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SUPPLEMENTANCILLARY TITLE

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SUPPLEMENTANCILLARY TITLE

Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

CHAPTER 6 LECTURE OUTLINE

    I. CONSUMER BUYING ACTIVITIES (p. 181)

    ? Your daily buying habits are affected by a wide variety of economic, social, and personal factors.

Practical Purchasing Strategies (p. 181)

    ? Six shopping techniques should be considered for various purchasing situations.

    Timing Purchases

    ? Many people save by buying holiday items and other products at reduced prices in late December and

    early January, when retail sales are slow.

    ? Bargains can be obtained by buying winter clothing in midwinter or late winter or by buying summer

    clothing in midsummer or late summer.

    Store Selection

    ? Your decision to shop at a particular store is probably influenced by the variety of merchandise and

    quality of its brands.

    ? Also important are the store’s policies with regard to such matters as check cashing, exchanges, and

    frequency of sales.

    Brand Comparison

    ? Comparison shopping is the process of considering alternative stores, brands, and prices. In contrast,

    impulse buying is unplanned purchasing. While some impulse buying may be acceptable, too much

    can cause financial problems.

    ? Brand name products are highly advertised items that are available in many stores.

    ? Store brand products, sold by one chain of stores, are low-cost alternatives to famous name products. ? Generic items, plain package, nonbrand items, provide a low-cost third choice.

    Label Information

    ? Federal law requires that a label on all food products contain information on the common name of the

    product, the name and address of the manufacturer or distributor, the net weight, and ingredients

    listed in decreasing order of weight.

    ? Product labeling for appliances includes information on operating costs that can assist you in

    selecting the most energy-efficient models.

    Open dating tells consumers about the freshness or shelf life of a perishable product.

Price Comparison

    ? Unit Pricing uses a standard unit of measurement to compare the prices of packages of different

    sizes.

    ? The process for calculating the unit price is follows:

    1. Determine common measurement unit (ounces, pounds, gallons, or number of sheets.

    2. Divide price by the number of common units; for example, an 8-ounce package of cereal for

    $1.52 has a unit price of 19 cents per ounce; 11-ounces for $1.98 has a unit price of 18 cents.

    3. Compare unit price for various sizes, brands, and stores to determine the best buy. ? Remember, the package with the lowest unit price may not be the best buy for you since it may

    contain more food than you would use before it spoiled.

    Warranties (p. 182)

    ? A warranty is a written guarantee from the manufacturer or distributor of a product that specifies the

    6-1 conditions under which the product can be returned, replaced, or repaired.

    ? An express warranty, usually in written form, is created by the seller or manufacturer and can be a

    full warranty or a limited warranty.

Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

    ? An implied warranty is the result of a product’s intended use or other suggested understandings that

    are not in writing.

    Used-Car Warranties (p. 182)

    ? The Federal Trade Commission requires businesses that sell used cars to have a buyers’ guide sticker.

    This disclosure must state if the car comes with a warranty; if so, what is the specific protection. ? While a used car may not have an express warranty, most states have implied warranties that protect

    the basic rights of a used car buyer.

New-Car Warranties (p. 183)

    ? New car warranties provide buyers with some assurance of quality. These warranties vary in time and

    mileage of the protection they offer and in the parts they cover.

Service Contracts (p. 183)

    ? A service contract is an agreement between a business and a consumer to cover the repair costs of a product. Also extended

    warranties, not are not warranties. For a fee, they insure the buyer against losses due to the cost of certain repairs.

II. MAJOR CONSUMER PURCHASES: BUYING MOTOR VEHICLES (p. 185)

    ? A specific decision-making process can help to make effective purchases.

    Phase 1: Preshopping Activities (p. 185)

    ? Objective decision making must start with a planned course of action. Define your shopping problem

    in terms of a broad perspective.

    ? Information is power. The better informed you are, the more likely you are to make the purchasing

    choice that best serves your interest.

    ? The main sources of consumer information are:

    1. personal contacts

    2. business organizations including advertising, labels, and sales personnel

    3. media information from television, radio, newspapers, and magazines

    4. independent testing organizations such as Consumers Union and Underwriters Laboratories

    5. government agencies

    6. online sources

    Phase 2: Evaluating Alternatives (p. 186)

    ? Each alternative needs to be evaluated on the basis of such factors as personal values and goals,

    available time and money, the costs of each alternative, the benefits of each alternative, and your

    specific needs with regard to product size, quality, quantity, and features.

    ? As you research various consumer purchases, you will need to identify the attributes important to you. ? Research studies have shown that price variations can occur for all types of products. For a

    single-lens reflex camera, prices may range from under $200 to well

    over $500. The price of aspirin may range from less than 50 cents to over $3 for 100 five-grain tablets.

    ? You can benefit from comparison shopping when

    ? buying expensive or complex items

    ? buying items you purchase often

    ? comparison can be done easily (using ads or catalogs) different sellers offer different prices and services product quality or prices vary greatly. 6-2

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Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

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Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

Used-Car Price Negotiation (p. 188)

    ? You can begin to determine a fair price by checking newspaper ads for the prices of comparable

    vehicles. Several published sources also list current prices for used cars.

    ? The basic price of a used car is also influenced by the number of miles and special features and

    options.

Price Bargaining For New Cars (p. 188)

    ? The sticker price, displayed in printed form on the vehicle, is the suggested retail price of a new car

    and optional equipment.

    ? Information about the dealer’s cost may be obtained from several sources including books available

    at libraries and computerized data services.

    ? Start your price bargaining by comparing prices of similar automobiles at several dealers.

    ? Use dealer’s cost information in your effort to get a vehicle price that is only a couple of hundred

    dollars over the dealer’s cost.

    ? Lowballing occurs when a new car buyer is quoted a very low price and add-on costs increase before

    the deal is concluded.

    ? Highballing occurs when a new car buyer is offered a very high price for a trade-in vehicle, with the

    extra amount made by increasing the price of the new car.

Comparing Financing Alternatives (p. 190)

    ? Car loans are available from banks, credit unions, finance companies, and other financial institutions.

    ? The annual percentage rate (APR) is the best indicator of the true cost of credit.

    Phase 4: Postpurchase Activities (p. 190)

    ? Maintenance and ownership costs may be associated with the purchased item.

    ? In some situations, you may not be satisfied with a purchase. A wide variety of grounds for complaint

    can occur.

Automobile Operation Costs (p. 190)

    ? Your driving costs will vary based on two main factorsthe size of your automobile and the number

    of miles you drive.

    ? The largest fixed expense associated with a new automobile is depreciation, the loss in the vehicle’s

    value due to time and use.

    ? Another fixed ownership cost is the interest charge for financing an automobile purchase.

    ? Other fixed costs associated with automobile ownership are insurance, license and registration fees,

    and taxes. Since fixed costs are fairly constant, they are easier to anticipate than variable costs.

    ? Expenses related directly to the operation of a vehicle are gasoline, oil, tires, maintenance, repairs,

    and replacement parts.

    ? An awareness of the total cost of owning and operating an automobile can be valuable for overall

    financial planning.

Motor Vehicle Maintenance (p. 192)

    ? People who sell, repair, or drive automobiles for a living state that regular vehicle care is one of your

    best investments.

    ? The systems of your car that should be monitored and maintained on a regular basis are the engine,

    cooling system, transmission, brakes, steering mechanism, exhaust components, and suspension.

    6-5

    Automobile Servicing Sources (p. 192)

    ? The service department of a car dealer offers a wide range of car care activities; their charges are

Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

    generally higher than other service locations.

    ? Local gas stations often provide convenience and reasonable prices for most repairs; fewer full-

    service stations are available than in the past.

    ? Independent repair shops serve a wide variety of servicing needs at competitive prices.

    ? Mass merchandising retailers offer convenient, low-cost service, and usually emphasize the sale of

    tires, batteries, mufflers, and other replacement parts.

    ? Specialty shops are limited-service businesses that offer a single product or maintenance effort at a

    reasonable price.

    ? Many individuals avoid repair fraud problems and minimize costs by working on their own vehicles.

III. RESOLVING CONSUMER COMPLAINTS (p. 194)

    ? Every business transaction is a potential problem. Most customer difficulties are the result of

    defective products, low quality, short product lives, unexpected costs, and poor repairs.

    ? You will probably never be completely satisfied with every purchase you make. The process for

    resolving differences has four phases:

    1. Returning to the place of purchase

    2. Contacting the company’s main office

    3. Obtaining assistance from a consumer agency

    4. Taking legal action.

    ? Mediation is involvement of an impartial third party who tries to resolve a difference between a

    customer and a business through discussion and negotiation.

    ? Arbitration is the settlement of a difference by a third partythe arbitratorwhose decision is

    legally binding.

    Many state, local, and federal government agencies are available to assist consumers; see Appendix B.

    IV. LEGAL OPTIONS FOR CONSUMERS (p. 196)

    ? If all previously mentioned avenues of action fail to resolve a consumer complaint, legal action may

    be appropriate.

? Small Claims Court (p. 196)

    ? In a small claims court, a person may file a claim for legal matters involving amounts under a set

    limit.

    ? To make best use of small claims court, the following tips are suggested:

    ? Become familiar with the location, procedures, and filing fees (usually ranging from $5 to $50)

    ? Observe other cases to learn more about the process

    ? Present your case in a polite, calm, and concise manner

    ? Submit evidence such as photographs, contracts, receipts, and other documents

    Use witnesses who can testify on your behalf

Class Action Suits (p. 197)

    ? A class action suit is a legal action taken by a few individuals on behalf of all the people who have

    suffered the same alleged injustice.

    Recent class action suits included auto owners who were sold unneeded replacement parts for their

    vehicles and a group of investors who sued a brokerage company for unauthorized buy and sell

    transactions resulting in high commission charges.

    6-6 Using a Lawyer (p. 198)

    Deciding when to use a lawyer is difficult. In general, straightforward legal situations usually do not require legal counsel. But

Chapter 06 - Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

    for more complicated matters, it is probably wise to obtain legal assistance. Other Legal Alternatives (p. 198)

    ? A legal aid society is one of a network of publicly supported community law offices that provide

    legal assistance to consumers who cannot afford their own attorney.

    Prepaid legal services are programs that provide unlimited or reduced-fee legal assistance for a set fee.

    6-7

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