1. Lesson 11.2 Spending Habits
Learning Objectives
LO 2-1 List and describe factors that influence spending.
LO 2-2 Explain how to plan for major purchases.
LO 2-3 Analyze marketing strategies that influence spending.
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2. Factors that Influence Spending
Personal Factors
Personal resources
Position in life
Customs, background, and religion
A custom is a long-established practice that takes on the force of an unwritten law.
Values and goals
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3. Factors that Influence Spending
(continued)
External Factors
The economy
The economy refers to all activities related to production and distribution of goods and services in a geographic area.
Technological advances
Environment
Social pressures
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4. Planning Major Purchases
Questions to ask before making a purchase:
1. Why do I want this product?
2. How long will this product last?
3. What substitutes are available and at what cost?
4. If I postpone this purchase, is it likely that I will choose not to buy it later?
5. What types of additional costs are involved, such as supplies, maintenance, insurance, and financial risks?
6. What are the trade-offs and opportunity costs of this purchase?
7. What is the total cost of this product?
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5. Planning Major Purchases
(continued)
Cash or credit?
Research before buying
Quality and price
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6. Marketing Strategies That Influence Spending
Advertising
Pricing
Sales
Promotional techniques
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7. Advertising Product advertising
Advertising intended to convince consumers to buy a specific good or service is called product advertising.
A target market is a specific consumer group to which the products advertised are designed to appeal.
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© 2016 South-Western, Cengage Learning

8. Advertising Company advertising Industry advertising
(continued)
Company advertising
Advertising intended to promote the image of a store, company, or retail chain is known as company advertising.
Industry advertising
Advertising intended to promote a general product group without regard to where these products are purchased is called industry advertising.
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9. Pricing The price of merchandise depends on several factors.
Supply and demand
Cost of raw materials and labor
Competitive pressures
Seller’s need to make a reasonable profit
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10. Pricing Pricing devices are used to persuade consumers to buy.
(continued)
Pricing devices are used to persuade consumers to buy.
Odd-number pricing is the practice of setting prices at uneven amounts rather than whole dollars to make them seem lower.
Discounts are often available for buying in large quantities.
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© 2016 South-Western, Cengage Learning

11. Sales
Stores advertise end-of-month sales, holiday sales, anniversary sales, clearance sales, inventory sales, and so on.
A loss leader is an item of merchandise marked down to an unusually low price, sometimes below the store’s cost.
The store may actually lose money on this item because the cost of producing the item is higher than the sale price.
The loss leader is used to get customers into the store in the hope that they will buy other products as well.
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© 2016 South-Western, Cengage Learning

12. Promotional Techniques
Displays
Contests and sweepstakes
Coupons
Rebates
Frequent-buyer cards
Customer-loyalty programs
Packaging
Sampling
Micromarketing
Micromarketing is a strategy designed to target specific people who are likely to buy certain products.
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© 2016 South-Western, Cengage Learning