1. Unit Seven Consumers in the Economy Chapter 22 The Informed Consumer
Intro to Business
Unit Seven
Consumers in the Economy
Chapter 22
The Informed Consumer

2. GOALS Describe the informed consumer in our economic system
Identify three types of consumer organizations
List ways in which businesses provide consumer information
Outline questions which informed consumers should ask when selecting the best product or service.

3. The CONSUMER
A consumer is a person who buys and uses goods or services.
Without satisfied consumers… businesses would not make sales, earn profits, or remain in business.
Your consumer behavior reflects and determines your lifestyle.
Uninformed consumers may unnecessarily wasteful with limited resources.

5. Consumer Information Organizations
Three Basic Types of Organizations:
Product-testing organizations
Print publishers
Broadcast organizations
Consumer = Customer mean the same may be used interchangeably.

6. Product-Testing Organizations
Main Purpose:
Testing of products and services
Underwriters Laboratories Inc.
tests electrical components of products from all over the work for fire and electrical safety.

7. Product-Testing Organizations
Home Appliance Manufacturers (AHAM)
develops and updates the performance standards of such appliances such as refrigerators, air conditioners, and freezers.
AHAM Seal indicates that product has met performance standards

8. Print Publishers
Report scientific, technical, and educational material about product and services.
Some are Non-profit Organizations i.e. Consumers Union Inc.
perform independent tests on consumer goods
publish articles on the quality of the goods.
Findings are published in Consumer Reports.

9. Print Publishers
Magazines will endorse products but only after the products have been tested.
i.e. Good Housekeeping or Parents
Any products in these magazines can display the magazines seal
Good Housekeeping Seal
promises the product will be replaced or money will be refunded if the product is found defective within one year of purchase
Consumer Digest & Bottom Line – specifically for providing objective consumer information

10. Print Publishers Financial Information for Consumers
Money
Kiplinger’s Personal Finance
Fortune
The Wall Street Journal
Evaluate and report on performances of investments (stocks, bonds, mutual funds, real estate, art, coins, etc.)
Specialty Magazines
Help consumers understand complex products
Comparative ratings

11. Broadcast Organizations
Like magazines and newspapers, radio and television also are sources of consumer info.
Provide regular segments to inform public of safety, care, use, shopping tips, sales, etc.
Many broadcast talk shows are designed to help listeners with their consumer problems.

12. Consumer Information from Government
Federal state, and local government also help people become informed consumers.
Federal Government
Consumer Information Center
Headquarters for Consumer Information
Issues catalogs four times a year
Publishes results of Gov’t Research & Product Tests
Office of Consumer Affairs
Food & Drug Admin
Federal Trade Commission
Product Safety Commission

13. Consumer Information from Government
USDA (U.S. Department of Agriculture) – information on food
Grade food (indicates quality or size of product)
USDA shield means product has been inspected and approved.
Publications for consumers specialize in:
judging quality,
buying wisely,
improve buying practices,
planning meals,
improving nutrition
and other farm & home related topics.

14. Consumer Information From Business
Businesses provide information to consumers by:
Advertising,
Product labels,
Customer service departments,
Business specialists
Better Business Bureaus
(Next 5 slides)

15. Consumer Information from Businesses
Advertising: main purpose is to convince you to buy a product/service, you should use it with care as a source of consumer information.
Product Labels: provides useful written information about the nature or content of a product.

16. Consumer Information from Businesses
Customer Service Departments: special departments devoted to customer service.
Business Specialists: consult expert advisors before buying products
Complicated items, not familiar with them
Houses, used cars, major equipment
i.e. Home inspector

17. Consumer Information from Businesses
Better Business Bureaus (BBB):
supported by dues paid by member businesses.
Work to maintain ethical practices in the advertising and selling of products and services and to combat consumer fraud.
If consumers have reported problems with a firm, you could find out about these complaints.
Only Give Facts, don’t recommend products or firms.

18. Effective Consumer Practices
Answer the following questions when choosing the best product/service for you:
Would you rather buy this item instead of another desired item that costs the same amount of money?
Which business(es) should you visit?
What quality of goods/services do you want?
What price are you willing to pay?
Should you pay cash?
Do you really need this item?
If you buy this, what do you have to give up buying?

19. Effective Consumer Practices
Opportunity Cost
The value of any alternative that you give up when you buy something else or make another choice.
Example: I want to go out this weekend I could go to the Movies or to the Ball game I only have enough money for one option
If I choose the Game
I give up the Movie
Part of the “cost” of the Game
is opportunity to go to Movie (Trade-off Occurs)

20. Opportunity Cost

22. Consumers in the Economy Consumer Buying Decisions
Intro to Business
Unit Seven
Consumers in the Economy
Chapter 23
Consumer Buying Decisions

23. GOALS List steps to follow when making a buying decision.
Explain the importance of a businesses‘ reputation and the value of brand names.
Outline how a consumer becomes an efficient shopper
Describe the Consumer Price Index

24. DECISION-MAKING STEPS
Identify your needs and wants. State why you intend to buy something.
Know your choices – price, quality, location, variety, reputation
Determine the measure of satisfaction of your needs and wants.
Consider the alternatives.
Decide to buy the product from the criteria you have identified

25. Developing Buying Skills
Good buying skills make you a better consumer
get greater value for your money each time you make a purchase. (Savvy Shopper)
Comparison Shopping means comparing: price, quality, services, and sales associated with one product with those of another product.

28. Comparing Unit Prices Unit Price – price per unit of measure
To calculate a unit price, you must divide the product.
Example:
Price tags show cost per ounce.
You could easily tell whether 12oz or 6oz is the better bargain regardless of the size of the containers. (Image Next Slide)

29. See the Math
.72 / 6oz = / 32 oz = .05

30. Comparing Quality
Examine a product before you buy it and make sure it will satisfy your needs.
Buying lower quality items can sometimes turn out to be more expensive than buying the higher quality items.
Example: buying a low quality pair of tennis shoes, will wear them out in a shorter period of time than higher quality shoes. May end up buying 2 pairs.

31. Comparing Service
Most businesses try to give good service, but types of services may differ.
Some businesses:
Cash Only Businesses vs. Offer Credit
Deliver Goods vs. Pickup Only
Large Stock of Items vs. Fewer Items
Service is important, but do not pay for more service than you actually need.
Know what you are willing to pay for.

32. Comparing Sales
‘Sales’ are used so often to try to sell goods that they are sometimes ineffective. (Overused word, less trusted)
When an item is really on sale, it is offered at a lower price than its normal selling price.
3 Types of Sales:
Promotional – temporary price reductions of regular merchandise
Opening a new store
Publicizing new location
Build acceptance for new products (low introductory price)
Buy low  like them  continue buying at regular price in future
Attract customers who will buy additional items that are not on sale

33. Comparing Sales 3 Types of Sales: Promotional – previous slide
Clearance – clear merchandise no longer needed
End of season
Odd sizes or model/display items
Line of merchandise they no longer carry
Bargain deals – but make sure you actually need the items
Special-Purchase – bought for a special sale rather than regular merchandise that has been reduced.
overstocked goods
goods no longer made (discontinued)
stock from a company that is closing / going out of business

34. DECIDING HOW TO BUY
The competitive market provides a variety of choices of where to buy a product/service.
When selecting a place to make a purchase, you should consider:
Business Reputation
Learn Brand Names
Then Plan Where to Buy

35. BUSINESS REPUTATION Most valuable business asset is a good reputation
A satisfied customer is likely to come back
Businesses with good reputations have salespeople who:
know the uses and the quality of the goods
are concerned about matching the appropriate goods with customers’ needs

36. BRAND NAMES
Name given to a product or service that is intended to distinguish it from other similar and/or competitive products/services.
Created by the business selling it
Designed to help build customer loyalty to a product or service

37. BRAND NAMES
National brand goods and services are advertised nationally and sold in almost every community
help consumers by:
can be expected to have uniform quality, even when from different businesses
make comparison shopping possible
Store brands & house brands
Costco = Kirkland
Walmart = Great Value
Usually sold at lower cost than national brands
Save money and offer good quality products

39. TYPES OF MERCHANTS Full-Service Stores Discount Stores
Wide variety of goods / emphasize customer service, personal shopper, deliveries, gift wrapping (e.g. Macy’s)
Discount Stores
Emphasize low prices (e.g. Dollar Tree)
Specialty Stores
Special line of products, wide variety of products from a narrow line (e.g. Crafts = Michaels)
Factory-Outlet Stores
High quality at low prices (e.g. Outlet Malls)

40. TYPES OF MERCHANTS Food Retailing Stores Supermarket Warehouse Market
Large, full-service store that carries a wide variety of national & store brands (Giant Food Stores)
Warehouse Market
Non-frills, food outlet emphasizing large quantity items at reasonable prices (Costco Warehouse)
Convenience Stores
Small stores emphasize sale of food items, an accessible location, and long operating hours (Wawa)

41. DECIDING TO BUY Take your Time – Pace yourself Time your Purchase –
Visit more stores, browse online, look for the best values)
Time your Purchase –
For some goods, prices are lower at predictable times (Fresh fruits, & vegetables in season, Cars - end of model year (Sept), Winter clothing in Spring, Firewood in Summer)
Avoid being Impulsive –
Impulse Buying usually happens when an item is attractively displayed and a consumer suddenly decides to buy it.
candy at checkout lines – small / harmless
Avoid by making a list and sticking to it

42. EFFICIENT SHOPPING Save Time, Energy & Money by PLANNING
Plan your purchases carefully and make a shopping list – make better decisions, avoids impulse buying
Use the Internet. Research businesses to find out if they have what you need. Maybe in buy item online
Carefully plan the route of your trip – saves time, fuel & cost

43. Effect of Economic Conditions on Buying Decisions
Price Index
Help consumers understand what is happening to prices in economy.
How prices have changed over a period of years
Consumer Price Index (CPI)
Show the changes in the average prices of goods and service bought by consumers over a period of time.

44. Consumer Price Index

45. Consumers in the Economy Consumer Rights and Responsibilities
Intro to Business
Unit Seven
Consumers in the Economy
Chapter 24
Consumer Rights and Responsibilities

46. GOALS Describe the consumer movement
Identify and explain seven consumer rights
Discuss five consumer responsibilities

47. Consumer Movement
Pleasant relationship between consumers and businesses did not always existed.
In the past, some businesses were viewed as trying to take advantage of consumers
False information was given to a customer in an effort to make a sale – fraud.
Product info misleading, Prices too high, Products unsafe
Consumer movement was formed to fight against unfair business practices

48. Consumer Movement Highlight of the Consumer Movement:
As a result, many new laws were passed
Fair Packaging and Labeling Act
National Traffic and Motor Vehicle Safety Act
Truth in Food Labeling Act
Fair Debt Collection Practices Act
And many others.
Highlight of the Consumer Movement:
President John F. Kennedy, 1962, presented Consumer Bill of Rights (4)
Nixon, Ford, Clinton continued to add to them

49. Your Consumer Rights Every consumer has the following rights:
The right to be informed: to be given the correct information to make an informed choice
The right to safety: to be protected from goods and service that are hazardous to health of life
The right to choose: to be assured of the availability of a variety of goods and services at competitive prices

50. Your Consumer Rights
The right to be heard: to be assured that consumer interests will be fully considered by government when laws are being developed and enforced
The right to a remedy: the assurance of the right to legal correction of wrongs committed against consumers
The right to consumer education: to learn about consumer rights and responsibilities as economic citizens
The right to service: to be entitled to convenience, courtesy, and responsiveness to problems and needs.

51. Exercising Your Consumer Rights
Skillful consumer
Knowing the Consumer Bill of Rights and how to exercise them
Details on each “Right” over the next 7 slides

52. The Right to be Informed
Fraud is committed when false information is given to a customer in an effort to make a sale.
However, when a salesperson exaggerates the good qualities of a product and says, “It’s the best”, there is no fraud.
If the salesperson tells you a car has new brakes and it does not, this is fraud.

53. The Right to Safety
Several agencies work to assure safety of consumers:
The Consumer Product Safety Commission (CPSC)
Set safety standards,
Ban hazardous materials
Recall dangerous products
Food and Drug Administration (FDA)
Prevent misbranded food, drug & cosmetics
Prevent product labels from misleading consumers
United States Department of Agriculture (USDA)
Standards of grading farm products
Controls processing, inspection and labeling

54. The Right to Choose
One of the main activities of the Federal Trade Commission (FTC) is to prevent one firm from using unfair practices to force competing firms out of business.
Monopoly: when a business has no competitors and controls the market for a product or service. Monopolies limit the right to choose.

55. The Right to be Heard
Office of Consumer Affairs (OCA) coordinates and advises other federal agencies on issues of interest to consumers.
Primary Concerns:
Represent the interests of consumers
To develop consumer information materials
To assist other agencies in responding to complaints.
Other Agencies:
Federal Trade Commission (FTC), Office of the Attorney General, Department of Consumer Affairs, Better Business Bureau

56. The Right to a Remedy
As a result of the consumer movement, many new laws were passed to provide assurances that consumers could seek a legal remedy if they were wronged.
A form of remedy that consumers have is the protection provided through a guarantee (or warranty).
A guarantee is a promise by the manufacturer or dealer, usually in writing, that a product is of a certain quality.
May promise defective parts be replaced only if it occurred within state a limited time offering
NO guarantee covers damages from misuse.
Keep a copy for evidence if ever needed.

57. The Right to a Remedy Express Warranties Implied warranties
A guarantee made orally or in writing and promise a specific quality of performance
Frequently in the form of statements like these: “The sweater will not shrink more than 3 percent”
Implied warranties
are not written and are imposed by law.
They are understood to apply even through they have not been stated either orally or in writing. (i.e. healthcare products over the counter will not harm you as long as you use them as directed)

58. The Right to Consumer Education
Educated consumers are aware that their decisions not only affect their lifestyle, but also have economic implications.

59. The Right to Service Consumers can expect:
convenience,
courtesy,
and responsiveness to consumer problems/needs.
Encourages businesses to take steps necessary to ensure that products/services meet the quality and performance levels claimed for those products and services.

60. Your Consumer Responsibilities
Be Honest
Be Reasonable
Report Unethical Practices
Be Informed
Be Involved

61. Be Honest
As a responsible consumer, you must be as honest with a business as you it to be with you. (i.e. tell the cashier that you received too much change)
Dishonesty, in addition to being illegal and unethical, usually results in higher prices for all consumers. (shoplifting = higher prices)

62. Be Reasonable
If you are dissatisfied with a product or service, you should complain in a reasonable way.
If you believe that your complaint is not handled fairly by the sales person or the customer service department, take the matter up with the owner or an official of the firm.
If you fail to receive a fair adjustment, you can contact one of the following:
Better Business Bureau (BBB)
Local or state consumer affairs agency or the attorney general’s office in your state
A lawyer or the Legal Aid Society if the problem is quite serious.
In larger cities, the small claims court, which is operated for filing small claims only
A consumer help department

63. Report Unethical Practices
As a responsible consumer, you should report unethical business practices to prevent other consumers from becoming victims.

64. Be Informed
The most important responsibility you have as a consumer is to be informed.
Find and use the information available to you.
Keep informed about your rights as a consumer
Learn about the laws and agencies that protect your rights and how to report a violation of your rights

65. Be Involved Involvement is important Citizen Responsibility -
Only when you become involved as a consumer can agencies do their jobs and legislative bodies pass appropriate laws.