Comparison Shopping Unit (1.5, 2.1, 3.3, 11.2, 11.3, 12.1-12.5, 13.1-13.3)

1. Comparison Shopping Unit(1.5, 2.1, 3.3, 11.2, 11.3, 12.1-12.5, 13.1-13.3) Consumer Economics 2012-2013

2. Unit Overview • Marketing Techniques • Comparison Shopping • Housing • Transportation • Tipping

3. 1. Marketing Techniques Advertising • Positive image – • Puffery – • Subjective claim – • Before-and-after comparison – • Endorsement – • Testimonial – • Humor, jingles, slogans – • Bandwagon – • Group identification – • Trendsetter – • Hidden fears – • Traditional values –

4. 1. Marketing Techniques (cont’d) Bait & Switch (video) • Bait - ad entices you into the store with • Switch – they are “out” of the advertised item and steer you toward a more expensive item Unit Pricing • Items are stated in cost per unit (12¢ per ounce) rather than • Makes it much easier to compare Loss Leader • Store sells an item for below their cost • Used to lure you in to

5. 1. Marketing Techniques (cont’d) Rebate • Partial or full refund of • Companies count on people NOT to • Keep copies of receipts and all forms in case Rain Check • Form issued when • You can get item later, when Clearance Sale • Stores use this to get rid of

6. 1. Marketing Techniques (cont’d) Closeout Sale • Similar to a clearance, for items the store no longer Going Out of Business Sale • When the store • Also called a • Liquidation – turning existing stock into Introductory Offer • Offer used to get you to • Example: Columbia House CD/DVD club

7. 2. Comparison Shopping Fads vs. Trends • Fads – temporary enthusiasm directed toward • Trends – more permanent attention for New vs. Used • Used items (like cars) are often much • Warranties are often non-transferable, so you are taking chances buying used items Generic vs. Brand Names • Generic items are often cheaper and • A common misperception is that

8. 2. Comparison Shopping (cont’d) As-Is Merchandise (not in book) • No warranties, you are taking a chance that the item will break down or not work • Generally not advisable unless you know Impulse Buying • Purchase made on a whim, with • Marketers try to get consumers to do this through attractive displays, locating items so they will be easily seen (candy bars in a checkout aisle) Label Reading • Food labels contain nutrition information • Clothing labels contain size, fabric contents, and • Other products have labels, be sure to read them for

9. 2. Comparison Shopping (cont’d) Freshness Date • Don’t use a food product after • Only advisory and have no Sticking to Your Budget • Don’t spend more than you originally planned if • Don’t buy impulse items (i.e., go food shopping after dinner) Negotiation • With cars and houses, it’s in your best interest to negotiate the best deal you can

10. 3. Housing Types of Housing • Condominium • You own the unit and a share in the • You will typically also pay a • Apartment • You pay rent and have no • Single Family Home • More privacy than • More control over • Location and Value • Look at prices of comparable homes in your area • Is it close to work, family, shopping, leisure activities?

11. 3. Housing (cont’d) Renting a Home • Advantages • Limited responsibility – don’t have to fix • Predictable costs – only have to pay rent, not for repairs or maintenance of property • Greater flexibility – at the end of your lease • Disadvantages • Limited control – you have to abide • Financial limitations – you build no • Fewer conveniences – no private laundry room, etc.

12. 3. Housing (cont’d) Lease • Legal agreement specifying rights and responsibilities of landlord and tenant • Most are annual; others can be • First time renters might need a • Terms disclosed • May be able to sublet, or

13. 3. Housing (cont’d) Landlord and Tenant Responsibilities • Landlord • Ensure electrical, heating, and plumbing work • Keep common areas • Provide garbage cans for disposal of trash • Provide • Tenant • Right to • Keep property • Respect rights of • Responsibility to • May be evicted if

14. 3. Housing (cont’d) Buying a Home (page 436) • Advantages • Independence – you can make any changes you wish (patio deck, etc.) • Investment opportunity – will increase in value over time • Tax advantages – interest paid on home loans and local property taxes is tax-deductible • Feeling of security – You feel you can settle down permanently • Disadvantages • More maintenance – yard work, painting, repairs are • Unplanned expenses – leaky roof, replacing a furnace can be • Reduced flexibility – can be difficult to relocate (sell your house and buy another)

15. 3. Housing (cont’d) Buying a Home (cont’d) • Mortgage • Can be at a fixed, adjustable, or graduated rate • Usually in 15-year and 30-year increments • Points • One-time finance charges paid at the beginning • Each point is 1% of • 3 points on a $100,000 loan = 3% of $100,000 = $3,000 • If you pay points you may receive • Closing Costs • Various fees that are paid at the time the purchase is • Can be

16. 3. Housing (cont’d) Buying a Home (cont’d) • Purchase Price Formulas • Can be at a fixed, adjustable, or graduated rate • Appraisal • Estimate of the value of a house made by • Useful if you don’t know what to ask when • Useful for insurance purposes also • Service Contracts • Are there any existing service contracts with the home? • Are there any you will need to implement? • Examples:

17. 4. Transportation Transportation Options • . • . • . • . Renting vs. Buying vs. Leasing a car • Length • Mileage • Wear & Tear • Price • Similar to renting vs. buying • By leasing, you pay each month but have nothing to show for it at end of lease • By owning, you own the car at the end of the loan

18. 4. Transportation (cont’d) Maintenance • With items such as cars and houses, you should check into the amount of maintenance necessary • If you are not handy, you will likely need to pay someone to do it for you • Can be expensive if older or special, one of a kind items Warranties • Check for warranty information to make sure you are protected • Keep all receipts, forms, etc. at least until warranty expires On-line Help • Kelley Blue Book/Edmunds/Car Facts • Know about pricing before you purchase

19. 4. Transportation (cont’d) Owning a Car • Depreciation • Negotiation • Invoice Price • Sticker Price • Maintenance • Lemon Law • a defect that cannot be fixed after • continued issue that keeps car in shop for more than 30 consecutive days during warranty period • numerous major problems

20. 5. Tipping Restaurants & Services • Usually • With parties more than 6 tip may be automatically added

21. Any Questions?