Consumer Purchasing
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What was the last thing that you purchased?
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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.
Before you shop.
1.
1.
What influences you to buy the product that you
buy.
Weighing the Alternatives
2.
1.
What is important to you.
Making the Purchase
3.
1.
How do you get to a price that you are happy with?
After the purchase.
4.
1.
Service Contracts?
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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
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Identify your needs…
Do you need the coach purse or the purse that
you can buy at Target?
Gather information
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Cost, options, and consequences.
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Before you shop…
Trade-offs and buying decisions
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Opportunity cost for buying something
What things help you make your decisions?
Economic
 Social
 Personal
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 Economic
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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
Lifestyle
 Interest
 Hobbies
 Friends
 Culture
 Advertisements
Media (magazines, radio, television, newspapers)
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Personal Factors
Gender
Age
Occupation
Income
Education
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4 Phases to a Research Based Approach
1.
2.
3.
4.
Before you shop
Weighing alternatives
Making the purchase
After the purchase
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
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People you know
Ads and Packaging
Reports
Web sites
 www.consumerReports.org
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Reliable, complete, relevant & impartial
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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.
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Compare Prices
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Price doesn’t always equal quality.
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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.
A car for example will have to have additional maintenance to it
after the purchase.
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What is the return policy if you so choose to
return it?
Best Buy Return Policy
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Negotiate the Price
 When can you negotiate price?
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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
 Payment Period
-- Type of credit account
-- Down payment
 Down Payment: a portion of the total cost of an item that must be
paid at the time of purchase
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Know the Real Price
 Installation or delivery fee
 Additional Equipment to buy – game controllers
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How do you get the best deal for your money?
Timing Purchases
 Store Selection
 Brand Comparison
 Label information research
 Price Comparison
 Warranty Evaluation
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When is the best time to buy something.
Back –to-school sale
 Buying a pool?
 Buying a house?
 New CD comes out?
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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.
Direct Selling, On-line shopping, Home
Shopping Network.
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National-Brand products
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More expensive, but consistent quality & value
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Store-brand
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Kelloggs
Nike
Dierbergs
Schnucks
Oberweis
Generic
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Cereal
Soup
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Impulse Buying
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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
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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…..
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Unit Pricing
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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
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Two other ways in which you can save money
is through:
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Coupons
Rebates
 Rebate is a partial refund of the price of a product.
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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
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Anything with a cost of more than 15 dollars
must have some sort of warranty.
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Types of warranties
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Implied – are unwritten guarantees that cover
certain aspects of a product or its use.
 Example – that a toaster toast bread.
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Express warranties
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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.
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Service Contract
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Which is a separately purchased agreement by the
manufacturer or distributor to cover the costs of
repairing the item.
Another name is extended warranty
Resolving Consumer Complaints
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Sources of Customer Dissatisfaction
Defective or Poor Quality
 Also unexpected costs, deceptive pricing, and unsatisfactory
repair service
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Fraud
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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
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Five Methods:
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
1.
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Most common method
Bring:
Receipts
 Keep calm and avoid yelling or threatening
 Explain the problem clearly explaining ALL relevant
info
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Send a complaint letter
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Consumer’s Resource Handbook
Company Web sites
Information number: 1-800-555-1212
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Sample Complaint Letter
 Describe your purchase
 State problem
 Give history of problem
 State reasonable time for action
 http://www.consumerlaw.com/sample.html
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National Organizations
Local Organizations
Better Business Bureau
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Most useful BEFORE you buy the product
Government Agencies
Food and Drug Administration
 Consumer Product Safety Commission
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Mediation
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The attempt by a third party to resolve a conflict between a
consumer and a business through discussion and
negotiation
 NOT legally binding
Arbitration
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A process where a conflict between a business and a
consumer is resolved by a neutral third party
 Legally binding
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Small Claims Court
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A court that deals with legal disputes that involve
amounts from about $500-$10,000
 No juries or lawyers
 Low cost
 Final decision
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Class-Action Suits
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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
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There are many tools to protect your rights =
use them!
Research companies before you do business
with them
Understand contracts before signing
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Do you know what I would like to have?????
Any Questions
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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.