Consumer Purchasing & ProtectionChapter 4

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What You’ll Learn When you have completed this chapter, you will be

able to:

Determine the factors that influence buying decisions

Explain a research-based approach to buying goods & services

Identify strategies for making wise buying decisions

Identify ways to solve consumer problems Describe the legal alternatives for consumers

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Consumer Purchasing• What influences you to make a purchase?

• Trade-offs & buying decisions• Ex. Buying on credit allows you to obtain the product

now…it will be more expensive in the long run due to interest charges

• Researching Consumer Purchases• Four phases of buying

1. Before you shop2. Weighing alternatives3. Making the purchase4. After the purchase

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Influences on Consumer Buying Decisions

(Figure 4.1) What are the economic, social, and personal

factors that would influence you if you were going to buy a car?

Economic Factors

Social Factors Personal Factors

Prices Lifestyle Gender

Interest rates Interests Age

Product quality Hobbies Occupation

Supply & demand Friends Income

Convenience Culture Education

Product safety Advertisements Family size

Brand name Media Geographic region

Maintenance costs Ethnic background

Warranty Religion

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Phase 1: Before you shop Identifying you needs

Does it have to be name brand or can it be generic?

Gathering information

Becoming aware of the marketplace

Completing these steps will enable you to get what you really want

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Phase 2: Weighing the Alternatives Every consumer decision may be approached in

several ways Instead of buying an item, what could you do

instead?

Identify what is important to you – features, performance, design

Compare prices

Do comparison shopping

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Phase 3: Making the Purchase Negotiate the price

Decide on credit or cash – consider the costs & benefits of each Before deciding on credit, evaluate its costs, such as

interest rates & fees

Down payment – portion of total cost that must be paid at time of purchase

Know the real price – any extra costs (installation, delivery, etc.)

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Phase 4: After the Purchase Any other costs or tasks?

Ex. Additional maintenance &ownership costs like insurance on car

Learn how to operate the product correctly in order to avoid major repairs

Learn the policy for returns or replacement of product

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Smart Buying Strategies• How can you make an informed purchase

decision?

• Timing purchases – seasonal deals

• Store selection– Cooperative

• Brand comparison – Generic vs. Name brand

– Impulse buying – purchasing items on the spur of the moment can be more expensive

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Label information research– Labels often include a great deal of advertising

– Federal laws also require labels present factual information

– Labels on processed foods must have nutritional information

– Open dating – helps determine freshness of some foods

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Price comparison Unit pricing – standard unit of measurement to

compare the prices of packages that are different sizes

Rebate – partial refund of the price of a product

Have to submit a form, the original receipt, and the package’s UPC symbol, or bar code

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Warranty evaluation Warranty – written guarantee from manufacturer

that states the conditions under which the product can be returned, replaced, or repaired

Types of warranties: Implied – unwritten guarantees that cover

certain aspects of the product or its use Express – full or limited warranty will fix or

replace product or parts

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Service contract Separately purchased agreement by the

manufacturer or distributor

Cover costs of repairing the item

Sometimes have extended warranties

You have to pay extra for service contract

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Resolving Consumer Complaints (4.2)• Sources of consumer complaints

• Most customer dissatisfaction results from products that are defective or of poor quality

• Results in unexpected costs, deceptive pricing, and unsatisfactory repair service.

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Fraud Dishonest business practices that are meant to

deceive, trick, or gain an unfair advantage

Types of fraud: Telephone and mail scams may offer you

phony free prizes, travel packages, work-at-home schemes, and investment opportunities

Best way to protect yourself from consumer fraud is to recognize it before you become a victim

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Resolving differences between buyers & sellers– Return to the place of purchase

– Contact company headquarters

– Consumer agency assistance• Government agencies

– Dispute resolution• Mediation – attempt by a neutral 3rd party to solve

problem…not legally binding• Arbitration – conflict is resolve by 3rd party and is legally

binding

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Legal options for consumers Small claims court – court that deals with legal

disputes that involve amounts below a certain limit

Class action suits – legal action on behalf of all people who have suffered same injustice

Other legal alternatives Legal aid society – network of community law

offices that provide free or low-cost legal assistance. Not everyone is eligible for this service…based on income

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