Consumer Decisions in the Economy

Consumer Decisions in the EconomyChapter 1, 1.4 and 1.5

What is a consumer anyway? A person who buys and uses goods and

services (in other words, you and me!)

what are some problems and concerns people have as consumers?

About consumers Businesses wouldn’t be around without

them standard of living not always based on

how much money you make have a responsibility to make informed

decisions

A thought for all you consumers if standard of living isn’t based on pay,

what is it based on? why is it important to be an informed

consumer?? where can you go to get help with or

information about consumer problems???

Consumer, inform thyselfThere are five types of organizations who

advise and test: product-testing media sources government agencies business sources personal contacts

PRODUCT-TESTING ORGANIZATION Test products and services paid by manufacturers to test safety may also develop and update

performance standards Underwriter Laboratories, Inc. Association of Home Appliance

Manufacturers (AHAM) Factory Mutual Approved Mark American Gas Association

Media Sources (print, broadcast & internet)

Goal is to report scientific, technical, educational information about products and services.

information is objective can be nonprofit Consumer Reports Good Housekeeping may also find specialty magazines for certain

products such as cars, travel or financial investments (ie. Money, Wall Street Journal)

Media Sources con’td Encompasses radio and t.v. goal is to inform public about safety, care

and use of products some are shows designed to help

consumer issues

Government Agencies United States Department of Agriculture

(USDA) Federal Trade Commission (FTC) Food and Drug Administration (FDA) Consumer Product Safety Commission

(CPSC) National Highway Traffic Safety

Commission (NHTSC)All make information available to consumers

BUSINESS SOURCES Advertising Product labels Customer service departments Better Business Bureau

ADVERTISING Most popular source Tell you what it is, how it’s made, what it

will do Can be word-of-mouth (most effective)

PRODUCT LABELS Tell you what it is, size, care of, when and

where it was made

CUSTOMER SERVICE DEPARTMENT Provide booklets of info May help improve buying skills Answer questions on potential purchases

and returns

BETTER BUSINESS BUREAU Supported by member businesses Self regulate ethical practices in

advertising and selling products Goal is to develop a more informed

consumer Provides information only, no

recommendations

PERSONAL CONTACTS The most often used source of all? Word

of mouth.

Remember the decision making process?

SPECIFY. Identify need or wants. SEARCH. Gather information and know

choices available. SIFT. Determine desired satisfaction and

evaluate alternatives (how much are you willing to pay? Quality? Will you wait for it to go on sale?)

SELECT. Make your choice. STUDY. Evaluate the results of your

choice.

Comparison Shopping Look at price, quality and services of one

product as they compare to another product.

Comparison Shopping cont’d Always look at unit price as it is the truest

measure of comparisonEx. 8oz./$0.50 12 oz./$0.65

Cont’d Per unit, each item is:$0.0625/oz. $0.0542/oz

These are actually the cheaper chips!

Comparing Quality Consider which item will last longer Will it cost you more in the long run to buy

2 of the lesser quality item?

Comparing Services Can you think of some differences

between the services these 2 stores offer?

Compare Sales There are 3 types: Promotional Clearance Special Purchase

Compare Brands National brands can be counted on for

uniform quality Store brands (aka private label brands) are

often found at a lower cost Generic brands (which are actually

unbranded) are not advertised or have pretty packaging and are thus often the least expensive choice.

Things to remember Take your time Time your purchases Avoid being impulsive

Where to shop? Traditional retailers (ie. department stores,

discount stores, specialty stores, supermarket, convenience stores)

Contemporary retailers (specialty superstores like Home Depot, or superstore like Target Homeland, or Costco)

Non store shopping (go online! Mail order and even vending machines count as non store shopping).