Chapter 08
_________________________ Strategies
and Legal Protection
McGraw-Hill/Irwin
Copyright © 2012 by The McGraw-Hill Companies, Inc. All rights reserved.
8-1
Chapter 8
Learning Objectives
1.
Identify strategies for effective consumer buying.
2.
Implement a process for making consumer purchases.
3.
Identify steps to take to resolve consumer problems.
4.
Evaluate legal alternatives available to consumers.
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Financial Implications of
Purchasing Decisions
Objective 1: Identify strategies for effective
consumer buying
FINANCIAL IMPLICATIONS OF CONSUMER
DECISIONS
• Commonly overlooked _________________ when
buying include…
– Paying a higher price over time by using ________ to buy
items you need now.
– Buying unknown, possibly poor-quality brands, that are less
_________________.
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Financial Implications of
Purchasing Decisions
• Commonly overlooked trade-offs when buying
include… (continued)
– Selecting brands that may be difficult to
________________________________.
– Ordering by ________________________ to
save time and money, but return or repair may be
difficult.
– Taking time and effort to comparison shop.
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Factors of Consumer Purchases
Social Factors
Economic Factors
Consumer prices
Interest rates
Supply/demand
Brand name
Warranty
Product Quality
Tax rates
Govt. regs.
Consumer
Buying
Influences
Lifestyle
Culture
Attitudes
Ads
Media/Internet
Hobbies
Peer group
Personal Factors
Sex and age
Marital status
Occupation
Income
Education
Family size
Housing type
Ethnic group
Religion
8-5
Financial Implications of
Purchasing Decisions
PRACTICAL PURCHASING STRATEGIES
____________________ purchases
– Be aware if the price varies with the time of the year
Store selection
– Choice of retailer depends on location,
price, product
– Cooperatives -non-profit organization;
members save money
8-6
Financial Implications of
Purchasing Decisions
PRACTICAL PURCHASING STRATEGIES (continued)
Brand Comparison
Comparison shopping of store and national brands;
avoid impulse buying (unplanned purchasing)
____________________ information
Look for information on label and open dating
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Practical Purchasing
Strategies
• Price comparison
– ____ pricing provides a standard of measurement
– Coupons (online: coolsavings.com; centsoff.com;
couponsurfer.com) and rebates (partial refund)
– Convenience & ready-to-use products may mean
higher prices. ______ is not always the best buy,
and “Sale” prices vary among stores
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Practical Purchasing
Strategies
• Evaluate _________________
– Full or limited express warranties, usually written.
– Warranty of Title-the right to sell the product
– Implied warranty of merchantability-fit for normal
use
• Service contracts -also called extended “warranties”
8-9
Major Consumer Purchases:
Buying Motor Vehicles
-The Process
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Major Consumer Purchases:
Buying Motor Vehicles
Objective2: Implement a process for making
consumer purchases
Phase 1: _________________ Activities
Problem identification
Information gathering
–
–
–
–
Personal contacts
Business Organizations
Media information-television, Websites
Independent testing organizations- Consumer
Reports
– Government agencies.
– Online Sources – http://www.edmunds.com/,
http://www.caranddriver.com/,
http://www.autoweb.com/
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Major Consumer Purchases: Buying
Motor Vehicles (continued)
Phase 2: Evaluation of ____________________
• Comparison shopping
• Selecting vehicle options-convenience, appeal,
etc.
• Comparing used vehicles- www.carmax.com
www.americasautomall.com, www.carfax.com
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Major Consumer Purchases: Buying
Motor Vehicles (continued)
Phase 2: Evaluation of Alternatives (continued)
• _________________ an automobile
– lower payments, smaller initial cash outlay
– no ownership in vehicle
– maximum # of miles/year; charged for extra miles
– know the capitalized cost of the lease, the money
factor, the monthly payment, number of payments,
and the residual value
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Major Consumer Purchases:
Buying Motor Vehicles (continued)
Phase 3: Determining Purchase Price
• _________________ for New and Used cars
– Know necessary information about the product
– Deal with a person of authority to give you a
lower price or additional features.
– Used-cars: Check newspaper ads, Kelly Blue
Book (www.kbb.com), www.edmunds.com
– New cars: Set-price dealers, car-buying
services
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Major Consumer Purchases:
Buying Motor Vehicles (continued)
Phase 3: Determining Purchase Price (continued)
•
Compare financing _______________
– Variety of lenders-some lenders may pre-approve you
– Avoid being _______________ or having negative
equity in your car
– Look for rebates or low-interest financing.
– Consider the APR, total finance charge.
• Check out www.bankrate.com
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Major Consumer Purchases: Buying
Motor Vehicles (continued)
Phase 4: Post-purchase Activities
Lemon Laws
Automobile operation costs
Use the item correctly to have improved
performance and fewer repairs
Investigate, evaluate and negotiate a variety of
servicing options
Motor Vehicle Maintenance
Automobile servicing sources; dealers, service
stations, garages, Wal-Mart, etc
Operation costs; fixed and variable expenses
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Resolving Consumer
Complaints
8-17
Resolving Consumer
Complaints
Objective 3: Identify steps to take to resolve
consumer problems
• Step 1: Return to place of _________________
• Step 2: Contact the company’s main office @ 1800-555-1212 to get company hotline
• Step 3: Obtain assistance from a consumer
agency
–
–
–
–
–
BBB provides pre-purchase information
Mediation - third party negotiates (nonbinding)
Arbitration - decision is binding
State consumer protection office or agency
Federal agencies - see Appendix B in text
8-18
Legal Options for Consumers
Objective 4: Evaluate the legal alternatives
available to consumers
• Step 4: Take Legal Action
–
–
–
–
Small claims court
Class action suits
Using a lawyer
Other legal alternatives
• Legal aid society
• Prepaid legal services
– Personal Consumer Protection
• Follow common sense guidelines on dealing
with reputable companies, signing contracts,
exaggerated offers, credit vs. cash purchase
and rushing to get a deal
8-19
