Bell Ringer #1 - Chapter 3 Create a list of disposable/need expenses and another for discretionary/want expenses using the items listed below. Electric Bill Anniversary Present Make – up Gas for your car Tickets to Football Game New Jeans Lunch at Runza Rent Payment Groceries Lunch Money for Child

Chapter 3 Your Role as a Consumer

Consumption, Income, and Decision Making Video

Vocab: Consumer: any person or group that buys or uses goods and services to satisfy personal needs and wants. The ability to consume depends on available income and how much of it a person chooses to spend now or save.

INCOME DISPOSABLEDISCRETIONARY Income remaining for a person to spend or save after all taxes have been paid. Spend on: ▫Food ▫Clothing ▫Shelter ▫Bills associated with shelter ▫ie. necessities Money income a person has left to spend on extras after necessities have been bought. Examples: ▫Luxury items ▫Entertainment ▫“Non-necessities” ▫Or – put into savings

VS 1 Consumer decision making deals with consumers’ choices about how to spend their income.

What are four things that can make a difference in a person’s earning power? 1.Education 2.Occupation 3.Experience 4.Health

Decision Making as a Consumer Involve three main considerations: 1.Scarce resources ▫Income & time ▫Research the product – the time and money you spend on the product ultimately cannot be used for anything else.

2. Opportunity Cost – see page 68 (figure 3.2) ▫If you pick a high quality product over a medium or low-quality, you will pay more money. ▫What features are important to you? ▫Is it a need or want? ▫Is it worth paying the extra money? Chart in Motion

3. Rational Choice —choosing the alternative that has the greatest perceived value from among comparable- quality products. Each person’s value system is different.

Figure 2

Activity—Rational Choice Choose a product you like and create two advertisements. The first ad should emphasize why buying this product is a rational choice. The second ad should appeal to the fun or light side of the product and the desire to buy it, even if it’s not a rational purchase. Example-Coke (thirst—rational & drink b/c everyone else does–more fun)

Three Basic Buying Principles 1.Gathering information 2.Using advertising wisely 3.Comparison shopping

Gathering Information Shopping tips: o You should obtain only as much information as is worthwhile. o Ask salespeople for accurate information. o Use a standard search engine on the Internet, and visit various sites in order to compare different information. o Read reviews other people have written about different brands and models of the product

Before making purchases, especially of big- ticket items, consumers should gather information and compare products from different sources.

Using Advertising Wisely competitive advertising: advertising that attempts to persuade consumers that a product is different from and superior to any other

informative advertising: advertising that benefits consumers by providing useful information about a product Look at page 72-73

Be Aware of Deceptive Advertising Bait and Switch-- ad that attracts consumers with a low-priced product, then tries to sell them a higher-priced product

FYI Studies reveal that Americans are bombarded with 3,000 to 5,000 advertising messages a day. The assault is so overwhelming that people scarcely notice most of these messages.

Comparison Shopping getting information on the types and prices of products available from different stores and companies Warranty-the promise of a manufacturer to repair or replace a product within a certain period of time if it is faulty

Comparison shopping continued… Brand nameGeneric Word, picture, or logo on a product that helps consumers distinguish it from similar products. General name for a product rather than a specific brand name given by the manufacturer.

Decision Making Process – 5 Steps 1.Identify the Problem 2.List the Alternatives 3.Determine the Pros and Cons 4.Make the best Decision 5.Evaluate the Decision

With A Neighbor Share with a neighbor the big decision you wrote about in your notes. Tell them what your alternatives were Tell them which decision you made Tell them how it turned out – would you make the same decision again? What would you do differently?

Decision Making Con’t People often make a chart or list to help them make decisions. Let’s practice using the chart on the back of your note sheet using the 5 steps. ▫Identify the problem – Need to choose a college ▫List the alternatives – UNL, UNK, SCC, Kansas State, Harvard

Decision Making practice con’t Determine Pros and Cons ▫List criteria –Tuition cost is $85 per credit hour or less, Must have 2000 students or less, Must have dorms and cafeteria plans, Must be within a 2 hour drive of Lincoln, Have a marching band program, Have an abroad program for the Junior and Senior year ▫Check Alternatives and Criteria for pros and cons

UNL $85 per credit hour Has 8,000 students Has dorm/cafeterias for students Less than a 2 hour drive Has a top marching band program No abroad studies programs

UNK $85 per credit hour Has 1700 students Less than a 2 hour drive from Lincoln Has dorm/cafeteria programs Has a marching band program Has an abroad studies program

SCC $60 per credit hour Has 1000 students Less than a 2 hour drive from Lincoln No dorm program has a cafeteria No marching band program No study abroad program

Kansas State College $125 per credit hour (out of state rate) Has dorm/cafeteria plans More than a 2 hour drive Has 2,000 students Has marching program Has an abroad study program

Harvard $275 per credit hour Has 3,500 students Much more than a 2 hour drive Has a dorm/food program Has a marching band Has a study abroad program

Decision Making Practice con’t Make the best Decision. ▫? Evaluate the Decision ▫Best college experience ever!