1. Chapter 3 Your Purchasing Power

2. 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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3. Activity Assume that your family recently bought the following items:
Loaf of bread
Blu-ray player
Ipad mini 4
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4. How Do Buying Strategies Affect Prices?
Rational buying
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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5. Smart Buying Strategies
Customer Loyalty Program: designed to encourage a customer’s repeat business by providing special discounts and other incentives
Emotional Buying: the process of purchasing products based on desire rather than logic
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6. Smart Buying Strategies cont.
Rational Buying: the process of selecting goods and services based on need, want, and logical choices
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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7. What Are Selling Strategies?
Meeting demand
Convenience
Customer service
The right product and price
Examples: meet basic needs, offer brand names, use discount pricing
3-3 Getting More for Your Money
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8. What Are Selling Strategies?
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.
3-3 Getting More for Your Money
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9. Cookies WSJ Video “Sponsored” ads on Instagram
“Suggested” posts on Facebook
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10. What Are Consumer Buying Strategies?
Prepare a shopping list.
Do not let a salesperson influence you.
Stick to your list and avoid impulse buying.
Shop when you are most alert.
Comparison shop among several sellers.
Keep receipts, warranties, and packaging.
3-3 Getting More for Your Money
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11. Your Purchasing Power Page 99: #10-18 Page 100 #20 With a partner
Individual answers
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12. 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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13. Sources of Consumer Protection
Federal Agencies
USDA
FDA
CPSC
FCC
FTC
FAA
SEC
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14. 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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15. 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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16. How Are Consumers Defrauded?
Deception involves false or misleading claims made about a product.
Bait and switch
Fake sales
Low-balling
Pyramid schemes
Ponzi schemes
Pigeon drop
Infomercials
3-4 Consumer Rights and Responsibilities
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17. Deceptive Advertising
Video
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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18. How Can Consumers Protect Themselves from Fraud?
Shop smart
Be aware of prices
Understand sale terminology
Compute unit prices
Read labels
Check packages carefully
Read contracts
Keep receipts and warranties
Compute total cost
Research businesses
3-4 Consumer Rights and Responsibilities
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19. 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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