C HAPTER 6

1. CHAPTER6 Consumer Purchasing Strategies and Wise Buying of Motor Vehicles Or “I’d Like Some More Things, Please!” Microsoft Chairman Bill Gates told CNBC that he wished he were not the richest man in the world. “There is nothing good that comes out of that,” he said. http://en.wikipedia.org/wiki/Bill_Gates

2. Culture of Consumption Scandal #6 Clothes

3. “Thanking you for the clothes of your dead people” A journalist was on assignment covering cultures around the world and specifically, how their cultures relate to and think of our culture. His guide in East Africa (the affluent part of Central Africa) invited him to come see the distribution of the clothes from the dead Americans to the locals. When the journalist asked the guide why the locals thought the clothes were from dead Americans, the guide looked at him oddly and said, “Why would a living person give away any of their clothes?”

4. Culture of Consumption Scandal #12 Pets

5. A What Therapist?! How much does a very busy dog therapist charge for six 1-hour sessions with you and your dog? • $250 • $500 • $1,000 • $1,500 The correct answer is (D). That is $250 per hour! Think Viet Nam.

6. How Much is Fido Costing You? Speaking of dogs, what is the average yearly cost of owning a dog?* • Less than $500 • Between $500 and $1,000 • Between $1,000 and $1,500 • Over $1,500 The correct answer is (D). Well, of course. Just one series of therapy sessions cost $1,500! Remember, this is per dog. The total for Americans is $58.5 billion and it is rising quickly. http://www.americanpetproducts.org/press_industrytrends.asp

7. “Frugal, Frugal, Frugal” “I can’t get my wife to spend any money!” • Do Not Forget Taxes • For every $2 spent, you must earn more than $3 – maybe up to $4 depending on your income bracket • “A Dollar Saved is Two Dollars Earned” • From The Wealthy Barber • From The Millionaire Next Door “How did the wife of a millionaire respond when her husband gave her $8 million worth of stock in the company he recently took public? She said, “I appreciate this, I really do.” Then she smiled, never changing her position at the kitchen table, where she continued to cut out twenty-five- and fifty-cent-off food coupons from the week’s supply of newspapers, just as she had done each week for the past 27 years.”

8. Speaking of Millionaires… “These people cannot be millionaires! They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires – they don’t even have millionaire names. Where are the millionaires who look like millionaires?” Spoken by the Senior Vice-President of a trust department of a major bank that had commissioned a focus group interview of twenty first-generation millionaires.

9. Speaking of Millionaires… (continued) There are over 8 million households in America with a net worth of over one million dollars. • The median age is 57 years old • Most are married and have not divorced • More than 80% are first-generation millionaires • The median income is $131,000 per year • Most invest at least 15% of their income each year • 50% have never spent more than • $399 for a suit • $140 for a pair of shoes • $235 for a wrist watch From The Millionaire Next Door

10. Speaking of Millionaires… (continued) The lesson is clear. If you want to become a millionaire, having a high income is not important. You must be frugal and invest wisely. Therein lies the paradox: Do you want to be a millionaire or do you want to live like a millionaire? All the people you think are millionaires – fancy cars, flashy clothes – are really just high-income, high-consumption wage earners with 10 credit cards run up to the maximum. The millionaires are the penny-pinchers. Bizarre, huh?

11. Speaking of Millionaires… (continued) But what about “The Lifestyles of the Rich and Promiscuous” & Don King & Jennifer Spears & Brittany Lopez? Huh? What about them? The media loves to showcase the high net worth, high consumption celebrity figures. The truth is that they constitute only a small percentage of the millionaires in the United States. The media advertisers love them because they encourage the “Little Folk” to over consume.

12. Speaking of Millionaires… (continued) And when you are sitting at home watching TV feeling sorry for yourself as you compare yourself to Donald Rump, instead compare yourself to the citizens of Niger. Over 60% of the population live on less than $1 per day. About 41% do not have access to clean water. Over 90% of the women over the age of 15 are illiterate. Life expectancy at birth is approximately 44 years. In fact, about 1.2 billion people around the world (about 1 in 6) survive on less than $1 a day. (Los Angeles Times)

13. Speaking of Millionaires… (continued) So do you still believe that you would live happily-ever-after if you were a millionaire? What You Have Happiness = –––––––––––––––– What You Want Simply put, if you never learn to be happy with what you have, you will never be happy. Your wants will always outweigh what you have. And even if you do become a millionaire, you will still face the same day-to-day travails that everyone faces. Your life will be more comfortable, but there is no guarantee of happiness.

14. Culture of Consumption Scandal #23 Batteries

15. Disposable or Rechargeable? Given normal usage, how many alkaline batteries would be replaced by one nickel metal-hydride battery? • 25 • 100 • 500 • 750 The correct answer is (C). Screw the Energizer Bunny!

16. Beware of Emotions • Shopping can be an addiction • Many, many people buy things simply trying to fulfill some unmet childhood desire • “An addiction is any mood-altering behavior that the participant is no longer in full control of.”John Bradshaw • Do not think the advertisers do not know all about this and other psychological phenomena “She had forty-seven cashmere sweaters.”

17. Speaking of Emotions… Ever wonder why advertisers use sex to sell their products? “You can keep the beer. But I will take the bubble-headed, bleached blonde with the big kn___kers & the tight b__t, thank you.”

18. Does Advertising Really Work? “Television commercials do not affect me!” Economists estimate that every hour of TV a person watches each week increases their annual spending by about $200. In 2005, Nielsen Media Research reported that the average person watched approximately 4½ hours of TV a day, or 31½ hours a week. At $200 in extra spending for each hour watched, that means that the average person spends an extra $6,300 a year that they would not have spent if they didn’t watch TV. The number has risen to over 5 hours per day. That is 9 years of your life! http://www.statisticbrain.com/television-watching-statistics/ Unhappy People Watch TV -- Happy People Socialize and Read

19. What Factors Motivate You? Social Factors Economic Factors • CPI - inflation • Interest rates • Supply/demand • Brand name • Warranty • Product Quality • Tax rates • Lifestyles • Culture • Attitudes • Ads/media • Hobbies • Peer group Consumer Buying Influences Personal Factors • Housing type • Ethnic group • Religion • Sex and age • Marital status • Occupation • Income • Education • Family size

20. Speaking of Influences… • Would someone please tell me why a Roach handbag is worth $600 more than a JCPenney’s handbag? Oh, I am so sorry. “Coach.” For the prices they are asking, shouldn’t they really call them “First Class?” And do not even get me started on Lousy Vuitton!

21. Culture of Consumption Scandal #73 Light Bulbs

22. Incandescent or Fluorescent? Given normal usage, how many incandescent bulbs would be replaced by one fluorescent bulb? • 2 • 4 • 8 • 11 The correct answer is (D). Incandescent bulbs give off 90% of their energy as heat. Fluorescent bulbs are cold.

23. Incandescent or Fluorescent? Over its lifetime, how much money will one fluorescent bulb save you in energy costs at current electricity rates? • $25 • $45 • $65 • $110 The correct answer is (B). Eventually, fluorescent bulbs will be replaced by LED bulbs.

24. Consumer Purchasing Activities • Problem identification • Information gathering: costs, options, consequences • Sources of attribute assessment • Personal contacts and experience of others • Business organizations advertising & media • Independent testing organizations – Consumer Reports • Price analysis: Are quality and price always related? • Comparison shopping: Do you take the time to comparison shop?

25. Consumer Purchasing Activities (continued) all • Negotiation may be used on some products • Decide on cash or credit • Get all acquisition and installation costs and conditions in writing • Maintenance and ownership costs may be associated with some purchases • Complain if you are not satisfied with a purchase • Do you complain if you are not satisfied? cash A 2004 to 2007 survey by Consumer Reports shows that more than 90 percent of shoppers who asked for discounts got at least one. The negotiated price cuts were on a wide range of goods and services, including furniture, electronics, and medical bills.

26. Practical Purchasing Strategies • Timing purchases • When is the best time to buy Christmas cards? • Brand comparison versus impulse buying • Store brands can be low-cost alternatives • Evaluate warranties and service contracts • Price comparison • Unit pricing provides a standard of measurement • Coupons and rebates (partial refund) • More convenience and ready-to-use products mean higher prices (Tightwad Gazette– Potatoes) • “Sale” does not always mean saving money • In fact…

27. Pretzel Logic • “But it’s on sale! Think of how much we will save!” • You may spend less, but you never save money whenever you buy something; you always spend money whenever you buy • Repeat after me: • “Spending is NEVER Saving!” • “Spending is NEVER Saving!” • “Spending is NEVER Saving!”

28. Pretzel Logic (continued) How much did we save? $37? We didn’t save nothin’! We spent $75!

29. Culture of Consumption Scandal #118 Meat

30. Societal Cost of Meat? How many gallons of fresh water are used to produce one pound of beef? • 100 gallons • 500 • 1,000 • 2,500 The correct answer is (D). Estimates range from 441 (beef industry) to over 12,000 (Dr. David Pimentel, Cornell University).

31. Societal Cost of Meat? How many people can be fed via grains with the resources needed to feed one person with beef? • 5 people • 10 • 20 • 30 The correct answer is (D). Plus, eating lots o’ meat jest ain’t the best thing for yer health, neither. http://www.nytimes.com/2009/04/28/health/28brod.html?em

32. The Cost of Convenience (revisited) Sources: Vons, Baron’s, McDonald’s

33. Speaking of Food… World average is 2,700 calories per day 2,400 calories per day 3,600 calories per day 3,200 calories per day Source: United Nations Environment Programme

34. Speaking of Food… (continued) The total daily caloric intake of the average American has risen by 148 calories per day since 1980. This amount reflects an extra 15 pounds per person each year. -- U.S. Department of Agriculture Your clothes feeling a little tighter recently? Yeah, me too.

35. Speaking of Food… (continued) 8,000 years ago, this was the image of the ideal woman. Today, this is the image of the ideal woman.

36. Speaking of Food… (continued) According to recent studies sponsored by the USDA and the NRDC, how much of the nation’s food ready to harvest never gets eaten? • 2% to 5% • 10% to 15% • 20% to 30% • 40%+ The correct answer is (D). http://www.nrdc.org/food/files/wasted-food-ip.pdf

37. Speaking of Food… (continued) And the average family of four throws out how many dollars worth of food each year? • $50 to $75 • $100 to $150 • $250 to $300 • $575 to $600 The correct answer is (D). Some studies have the number much higher.

38. Culture of Consumption Scandal #235 Bottled Water

39. Ads We Would Love to See http://www.democracynow.org/2007/8/1/the_bottled_water_lie_as_soft

40. But It’s Really Not Just Water! How many plastic water bottles make their way into landfills or wind up as litter each year? • 5,900,000,000 (almost 6 billion) • 12,100,000,000 (a bit over 12 billion) • 22,600,000,000 (about 22½ billion) • 28,000,000,000 (around 28 billion) The correct answer is (C). 62 million each day. http://www.container-recycling.org/ But the State of New York says that it is really closer to (D).

41. Steps in ResolvingConsumer Complaints • Return to place of purchase • Contact the company’s main office via telephone or their web site • Obtain assistance from a consumer agency • Better Business Bureau web site to file a complaint on line: http://www.bbb.org • Federal agencies – Federal Trade Commission • http://www.consumer.ftc.gov/ • Mediation – parties decide for themselves(non-binding) • Arbitration – third-party decides(binding)

42. Steps in Resolving Consumer Complaints (continued) • Take legal action • Small claims court • Class-action suits • Use a lawyer? (can not use one in small claims) • Other legal alternatives • Legal aid society • Prepaid legal services • Research legal questions at www.nolo.com • Try mediation or arbitration first

43. Personal Consumer Protection • To protect yourself as a consumer… • Deal with reputable companies • Avoid doing any business with or giving any information to telemarketers / spammers • www.donotcall.gov • Avoid signing contracts and other documents you do not understand • Compare financing through the seller with other sources such as credit unions • Avoid rushing to get a good deal • Be cautious about offerings that seem too good to be true –they usually are! • http://www.ftc.gov/bcp/edu/multimedia/interactive/grandscam/index.html

44. Culture of Consumption Scandal #1 Cars http://www.youtube.com/watch?v=Z2mf8DtWWd8&feature=player_embedded

45. Buying and Operating Motor Vehicles CHAPTER6 Appendix Or “You Are Not What You Drive!”

46. First, Some Statistics… • Percentages of Short Motor Vehicle Trips… • 49% – Three miles or less • 40% – Two miles or less • 27% – One mile or less • The Average American Uses as Much Energy As… • 3 Japanese • 13 Chinese • 153 Bangladeshis • 499 Ethiopians “…gas mileage usually decreases rapidly at speeds above 50 mph. You can assume that each 5 mph you drive over 50 mph is like paying an additional $0.25 per gallon for gas.” http://www.fueleconomy.gov/feg/driveHabits.shtml

47. Societal Cost of Cars? For every one gallon of gas you burn, how much carbon dioxide do you pump into the atmosphere? • 7 pounds • 15 pounds • 20 pounds • 125 pounds The correct answer is (C). Here is the chemical formula: C8H12 + O2 H2O + CO2

48. Societal Cost of Cars? How much of our oil do we import? • 12% • 27% • 40% • 66% The correct answer is (C). However, for almost two decades, it was approximately 66%. http://www.eia.gov/energy_in_brief/article/foreign_oil_dependence.cfm Source: United States Energy Information Administration

49. Societal Cost of Cars? And how much, per person per year, do we spend on imported oil? • $256 • $409 • $859 • $2,240 The correct answer is (B). Six months ago, it was C. The summer of 2008, it was D. (7.4 million barrels/day) * ($50/barrel) * (365 days/year) / (330 million people)

50. Societal Cost of Cars? Let's see, $409 per person per year multiplied by 330,000,000 people – That is approximately... • $82,000,000,000 ($82 billion) • $135,000,000,000 ($135 billion) • $283,000,000,000 ($283 billion) • $672,000,000,000 ($672 billion) The correct answer is (B). This is your money going to foreign oil producing countries like Saudi Arabia, the folks that really brought you 9/11. (Psst. It was not Iraq. Don’t tell your Republican friends.)