4.2 Consumer behavior

Consumer BehaviorConsumer BehaviorPersonal FinancePersonal Finance

• After today you will be able to:–Determine the factors that influence buying decisions

• Explain a research based approach to buying goods & services,

• Identify strategies for making smart buying decisions.

1. Take out a piece of paper…2. Think back over the last 2 weeks and

make a list of everything you have purchased and it’s estimated cost.

3. Looking back, what did you overpay for?4. What purchases should you have just

not made.5. Total the items from 3 & 4.

• What is the difference between a need & a want?

• A want is an unfulfilled desire• New car, new clothes, Starbucks, etc.

• A need is anything you require to live• Food, sleep, shelter, water, air

• Look back over your list and give me some examples of wants.

Esteem

(respect and recognition)

Social

(friends, love, belonging)Security

(physical safety and economic security)

Physiological

(food, sleep, water, shelter, air)

Self-Actualization

(to realize your potential)

• Trade-off that one makes when deciding what to buy.• You and a friend have tickets to a big

concert tonight. On your way home, your dad calls you and gives you tickets to the Springfield Cardinals for tonight.

• Do you go to the concert or the game? You cannot do both.

• Emotional Motives• Based on feelings, beliefs, or

attitudes

• Rational Motives• Based on saving money, durability,

saving time, etc.

• Patronage Motives• Based on loyalty to a brand or store

• Economic• Prices, Convenience, Warranty,

Maintenance, etc

• Social• Lifestyle, Interests/Hobbies,

Advertisements, etc.

• Personal• Gender, Ethnic background, Religion, etc

Identify Your Needs

Identify Your Needs

GatherInformation

GatherInformation

Evaluate YourOptions

Evaluate YourOptions

Make thePurchaseMake thePurchase

Post-Purchase Evaluation

Post-Purchase Evaluation

• Figure out what is important to you• Features, performance, design, etc.

• Compare Prices• Do Comparison Shopping

• Most important for complex or expensive items

• Use the internet! •Ebay, Craigslist, Yahoo, etc.

• Negotiate the price• Cars, houses, jewelry…you never

know if you don’t ask!

• Decide on Cash or Credit

• How to make complaints if something goes wrong?– Put it in writing – keep a written record– Be prompt– Talk to the right person– Be specific about what is wrong and

what you want– Be reasonable & suggest a solution– Be persistent

• Time Purchases – when is the best time to buy?

• Store Selection– what store will best meet your needs?

• Compare Brands– are they the same, but with different

names?• Price Comparison• Warranty Evaluation

Get Advice

Sleep on it

Consider the Opportunity Cost

Check your motives

Never buy what you don’t understand