Consumer Choice

1. Consumer Choice Stage 5 Commerce

2. Consumer Choice – Commerce and Choice Students learn to: • Investigate the scope of Commerce and choice • Identify and classify examples of different types of commercial and legal decisions that people make on a daily basis • Recognise the consequences of commercial and legal decisions on the quality of our lives and the environment Students learn about: • Decisions affecting the quality of our lives • Consumer • Financial • Business • Employment • Legal • Environmental

3. Consumption of goods and services • Write definitions for the following terms and find a picture to illustrate each: • Goods • Services • Needs • Wants • Consumers • Personal wants • Collective wants

4. ClickView: Consumer Choice & Protection • What things that have you consumed today? • Are they a good, service, need or want? • This video gives you an overview of various factors that you may/not be aware of when making a purchasing decision

5. Decisions Affecting The Quality Of Our Lives Commercial Personal

6. Commercial Decisions

7. Employment decisions • The main types of employment decisions a person makes: • Number of hours worked / number of hours for leisure activities. • Sector to work in. • Run business or work for someone. • Adapt to change in the job market. • How employment decisions impact on a person’s quality of life: • Number of hours with the family. • Friendship time. • Leisure activities. • Amount of money earned. Outline 5 examples of flexible working practices and the advantages of each way of working.

8. Lingo List • Income • Labour • Wages • Enterprise • Profit • Savings

9. Financial decisions • The key financial decisions consumers need to make and the importance of the decision. • Spend money – to satisfy needs and wants • Save money – • Personal satisfaction and security • Superannuation and long term investment • Buy expensive item • Savings history to get a loan Develop a poster on preparing a budget OR options for paying (cash, credit card, direct debit etc) OR making investment decisions OR deciding how to receive income (cash, fringe benefit, salary sacrifice)

10. Lingo List • Casual • Part-time • Flexible work hours • FIFO (fly in fly out) • Shift work • Credit Card • Direct Debit • Cash • Debit Card • Superannuation • Budgets

11. Legal decisions • Protect consumer rights. • Responsibility of suppliers. • Contract – when purchase item enter contract with retailer. Right to get what paid for. Access the NSW Office of Fair Trading website www.fairtrading.nsw.gov.au. Outline the types of legal advice this site provides for consumers.

12. Consumer decisions • choosing where to buy • range of locations and sources • types of retail outlets • internet purchasing and mail order • locally, interstate, globally • choosing what to buy • types of goods and services • different brands and products

13. Lingo List • Comparison shopping • Retail outlet • E-commerce • Local • Interstate • National • Global

14. Business decisions • Marketing – Product (what consumers want), Price (what competitors charge and what consumers willing to pay), Promotion (how market), Place (where sell). • Quantity to produce – consider demand. • Distribution– shop front, direct mail, internet. • Financial requirements • Business skills including technology • Employee requirements • Legal structure – determines liability – sole trader, partnership, company, franchise, cooperative. • Production – where/how will it be produced (primary/secondary/tertiary/quaternary/quinary)

15. Lingo List • Primary • Secondary • Tertiary • Quaternary • Quinary • Product • Price • Place • Promotion • Liability

16. Personal Decisions Social life decisions. How will I respond to pressures from my peers?

17. Environmental decisions • Environmentally aware consumers ask themselves the following questions: • Does the production or distribution process of this product harm the environment? • Does the use of the product harm the environment? • Is this product recyclable? Brainstorm the strategies consumers can use to minimise the impact of their consumption decisions on the environment

18. Consumer decisions Students learn to: • research consumer information from a variety of sources that may include the internet, advertising material, specialist magazines and comparison shopping surveys • select and apply appropriate criteria to rank alternative purchasing options • explain the factors influencing decisions to buy locally, regionally, interstate or globally, retail or wholesale or on the internet • research and report on comparison shopping processes and decisions using word processing applications

19. Types of goods and services • Consumers purchase two main types of goods – • 1. Durable goods – goods that have a long lifespan and do not need to be replaced frequently. For example a washing machine, furniture and motor vehicles. • 2. Non-durable goods – goods that are purchased frequently and have a short lifespan. They are less expensive and bought with cash or EFTPOS. For example food and pens

20. Types of goods continued • Another way of naming or grouping goods is to look at the relationships between them. • Complementary goods – a good that is generally consumed with another good. For example tomato sauce and meat pies. • Substitutes – a good that can be purchased as an alternative to another good. For example butter instead of margarine.

21. Services • Intangible goods provided to consumers by individuals or firms. • Some like education are transferable from one person to another. • Some are consumed at the point of sale like watching a concert so are not transferable. Make a list of the services you consume on a weekly basis.

22. Producer or consumer services • Divided into producer or consumer services based on who the consumer is: • Those consumed by businesses like transport are called producer services. • Those individuals consume in their everyday lives like health are consumer services.

23. Different brands and products • Notable examples include Nike, Coke, Quik silver, Microsoft, Apple • Brand names can become so powerful they replace the original or generic name for the product for example vacuuming being referred to as hoovering. • Generic and own-label goods include ‘no frills’. They boost the reputation of supermarkets and reduce the power of manufacturing companies. They often cost less and are of comparable quality to the branded alternatives.

24. Activity Select 10 goods you would purchase during a typical week and then copy and complete the table as shown above.

25. Choosing what to buy • Impulse buying – where you purchase a good or service on the spur of the moment and later discover you cannot afford the product or do not really need it.

26. Strategies to avoid impulse buying • Asking the following questions enables you to avoid impulse buying. • What exactly are my needs ? • Can I afford this ? • Have I compared prices ? • What after-sales service is available with the product ? • What are the features of the product and will it do all I want it to do ? • How safe and reliable is the product ? Design an educational pamphlet to outline the steps consumers take to avoid impulse buying. Include pictures and illustrations to help get your message across.

27. Choosing where to buy – range of locations and sources • Retail stores can be placed in a hierarchy based on the types of goods they provide and how far consumers need to travel to get to them. • At the top are large regional shopping centres and stores selling expensive consumer durables (sporting equipment) • Then come planned shopping centres like Westfield which provide one stop shopping and a carpark. • Independent retailers and corner stores have largely been replaced. Select a product sold in a range of locations and from different sources and report on comparison-shopping processes. Include a picture of the product.

28. Choosing where to buy – types of retail outlets • General (corner) stores – small retail outlets that focus on selling everyday convenience items like milk and bread. • Supermarkets – (Coles) large self-service stores that sell a wide variety of food and other household products. • Department stores – (David Jones) retail outlets divided into a number of smaller units or departments selling a wide rage of goods and services. • Discount stores – (Big W) offer a range of goods through specific product departments which provide cut price promotions and value for money. • Independent specialty stores – (The Bike Barn) usually owner operators that focus on selling a specific product. • Category killers – (Toys ‘R’ Us) retail outlets often operating out of large warehouses that dominate the sale of one particular product type.

29. Choosing where to buy – types of retail outlets continued • Franchises – a type of retailing that involves selling the rights to use a business name, image or management system. • Periodic markets – large numbers of sellers in an informal market setting open only on the weekend and providing bargain and bulk-orders to save money. • Shopping strips – traditional shopping centres consisting of a range or retail outlets lining the main street of a town or suburb. • Planned centres– (Macquarie Centre) retail outlets that are planned, operated and managed as a single unit. They contain a couple of large anchor stores and a wide range of speciality stores under one roof with easy car parking. Develop a mind map of the different types of retail outlets.

30. Activity • Using the following website • www.castletowers.com.au (Castle Towers Shops) and your own knowledge • Write a report outlining the key differences between planned centres (Castle Towers) and other common retail formats (Knightbridge shopping centre). Comment on the following features: • How to get there and access to car parking. • Number and variety of retailers. • The format / layout of the centre. • Services and entertainment provided.

31. Choosing where to buy – Internet purchasing • Anyone with a computer and internet access can purchase a range of goods from around the world and have them delivered direct from the warehouse or manufacturer to almost any location in the country.

32. Choosing where to buy – Internet purchasing Select one online shopping site and answer the following questions: How easy is this site to use? What types of goods are available from this site? How are the goods delivered, how long does this take and what are the delivery charges? What payment options are available? How secure is the site? Present your findings in the form of a report.

33. Choosing where to buy – mail order • Direct marketing is where goods are sold directly to a customer rather than through a retail outlet. • Direct marketing includes mail order (sending customer offers, advertising or catalogues) and telemarketing (phone sales) and door-to-door sales.

34. Choosing where to buy – direct marketing Design a pamphlet or power point presentation informing consumers of the advantages and disadvantages of either direct marketing or internet shopping.

35. Choosing where to buy – locally, interstate, globally • Consumers can choose whether to purchase locally manufactured or imported goods (goods produced overseas). • Improvements in communications technology and road, rail and air transport make it easier for consumers to purchase products regionally or from interstate. • In the mid-1990s Australian labelling was changed to make it easier for customers to identify products made in Australia • To be labelled ‘Product of Australia’ it needs to be produced and processed within Australia • To be labelled ‘Made in Australia” the product is manufactured in Australia but contains imported ingredients.

36. Choosing where to buy – locally, interstate, globally • Guides for making a decision include: • The price of the good or service • The quality of the good or service • The service provided including warranties and after-sales advice. • Your ethical perspective – when we purchase imported goods there is a flow of money out of the country to pay for them. access www.choice.com.au and www.consumersonline.gov.au and investigate ethical consumerism.

37. Consumer decisions continued Students learn about: • Key factors affecting consumer decisions • Finance, price, marketing, age, gender, convenience, service • Environmental considerations Students learn to: • Explain the factors affecting consumer decisions. • Examine factors which contribute to changes in behaviour and practices by individuals and organisations.

38. Finance • Can I obtain finance to help me make this purchase ? • Funds come from your savings, a bank or financial institution. • Some stores offer store credit cards and hire purchase agreements (funds lent to customer by the store). • Your disposable income, the amount of money you have to spend on goods and services. Disposable income (net income) = gross income (total income) - tax

39. Price • What is my budget? • Can I afford this good? • Obtain a minimum of three quotes before buying an expensive good or service. • Don’t be rushed into making purchases. • Be aware of hidden costs like installation charges, service costs and postage.

40. Price continued Potato chips are available in the following package weights and prices. Use the unit pricing method to work out which is the best value? 500g packet $2.50 750g packet $3.60 1kg box $5.30

41. Marketing • The five P’s are used to alter the buying behaviour of consumers. • Price, • Position, • Product, • Promotion and • Place

42. Age • Consumers wants change as they get older. Write down two wants relevant for each of the five age groups

43. Gender • Boys and girls often purchase different types of products.

44. Convenience • Many Australians use convenient shopping options like online shopping and ebay. Using word art list words to show options Australians could use to purchase a computer.

45. Service • Consumers are demanding a morepersonalised shopping experience. • Businesses have responded by offering a range of mobile domestic services including pet grooming and gardening services. These services are available seven days a week and travel to a customer’s home or workplace at a time the customer chooses. Using the internet find the name and contact details of a mobile pet grooming and gardening service.

46. Environmental considerations • Consumers are considering the environmental impact of their purchases. • Manufacturers and retailers are selling ‘environmentally friendly’ products manufactured from recycled materials. Using pictures from the internet create a collage of factors that influence consumer decisions.

47. Consumer protection Students learn about: • The need for consumer protection – scams and rip-offs • Features of a simple contract • Legal rights and protective legislation for consumers • Organisations that provide assistance for consumers • Government departments and organisations – state and federal • Independent organisations • The process of consumer redress • Remedies and their outcome

48. Consumer protection Students learn to: • Use the internet to research scams and rip-offs • Identify the methods used in scams and rip-offs and analyse the ethics involved • Identify the features of a simple contract using at least one legal case study. • Investigate consumer laws and appropriate processes for consumer protection. • Work collaboratively to gather, interpret and present information on the protection provided by consumer protection agencies and independent bodies.

49. The need for consumer protection –scams and rip-offs • Unconscionable conduct – dishonest and unfair conduct by individuals or businesses providing goods and services to consumers. • Misleading advertising: bait and switch strategies – attracted to store by low prices, once in the store told sale stock has run out and convinced to buy a more expensive item. • Fake price reduction – when a retailer claims a price was $75.00 and is now only $50.00 they must guarantee the original selling price is accurate and that goods were sold for that amount.

50. Activities • Access www.scamwatch.gov.au and http://fido.asic.gov.au • Choose one scam from the website – pyramid schemes, amazing offers scams, medical scams, internet scams, scam games – and explain how it is carried out • Access http://fido.asic.gov.au • Investigate the process of complaining about a financial scam by accessing http://fido.asic.gov.au and going to the ‘how to complain’ page • Report a scam by participating in the Gull Awards and emailing their entry to: gullawards@asic.gov.au or fax hardcopy entries to ASIC