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Your role as a consumer
• Consumption, Income and decision making –
A consumer is any person or group that buys or uses goods and services to satisfy personal needs and wants. Consumers buy a whole range of things – food, clothes, cars, movie tickets, tattoos etc. This section you will learn how to spend or not spend your money wisely
Chapter 3 standards • E.2.2 Recognize that consumers ultimately
determine what is produced in a market
economy.
• E.1.3 Identify incentives and explain how
they influence decisions.
Define Consumerism • Break it down – what is a consumer?
• What does the suffix - ism mean?
• Where else do we see the suffix ism?
• So what does Consumerism mean?
• What else might this word refer to?
• Definition of CONSUMERISM
• 1: the promotion of the consumer's
interests
• 2: the theory that an increasing
consumption of goods is economically
desirable; also : a preoccupation with and
an inclination toward the buying of
consumer goods
A.) Disposable and discretionary income
1.) The ability to consume depends on a person’s available income and how much of it is spent or saved
2.) Income can be both disposable and discretionary
– a.) Disposable income – money left after paying all taxes and used to buy necessities such as food, clothing, housing etc
– b.) Discretionary income – any money left after paying for necessities and can be saved or spent on extras such as luxury items or entertainment
3.) Education, occupation, experience, health, location (city vs. rural), wage, inheritance, or owning property can all be influential to how a person’s consumes
4.) Key point – regardless of the size of a person’s income, spending money requires constant decision making
B. ) Decision making as a consumer 1.) 1st decision is whether to buy or not
2.) Making decisions involves 3 parts
a.) deciding to spend your money
b.) deciding on the right purchase
c.) deciding how to use your purchase
3.) Two scarce resources are involved in every
consumer purchase you make – income & time
a.) time costs – you need to invest time in obtaining information about the item you want to buy. This time can’t be used for anything else
5.) Rational choice is making a decision
based on opportunity costs. Choose the
best quality item that is the least
expensive and will satisfy your wants.
6.) Rational consumers will all make
different choices
Money left over after paying for
necessities is disposable income
A. True
B. False
Written response
• Explain a situation where you had to use
rational choice to make a purchasing
selection. What factors led to your
decision?
Buying principles or strategies
A.) Gathering information
1.) Takes time and research
2.) Try to find out only what you need to know
3.) Getting accurate information from a salesperson is a life-long skill. The better informed you are, the better decision maker you will be
4.) Use the internet to research a product and the companies selling it
5. ) Key point – the value of your time & effort spent gathering information shouldn’t be greater than the value you receive from making the best choice of a product
B. Using advertising wisely
1.) Advertising is everywhere, it is intended to raise interest and desire in the product it is selling
2.) most companies fall under one or two types
a.) Competitive advertising – trying to convince people one product is better than the other & try to create brand name recognition & loyalty
Examples of competitive advertising
• Nike vs Reebok
• Coke vs Pepsi
• McDonalds vs Burger King
• Apple vs Mac
• Sprint vs Verizon
• b.) Informative advertising –
Benefits the consumer, provides
information about the product such as
price and features
• http://www.youtube.com/watch?v=OTZvnA
F7UsA
• Disclaimer anyone?
3.) Some advertisers have deceptive practices such as “bait and switch” to present their products
a.) they “bait” by advertising the item at a low price, but say it’s out of stock when the consumer gets to the store.
b.) They “switch” by trying to sell a higher priced item instead, promoting its good features over out-of-stock item
c.) Bait and switch is both deceptive & illegal
C. Comparison shopping
1.) Compare different stores & companies to get information on the types of products available
a.) to efficiently comparison shop, read newspaper ads, make phone calls, check internet and visit different stores
2.) Use information obtained from sources to negotiate prices
3.) Consider the different product warranties
ex = you can find tools much cheaper than Sears tools but Sears has a lifetime warranty on most tools
4.) Compare the value of a generic brand to a brand name product
Consumerism
Consumerism is a movement to educate
buyers about the purchases they make
and to demand better and safer products
from manufacturers.
A. Consumer rights
1. Since the 1960’s consumerism has grown steadily – businesses are now responsible for product safety, healthful food and drugs & accurate advertising
2. Since 1962 (starting with JFK) consumers have had certain right:
a.) right to safety – protection against goods that are dangerous to life or health
b.) right to be informed – used not only as protection against fraud but also as the basis for making choices
c.) right to choose – means fair competition and for the gov’t to protect consumers in markets where competition doesn’t exist (like utilities)
d.) right to be heard – consumer interests will be listened to and considered when laws are being written
e.) right to redress – ability to obtain from the manufacturers payment in money or goods for financial or physical damages caused by a product
B. Help for Consumers
1. People can complain to store managers or write/call manufacturers when dissatisfied with a product
a. May take the case to small claims court or hire a lawyer
2. Private groups that aid consumers include local citizens’ action groups and the Better Business Bureau (BBB)
3. The BBB gives consumers information on products and selling practices and help settle disputes between buyers and sellers
4. There are magazines and private consumer groups that provide helpful information on products
5. Numerous federal agencies have programs to aid consumers – such as the consumer product safety commission and the Food and Drug Administration (FDA) There are also state agencies
C. Consumer responsibilities
1. Be informed about purchases – read contracts
and warranties, follow directions for proper use
of the product etc.
2. When a product or service is faulty –
consumers need to initiate the problem solving
process. The Office of Consumer Affairs aids
this process
3. Practice honest and ethical behavior – only
return products with legitimate faults
Which is not a consumer right?
A. Right to redress
B. Right to be informed
C. Right to a warranty
D. Right to be heard
[Default]
[MC Any]
[MC All]
Written response
• Which consumer right do
you believe is the most
important and why?
