1. Buying Goods & Services Ch. 3
PERSONAL FINANCE

2. Factors that Influence Buying Decisions
Wise Buying Decisions are smart money management
Help to get the most out of products
Enable you to meet your long term financial goals

3. Factors that Influence Buying Decisions
Activity
Make a list of economic factors and social factors that can influence buying decisions

4. Factors that Influence Buying Decisions
Economic Factors
Prices
Interest rates
Product quality
Product safety
Convenience
Maintenance costs

5. Factors that Influence Buying Decisions
Social Factors
Lifestyle
Interests, Hobbies
Friends
Culture
Advertisements

6. Factors that Influence Buying Decisions
Trade-offs and Buying Decisions
Needs vs. Wants
Price vs. Quality
Online time saving vs. Return hassles
Buy now on credit vs. Higher Cost

7. Online Shopping
companies-charge-online-shoppers- different-prices/

8. Research Based Approach to Consumer Purchases
Before You Shop
Weighing Alternatives
Making the Purchase
After the Purchase

9. Phase 1: Before You Shop Identify Your Needs Gather Information
Costs
Options – what is produced and where is it available
Consequences – Is It In My Budget?
Routine vs. Expensive Purchases
Sources of information: recommendations, ads and packaging, reports, websites
Be Aware of the Marketplace

10. Phase 2: Weighing the Alternatives
Identify What is Important to You
Compare Prices
Do Comparison Shopping

11. Phase 3: Making the Purchase
Negotiate Price
Decide on Credit or Cash
Source of Loan (parents, bank, credit card)
Type of Credit Account
Payment Period
Amount of Down Payment
Know the “Real” Price
Consider extra fees (installation, delivery)

12. Phase 4: After the Purchase
Manage Additional Costs Responsibly
Know what to do in case you are not satisfied with the product
Return Policies
Customer Complaints
Know How to Maintain the Product

13. Smart Buying Strategies
Timing of Purchases
Price variations by time of year (season)
Examples?
Store selection
Location
Price
Selection
Services

14. Smart Buying Strategies
Brand Comparison
National Brand
Private Label or Store Brand
Label Information
Open Dating (shelf life of products)

15. Smart Buying Strategies
Price Comparison
Unit pricing = standard of measurement
Large not always the best buy (check unit price, usage)
Coupons and rebates
More store convenience higher prices
Ready-to-use products higher prices
“Sale” prices not always a savings
Online sources can save time

16. Unit Pricing example

17. Smart Buying Strategies
Warranties
Written guarantee from manufacturer or distributor specifying conditions under which a product can be returned, replaced or repaired.
2 Categories:
Express
Implied

18. Smart Buying Strategies
Express warranty (usually written)
Full Warranty (covers entire product, period of time)
Limited Warranty (covers only certain parts of a product)
Extended warranty

19. Beware of Extended Warranties

20. Smart Buying Strategies
Warranties (continued)
Implied warranty (covers intended use)
Warranty of title – seller has a right to sell a product
Warranty of merchantability – product is fit for use
Exceptions: “as is” or “with all faults”

21. How Are Prices Set in a Market Economy?
Cost-recovery pricing is used to recover R&D costs.
Cost-plus pricing is calculated using production costs plus a markup.
Value-based pricing is based on what consumers are willing to pay.
Market-based pricing is set to be competitive with similar products.
3-2 Prices and Consumer Choices
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22. Activity Assume that your family recently bought the following items:
Loaf of bread
Blu-ray player
Ipad mini 4
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23. How Do Buying Strategies Affect Prices?
Rational buying: the process of selecting goods and services based on need, want, and logical choices
Economizing is saving money and spending only when necessary.
Optimizing is
getting the highest
value for money
spent.
3-2 Prices and Consumer Choices
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24. Smart Buying Strategies cont.
Emotional Buying: the process of purchasing products based on desire rather than logic
Impulse Buying: buying something in the spur of the moment without thinking it through or planning your purchase
Buyer’s remorse: sense of regret after making a large purchase
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25. Creating demand
Advertising is informing consumers about products and encouraging them to buy.
Advertising sources: newspapers, magazines, TV, radio, Internet, billboards, signs, direct sales
The target audience is a specific group of people who are likely to buy.
Customer Loyalty Program: designed to encourage a customer’s repeat business by providing special discounts and other incentives
3-3 Getting More for Your Money
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26. Cookies WSJ Video “Sponsored” ads on Instagram
“Suggested” posts on Facebook
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27. How Are Consumers Defrauded?
Deception involves false or misleading claims made about a product.
Bait and switch
Fake sales
Low-balling
Pyramid schemes
Acceptance by
default
Infomercials
3-4 Consumer Rights and Responsibilities
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28. Deceptive Advertising
Find an infomercial
What claims are made about the product?
What gimmicks are being used to sell the product?
How effective is the commercial?
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29. Deceptive Advertising

30. Resolving Consumer Complaints
What are some sources or examples of consumer complaints?
Defective product or poor quality
Deceptive advertising
Unexpected costs
Contact the Better Business Bureau

31. Your Purchasing Power With a partner: Page 99: #10-18 Page 100 #20
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32. What Are Consumer Rights?
Many laws protect consumers.
Consumer Bill of Rights
Airline Passenger Rights
Consumer Technology Bill of Rights
Patients’ Bill of Rights
Consumer Protection Laws
Examples: Food, Drug, and Cosmetic Act; Hazardous Substances Act; Cigarette Labeling and Advertising Act; Nutrition Labeling and Education Act; FERPA; HIPAA
3-4 Consumer Rights and Responsibilities
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33. Consumer Bill of Rights
Right to safety
Right to be informed
Right to choose
Right to be heard
Right to reparation
Right to consumer education
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34. Sources of Consumer Protection
Federal Agencies
USDA
FDA
CPSC
FCC
FTC
FAA
SEC
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35. Sources of Consumer Protection
State and local assistance
Private Organizations
Examples: BBB, National Consumers League, Consumers Union
3-4 Consumer Rights and Responsibilities
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36. International Studies
With a partner, select another country and research its consumer protection laws. Report the following to the class:
What laws are in place?
How are they different from the U.S.’s laws?
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