Buying Principles or Strategies Chapter 3 section 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!!

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

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

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

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

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

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

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

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

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.

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!

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.

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.

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.

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

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

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”

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?

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

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.

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

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).

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.

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

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