1. 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

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

3. 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

4. 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)

5. 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.

6. 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

7. 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

8. 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

9. 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

10. Your Role as a Consumer
Chapter 3