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
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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
• Television
1. Infomercial
2. 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 sales
a) Pre-season
b) End-of-season sale, or clearance sale
c) 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
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Computers
Internet access
Scanners
Handheld organizers,( tablet, Ipad, e-readers)
Functions of High-Tech Equipment
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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 decisions
a. 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
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Three types are
Regular charge accounts
Installment charge accounts
Revolving charge accounts
Applying for Credit
• Establishing a credit rating
1. Open a checking account and a savings account
2. 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
account
5. 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 Laws
1. Truth in Lending Law
2. Equal Credit Opportunity Act
3. Fair Credit Billing Act
4. Fair Credit Reporting Act
Consumer Rights and Responsibilities
• Right to
1. Information
2. Selection
3. Performance
4. Safety
5. recourse
Responsibility
1. Seek and use information when making
consumer decisions
2. Select wisely
3. Follow instructions
4. Guard against carelessness
5. Let dissatisfactions be known
Recourse
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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