1. Buying Principles or Strategies
Chapter 3 section 2

2. Introduction
The goal of advertisements is to win your consumer dollars.
Advertisers are willing to spend millions of dollars to attract your attention to their products.
It’s Super Bowl Sunday, Do you know how much advertisers pay for 30 seconds of fame?
Almost $3,000,000 per 30 seconds!!!
That’s about $100,000 per second!!

3. Introduction
Because of the problems of scarcity your goal should be to obtain the most satisfaction from your limited income and time
In this section you will learn about three basic buying principles that can help you and all consumers achieve this goal. They are:
Gathering Information
Using Advertising wisely
Comparison Shopping

4. Gathering Information
Suppose you want to buy a new Ipod or MP3 Player
1st you have to get information about the different types of Ipods or MP3 players that are available
You could spend time testing out one that a friend has.
You could also go to different stores and discuss good and bad points of different brands
A wise consumer would do both

5. How Much Information Do you Need?
Information is costly because it involves your time
You need to figure out how much information you need
You only need as much information as is worthwhile.
In other words the value of your time you spent researching information on the MP3 player should not be greater than the value you receive from choosing the MP3 player you chose

6. Developing a Consumer Knowledge Base
As you are shopping in different places looking for the right MP3 player, you are developing a consumer knowledge base
The knowledge you pick up from finding the right MP3 player might one day help you in choosing a car or a computer
Simply getting salespeople to give you the information you want is a skill that will sharpen over time while you shop for other products

7. Using Advertising Wisely
Advertising is all around you, you see it on TV, Radio, the Internet, Billboards, Buses, etc
Advertisements can be classified as:
Competitive Advertisement
Informational Advertisement

8. Competitive Advertisement
Advertising that attempts to persuade consumers that a product is different and/or superior to any other is Competitive Advertisement
Its purpose may be to take consumers away from competitors or to keep competitors from taking away customers
Ads for well established brand names such as Dell & Nike often use this strategy
Competitive Ads appeal to people’s emotions

9. Informative Advertising
Informative Advertising benefits consumers by giving information about a product
From such ads you can simply find out that such items exist!
You can also learn about the price, quality and special features of the product without spending much time or effort

10. Bait and Switch Some advertisers use deceptive, or false advertising
Sellers may misrepresent the quality, features, or the true prices of goods
One of the most widely used methods of deceptive advertising is the bait and switch

11. Bait and Switch
The Bait and Switch is an ad that attracts consumers with a low priced product (Bait), then tries to sell them a higher-priced product (switch).
Car dealerships are notorious for this!
For Example:
Pete Moore is advertising a 2007 Chevy Impala for $10,000. You go to Pete Moore to buy an Impala for the advertised price. When you get there the salesman points out that the Impala for that price has no radio, no CD player, no A/C, no Heat, no power Steering. So he then directs to the $21,000 Impala.

12. Bait and Switch This practice is both deceptive and sometimes illegal
How do you think car dealerships get around this?
By stating the real price in small print, ALWAYS READ THE SMALL PRINT!

13. Pros and Cons of Advertising
Write on sheet of paper three things that are good and three things that are bad about advertising.
Compare your answers with the people at your table, see what answers were most popular
Elect a representative to share the most prominent answer at you table.

14. Comparison Shopping
After you have gathered the information about the make and model you want, you must decide where to buy it
It is generally worthwhile to get information on the types and prices of products available from different stores or companies, This is known as comparison shopping.

15. Comparison Shopping To efficiently comparison shop you should:
Read the newspaper ads
Make telephone calls
Browse the web
Visit Stores
Armed with prices you can negotiate with local merchants to get them to match (or come close to) the lowest price.

16. Warranties
When comparison shopping obviously the price will influence you decision
However don’t forget to find which store offers the best warranty.
The warranty is the promise made by the manufacture or seller to replace a product if it is found to be faulty within a certain time

17. Brand Name or Generic Products
Another choice to be made is the choice between brand name or generic brands.
Brand name is a word, picture, or logo on a product that helps consumers distinguish it from similar products
Such as The Jordan Symbol, or the Reebok symbol
These product are usually sold nation wide and backed by major companies

18. Brand Name or Generic Products
Some companies produce and sell generic brands which means there is a general name for a product rather than a specific brand name given by the manufacturer
For Example:
“Rice Cereal” would be the generic cereal for Kellogg's “Rice Krispies”

19. Review
What are the 3 basic buying principles that can help you obtain the most satisfaction from your limited income?
When gathering information for a purchase, how much information do you need?
What's the difference between Competitive & Informative Advertising?
How does the bait and switch advertising method work?
What is comparison shopping?

20. Introduction
Because of the problems of scarcity your goal should be to obtain the most satisfaction from your limited income and time
In this section you will learn about three basic buying principles that can help you and all consumers achieve this goal. They are:
Gathering Information
Using Advertising wisely
Comparison Shopping

21. How Much Information Do you Need?
Information is costly because it involves your time
You need to figure out how much information you need
You only need as much information as is worthwhile.

22. Informative Advertising
Advertising that attempts to persuade consumers that a product is different and/or superior to any other is Competitive Advertisement
Informative Advertising benefits consumers by giving information about a product

23. Bait and Switch
The Bait and Switch is an ad that attracts consumers with a low priced product (Bait), then tries to sell them a higher-priced product (switch).

24. Comparison Shopping
After you have gathered the information about the make and model you want, you must decide where to buy it
It is generally worthwhile to get information on the types and prices of products available from different stores or companies, This is known as comparison shopping.

25. Homework Find an advertisement in a magazine, newspaper, or internet.
Analyze and answer the questions using the checklist on pg 68 (Figure 3.7)
Tell me if you thought the ad was successful in influencing your consumer behavior. Then tell me why or why not.
Bring in the Ad with a sheet of paper that has the answers the questions on the check list

26. Class Work
Pg 70 #1,2,3,4