Your Role as a Your Role as a ConsumerConsumer

Chapter 3Chapter 3

Consumption, Income, & Decision MakingConsumption, Income, & Decision Making

Consumer – a person or group that buys or Consumer – a person or group that buys or uses goods and services to satisfy uses goods and services to satisfy personal needs and wantspersonal needs and wants

Role as a consumer depends on your Role as a consumer depends on your ability to consume which depends on ability to consume which depends on income.income.

Disposable Income – income remaining for Disposable Income – income remaining for a person to spend or save after all taxes a person to spend or save after all taxes have been paidhave been paid

Discretionary Income – money income a Discretionary Income – money income a person has left to spend on extras after person has left to spend on extras after necessities have been boughtnecessities have been bought

Consumption, Income, & Decision MakingConsumption, Income, & Decision Making

Earning power dependent on:Earning power dependent on:– EducationEducation– OccupationOccupation– ExperienceExperience– HealthHealth– LocationLocation

Consumption, Income, & Decision MakingConsumption, Income, & Decision Making

Decision Making as a ConsumerDecision Making as a Consumer– First decision a consumer must make is First decision a consumer must make is

whether to buy an item or not.whether to buy an item or not.– Figure 3.4 on page 63 is important!Figure 3.4 on page 63 is important!– Scarce resources – income & time (comparison Scarce resources – income & time (comparison

shopping)shopping)– Opportunity cost – Will you purchase a high or Opportunity cost – Will you purchase a high or

low quality product?low quality product?– Rational Choice – choosing the alternative that Rational Choice – choosing the alternative that

has the greatest value from among products has the greatest value from among products that are comparable in qualitythat are comparable in quality

Buying Principles or StrategiesBuying Principles or Strategies

Gathering InformationGathering Information– How much information about a product How much information about a product

or service do you need? Gathering or service do you need? Gathering information involves time. Time and information involves time. Time and effort should not be greater than the effort should not be greater than the value received.value received.

– Learn as much about a product or Learn as much about a product or service as possible (Internet & consumer service as possible (Internet & consumer reports)reports)

Buying Principles or StrategiesBuying Principles or Strategies Using Advertising WiselyUsing Advertising Wisely

– Competitive Advertising – advertising that Competitive Advertising – advertising that attempts to persuade consumers that a attempts to persuade consumers that a product is different from and superior to any product is different from and superior to any other. Try to take customers from competitors other. Try to take customers from competitors or keep customers from competitors.or keep customers from competitors.

– Informative Advertising – advertising that Informative Advertising – advertising that benefits consumers by giving information benefits consumers by giving information about a product (price, quality or special about a product (price, quality or special features)features)

– Bait and Switch – ad that attracts consumers Bait and Switch – ad that attracts consumers with a low-priced product, then tries to sell with a low-priced product, then tries to sell them a higher-priced product.them a higher-priced product.

Comparison ShoppingComparison Shopping Comparison Shopping – getting information on Comparison Shopping – getting information on

the types and prices of products available from the types and prices of products available from different stores and companies (newspapers, different stores and companies (newspapers, internet, telephone calls or visit stores)internet, telephone calls or visit stores)

Warranty – promise made by a manufacturer or a Warranty – promise made by a manufacturer or a seller to repair or replace a product within a seller to repair or replace a product within a certain time period if it is found to be faultycertain time period if it is found to be faulty

Brand Name – word, picture, or logo on a product Brand Name – word, picture, or logo on a product that helps consumers distinguish it from similar that helps consumers distinguish it from similar productsproducts

Generic Brand – general name for a product Generic Brand – general name for a product rather than a specific brand name given by the rather than a specific brand name given by the manufacturermanufacturer

ConsumerismConsumerism Consumerism – movement to educate Consumerism – movement to educate

buyers about the purchases they make buyers about the purchases they make and to demand better and safer products and to demand better and safer products from manufacturersfrom manufacturers

Consumer RightsConsumer Rights– 1.1. Right to SafetyRight to Safety– 2.2. Right to be InformedRight to be Informed– 3.3. Right to Choose – need markets to be Right to Choose – need markets to be

competitivecompetitive– 4.4. Right to be HeardRight to be Heard– 5.5. Right to Redress – obtain money or Right to Redress – obtain money or

goods for financial or physical damagesgoods for financial or physical damages

ConsumerismConsumerism Consumer ResponsibilitiesConsumer Responsibilities

– 1.1. Report the problem immediatelyReport the problem immediately– 2.2. State the problem and suggest a solutionState the problem and suggest a solution– 3.3. Include details such as receipts, guarantees and Include details such as receipts, guarantees and

contractscontracts– 4.4. Describe what you may have done to correct the Describe what you may have done to correct the

problemproblem– 5.5. Keep a record of efforts to solve the problemKeep a record of efforts to solve the problem– 6.6. Allow reasonable time to solve the problemAllow reasonable time to solve the problem– 7.7. Contact manufacturer in writing if necessary and Contact manufacturer in writing if necessary and

keep a copykeep a copy– 8.8. Keep coolKeep cool

Ethical behavior – acting in accordance with moral and Ethical behavior – acting in accordance with moral and ethical convictions about right and wrongethical convictions about right and wrong

ConsumerismConsumerism Help for ConsumersHelp for Consumers

– Complain to store manager or write to Complain to store manager or write to the manufacturerthe manufacturer

– Small claims courtSmall claims court– Hire a lawyerHire a lawyer– Private and government agenciesPrivate and government agencies

Better Business BureauBetter Business BureauAgencies on page 74Agencies on page 74