Consumers in A Changing World

Consumer EconomicsIssues and Behaviors, 1/e HACE 3100

Chapter 1Consumers in a Changing World

HACE 3100


Economy. . .

. . . The word economy comes from a Greek word for “one who manages a household.”


Economics…

Economics is the study or science of production, distribution, and consumption. (Goldsmith)

Economics is the study of how society manages its scarce resources. (Miller)


Scarcity . . .

. . . means that society has limited resources and therefore cannot produce all the goods and services people wish to have.


Society and Scarce Resources:

The management of society’s resources is important because resources are scarce.Scarcity implies choice and choice implies cost.


Economists study. . .

How people make decisions.

How people interact with each other.

The forces and trends that affect the economy as a whole.


Consumer Economics…

The study of how people deal with scarcity, fulfill needs, and select among alternative goods, services, and actions.


Consumer Economics: Keeps us from making poor grooming choices


Consumer Economics lead to… Careers in consumer

protection, consumer advocacy, policy making, education, law, business, management, government, marketing…

http://japanesecentral.com/Siryoo/pictureclips/profession/teacher.jpg


Why Study Consumer Economics? To apply course knowledge to personal

decisions. When you pump your own gasoline what is the

last decision you have to make to be a safe consumer?


Why Study Consumer Economics? To apply course knowledge to social

issues. What recent economic legislation will have an

impact on you? Health care? Cleaner coal burning technology? Screening tests for newborns?

Georgia increased its screenings from 13 to 29 Down’s syndrome screening?


Why Study Consumer Economics? To overcome passivity—to understand and

“own” your place in the economy. To become a Consumer Protection

Advocate… Standing up for consumer rights. One Person Can Make a Difference!

Ralph Nader Erin Brockovich You


http://www.youtube.com/watch?v=d82WKtGjJBA


http://www.freerepublic.com/focus/f-news/2058011/posts


So what????? One of the goals of this class is to make

you more aware of your surroundings. To make you your own best consumer

advocate; if you don’t educate and protect yourself who will?

You need to leave college with a firm grasp of your world: including “the good, the bad and the ugly”……


Consumers:individuals and groups who

obtain, use, maintain, and dispose of goods (products) and services to fulfill needs and increase satisfaction.


Goods and Services Goods: tangible objects (e.g., car) Services: intangible actions of work done:

(catering services)


Satisfaction: Also known as “utility”

(satisfaction, well-being)


Consumers….obtain, use, maintain, and

dispose of…..Obtain…Use…Maintain….Dispose of….


Though even obtaining can be problematic


The Road to Consumer Economics… Adam Smith (1776): Author of “An Inquiry into the Nature

and Causes of the Wealth of Nations” stated that: “consumers act in their own self interest and markets work with the invisible hand.”

The founder of modern economics

Felt consumers should be given the freedom and authority to run their own economic affairs.

The US’s founding fathers liked the idea that wealth should be based on goods and services produced and consumed by consumers.


Capitalism: Capitalism is a social system based on

the recognition of individual rights Under capitalism the state is separated

from economics (production and trade), just like the state is separated from church/religion.

Being able to freely choose among a vast array of commodities gives people a sense of freedom.

http://www.capitalism.org/faq/rights.htm


Seriously…. Do we truly have a pure Capitalistic

society where our choices are made free and clear of government intervention?

Examples?


Consumerism: The belief that goods give meaning to individuals and their roles in society.


Consumerism: How much does this belief drive our

consumption habits? Do you buy goods because you care about

what others think about your good? Who only shops at name brand stores? Who shops at Walmart? Who shops at Goodwill?


Goods and Services Remind me again why we buy goods and

services? Buying goods and services is an act of

trust. True? False?


Goods and Services

True, because we assume our purchases will increase our satisfaction; however…

Consumption may not always bring satisfaction: Unsatisfactory products Injurious consumption (negative in long-run) Consumer Fraud Examples?


Caveat Emptor“May the

buyer beware”


Bad Service………….


Goods and Services to meet Human Needs Needs: The barest minimum physical necessities

that allow you to survive. Examples:


Maslow’s Hierarchy of Needs


Needs versus Wants


Wants: What people would acquire if their

resources were unlimited. Examples:


Resources: Things used to produce other things to satisfy

people’s needs and wants. Provide the means to satisfy the family

system’s demands. Material resources-(non human)

Examples: Human resources-(personal characteristics)

Examples:


Scarcity: Not enough resources are available to

satisfy one’s needs and wants and choices have to be made about their use. Examples of scarce resources? I WILL ONLY BE AWARDING THE TOP 5

STUDENTS IN THIS CLASS WITH A’S.


The Consumption Process Because there are so many aspects of

consumption it can be thought of as a process.


Consumption Process

Awareness–what are needs and wants Thinking—gather information Planning—shopping around Implementing--buying Evaluating–would you re-purchase?


Awareness A “stimulus” lets us know that something

is needed or desired. A broken computer makes us aware

another one is needed. Your friend’s Play Station 2 game system

purchase makes you aware you want one!!


Thinking The mental exploration of the possibilities:

weighing pros and cons and gathering information about the product in question.

Random set of thoughts.


Planning Deciding “ordered steps of action” needed

to make the purchase a reality. Planning on taking $50 from each pay check to

pay for it. Planning on the date you will have the money. Making a plan to get to the store/or on the

internet to make the purchase….


Implementing You actually sit down at the computer and

serf the web for the best price for the product.

You go to the store to price the product. You actually put the $50 into the bank

each paycheck. Or you really go and make the purchase.


Evaluating Spend time reflecting on your outcome. Is the product in OK condition? Did you achieve some level of satisfaction

with your purchase? Compared to something else was this the

right choice? Should you make an alternative choice?


Factors that influence consumers

Economics History Consumer culture Individual traits, e.g., age Physiological needs Desire for technology Political area, e.g., government standards


Economics The condition of national and worldwide

economies during times of decision making. The unemployment rate Interest rates Inflation rates


History

The background history of each person influences his or her decisions. This includes our own personal histories and also the histories of our families.

The history of the area in which the person resides influences consumer decision making as well.


Consumer culture

Generally refers to patterns of human activity and the symbolic structures that give such activity significance

It is the way people live in accordance to beliefs, language, history, or the way they dress

Culture includes the groups in which an individual or family resides and their behaviors or traditions.


Individual Traits Age Eye color Hair color/type Weight Height


Physiological needs

Thirst Hunger Safety Housing Protection


Desire for technology

Technology includes the methods and materials that individuals use to get what they want.

Including machines, techniques, material objects, and processes.


Political area Politics affect our economic decision

making. Policies impact our consumption…..we

have to buy auto insurance but we don’t have to buy health insurance.

If the draft is reinstated some of you may buy a one way ticket to Canada.


Next Class Read Chapter 1: Consumers in a Changing

World Yes………lots and lots of people and dates

and places and agencies!!! The pain begins immediately do not

complain that you have not been sufficiently warned

Education

Consumers in A Changing World