1. Consumer Purchasing

2.  What was the last thing that you purchased?  What was the last article of clothing?  Was it to satisfy a want or a need?  Because of our high standard of living a large portion of the populations income is spent on wants and desires rather than on basic needs.

3. 1. Before you shop. 1. What influences you to buy the product that you buy. 2. Weighing the Alternatives 1. What is important to you. 3. Making the Purchase 1. How do you get to a price that you are happy with? 4. After the purchase. 1. Service Contracts?

4.  Minor New Purchase – these purchases represent something new to a consumer but in in the customers mind is not a very important purchase.  Minor Repurchase- these are the most routine of all purchases and often the consumer returns to purchase the same product without giving much thought.  Major New Purchase – most difficult of all decisions. It is important to the consumer but the consumer has little or no previous experience making the decision.  Major Re-Purchase – these purchase decisions are also important to the consumer but the consumer feels confident in making these decisions since they have previous experience purchasing the product

5.  Identify your needs…  Do you need the coach purse or the purse that you can buy at Target?  Gather information  Cost, options, and consequences.

6.  Before you shop…  Trade-offs and buying decisions  Opportunity cost for buying something  What things help you make your decisions?  Economic  Social  Personal

7.  Economic Factors  Prices – can you purchase the same at a lower price? SAMS WAREHOUSE  Interest Rates  Product Quality  Supply and demand  Convenience – 7-11, QT,corner grocery store  Product safety – Recall, Volvo  Brand name – Polo, FUBU,  Maintenance costs – when it breaks how much  Warranty – extended / what happens when it breaks

8.  Lifestyle  Interest  Hobbies  Friends  Culture  Advertisements  Media (magazines, radio, television, newspapers)

9. Personal Factors Gender Age Occupation Income Education

10.  4 Phases to a Research Based Approach 1. Before you shop 2. Weighing alternatives 3. Making the purchase 4. After the purchase

11. 1. Identify your needs - Clearly define your needs Do I need a PC based phone or do I want a PC based phone 2. Gather information - Costs, options, consequences – insurance? - Advertising, media, Consumer Reports, friends 3. Become aware of the marketplace - Knowledge is power - Common myths

12.  People you know  Ads and Packaging  Reports  Web sites  www.consumerReports.org www.consumerReports.org  Reliable, complete, relevant & impartial

13.  Identify what is important to you.  Personal Values  Available time for research  Amount of money you can spend  Convenience of buying the item immediately  Pros and cons of a particular brand.  Compare Prices  Price doesn’t always equal quality.

14.  Now that you have made a decision.  What is next? 1. Negotiating the price. 1. Is the price that shows the price you are going to pay? 2. Credit vs. Cash 1. Can you get a better deal if you pay cash or using a store credit card. 2. Can or do you have to put a DOWN PAYMENT down? 3. How long do you have to pay? 3. Is the price you see the price you get? 1. Additional charges, installation, 3 month trial period.

20. A car for example will have to have additional maintenance to it after the purchase.

21.  What is the return policy if you so choose to return it?  Best Buy Return Policy

22.  Negotiate the Price  When can you negotiate price?  Decide on Cash or Credit  Cash: Money is immediately taken out of your account  Credit: buy something now and pay for it later (fees, interest)  Source of the loan-- Type of credit account  Payment Period-- Down payment  Down Payment: a portion of the total cost of an item that must be paid at the time of purchase  Know the Real Price  Installation or delivery fee  Additional Equipment to buy – game controllers

23.  How do you get the best deal for your money?  Timing Purchases  Store Selection  Brand Comparison  Label information research  Price Comparison  Warranty Evaluation

24.  When is the best time to buy something.  Back –to-school sale  Buying a pool?  Buying a house?  New CD comes out?

25.  Quality and variety of goods may influence your decision.  Reputation  Cooperative Stores – not-for-profit organizations owned and operated by its members for the purpose of saving money on the purchase of goods and services. Cooperative Stores  Direct Selling, On-line shopping, Home Shopping Network.

26.  National-Brand products  More expensive, but consistent quality & value  Kelloggs  Nike  Store-brand  Dierbergs  Schnucks  Oberweis  Generic  Cereal  Soup

27.  Impulse Buying  Buy items without thought to price.  Honest Branding  Low-fat  Light  Low in calories  Open dating: a labeling method that indicates the freshness, or shelf life, of a perishable item

28.  Federal laws also require labels to present factual information.  For example food labels must indicate the common name of the product, name and address of the manufacturer or distributor, the net weight of the product and a list of the ingredients in decreasing order of weight.  Open dating – “Use before” or Best if sold before…..

29.  Unit Pricing  Is the use of a standard unit of measurement to compare the prices of packages that are different sizes.  For example  Which is the better deal – 12 ounces for $2.89 or 16 ounces for $3.39?  Total Price / Unit of measure = unit price  2.89/12 ounces =.24 cents  3.39/ 16 ounces =.21 cents

30.  Two other ways in which you can save money is through:  Coupons  Rebates  Rebate is a partial refund of the price of a product.

31.  Warranty Evaluation  Warranty: a written guarantee from the manufacturer or distributor that states the conditions under which the product can be returned, replaced, or repaired  Implied  Elicit Cell phone warranty….  Service Contract: a separately purchased agreement made by the manufacturer or distributor to cover the costs of repairing the item  Pay extra for  Anything with a cost of more than 15 dollars must have some sort of warranty.

32.  Types of warranties  Implied – are unwritten guarantees that cover certain aspects of a product or its use.  Example – that a toaster toast bread.  Express warranties  Which are usually written, come in two forms  Full warranty- states that a defective product will be fixed or replaces at not charge during a reasonable amount of time  Limited warranty covers only certain aspects of the product, such as parts. May have to pay for a portion of cost.

33.  Service Contract  Which is a separately purchased agreement by the manufacturer or distributor to cover the costs of repairing the item.  Another name is extended warranty

34. Resolving Consumer Complaints

35.  Sources of Customer Dissatisfaction  Defective or Poor Quality  Also unexpected costs, deceptive pricing, and unsatisfactory repair service  Fraud  Dishonest business practices that are meant to deceive, trick, or gain an unfair advantage  Examples? Free prizes, travel packages, work-at-home schemes, scientific breakthrough, miraculous cure

37.  Five Methods: 1. Return to the place of purchase 2. Contact the company headquarters 3. Consult a consumer agency 4. Use mediation or arbitration 5. Take legal action

38.  Most common method  Bring:  Receipts  Keep calm and avoid yelling or threatening  Explain the problem clearly explaining ALL relevant info

39.  Send a complaint letter  Consumer’s Resource Handbook  Company Web sites  Information number: 1-800-555-1212  Sample Complaint Letter  Describe your purchase  State problem  Give history of problem  State reasonable time for action  http://www.consumerlaw.com/sample.html http://www.consumerlaw.com/sample.html

40.  National Organizations  Local Organizations  Better Business Bureau  Most useful BEFORE you buy the product  Government Agencies  Food and Drug Administration  Consumer Product Safety Commission

41.  Mediation  The attempt by a third party to resolve a conflict between a consumer and a business through discussion and negotiation  NOT legally binding  Arbitration  A process where a conflict between a business and a consumer is resolved by a neutral third party  Legally binding

42.  Small Claims Court  A court that deals with legal disputes that involve amounts from about $500-$10,000  No juries or lawyers  Low cost  Final decision

43.  Class-Action Suits  Legal action on behalf of all the people who have suffered the same injustice  All parties must be notified of the suit  Favor of the class action = $ divided among claimants or put into public funds  Other Legal Alternatives  Lawyer (American Bar Association)  Legal Aid Society: a network of community law offices provided for no or low-cost legal assistance  Legal office

44.  There are many tools to protect your rights = use them!  Research companies before you do business with them  Understand contracts before signing

45.  Do you know what I would like to have?????  Any Questions  Should have a poster  A one to two page paper explaining the questions that I have asked you from the handout, explaining the concepts from the chapter and applying them to your products.