Your Role as a Consumer Consumption, Income, and Decision Making Mr. Cargile Mission Hills High School San Marcos, CA

Consumption, Income, and Decision Making

Consumerism: The movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers.

Consumer: Any person or group that buys or uses goods and services to satisfy personal needs and wants. To be a consumer you must have the ability to consume…Income!

Disposable Income Income remaining for a person to spend or save after all taxes have been paid. Needed to buy: Necessities Extras

Disposable Income Income remaining for a person to spend or save after all taxes have been paid. Needed to buy: Necessities Extras

Disposable and Discretionary Income Discretionary Income Income a person has left to spend on extras after necessities have been bought.

-- = Disposable Income Expenses Discretionary Income What happens when you receive a pay raise? What happens when you cut energy expenses? What happens when you leave your full-time job for a lower-paid part-time job to finish school faster?

Decision Making as a Consumer Do I purchase the item or not? What scarce resources are at risk? What is my opportunity cost of buying the item? Quality vs. Price Efficiency vs. Durability Make a rational choice

Your Role as a

Buying Principles or Strategies Gathering Information Use Advertising Wisely Comparison Shopping

Gathering Information Develop a Knowledge Base Test out different products Go to different stores to see different products Internet How much information do you need? Opportunity Cost of information = time Gather only worthwhile information—time should not be greater than value of information.

Competitive Advertising: advertising that attempts to persuade consumers that a product is different from and superior to any other. Purpose=take customers away or keep customers Examples: Dell or Nike Informative Advertising: advertising that benefits consumers by giving information about the product—price, quality, special features. Bait and Switch: advertising that attracts consumers with a low-priced product, then tries to sell them a higher-priced product. Deceptive and illegal

Does the ad only appeal to my emotions or does it provide facts? What are the special features of the product? Do I need any of these features? Does the ad tell me anything about operating costs? Does the ad tell me anything about a product’s durability, or ability to last? Does the advertised price compare favorably with the price of similar products? Is the advertised price the entire price, or are there extra costs in small print?

Comparison Shopping—getting information on the types and prices of products available from different stores and companies. Warranties: promises made by a manufacturer or a seller to repair or replace a product within a certain time period if it is found to be faulty. Brand Name Vs. Generic Brand Name: word, picture, or logo on a product that helps consumers distinguish it from similar products. Generic: general name for a product rather than a specific brand name given by the manufacturer

Consumerism

Consumer Rights JFK developed 4 consumer rights principles we follow today: The right to safety—government checks out all goods. The right to be informed—government checks against fraud The right to choose—government allows competition The right to be heard—government listens to complaints Nixon added a 5 th : The right to redress—government or the manufacturer makes an adequate payment or exchange for faulty products.

Report problems with products Ethical Behavior—acting in accordance with moral and ethical convictions about right and wrong when dealing with businesses, services, or products.

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