Unit 6 Purchasing Habits Advertising 6 Step Decision

Unit 6: Purchasing Habits & Advertising

6 Step Decision Making Process 1. Define the Problem - What are you trying to accomplish? Distinguish between “wants” and “needs” Scenario: - Graduating this year, need to decide on a college to attend 2. Research - Research and record all options for possible solutions Know what products/services are available, costs, etc. Scenario: - List colleges that interest you - Find tuition costs, room/board, etc.

3. Compare Choices - Each choice involves a trade-off, giving up something Opportunity Cost – the value of what you are giving up Scenario: - Compare total costs - Opportunity Costs? ? 4. Make a Decision Scenario: - Decide which college to attend

5. Take Action - Buy item, solve your problem/decision Scenario: - APPLY! 6. Re-evaluate - After several months Happy with your choice? Not happy? What should you do different next time? Scenario: - Do you like your college classes? Your major? - Financially able to continue there?

Needs vs Wants • Basic Needs – Necessary for survival – Food, shelter, water, clothing • Life-enhancing wants – Food, clothing, shelter beyond necessary for survival – Medical care to improve life – Education – Travel, vacations, recreation – Gadgetry / luxuries

Individual Wants • What you want to buy is based on 4 factors 1. Values - Principles by which you live - Ex. family, vacations, a hobby 2. Personal Preferences - your tastes / likes / dislikes

3. Income - Discretionary Income - Income affects what you can afford 4. Leisure Time - what you do in your free time affects what you’ll buy

5 Collective Values • Important to all of society – everyone shares in costs/benefits 1. Legal Protection 2. Employment 3. Progress (Technology & innovative advances) - New ideas, methods, devices which change the way we live 4. Quality of Environment 5. Public & Government Services - “of the people, by the people, and for the people”

Personal Factors that Influence Spending • Personal Resources (time, $, available credit) • Position in Life (age, marital status, lifestyle) • Customs, Background, & Religion • Values & Goals

Outside Factors that Influence Spending • Economy • Technological Advances • Environment • Social Pressures

Comparison Shopping • Determining the best quality for the price Odd – Number Pricing • Setting prices at uneven amounts rather than whole dollar amounts to make them seem much cheaper

3 Types of Advertising • Product Advertising – convince to buy a specific good/service – Have famous people in the ad – Have a specific target market – Repeat the item’s name several times • EXAMPLES? ?

Company Advertising • Promotes the image of a store, company, or chain – Doesn’t mention specific products or prices • EXAMPLES? Industry Advertising • Promotes general product group regardless of where you buy them • EXAMPLES?

Promotional Techniques • Displays • Contests & Games • Coupons (Manufacturer vs. Store) • Frequent-Buyer cards vs. Customer-Loyalty cards • Packaging • Sampling • Micromarketing (information is shared)