Your Role as a Consumer

Disposable and Discretionary Income Consumer- anyone who buys or uses good or services –D–D–D–Depend on the available income Income can be disposable and discretionary –D–D–D–Disposable- money left over after taxes- use to buy necessity –D–D–D–Discretionary- leftover income can be saved or spent –D–D–D–Disposable income – Expenses = Discretionary Income Influences on consumption: Education, Occupation, Experience, Health, Location, Wages Requires constant decision making

Figure 3.1 Consumer Spending The circle graph shows how Americans spend their income.

Disposable and Discretionary Income Figure 3.3 Earning Power The number of years you are educated has a direct effect on your income.

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Decision Making Decide what to buy or not to buy How much do you really think about it? Parts –S–S–S–Scarce Resources- time and income –O–O–O–Opportunity cost- next best alternative –R–R–R–Rational Choice- what is the alternative that has the greatest perceived value? Goal- best quality at the lowest price Not all choices require this process –S–S–S–Some are simple and easy to make

Gathering Information Need information about a product Some information is common knowledge and the choice is instant Information can be costly because of the time factor –I–I–I–It is worthwhile to collect the information –G–G–G–Get accurate information- life-long skill –I–I–I–Internet is a great research tool More you shop, the more knowledge you gain Sharpens your skills

Using Advertising Wisely Everywhere (TV, Radio, Internet, Posters, etc.) Ads that tries to get you to buy things are called competitive advertising Informative advertising gives you information about the product Learn- existence, price, quality and special features without spending much time Bait and switch- attracting consumers with one deal and the ‘switching’ to another product once they reach the store Deceptive advertising is legal –U–U–U–Use more examples of deceptive advertising

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Comparison Shopping When you look at different stores and products is called comparison shopping Heaviest influence is price Warranty- promise to repair or replace a product –D–D–D–Different types- limited, full, and merchant ability Brand names vs. generic products

Consumer Rights Consumerism- movement to educate buyers Businesses are responsible for product safety and accurate advertising 1962 President JFK stated these Consumer Rights: –R–R–R–Right to safety –R–R–R–Right to be informed –R–R–R–Right to choose –R–R–R–Right to be heard Later added by President Nixon: –R–R–R–Right to redress

Help for Consumers People have the right to complain to producers and sellers (can sue) Better Business Bureaus- give information to customers and help settle disagreements

Consumer Responsibilities Consumer must start the process –R–R–R–Report the problem immediately –S–S–S–State the problem and suggest solution –I–I–I–Include details (receipts) –D–D–D–Describes Action –K–K–K–Keep Accurate records –A–A–A–Allow reasonable time –C–C–C–Contact manufacture in writing (keep copies) –S–S–S–Stay calm, be patient Ethical Behavior- moral behavior with respect to the rights of producers and sellers (no false claims)

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