Making Consumer Decisions Buying Goods and Services

Consumer Choices Deciding What to Buy Deciding When to Buy Deciding Where to Buy Deciding How Much to Pay

Customer vs. Consumer CUSTOMER –A person who selects and purchases goods and services CONSUMER –a person who selects, purchases, uses, and disposes of goods and services

WHAT TO BUY BRAND vs. GENERIC Brands – help consumer distinguish it from other products Generic – priced lower because… –producers spend so little on marketing and advertising –Usually sell for 40% lower

WHEN TO BUY Planning a major purchase in advance can help save money –End of Season –After the holidays –Before new models are released

WHERE TO BUY Department Stores Discount Stores Off-Price and Outlet Stores Limited-Line Retailers Superstores Convenient Stores Warehouse Stores Shopping at Home

Department Stores Sell a wide variety of goods –Clothing, Furniture, appliances, jewelry –Brand Names –Customer Service –Higher Prices Examples: –Macy’s –Penny’s –Carsons

Discount Stores Sell a wide variety of goods but at lower prices –K-mart –Wal-Mart –Target

Off-Price and Outlet Stores Off-price and outlet stores are able to offer large discounts because the items they sell have minor flaws, are out of season, or have been discontinued, or were overstocks: –TJ Maxx –Marshalls –SteinMart

Limited Line Sell an assortment of goods in one product line –Such as: Electronics, shoes, sporting goods, clothes Examples: –Dick’s Sporting Goods –Best Buy –Toys R us –American Eagle

Superstores Superstores are a complete grocery store but also have a wide variety of other items Examples: –Super Walmart –Super Target –Meijers

Convenient Stores Provide easy access that consumers often buy as a necessity Usually close to home Examples: –7-11 –White Hen

Warehouse Store Typically the size of a football field Carry a huge selection of food and nonfood items Bulk Examples: –Costco –Sam’s Club

Shopping at Home Examples: –TV –Catalogs –On-line

WHAT TOPAY WHAT TO PAY Most expensive – best quality? Least expensive – best buy? HOW do you know what to pay??? COMPARISON SHOP WHEN MOST IMPORTANT? –Major purchases because the cost differences can be enormous

COMPARISON SHOPPING Comparing the prices and characteristics of competing brands or stores Comparison Shopping Checklist –Price ( Unit Pricing ) –Features –Quality –Convenience –Warranty

COMPARISON SHOPPING Comparing the prices and characteristics of competing brands or stores Comparison Shopping Checklist –Food –Toys –Clothing – Online Comparison sites

Preparing to Shop Study Advertisements WHAT IS ADVERTISING? Advertising is a paid form of communication, to persuade a particular audience to purchase goods/services Three primary objectives of advertising are to: –Persuade –Remind –Inform

Advertising Strategies –Advertising Strategies Rational Advertising – facts and information Emotional Advertising – appeals to your feelings

Preparing to shop… Reading Consumer Publications –Consumer Reports Examines and rates products –Consumer Research Magazine

Shop at Sales –Promotional Sales Special buy on new products –Clearance Sales To clear out goods that are out of season or no longer profitable –Loss Leaders Advertised products that sell at a loss to bring customers into a store

Preparing to shop… Uses Shopping Lists To avoid impulse buying To help save money Resist pressure and gimmicks “Super low prices” “You’re Won a Prize”

Read Labels and Warranties Warranty –A written guarantee from the manufacturer that states the conditions under which the product can be returned, replaced or repaired –A legal document that states the rights and responsibilities of the consumer and manufacturer –Federal Law requires sellers of products greater than $15 to have a written warranty

Types of Warranties Implied –Unwritten guarantees that a product is fit for the intended use Expressed –Written and comes in two forms Full warranties states that the seller will repair or replace the product. Usually good for a stated time period. (ie: 90 days) Limited Warranty covers only certain parts of a product. The buyer may have to pay a portion of the repair cost