Download Chapter 3- Your Role as a Consumer

Your Role as a
Consumer
Consumption, Income,
and Decision Making
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Consumer: any person or group that buys or
uses goods and services to satisfy personal
needs and wants
A person’s role as a consumer depends on their
available income and how much of it is spent
or saved.
Disposable income: income remaining for a
person to spend or save after all taxes have
been paid.
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Discretionary income: money income a person
has left to spend on extras after necessities have
been bought
Discretionary income is spent on luxury items
or entertainment.
Spending income requires constant decision
making.
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Making consumer decisions involves three
parts.
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Deciding to Spend Your Money
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Deciding on the Right Purchase
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Deciding How to Use Your Purchase
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2 resources are involved: income and time.
Before you spend money, you need to invest
time in obtaining information about the
product.
Remember time is a cost to you. If you invest
time researching a product, you cannot get that
time back.
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Choosing between a low, medium, or high
quality product.
This is why research is important: the low or
medium quality item might meet your needs as
well as the high quality item and it will save
you money.
When you make consumer decisions base on
opportunity cost, you are engaging in rational
choice.
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Once you own something you must decide
how much time it takes to repair and maintain.
You should know when you need to replace
the item.
You should know at what point the item will
become obsolete.
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Choose the best quality item that is the least
expensive and will satisfy your wants.
Rational consumers all make different choices.
Buying Principles or
Strategies
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Takes time and research.
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Try to find out only what you need to know.
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Getting accurate information from a
salesperson is a life-long skill.
Use the internet to research a product and the
companies selling it.
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Advertising is everywhere.
Three common types of advertising:
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Competitive Advertising= advertising that attempts to
persuade consumers that a product is different from
and superior to any other
Informative Advertising= advertising that benefits
consumers by giving information about a product
Bait and Switch= advertising that attracts consumers
with a low-priced product, then tries to sell them a
higher-priced product
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Comparison shopping: getting information on the
types and prices of products available form
different stores and companies
Use information obtained from other stores to
negotiate a lower price.
Consider the different product warranties.
Compare the value of generic to brand name
products.
Consumerism
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Consumerism: movement to educate buyers
about the purchases they make and to demand
better and safer products from manufacturers
Business are now responsible for product
safety, healthful food, and accurate advertising.
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Since 1962, consumers have the right to
product safety, to be informed about their
product, to choose from a variety or products,
and the be considered in making laws about
products.
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People can complain to store managers and
manufactures when dissatisfied with a
product.
The Better Business Bureaus give information
on products and help to settle buyer and seller
disagreements.
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There are magazines and private consumer
groups that provide helpful information on
products.
Federal agencies require consumer notification
and warranties.
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Be informed about purchases.
Consumers need to initiate the problemsolving process when a product or service is
faulty.
Practice honest and ethical behavior.
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Only return products with legitimate faults.
Ethical behavior: acting in accordance with
moral and ethical convictions about right and
wrong