consumer skills lesson - loudoun county public schools

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Consumer Decision Making

• Refers to the thought process of a purchasing decision

• Can be determined by various mental and social factors

• Research helps businesses gain knowledge to provide value to consumers

• Research helps consumers make wise choices

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Consumer Decision Making Process

• Includes five stages:– need identification – information searching– alternative evaluation– purchase decision – post-purchase evaluation

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Need Identification

• Occurs when a person recognizes a difference between his or her ideal and actual situation

• Examples include: – recognizing the need of a

formal suit for a job interview– perceiving the need of a

better computer for running a high-demanding software

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Information Searching

• Involves searching for more information about the product or service

• Includes two methods– internal search– external search

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Internal Search

• Is based on previous experiences of using the product or service

• Is efficient for frequently purchased items• Examples include:

– buying the same brand of milk – having lunch at the school cafeteria

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External Search

• Involves searching for outside information to learn about the product or service

• Is often used when past experience is insufficient• Primary sources include:

– personal sources such as friends or family – public sources such as information on the Internet – marketing sources such as advertising and salespeople

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Alternative Evaluation

• Involves evaluating a product or service based on the consumer’s criteria of meeting the need

• Can be influenced by:– rational reasons

• cost-efficiency • certain attributes of a product

– cognitive impulses • favor of a brand

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Purchase Decision

• Refers to the actual decision of buying or not buying a product

• Has three possibilities:– item first

• selecting a set of brands and then considering when and where to buy

– outlet first• deciding when and where to buy

and then choosing certain brands– not to purchase

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Purchase Outlet

• Involves two main considerations:– where to buy, which can be influenced by:

• store atmosphere• quality of service• return policy

– when to buy, which can be influenced by:• discount sales• time pressure• certain holidays

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Post-Purchase Evaluation

• Involves comparing the product to expectations and deciding whether it is satisfying or dissatisfying

• May leads to:– positive consumer

perceptions – negative consumer

perceptions – repeat-purchase behavior

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Cognitive Dissonance

• Refers to the post-purchase anxiety caused by the doubt of whether a correct purchase decision has been made

• Can be reduced by:– follow-up calls– extended warranty– post-purchase customer service

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Consumer Skills• Assists consumers in purchasing the right product to suit their needs

• Helps consumers increase purchasing power

• buying the same product or service for less money

• buying more goods and services with the same amount of money

• buying better quality goods for the same amount of money

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Smart Shopping• Include three steps:

• identify the needs • what problem are you trying to solve? • how will you use this product and service?

• list the attributes • what functions do you have to have?• what functions would be nice to have but are not necessary?

• compare the items• which item is the most cost‐effective?• how well does each item fit in your budget?

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Reliable Consumer Organizations• Include:

• Consumers Union• publishes Consumer Reports, an unbiased source of product and service evaluations 

• Underwriter’s Laboratories (UL)• establishes safety standards • gives the UL Seal of Approval to qualified products 

• Better Business Bureau (BBB)• reports consumer complaints• provides consumers news and tips 

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When Shopping for Food 

• Consumers should read food labels and look for the following information:

• the name of the product • amount of contents • information of the processor, distributor or packer• list of ingredients • the Nutrition Facts panel

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The Nutrition Facts Panel • Must provide the following information:

• serving size• number of servings • calories per serving • protein per serving (in grams)• carbohydrates per serving (in grams)

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The Nutrition Facts Panel • Must provide the following information:

• fat per serving (in grams)• fiber per serving (in grams)• sodium per serving (in milligrams)• percent of Daily Value for protein, carbohydrates, fat, cholesterol and certain vitamins and minerals 

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When Shopping for Clothes

• Consumers should read the following information on clothing labels:• fiber content• care instructions• where the clothing was made

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When Shopping for Clothes • Consumers should be able to select:

• well‐constructed clothes• attention to detail• well‐fitted• reliable stitching and assembly

• quality fabric clothes• even color throughout• free of snags and pulls• returns to the original shape after being stretched or pulled 

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When Buying a Used Car• Consumers should:

• find the car’s value• value of a used car can be found at Kelley Blue Book (KBB) or the National Automobile Dealers Association (NADA)

• check the vehicle history report• can be found at CARFAX.com• includes information such as number of previous owners and whether it was salvaged, stolen, recalled or in an accident

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When Buying a Used Car

• Consumers should:• never sign an “As Is” statement with the dealer• have the financing and loan approvals ready

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When Buying a New Car• Consumers are suggested to:

• conduct extensive research and know what they want

• put their priorities in order and narrow down choices

• test drive • compare the price at several different places

• plan to negotiate the best price• take financing, warranties and insurance into consideration

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New Car or Used Car?New Car Used Car

Advantage • Freedom of choice• Better financing 

• Lower cost• Better insurance 

rates

Disadvantage  • More expensive• Higher insurance 

cost

• Unknown problems• Higher financing 

rates• Limited choices

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When Buying a House• Consumer should:

• conduct extensive research• common sources include real estate agencies, newspaper classifieds, online sources, family and friends, etc. 

• look for government aid• housing aid is provided by federal agencies such the Federal Housing Administration (FHA) and the U.S. Department of Housing and Urban Development (HUD)

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When Buying a House

• Consumers must:• have the property inspected 

• professional home inspections are required by law in many states• know the laws and regulations of purchasing a home 

• home buyers must have a title search in order to establish a clear claim to ownership 

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When Renting a House• Tenants must understand:

• renter’s rights• have a safe and healthy environment• have privacy

• renter’s responsibilities• must care for the property • must pay the full rent when due• must obey terms and restrictions in lease 

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Renting or Buying?• Should be considered based on:

• budget• renters: deposit, monthly rent, utilities and renter’s insurance • buyers: down payment, mortgage, property taxes, utilities and property insurance

• responsibility • renters: greater freedom to move, less responsibility for upkeep• buyers: greater sense of security and stability, freedom to remodel or redecorate 

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Renting or Buying?Renter Buyer

Payments  • Deposit• Monthly rent• Utilities • Renter’s insurance 

• Down payment• Mortgage• Property taxes 

Utilities • Insurance

Advantages • Greater freedom to move

• Less responsibility for upkeep

• Greater sense of security and stability

• Freedom to remodel or redecorate 

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Rules for Smart Shoppers • Include:

• learn about the product and service 

• shop around• watch for sales• be aware of hidden costs• read the label• consider the maintenance and warranty

• think before you buy

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COMPLETE THE CONSUMER SKILLS QUIZ ON VISION

References

• http://www‐rohan.sdsu.edu/~renglish/370/notes/chapt05/• http://www.managementstudyguide.com/consumer‐decision‐making‐process.htm• http://www.udel.edu/alex/chapt6.html• http://www.psychologytoday.com/basics/consumer‐behavior• http://www.consumerpsychologist.com/• http://texas4‐h.tamu.edu/files/2012/12/2012‐13_CDM_Best_Consumer_Decision.pdf• http://www.consumerreports.org/cro/index.htm• http://www.carfax.com/entry.cfx

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AcknowledgementProduction CoordinatorCaroline Huang‐Loggains 

Brand ManagerMegan O’Quinn

Graphic DesignerMelody Rowell

Technical WriterJessica Odom

V.P. of Brand ManagementClayton Franklin

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Executive ProducerGordon W. Davis, Ph.D.

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