Consumer Decisions in the Economy

Chapter 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 thyself

There 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 comparison

Ex.

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).