Smart Consumer Choices: Brand vs. Generic, Comparison Shopping, and More

1. 22 Chapter Making Consumer Decisions pp. 354-369

2. Learning Objectives After completing this chapter, you’ll be able to: • Describe choices consumers make when buying goods and services. • Identify types of stores where consumers can make purchases. continued

3. Learning Objectives After completing this chapter, you’ll be able to: • List ways to be a smart consumer.

4. Why It’s Important As a consumer you have the problem of making your money go as far as possible. If you want to get the most for your money, you have to learn how to make good consumer decisions.

5. Key Words brand name generic products comparison shopping unit price promotional sale clearance sale continued

6. Key Words loss leaders impulse buying warranty

7. Consumer Choices Being a consumer—a person who selects, purchases, uses, and disposes of goods and services—is difficult when you have many choices.

8. What to Buy You can choose to buy either a brand-name product or a generic product. A brand name is a word or name on a product that helps consumers distinguish it from other products.

9. What to Buy Generic products are plainly labeled, unadvertised, and sold at lower prices. On the average, generic products cost 40 percent less than name-brand products.

10. Figure 22.1 MAKING A BRAND DECISION Generic brands usually cost less than brand-name products. Fresh, frozen, and canned are choices for many food products. When would you buy each of these different vegetable products?

11. What to Buy The main reason generic products cost less is because the producers spend so little on marketing and advertising.

12. When to Buy Prices for many items change during different times of the year. If you plan on buying a car or a computer, the prices usually go way down shortly before the new models are released.

13. Where to Buy The three reasons for the different types of places in which to shop are: • The kinds of goods and services sold • The prices • The convenience

14. Department Stores Department storessell a wide variety of goods, such as clothing, furniture, appliances, and sporting goods.

15. Department Stores Because department stores offer name brands and customer services, their prices are often higher than other types of stores.

16. Discount Stores Discount stores sell a wide variety of goods like department stores but at lower prices. They offer few services and stock merchandise in large quantities.

17. Off-Price and Outlet Stores Off-price and outlet stores are able to offer large discounts because the items they sell have minor flaws, are out of season, or have been discontinued.

18. Superstores and Hypermarkets Superstores and hypermarkets are like supermarkets but sell items such as books, hardware, and clothing as well as groceries.

19. Warehouse Stores Warehouse stores carry a huge selection of food and nonfood items at low prices and in bulk quantities. They sometimes require customers to become members of the store by paying a membership fee.

20. Showroom Retailers Showroom retailers display samples of their products for customers to choose from. Customers fill out an order form and the orders are filled from a backroom warehouse.

21. Shopping at Home You can also shop without ever leaving home by ordering products through: • TV home shopping channels • Mail-order catalogs • The Internet

22. What to Pay Checking the price and quality of a product in more than one store is called comparison shopping. Comparison shopping is most important when making a major purchase.

23. What to Pay The unit price is the cost of an item for a standard unit of measurement, such as an ounce. Many stores list the unit price under the posted cost of an item.

24. What to Pay You can calculate the unit price of an item yourself by dividing the total price by its weight, volume, or quantity.

25. Figure 22.2 CHECKLIST FOR COMPARISON SHOPPING When you’re comparison shopping, check for various products’ features. When you examine an item of clothing for quality, what should you look for?

26. Fast Review • Why do generic products cost less than brand-name products? • When is a good time to shop for a product like a car, a computer, or an item of clothing? continued

27. Fast Review • What are the ways you can shop from home? • How can you calculate the unit price of an item?

28. How to Be a Smart Consumer You can become a smart consumer by planning in advance. One way to be a smart consumer is by learning how to read advertisements.

29. Study Advertisements Rational advertising attempts to convince you with facts and information. Emotional advertising appeals to your feelings.

30. Study Advertisements An ad that says “The best buy in town!” won’t necessarily help you become a smarter consumer. An ad that says “9 oz. Sparkle-Plenty Toothpaste, $1.99” might be very helpful.

31. Read Consumer Publications Magazines such as Consumer Reports and ConsumersResearch Magazine give detailed information about goods that have been tested and rated by them.

32. Read Consumer Publications Libraries and online services are good places to find these sources of consumer information.

33. Shop at Sales Some shopping experts say that the average consumer can save up to 15 percent by taking advantage of sales.

34. Shop at Sales A promotional sale is one that gives you a special buy on a new product or a product that’s in season.

35. Shop at Sales A store might have a clearance sale to clear out goods that are going out of season or are no longer profitable in order to make room for new merchandise.

36. Shop at Sales During sales, look for products that are advertised as selling at a loss or below cost. These advertised specials are called loss leaders.

37. Use Shopping Lists Impulse buying is purchasing things on the spur of the moment.

38. Use Shopping Lists A shopping list will keep you from making unnecessary shopping trips and keep you from buying on the spur of the moment.

39. Resist Pressure and Gimmicks Some salespersons use high-pressure tactics to try to get you to buy what they’re selling.

40. Resist Pressure and Gimmicks Sales gimmicks are meant to grab your attention and get you into the store or draw you into buying something.

41. Resist Pressure and Gimmicks Always closely examine any deal or bargain that seems too good to be true.

42. Read Labels and Warranties You might find information on the label that will make you decide not to buy the product.

43. Read Labels and Warranties A warranty is a legal document that states the rights and responsibilities agreed to by the consumer and the store or the manufacturer.

44. Read Labels and Warranties Full warranties state that the seller will repair a product that doesn’t work, usually free of charge. It could also offer to replace the product or refund your money.

45. Read Labels and Warranties Full warranties are usually good for a stated time period, such as 90 days or one year. Limited warranties cover only certain parts of a product.

46. Graphic Organizer Graphic Organizer Being a Smart Consumer Study advertisements Read labels and warranties Shop at sales SMART COSUMERS Read consumer publications Resist sales gimmicks Use shopping lists

47. Fast Review • What is the difference between rational advertising and emotional advertising? continued

48. Fast Review • What two consumer magazines are good sources of information about products? • Why do stores have clearance sales? continued

49. Fast Review • What is the difference between a full warranty and a limited warranty?

50. Business Building Blocks Developing Listening Skills In business, good communication spells success. Active listening is an important part of good communication. You can learn and improve active listening. continued