Consumer decision

Making Shopping Decisions

Objectives

• Evaluate options available when deciding where to shop

• Analyze the factors affecting consumer buying decisions.

• Relate comparison shopping guidelines to your shopping decisions.

Deciding Where to Shop

• Informed consumers are smart shoppers.• Use decision-making process• Plan shopping in advance• Decide where and when to shop• Decide what to buy• Know how to compare goods and services• What warranties to look for

Retail shopping

• Retail stores sell goods and services directly to consumers

• Department stores are large retail firms that offer a wide variety of consumer goods and services all under one roof.

• Discount stores sell a wide assortment of goods at lower prices.

• Specialty stores specialize in selling one line of goods such as shoes, videos, or books

Retail Shopping

• Off-price retail stores buy designer label products or brand name products at low prices from manufacturers, then they pass the cost savings on to consumers.

• Factory outlet stores owned by the manufacturer, sell directly to the consumer.

• Irregulars or closeout;

Catalog Shopping

• Read the catalog before you place an order. Know the return policy

• Fill out the order form accurately and completely before sending in your order.

• Avoid sending cash through the mail• Keep a record of your order until you receive

the goods.• When the order arrives, check it carefully

In-Home Electronic Shopping

• Television1. Infomercial2. Shopping channels-QVC, HSN, ShopHQ• Internet

Advantages

• It save time• Prices are comparable to or slightly lower than

in-store prices• Ordered items are delivered quickly to the

home• Policies on returning merchandise are usually

generous.

Disadvantages

• You do not have the personal assistance of a salesperson.

• Some manufacturers will not allow their products to be sold through electronic channels, thus eliminating those options.

• You cannot check or test a product before purchasing it.

• You are not contributing to your local economy.

Other shopping options

• Thrift stores, garage or yard sales, and flea markets

• Impulse buying is making an unplanned or quick purchase without giving it much thought.

• To buy wisely, consumers must analyze their shopping goals and buy only what they need.

Deciding when to Buy

• Smart shoppers plan their purchases ahead of time and watch for sales.

• Shopping at salesa) Pre-seasonb) End-of-season sale, or clearance salec) Seasonal sales• Factors affecting buying• Time and mood

Deciding What to Buy

• Comparison shopping means comparing products and prices in different stores before buying.

• Look at features• Price quality• Use and care• warranties

The Impact of Technology on Consumers

• List information technology available to consumers

• Analyze the impact of information technology on the lives of consumers.

• Summarize ways to manage technology.

Technology

• Technology affects every area of life.• Provides ways to perform complicated tasks

more quickly and easily• Technological advances can help people

manage resources, solve problems, and make accomplishments.

High-Tech products and services

• Computers• Internet access• Scanners• Handheld organizers,( tablet, Ipad, e-readers)•

Functions of High-Tech Equipment

• Information processing• Money management• Record keeping• Information gathering and learning• Entertainment• communication

Managing Technology

• How high-tech devices are used is what really matters

• Making buying decisionsa. What equipment features do you need?b. What new products will be introduced soon?c. What nonproduct factors should you

consider before buying?d. What is the total cost?

Drawbacks to using High-Tech

• Personal privacy may be threatened• Health and development can be adversely

affect• The natural environment could be endangered• Spending can occur too easily• Too much pressure can be exerted on other

family resources• Family life may be threatened

The Role of Advertising

• Advertising plays an important role in the economy

• Benefits both the consumer and the business

How Advertising Affects Consumer Spending

• Advertisement is a paid public message communicated through various media that promotes the sale of goods and services

• Can influence your lifestyle• Main goal of an ad is to convince you to buy

something

Types of advertising

• Factual ads provide useful consumer information

• Comparison ad make comparisons with competing products

• Testimonial ad use celebrities, sports professionals, or experts to endorse products

• Attention getter ads• Bandwagon ads• Sex-appeal ads

Evaluating advertisements

• Can you determine the purpose of the ad?• Is it designed to inform you or persuade you

to buy a product or service• Is the information in the ad useful to you?• Is it factual and easy to understand?• Does it tell what you want to know about the

features, quality, and price?

Methods

• Persuasive ad offers little or no useful information about a product or service

• Deceptive Advertising misleading • Bait and switch• Informed you won a free gift have to listen to

a sales presentation etc.

Consumer Protection Against Deceptive Advertising

• FTC-/Federal Trade Commission) is responsible for preventing false advertising and deceptive advertising practice.

• Federal Communications Commission(FCC) regulates ads aired on television or radio

11-4 Using Consumer Credit

• Credit is an arrangement that allows consumers to buy goods or services now and pay for them later.

• Credit can be a successful buying tool, but if misused it can cause many problems.

• Use it sensibly and carefully

Pros and of Using Credit

• Convenience• Can provide temporary help for an

unexpected expense• Allows you to use expensive goods and

services as you pay for them(car, home, etc.)

Cons of using credit

• Makes spending to easy, can encourage impulse spending

• If payments are not made on schedule you may lose the merchandise

• Creditors people who give credit and to whom debts are owed

• Collateral is something of value that you own and that you pledge to a creditor as security for a loan

Cons of Using Credit

• Using credit is expensive• Misusing credit can have serious long term

effect• Bad credit rating, repossession of goods, or

bankruptcy

Types of Credit

• Sales credit those who have goods or services to sell

• Cash credit those who have money to loan• Two categories non-installment credit

installment.• Non-installment is to be repaid in full at the end

of the month• Installment credit is repaid in a series of regular,

equal payments.

Sales credit

• Three types are • Regular charge accounts• Installment charge accounts• Revolving charge accounts

Applying for Credit

• Establishing a credit rating1. Open a checking account and a savings

account2. Buy something on a layaway plan.3. Be prepared to make a big down payment in

your first attempt to get credit.4. Apply to a local department store for a charge

account5. Ask a relative to cosign a loan for you.

Applying for Credit

• Keeping a good credit rating• Use credit only in amounts you can afford and

repay on time • Late payments or failure to pay on time will

lead to a poor credit rating.

Three Cs of Credit

• Character• Capital• Capacity

Shopping for Credit

• Finance charges are the total amounts a borrower must pay the creditor for the use of credit.

• Include interest, service charges, and any other dees

Cost of Credit

• Three factors determine the total cost of using credit.

• Size of the loan or the amount of credit used• The annual percentage rate• Repayment time

credit

• A credit contract is a legally binding agreement between creditor and borrower.

• Details the terms of repayment• Before signing ask.1. What action can be taken if I skip a payment or

make it late?2. Can I repay the debt in advance?3. If I pay in advance will part of the finance

charges be refunded to me?

Using Credit Wisely

• Before using credit, determine how much credit you can afford.

• Evaluate whether or not to use credit• If you decide to use credit, shop for the best

terms to meet you needs.

Handling Credit Problems

• Consolidate your debts• Credit Counseling• Court Protection

11-5 Consumers and the Law

• Consumer Protection Laws1. Truth in Lending Law2. Equal Credit Opportunity Act3. Fair Credit Billing Act4. Fair Credit Reporting Act

Consumer Rights and Responsibilities

• Right to1. Information2. Selection3. Performance4. Safety5. recourse

Responsibility

1. Seek and use information when making consumer decisions

2. Select wisely3. Follow instructions4. Guard against carelessness5. Let dissatisfactions be known

Recourse

• A product you bought is defective• Services or product repairs are not satisfactory• Merchandise you ordered was not received• A warranty or guarantee is not honored• A refundable deposit is not refunded.• Chambers of commerce• Better business bureaus• Media complaint desks