Chapter 4 Consumer Purchasing Section 1 1

Factors That Influence Buying Decisions wise decisions will help you get more out of the products and services you buy help you meet your long-term financial goals Turn to Page 91 in Your Textbook - Figure 4-1 Factors That Influence the Purchases You Make Economic: how made – quality, cost Social: trends, advertising Personal: worth spending income? Trade offs – what you give up, what you gain 2

Researching Consumer Purchases Four Phases… 1. Before you shop 2. Weighing the alternatives 3. Making the purchase 4. After the purchase 3

Research Based Approach to Consumer Buying Phase One: Before You Shop Turn to page 92 in your textbook – Figure 4.2 – Identifying Your Needs what you need vs. what you want – Gathering Information 3 Categories: cost, options and consequences – Becoming Aware of the Marketplace the more you know that better off you are Turn to Page 94 in your textbook – Figure 4.3 4

Research Based Approach to Consumer Buying Phase Two: Weighing the Alternatives – What’s important to you? Features Performance Design Pros and cons of brands – Compare Prices if little money – best quality for money if money – can afford highest quality possible 5

Phase Two (cont.) Do Comparison Shopping – compare prices and quality – useful when… buying complex/expensive items buying items purchased often using internet, catalog, ads sellers offer different prices and services Product quality or money varies Turn to page 95 in your textbook - $avvy Saver 6

Research Based Approach to Consumer Buying Phase Three: Making the Purchase – Negotiating money – Deal with the person who can give you the best price – manager/owner – Cash or Credit – interest and fees – Determining the real price – hidden charges – Down Payment – portion of the total cost that must be paid at time of purchase 7

Research Based Approach to Consumer Buying Phase Four: After the Purchase – Maintenance costs – Dissatisfied – return or replace Ongoing Process – Previous buying experiences will help you make decisions in future Consider changes in lifestyle, values, goals, and financial resources 8

What’s Your Financial ID? Turn to Page 114 in your textbook 9

Smart Buying Strategies 1 of 6 Timing Purchases – Sales – Law of supply and demand – Waiting to buy new hot items plasma tv’s cars – Clearance Sales – store wants to wipe out inventory (not selling anymore/excess stock) 10

Smart Buying Strategies 2 of 6 Selecting the Store or Other Alternatives – Cooperative – non profit, owned and operated by members for purpose of saving $ on purchases – Buying in bulk, groups coming together to buy in quantity – Direct Selling: includes mail order, tv, home shopping, online shopping Advantages – convenience, lower prices, easier to find product information Disadvantages – shipping and handling fees, difficult to return 11

Smart Buying Strategies 3 of 6 Comparing Brands – Store Brand: made by same company that makes the brand names but does not carry the brand name label Walgreens, Target, Staples, Sam’s Choice – Impulse Buying – purchases made on spur of the moment 12

Smart Buying Strategies 4 of 6 Label Information – Advertising – Factual Information - federal law on some products Food – who make, ingredients, dietary information, weights – Low fat – low cal must meet government regulations to quality for that label scientific evidence to prove Open Dating – indicates the freshness or shelf life of a perishable product – Use before… – Not to be sold after… – Freshness Guaranteed until… Large appliances have operating instructions on the label 13

Smart Buying Strategies 5 of 6 Comparing Prices – Unit Pricing – the use of a standard unit of measurement to compare the cost of packages that are different sizes – Turn to page 101 in your textbook - Go Figure – Coupons – Rebate – partial refund of money of cost of a product – Guidelines: More convenience – higher prices Ready to use – higher prices Large packages best buy usually – compare unit price Sale – not always save money a sale at one store could be higher than regular price at another store (Shaw’s vs. Market Basket) 14

Smart Buying Strategies 6 of 6 Evaluating Warranties – Warranty: a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced or repaired $15 or more, federal law requires that the warranty be available before purchase – Implied Warranty – product will do what supposed to do 15

Smart Buying Strategies 6 of 6 (cont.) Evaluating Warranties – Express Warranty – if defective will be fixed or replaced within reasonable time – Limited Warranty – covers certain aspects of the product (i.e. parts) or requires the buyer to pay part of the shipping or repair charges – Service Contract – separately purchased agreement by manufacturer or distributor to cover cost of repairs (a.k.a. extended warranty) 16

Document Detective Please turn to page 102 in your textbook Complete the exercise in your notebook. 17

Chapter 4 Consumer Purchasing Section 2 18

Fraud dishonest business practices that are meant to deceive, trick or gain unfair advantage – Types of Fraud: Telephone, mail, free prizes, travel packages, work-at- home schemes, investment opportunities Recognize and report 19

Resolving Differences between Buyers and Sellers Documents – receipts, dates, letters Five ways to Handle 1. Return to place of purchase 2. Contact Company Headquarters 3. Get Help From Consumer Agency Better Business Bureau companies do not have to respond best to use before purchase to research products history FDA – food and drug safety Consumer Product Safety Commission – protects against unsafe products 20

Resolving Differences between Buyers and Sellers 4. Dispute Resolution Mediation: an attempt by a neutral third party to resolve a conflict between a customer and a business through discussion and negotiation (not legally binding) Arbitration: process where conflict between the company and a business is resolved by an impartial third party whose decision is legally binding 21

Last resort - Legal Options 5. Take Legal Action – if methods above do not get results you want – Small Claims Court – deals with legal disputes that involve amounts below a certain limit Amount varies from state to state ($500-$10,000) Do not involve injury or lawyers – Class Action Suits – a legal action on behalf of all the people who have suffered the same injustice “Class” of people represented by one or a group of lawyers working together 22

Last resort - Legal Options – Hiring a Lawyer and Other Legal Alternatives Lawyers recommended by family/friends Local Phonebook/newspapers ABA – American Bar Association Check out - Experience, fees payment policies Legal Aid Society – one of a network of community law offices that provide free or low-cost legal assistance – not everyone is eligible 23