Chapter 4 Consumer Purchasing 4.1

Students will learn: Determine the factors that influence your buying decisions. Use a research-based approach to buying goods and services. Apply strategies to make wise buying decisions.

Factors that influence buying decisions Economic Factors Social Factors Personal Factors Prices Lifestyle Gender Interest Rate Interests Age Product Quality Hobbies Occupation Supply & Demand Friends Income Convenience Culture Education Product Safety Advertisements Family Size Brand Name Media Geographic Region Maintenance Costs Ethnic Background Warranty Religion

Consumer Purchasing: A research-based approach Tool used to research and evaluate items you want to buy, enabling you to get more value for your money. 4 Phases: Before You Shop Weighing the Alternatives Making the Purchase After the Purchase

Phase 1: Before you shop Identify your Needs Gather Information What exactly do you need? Gather Information Look at costs, options, and consequences Become Aware of the Marketplace

“I can return my car within three days of purchase.” Common consumer myths “I can return my car within three days of purchase.” There is no such time period

“It says right here that I’ve won; it must be true.” Common consumer myths “It says right here that I’ve won; it must be true.” Fake prize notifications continue to become more convincing. Some consumers actually go to company offices to try to pick up their prizes.

“If I lose my credit cards, I’m liable for purchases.” Common consumer myths “If I lose my credit cards, I’m liable for purchases.”

Common consumer myths “An auto lease is just like a rental; if I have problems with the car or problems paying, I can just bring it back.”

“You can’t repossess my car; it’s on private property.” Common consumer myths “You can’t repossess my car; it’s on private property.”

Phase 2: weighing the alternatives Decide what’s important to you Compare prices Do some comparison shopping Comparison shopping when… Buying complex or expensive items Buying items you purchase often Can comparison shop easily Different sellers offer different prices and services Product quality or price varies greatly

Phase 3: making the purchase Can you negotiate the price? Should you use cash or credit? Do you know what the real price is? Down Payment – portion of the total cost of an item that must be paid at the time of purchase.

Phase 4: after the purchase Additional costs & tasks Return or replace Rethink and reevaluate decisions Car – insurance, registration, tags

6 Smart buying strategies Timing Purchases Selecting the Store Comparing Brands Label Information Comparing Prices Evaluating Warranties

Timing Purchases Seasonal shopping Discounts & Sales Back to school Winter coat/ Swimsuit Discounts & Sales Law of Supply & Demand New movie release

Selecting the Store Quality and variety differ from store to store Hours Location Prices Reputation Policies Services Two alternatives to stores: Cooperative – nonprofit org owned and operated by its members for the purpose of saving money on the purchase of goods and services. Direct Selling – mail order, TV home shopping, and online shopping Coop Ad Buy large amounts, keeps cost lower Coop Dis Offer few customer services Direct Selling Ad Convenience of not leaving home Lot of product info from internet Direct Selling Dis Pay for shipping and handling Harder to return purchases and receive funds

Comparing Brands National brand vs. Store-brand Store-brand – often times they are made by the same companies that make the name brand = high quality products. Because they don’t carry “the name” they can be sold for cheaper. Impulse Buying – purchasing items on the spur of the moment

Open Dating– indicates the “shelf life” of a perishable product Label Information Lot of advertising Federal law require factual info Processed Food: Nutritional info Meet govt standards to advertise as “low in fat”, “light” Food: Common name of product Name and address of manufacturer Net weight of product List of ingredients (decreasing order of weight) Appliances: Info on operating costs

Comparing Prices Unit Pricing– use of standard unit of measurement to compare the prices of packages that are different sizes. Rebate– partial refund of the price of a product.

Evaluating Warranties Warranty– written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired. Service Contract– a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item.