet what was the process that you went through to buy these goods

4. Types of Consumer Purchase Decisions • Minor New Purchase – these purchases represent something new to a consumer but in in the customers mind is not a very important purchase. • Minor Repurchase- these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought. • Major New Purchase – most difficult of all decisions. It is important to the consumer but the consumer has little or no previous experience making the decision. • Major Re-Purchase – these purchase decisions are also important to the consumer but the consumer feels confident in making these decisions since they have previous experience purchasing the product

5. What things help you make your decisions? • Economic • Social • Personal

6. What things would make you purchase the goods you buy? • Economic Factors • Prices – can you purchase the same at a lower price? SAMS WAREHOUSE • Interest Rates • Product Quality • Supply and demand • Convenience – 7-11, QT,corner grocery store • Product safety – Recall, Volvo • Brand name – Polo, FUBU, • Maintenance costs – when it breaks how much • Warranty – extended / what happens when it breaks

7. Social Factors • Lifestyle • Vegetarian vs. Meat Eater • Interest • Hobbies – John Daly • Friends • Leg WarmersParachute PantsMiami Vice Big Hair BandsHair Style – GirlsThe Mullet • Culture • Advertisements • Media (magazines, radio, television, newspapers)

8. Personal Factors Gender Age Occupation Income Education

9. Phase 1: Before You Shop • Identify your needs - Clearly define your needs Do I need a PC based phone or do I want a PC based phone • Gather information - Costs, options, consequences – insurance? - Advertising, media, Consumer Reports, friends • Become aware of the marketplace -Knowledge is power - Common myths

10. Sources of Consumer Information • People you know • Ads and Packaging • Reports • Web sites • www.consumerReports.org • Reliable, complete, relevant & impartial

11. Phase 2 – Weighing the Alternatives • Identify what is important to you. • Personal Values • Available time for research • Amount of money you can spend • Convenience of buying the item immediately • Pros and cons of a particular brand. • Compare Prices • Price doesn’t always equal quality. • Understand what you read or see – lets look at a few examples • Car Commercial

12. Phase 3 – Making the Purchase • Now that you have made a decision. • What is next? • Negotiating the price. • Is the price that shows the price you are going to pay? • Credit vs. Cash • Can you get a better deal if you pay cash or using a store credit card. • Can or do you have to put a DOWN PAYMENT down? • How long do you have to pay? • Is the price you see the price you get? • Additional charges, installation, 3 month trial period.

18. Phase 3: Making the Purchase • Negotiate the Price • When can you negotiate price? • Decide on Cash or Credit • Cash: Money is immediately taken out of your account • Credit: buy something now and pay for it later (fees, interest) • Source of the loan -- Type of credit account • Payment Period -- Down payment • Down Payment: a portion of the total cost of an item that must be paid at the time of purchase • Know the Real Price • Installation or delivery fee • Additional Equipment to buy – game controllers

19. Smart Buying Decisions • How do you get the best deal for your money? • Timing Purchases • Store Selection • Brand Comparison • Label information research • Price Comparison • Warranty Evaluation

20. Timing Purchases • When is the best time to buy something. • Back –to-school sale • Buying a pool? • Buying a house? • New CD comes out?

21. Store Selection • Quality and variety of goods may influence your decision. • Reputation • Cooperative Stores – not-for-profit organizations owned and operated by its members for the purpose of saving money on the purchase of goods and services. • Direct Selling, On-line shopping, Home Shopping Network.

22. Brand Comparison • National-Brand products • More expensive, but consistent quality & value • Kelloggs • Nike • Store-brand • Dierbergs • Schnucks • Oberweis • Generic • Cereal • Soup

23. Brand Comparison • Impulse Buying • Buy items without thought to price . • Honest Branding • Low-fat • Light • Low in calories • Open dating: a labeling method that indicates the freshness, or shelf life, of a perishable item

24. Labeling Information Research • Federal laws also require labels to present factual information. • For example food labels must indicate the common name of the product , name and address of the manufacturer or distributor, the net weight of the product and a list of the ingredients in decreasing order of weight. • Open dating – “Use before” or Best if sold before…..

25. Price Comparison • Unit Pricing • Is the use of a standard unit of measurement to compare the prices of packages that are different sizes. • For example • Which is the better deal – 12 ounces for $2.89 or 16 ounces for $3.39? • Total Price / Unit of measure = unit price • 2.89/12 ounces = .24 cents • 3.39/ 16 ounces = .21 cents

26. Price Comparison con’t • Two other ways in which you can save money is through: • Coupons • Rebates • Rebate is a partial refund of the price of a product.

27. After the Purchase… A car for example will have to have additional maintenance to it after the purchase.

28. After the purchase continued • What is the return policy if you so choose to return it? • Best Buy Return Policy

29. Warranty Evaluation • Warranty Evaluation • Warranty: a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired • Implied • Elicit Cell phone warranty…. • Service Contract: a separately purchased agreement made by the manufacturer or distributor to cover the costs of repairing the item • Pay extra for • Anything with a cost of more than 15 dollars must have some sort of warranty.

30. Warranties con’t • Types of warranties • Implied – are unwritten guarantees that cover certain aspects of a product or its use. • Example – that a toaster toast bread. • Express warranties • Which are usually written, come in two forms • Full warranty- states that a defective product will be fixed or replaces at not charge during a reasonable amount of time • Limited warranty covers only certain aspects of the product, such as parts. May have to pay for a portion of cost.

31. More on warranties • Service Contract • Which is a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item. • Another name is extended warranty

32. Chapter 4.2 Resolving Consumer Complaints

33. Sources of Consumer Complaints • Sources of Customer Dissatisfaction • Defective or Poor Quality • Also unexpected costs, deceptive pricing, and unsatisfactory repair service • Fraud • Dishonest business practices that are meant to deceive, trick, or gain an unfair advantage • Examples? Free prizes, travel packages, work-at-home schemes, scientific breakthrough, miraculous cure

34. Examples

35. Resolving Consumer Complaints • Five Methods: • Return to the place of purchase • Contact the company headquarters • Consult a consumer agency • Use mediation or arbitration • Take legal action

36. 1. Return to the place of purchase • Most common method • Bring: • Receipts • Keep calm and avoid yelling or threatening • Explain the problem clearly explaining ALL relevant info

37. 2. Contact Company Headquarters • Send a complaint letter • Consumer’s Resource Handbook • Company Web sites • Information number: 1-800-555-1212 • Sample Complaint Letter • Describe your purchase • State problem • Give history of problem • State reasonable time for action • http://www.consumerlaw.com/sample.html

38. 3. Consumer Agency Assistance • National Organizations • Local Organizations • Better Business Bureau • Most useful BEFORE you buy the product • Government Agencies • Food and Drug Administration • Consumer Product Safety Commission

39. 4. Dispute Resolution • Mediation • The attempt by a third party to resolve a conflict between a consumer and a business through discussion and negotiation • NOT legally binding • Arbitration • A process where a conflict between a business and a consumer is resolved by a neutral third party • Legally binding

40. 5. Legal Action • Small Claims Court • A court that deals with legal disputes that involve amounts from about $500-$10,000 • No juries or lawyers • Low cost • Final decision

41. 5. Legal Action • Class-Action Suits • Legal action on behalf of all the people who have suffered the same injustice • All parties must be notified of the suit • Favor of the class action = $ divided among claimants or put into public funds • Other Legal Alternatives • Lawyer (American Bar Association) • Legal Aid Society: a network of community law offices provided for no or low-cost legal assistance • Legal office

42. So……… • There are many tools to protect your rights = use them! • Research companies before you do business with them • Understand contracts before signing

43. Poster Assignment • Do you know what I would like to have????? • Any Questions • Should have a poster • A two page paper explaining the questions that I have asked you from the handout, explaining the concepts from the chapter and applying them to your products.