Your Role as a Consumer Chapter 3

Consumption, Income, & Decision Making  Consumer – a person or group that buys or uses goods and services to satisfy personal needs and wants  Role as a consumer depends on your ability to consume which depends on income.  Disposable Income – income remaining for a person to spend or save after all taxes have been paid  Discretionary Income – money income a person has left to spend on extras after necessities have been bought

Consumption, Income, & Decision Making  Earning power dependent on: –Education –Occupation –Experience –Health –Location

Consumption, Income, & Decision Making  Decision Making as a Consumer –First decision a consumer must make is whether to buy an item or not. –Figure 3.4 on page 63 is important! –Scarce resources – income & time (comparison shopping) –Opportunity cost – Will you purchase a high or low quality product? –Rational Choice – choosing the alternative that has the greatest value from among products that are comparable in quality

Buying Principles or Strategies  Gathering Information –How much information about a product or service do you need? Gathering information involves time. Time and effort should not be greater than the value received. –Learn as much about a product or service as possible (Internet & consumer reports)

Buying Principles or Strategies  Using Advertising Wisely –Competitive Advertising – advertising that attempts to persuade consumers that a product is different from and superior to any other. Try to take customers from competitors or keep customers from competitors. –Informative Advertising – advertising that benefits consumers by giving information about a product (price, quality or special features) –Bait and Switch – ad that attracts consumers with a low-priced product, then tries to sell them a higher-priced product.

Comparison Shopping  Comparison Shopping – getting information on the types and prices of products available from different stores and companies (newspapers, internet, telephone calls or visit stores)  Warranty – promise made by a manufacturer or a seller to repair or replace a product within a certain time period if it is found to be faulty  Brand Name – word, picture, or logo on a product that helps consumers distinguish it from similar products  Generic Brand – general name for a product rather than a specific brand name given by the manufacturer

Consumerism  Consumerism – movement to educate buyers about the purchases they make and to demand better and safer products from manufacturers  Consumer Rights –1.Right to Safety –2.Right to be Informed –3.Right to Choose – need markets to be competitive –4.Right to be Heard –5.Right to Redress – obtain money or goods for financial or physical damages

Consumerism  Consumer Responsibilities –1.Report the problem immediately –2.State the problem and suggest a solution –3.Include details such as receipts, guarantees and contracts –4.Describe what you may have done to correct the problem –5.Keep a record of efforts to solve the problem –6.Allow reasonable time to solve the problem –7.Contact manufacturer in writing if necessary and keep a copy –8.Keep cool Ethical behavior – acting in accordance with moral and ethical convictions about right and wrong

Consumerism  Help for Consumers –Complain to store manager or write to the manufacturer –Small claims court –Hire a lawyer –Private and government agencies  Better Business Bureau  Agencies on page 74