Consumer ChoiceConsumer Decisions - Stage 5 Commerce

comparison shopping◦ types of goods and

services◦ different brands and

products◦ choosing what to buy

choosing where to buy◦ range of locations and

sources◦ types of retail outlets◦ internet purchasing and

mail order◦ locally, interstate, globally

key factors affecting consumer decisions◦ finance, price,

marketing, age, gender, convenience, service

◦ environmental considerations

Consumer Choice – Commerce and Choice

Comparison Shopping

Consumers purchase two main types of goods – ◦ 1. Durable goods – goods that have a long lifespan and

do not need to be replaced frequently. For example a washing machine, furniture and motor vehicles.

◦ 2. Non-durable goods – goods that are purchased frequently and have a short lifespan. They are less expensive and bought with cash or EFTPOS. For example food and pens

Types of goods and services

Another way of naming or grouping goods is to look at the relationships between them.◦ Complementary goods – a good that is generally

consumed with another good. For example tomato sauce and meat pies.

◦ Substitutes – a good that can be purchased as an alternative to another good. For example butter instead of margarine.

Types of goods continued

Intangible goods provided to consumers by individuals or firms.

Some like education are transferable from one person to another.

Some are consumed at the point of sale like watching a concert so are not transferable.

Services

Make a list of the services

you consume on a weekly

basis.

Different Brands & Products

Notable examples include Nike, Coke, Quik silver, Microsoft, Apple

Brand names can become so powerful they replace the original or generic name for the product for example vacuuming being referred to as hoovering.

Generic and own-label goods include ‘no frills’. They boost the reputation of supermarkets and reduce the power of manufacturing companies. They often cost less and are of comparable quality to the branded alternatives.

Different brands and products

Choosing What To Buy

Brand Is this good a need or a want ?

Is this good durable or non-durable ?

What is a substitute to this good ?

Is this a generic / own – label good ?

Activity

Select 10 goods you would purchase during a typical week and then copy and complete the table as shown above.

Choosing Where to Buy

See activity on www.studyismybuddy.com Year 9 Commerce Consumer Choices

Choices, Choices, Choices

Impulse buying – where you purchase a good or service on the spur of the moment and later discover you cannot afford the product or do not really need it.

Choosing what to buy

Retail stores can be placed in a hierarchy based on the types of goods they provide and how far consumers need to travel to get to them.◦ At the top are large regional shopping centres and stores

selling expensive consumer durables (sporting equipment)◦ Then come planned shopping centres like Westfield which

provide one stop shopping and a car park.◦ Independent retailers and corner stores have largely been

replaced.

Choosing where to buy – range of locations and sources

Select a product sold in a range of locations and from different sources and report on comparison-shopping processes. Include a picture of the product.

Asking the following questions enables you to avoid impulse buying.◦ What exactly are my needs ?◦ Can I afford this ?◦ Have I compared prices ?◦ What after-sales service is available with the product ?◦ What are the features of the product and will it do all I want

it to do ?◦ How safe and reliable is the product ?

Design an educational pamphlet to outlinethe steps consumers take to avoid impulse buying. Include pictures and illustrations to help get your message across.

Strategies to avoid impulse buying

Range Of Locations And Sources

General (corner) stores – small retail outlets that focus on selling everyday convenience items like milk and bread.

Supermarkets – (Coles) large self-service stores that sell a wide variety of food and other household products.

Department stores – (David Jones) retail outlets divided into a number of smaller units or departments selling a wide rage of goods and services.

Discount stores – (Big W) offer a range of goods through specific product departments which provide cut price promotions and value for money.

Independent specialty stores – (The Bike Barn) usually owner operators that focus on selling a specific product.

Category killers – (Toys ‘R’ Us) retail outlets often operating out of large warehouses that dominate the sale of one particular product type.

Types Of Retail Outlets

Franchises – a type of retailing that involves selling the rights to use a business name, image or management system.

Periodic markets – large numbers of sellers in an informal market setting open only on the weekend and providing bargain and bulk-orders to save money.

Shopping strips – traditional shopping centres consisting of a range or retail outlets lining the main street of a town or suburb.

Planned centres – (Macquarie Centre) retail outlets that are planned, operated and managed as a single unit. They contain a couple of large anchor stores and a wide range of speciality stores under one roof with easy car parking.

Types Of Retail Outlets Continued

Develop a mind map of the different types

of retail outlets.

Direct MarketingDesign a pamphlet or power point presentation informing consumers of the advantages and disadvantages of either direct marketing or internet shopping.

Direct marketing is where goods are sold directly to a customer rather than through a retail outlet.

Direct marketing includes mail order (sending customer offers, advertising or catalogues) and telemarketing (phone sales) and door-to-door sales.

Mail Order

Anyone with a computer and internet access can purchase a range of goods from around the world and have them delivered direct from the warehouse or manufacturer to almost any location in the country.

Internet Purchasing

Internet PurchasingSelect one online shopping site and answer the following questions:

a) How easy is this site to use?

b) What types of goods are available from this site?

c) How are the goods delivered, how long does this take and what are the delivery charges?

d) What payment options are available?

e) How secure is the site?

Present your findingsin the form ofa report.

Where – Locally? Interstate? Globally?

Guides for making a decision include:◦ The price of the good or service◦ The quality of the good or service◦ The service provided including warranties and

after-sales advice.◦ Your ethical perspective – when we purchase

imported goods there is a flow of money out of the country to pay for them.

Choosing Where To Buy

access www.choice.com.au and www.consumersonline.gov.au and investigate ethical consumerism.

Consumers can choose whether to purchase locally manufactured or imported goods (goods produced overseas).

Improvements in communications technology and road, rail and air transport make it easier for consumers to purchase products regionally or from interstate.

In the mid-1990s Australian labelling was changed to make it easier for customers to identify products made in Australia◦ To be labelled ‘Product of Australia’ it needs to be produced and processed within Australia◦ To be labelled ‘Made in Australia” the product is manufactured in Australia but contains imported ingredients.

Choosing To Buy Local?

Key Factors Affecting Consumer Decisions

Decisions Affecting The Quality Of Our

Lives CommercialPersonal

Can I obtain finance to help me make this purchase ?◦ Funds come from your savings, a bank or financial

institution.◦ Some stores offer store credit cards and hire

purchase agreements (funds lent to customer by the store).

◦ Your disposable income, the amount of money you have to spend on goods and services. Disposable income (net income) =

gross income (total income) - tax

Finance

What is my budget? Can I afford this good?

◦ Obtain a minimum of three quotes before buying an expensive good or service.

◦ Don’t be rushed into making purchases.◦ Be aware of hidden costs like installation charges,

service costs and postage.

Price

Price continued

Potato chips are available in the following package weights and prices. Use the unit pricing method to work out which is the best value?a) 500g packet $2.50b) 750g packet $3.60c) 1kg box $5.30

The five P’s are used to alter the buying behaviour of consumers.◦ Price, ◦ Position, ◦ Product, ◦ Promotion and ◦ Place

Marketing

Consumers wants change as they get older.

Age

Babies

Toddlers

Pre schoolers

Primary School

Secondary School Write

down two wants relevant for each of the five age groups

Boys and girls often purchase different types of products.

Gender

Boys Girls

Many Australians use convenient shopping options like online shopping and ebay.

Convenience

Using word art list words to show options Australians could use to purchase a computer.

Consumers are demanding a more personalised shopping experience.

Businesses have responded by offering a range of mobile domestic services including pet grooming and gardening services. These services are available seven days a week and travel to a customer’s home or workplace at a time the customer chooses.

Service

Using the internet find the name and contact details of a mobile pet grooming and gardening service.

Consumers are considering the environmental impact of their purchases.

Manufacturers and retailers are selling ‘environmentally friendly’ products manufactured from recycled materials.

Environmental Considerations

Using pictures from the internet create a collage of factors that influence consumer decisions.