Consumer PurchasingChapter 4

I have no money, no resources, no hopes. I am the happiest man alive.

- Henry Miller

Anybody who thinks money will make you happy, hasn't got money.

- David Geffen

What Influences Your Buying Decisions?• Come up with 10 factors that could

affect your decision to buy or not to buy something

• Categorize each of your factors by indicating whether it is a:– Economic– Social – Personal

Economic Factors

– Prices– Interest rates– Product quality– Supply and demand– Convenience– Product safety– Brand name– Maintenance costs– Warranty

Social Factors– Lifestyle– Interests– Hobbies– Friends– Culture– Advertisements– Media (magazines, radio, television,

newspapers)

Personal Factors– Gender– Age– Occupation– Income– Education– Family size– Geographic– Ethnic background– Religion

What kinds of things can you do to get more for your money or increase your buying power?

• Trade offs– Buy with a credit card now, instead of

buying later– Buy quality online/catalog as opposed to

buying cheap at the store

• Research the Product – Cheap brands, stores, sizes

How do you intelligently go about purchasing a product?

• Four phases– Phase 1: Before you shop– Phase 2: Weighing the Alternatives– Phase 3: Making the Purchase– Phase 4: After the Purchase

Phase 1: Before you shop

• Identify your needs• Gather information

– People– Ads and packaging– Reports– Web sites

• Be aware of the marketplace– Know the brands and features available– Be familiar with sales, returns, and credits

Phase 2: Weighing the Alternatives

• Identify what is important to you• Compare prices

– Does high/low cost always relate to quality• Do comparison shopping

– When buying complex or expensive items– When you are buying them often– When using the Internet, print ads, or mail-order

catalogs– Different sellers offering different prices and

services for the same product– Product quality or price varies greatly

Phase 3: Making the Purchase

• Negotiate price– What kind of items can you negotiate on?– Make sure the other person has authority

• Decide on credit or cash– Evaluate the source of loan, credit acct.,

payment period, down payment• Know the real price

– What types of things may be added on?•Delivery, installation, shipping

Phase 4: After the Purchase

• Added costs– Additional maintenance and ownership costs

• Always reevaluate your purchase decisions• Consider changes in needs, lifestyle, values, goals,

and financial resources

Personal Decision Making Process• Complete the activity based on the

problem of needing a computer to do schoolwork

Need Use of a Computer

Smart Shopping Ideas

• Timing purchases• Store selections• Brand comparison• Label information research• Price comparison

Timing Purchases

• Seasonal, buy bargains at certain times of the year

• Holidays – things may be more costly• Wait until products have been on the

market • Supply and demand

Store Selection

• Retail store vs. convenience store• Mail order• TV home shopping• Online shopping

– Why do this?– Don’t have to leave home, lower prices,

offer more than what is at the store, good product info

Brand Comparison

• Brand names vs. generic• Impulse buying

– Displays may be distracting– Buy what you don’t need

Label Information Research

• Advertising on product packages• To have “low fat” or “light” must meet

govt. criteria• Packages must have:

– Manufacturer name/address– Weight and ingredients– Nutritional information– Open dating – freshness and shelf life

Price Comparison

• Unit pricing– Total price/Unit of measurement– $2.89/12 oz = $.24 per oz

• Discount coupons• Manufacturers rebates• Remember

– More convenience mean higher prices– Ready-to-use means higher prices– Large packages are usually best buy– “On sale” doesn’t mean you save

Price Comparison Websites

• http://www.comparegroceryprices.org

Advertising1. Product Advertising

– Product name repeated several times, famous people hired to use product, testimonials from those who have used product, and ads carefully aimed to appeal to certain people (certain days, time, and types of programming).

Examples:

2. Company Advertising – Emphasis placed on quality of products or services the company

sells, warranties and/or guarantees, or social and environmental concerns of company. May be accompanies by catchy slogans and tunes.

Examples:

3. Industry Advertising– All producers benefit from advertising

Examples:

Ad Slogans

• Coke– 1900

• "For headache and exhaustion drink Coca-Cola"

– 1905-• "Coca-Cola revives and sustains“• "The favorite drink for ladies when

thirsty,  weary, and despondent“

– 2000• "Coca-Cola Enjoy“

– 2001• "Life tastes good"

Ad Slogans

• Pepsi– 1903

• "Exhilarating, Invigorating, Aids Digestion“

– 1906• "Original real food drink“

– 1908• "Delicious and Healthful"

Advertising

• Celebrity Endorsements– Carrot Top, Cosby, Jordan

• Mascots – Animals– AFLAC Duck, Energizer Bunny, Geico

Gecko, Taco Bell Dog

• Mascots – Objects– Arby’s Oven Mitt, Poppin’ Fresh Doughboy,

Scrubbing Bubbles, Kool-Aid Man

• Mascots – People– Aunt Jemima, Burger King, Gerber Baby,

Keebler Elves

Common Advertising Strategies• 1. Ideal Kids

– Kids in commercials are a little older and a little more perfect than the target audience of the ad. A commercial that is targeting eight year-olds, for instance, will show 11 or 12 year-old models playing with an eight year old's toy

• 2. Heart Strings– Commercials often create an emotional ambience that

draws you into the advertisement and makes you feel good. The McDonald's commercials featuring father and daughter eating out together, or the AT&T Reach Out and Touch Someone ads are good examples. We are more attracted by products that make us feel good

• 3. Amazing Toys– Many toy commercials show their toys in life-like fashion,

doing incredible things. Airplanes do loop-the-loops and cars do wheelies, dolls cry and spring-loaded missiles hit gorillas dead in the chest. This would be fine if the toys really did these things.

Common Advertising Strategies

• 4. Life-like Settings– Barbie struts her stuff on the beach with waves

crashing in the background, space aliens fly through dark outer space and all-terrain vehicles leap over rivers and trenches. The rocks, dirt, sand and water don't come with the toys, however.

• 5. Sounds Good– Music and other sound effects add to the excitement of

commercials. Sound can make toys seem more life-like or less life-like, as in a music video. Either way, they help set the mood advertisers want.

• 6. Cute Celebrities– Teenage Mutant Ninja Turtles sell pizza. Spuds

McKenzie sells beer. "Joe Cool" camel sells cigarettes. All of these are ways of helping children identify with products either now or for the future.

Common Advertising Strategies• 7. Selective Editing

– Selective editing is used in all commercials, but especially in commercials for athletic toys like frisbees or footballs. Commercials show only brilliant catches and perfect throws. Unfortunately, that's not the way most children experience these toys.

• 8. Family Fun.– "This is something the whole family can do together!" or "This is

something Mom will be glad to buy for you." Many commercials show parents enjoying their children's fun as if the toy will bring more family togetherness.

• 9. Excitement!– Watch the expressions on children's faces. Never a dull

moment, never boring. "This toy is the most fun since fried bananas!" they seem to say. How can your child help thinking the toy's great?

• 10. Star Power.– Sports heroes, movie stars, and teenage heart throbs tell our

children what to eat and what to wear. Children listen, not realizing that the star is paid handsomely for the endorsement.

Food Advertising Strategies• Star Power - your favorite sports star or

celebrity is telling you that their product is the best! Kids listen, not realizing that the star is being paid to promote the product

• Bandwagon - join the crowd! Don't be left

out! Everyone is buying the latest snack food: aren't you? 

• Scale - is when advertisers make a product look bigger or smaller than it actually is

• Put Downs - are when you put down your competition's product to make your own product seem better. 

Food Advertising Strategies

• Facts and Figures – Facts and statistics to enhance your

product's credibility

  • Repetition

– Advertisers hope that if you see a product, or hear it's name over and over again, you will be more likely to buy it

Food Advertising Strategies• Sounds Good

– Music and other sound effects add to the excitement of commercials, especially commercials aimed at kids. Those little jingles, that you just can't get out of your head, are another type of music used to make you think of a product. Have you ever noticed that the volume of commercials is higher than the sound for the program that follows? 

• Cartoon Characters– Tony the Tiger sells cereal and the Nestlés Quick

Bunny sells chocolate milk. Cartoon like these make kids identify with products. 

Food Advertising Strategies

• Weasel Words – Look for words in commercials like: "Part of..." "The taste of

real..." "Natural..." "New, better tasting....." "Because we care..." There are hundreds of these deceptive sayings – how many more can you think of?  

• Omission – Don't give you the full story about their product. For

example, when a Pop Tart claims to be "part" of a healthy breakfast, it doesn't mention that the breakfast might still be healthy whether this product is there or not. 

• Are You Cool Enough? – Try to convince you that if you don't use their products, you

are a nerd. Usually advertisers do this by showing people that look uncool trying a product and then suddenly becoming hip looking and doing cool things. 

Cleveland Municipal Stadium, 1974• The Promotion: 10-Cent Beer Night

– To bring fans to see the miserable Cleveland Indians, management decided to sell 10-ounce cups of beer for only 10 cents at a game against the Texas Rangers

• What went wrong: – Management forgot one small detail: drunk people get restless– More than 25,000 fans showed up for the event, most of them already tipsy

at the gate– Among the more tame incidents was a woman who flashed the crowd from

the on-deck circle, a father-son team mooning the players (good bonding experience) and fans jumping on the field to meet shake hands with the outfielders

– In the bottom of the ninth, the Indians tied the game, but never got a chance to win. Fans started throwing batteries, golf balls, cups and rocks onto the field and one even took the glove of the Rangers right fielder. As the player rushed into the stands to get his glove back, fans starting swarming the field to stop him and threw chairs to block his way

• The Outcome: – The Indians were forced to forfeit, nine fans were arrested, and the AL

president forced the franchise to abandon the promotion idea after understating “There was no question that beer played a great part in the affair.”

Comiskey Park, 1979 • The Promotion: Disco Demolition Night

– White Sox fans were encouraged to bring old disco records to the park in exchange for a reduced admission price of 98 cents. The records were to be destroyed in between the two games of a doubleheader against the Detroit Tigers

• What went wrong– A lot of people wanted to see disco records destroyed. They

thought they would get 5,000+, but got 75,000+ showed up – The crowd, who were reportedly heavily under the influence, soon

realized that records could double as Frisbees, which naturally led to fans throwing firecrackers and drinks

– When the demolition moment came, the explosion was bigger than expected and ended up ripping a hole in the outfield grass. Thousands of fans ran onto the field to join the mayhem, burning banners and throwing objects. The batting cages were even destroyed in the riot

• The outcome– The Tigers refused to take the field, forcing the White Sox to forfeit

the game. The quick patch job on the outfield left the grass uneven and players complained about it for the rest of the season

Dodger Stadium, 1995

• The Promotion: Ball Night– Fans entering the game were given a souvenir baseball

• What went wrong: – Turns out baseballs are pretty convenient things to throw. In

the seventh inning, fans threw balls at an opposing outfielder when he bobbled a play

– The real drama happened in the bottom of the ninth, though. Dodger Raul Mondesi and manager Tommy Lasorda were ejected for arguing a strikeout call, inspiring about 200 fans to throw their promotional balls onto the field

– The umps urged the Cardinals to stay on the field, but finally decided to end the game after more fans decided to contribute their gifts to the game

• The Outcome: – The Dodgers were forced to forfeit the game, the first forfeit

in the National League in 41 years

Fifth Third Ballpark, 2006

• The Promotion: Cash Drop– The West Michigan Whitecaps, Detroit’s class-A affiliate, had

a helicopter drop $1,000 in various bills from a helicopter after a game.

• What went wrong: – People love money more than they love other people. – Two children were injured scrambling for the cash. A girl

received a bloody lip being pushed to the ground, while a seven-year-old boy was bruised when he got trampled in the fray

• The Outcome: – The boy was taken to the hospital, but released after

treatment. The team management summed up the incident by reminding everyone that they had signed waivers

Dodger Stadium, 2007

• The Promotions: All-you-can-eat seats– The Dodgers decided to promote obesity by opening up a section

of all-you-can-eat seats. Although beer, ice cream and candy are still for sale, most food is just given away. Ticket prices are $35 in advance and $40 on game day

• What went wrong: – Not everybody can handle an open buffet of hot dogs and nachos. – One Slate reporter wrote about his experience in the seats, which

predictably ended in vomit– Countless other fans have had their evenings end in a similar way

• The Outcome: – Despite the upchucking, the seats remain open and usually draw

between 2,000 and 4,000 fans a night. In fact, the Dodgers have declared the promotion a success and have reached the second-highest attendance in baseball. Other stadiums have contacted the Dodgers about copying the idea