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Consumer Purchasing Strategies and Legal Protection
Chapter 4
Factors That Influence Buying Decisions
l Economic Factors– Prices, Convenience,
Product Quality
l Social Factors– Lifestyle, Interests,
Friends, Culture, Media, TV
l Personal Factors– Gender, Age, Occupation,
Income, Education, Ethnic, Geographic region
Consumer Purchasing: A Research-Based Approach
l Doing research enables you to get more for your money
l Spending a little time researching will save you money
l A research-based approach has four phases
Phase 1: Before You Shop
l Three Steps1. Identify your needs
2. Gathering Informationl People, Ads,
Reports/Magazines, Web sites
3. Becoming aware of the marketplace
Phase 2: Weighing the Alternatives
l Decide what’s important to you
l Compare Pricesl Do Some Comparison
Shopping
Comparing Prices
l Unit pricing-use of a standard unit of measurement to compare the prices of packages that are different sizes.
l Divide the price of the item by the unit of measurement
l The best unit price may not be your best purchase
Phase 3: Making the Purchase
l Can you negotiate the price?– What items can you usually
negotiate?l Should you use cash or
credit?– Down Payment-Portion of the
total cost of an item that must be paid at the time of purchase
l Do you know what the real price is?
– Installation, delivery– Get all costs in writing
Phase 4: After the Purchase
You may have to – learn how to use your new
item– Return the item/Complain
Assignment
Comparison Shopping Assignment
Smart Buying Strategies
Timing Purchases
l Supply and Demand– When does an item cost
the most?
l Salesl Competition
Selecting the Store
l Quality and variety of goodsl Hours, location, prices,
reputation, policies, parking, delivery
l Cooperative-a non profit organization owned and operated by its members for the purpose of saving money
l Direct Selling-mail order, TV home shopping, online shopping (shipping & handling fees)
Comparing Brands
l Brand name products widely advertised, widely available
l Store brands-carries the name of the chain on its label (usually less expensive)
l Compare price and quality
l Impulse buying-purchasing items on the spur of the moment
Label Information
l Packages contain advertising and informationl Food labels must indicate
– Common name, address of the manufacturer, net weight, list of ingredients, nutritional information
l Foods must meet government criteria to be labeled “low in fat”…
l Open Dating-Indicates the freshness or “shelf life” of a perishable product
l Labels for appliances include information about operating costs
Comparing Prices Continued
l Two common ways to save money
– Discount coupons– Manufacturers Rebates
l Rebate-a partial refund of the price of a product
Comparing Prices Guidelines
l More Convenience=Higher Prices
l Ready-to-use Products=Higher Prices
l Large packages are usually the best buy-use unit pricing
l Sale may not always mean you save money
Evaluating Warranties
l Warranty-A written guarantee of quality from the manufacturer or distributor that states the conditions under which the product can be returned, replaced or repaired.
l Two Types:Implied-Unwritten guarantee that covers certain aspects of a product or its useExpress-Full or limited
l Service Contract-Separately purchased agreement to cover the costs of repairing the item.
Assignment
l Section 4.1 Assessment Page 104l 1-6
l Warranty Assignment
Resolving Consumer Complaints
Section 4.2
Sources of Common Consumer Complaints
l Every purchase involves some degree of risk
l Defective or poor qualityl Unexpected costs,
deceptive pricingl Fraud-dishonest
business practices that are meant to deceive, trick, or gain an unfair advantage
Common Types of Fraud
l Fraud costs consumers tens of billions of dollars
l Telephone and mail scamsl Travel scams, work-at-home
schemes, investment opportunities
l Medical scamsl Recognize scams and report
theml FTC Guidelines
Resolving Differences Between Buyers and Sellers
l Make sure to document the process
l Keep receipts, names of people you talk to, dates of attempted repairs, copies of letters you wrote, any fees you have paid
l Usually can be handled in five different ways
Five Ways to Resolve Complaints
1. Return to the place of purchase– Businesses care about reputation for honesty and
fairness. – Bring receipts and other information– Keep calm and reasonable
2. Contact Company Headquarters– Send letter or call company customer service line
Five Ways to Resolve Complaints
3. Get help from a Consumer Agency– Better Business Bureau– Go to:
http://wisconsin.bbb.org/consumers/– Food and Drug Administration
4. Dispute Resolution– Mediation-the attempt by a neutral third
party to resolve a conflict between a customer and a business
5. Take Legal Action– If all else fails
Assignment
• Complaint Letter
Legal Options for Consumers
When all else fails
Small Claims Court
l A court that deals with legal disputes that involve amounts below a certain limit.
l From $500 to $10,000l Usually don’t involve
juries or lawyers=Low cost
l Judges decision is final
Class-Action Suits
l A legal action on behalf of all the people who have suffered the same injustice.
l Group of people represented by one lawyer or group of lawyers
l Money awarded is divided among all involved or put into government funds
Hiring a Lawyer
• Find a lawyer with experience in your type of case
• Ask about fees/payment policies
• Legal aid society-network of community law offices that provide free or low-cost legal assistance
• Not everyone is eligible
Assignment
Section 4.2 Assessment Page 113
1-6
