Buying Principles or Buying Principles or StrategiesStrategies

Chapter 3 section 2Chapter 3 section 2

IntroductionIntroduction

The goal of advertisements is to win your The goal of advertisements is to win your consumer dollars.consumer dollars.

Advertisers are willing to spend millions of Advertisers are willing to spend millions of dollars to attract your attention to their dollars to attract your attention to their products.products.

It’s Super Bowl Sunday, Do you know how It’s Super Bowl Sunday, Do you know how much advertisers pay for 30 seconds of much advertisers pay for 30 seconds of fame?fame?

Almost $3,000,000 per 30 seconds!!!Almost $3,000,000 per 30 seconds!!! That’s about $100,000 per second!!That’s about $100,000 per second!!

IntroductionIntroduction

Because of the problems of scarcity your goal Because of the problems of scarcity your goal should be to obtain the most satisfaction should be to obtain the most satisfaction from your limited income and timefrom your limited income and time

In this section you will learn about three basic In this section you will learn about three basic buying principles that can help you and all buying principles that can help you and all consumers achieve this goal. They are:consumers achieve this goal. They are:

Gathering InformationGathering Information Using Advertising wiselyUsing Advertising wisely Comparison ShoppingComparison Shopping

Gathering InformationGathering Information

Suppose you want to buy a new Ipod or Suppose you want to buy a new Ipod or MP3 PlayerMP3 Player

11stst you have to get information about the you have to get information about the different types of Ipods or MP3 players different types of Ipods or MP3 players that are availablethat are available

You could spend time testing out one that You could spend time testing out one that a friend has.a friend has.

You could also go to different stores and You could also go to different stores and discuss good and bad points of different discuss good and bad points of different brandsbrands

A wise consumer would do both A wise consumer would do both

How Much Information Do you How Much Information Do you Need?Need?

Information is costly because it involves Information is costly because it involves your timeyour time

You need to figure out how much You need to figure out how much information you needinformation you need

You only need as much information as is You only need as much information as is worthwhile.worthwhile.

In other words the value of your time you In other words the value of your time you spent researching information on the MP3 spent researching information on the MP3 player should not be greater than the player should not be greater than the value you receive from choosing the MP3 value you receive from choosing the MP3 player you choseplayer you chose

Developing a Consumer Developing a Consumer Knowledge BaseKnowledge Base

As you are shopping in different places As you are shopping in different places looking for the right MP3 player, you are looking for the right MP3 player, you are developing a consumer knowledge basedeveloping a consumer knowledge base

The knowledge you pick up from finding The knowledge you pick up from finding the right MP3 player might one day help the right MP3 player might one day help you in choosing a car or a computeryou in choosing a car or a computer

Simply getting salespeople to give you the Simply getting salespeople to give you the information you want is a skill that will information you want is a skill that will sharpen over time while you shop for other sharpen over time while you shop for other products products

Using Advertising WiselyUsing Advertising Wisely

Advertising is all around you, you see Advertising is all around you, you see it on TV, Radio, the Internet, it on TV, Radio, the Internet, Billboards, Buses, etcBillboards, Buses, etc

Advertisements can be classified as:Advertisements can be classified as: Competitive AdvertisementCompetitive Advertisement Informational AdvertisementInformational Advertisement

Competitive AdvertisementCompetitive Advertisement

Advertising that attempts to persuade Advertising that attempts to persuade consumers that a product is different consumers that a product is different and/or superior to any other is and/or superior to any other is Competitive AdvertisementCompetitive Advertisement

Its purpose may be to take consumers Its purpose may be to take consumers away from competitors or to keep away from competitors or to keep competitors from taking away customerscompetitors from taking away customers

Ads for well established brand names such Ads for well established brand names such as Dell & Nike often use this strategyas Dell & Nike often use this strategy

Competitive Ads appeal to people’s Competitive Ads appeal to people’s emotions emotions

Informative AdvertisingInformative Advertising

Informative Advertising Informative Advertising benefits benefits consumers by giving information consumers by giving information about a productabout a product

From such ads you can simply find From such ads you can simply find out that such items exist!out that such items exist!

You can also learn about the price, You can also learn about the price, quality and special features of the quality and special features of the product without spending much time product without spending much time or effortor effort

Bait and SwitchBait and Switch

Some advertisers use deceptive, or Some advertisers use deceptive, or false advertisingfalse advertising

Sellers may misrepresent the quality, Sellers may misrepresent the quality, features, or the true prices of goodsfeatures, or the true prices of goods

One of the most widely used One of the most widely used methods of deceptive advertising is methods of deceptive advertising is the bait and switch the bait and switch

Bait and SwitchBait and Switch The The Bait and SwitchBait and Switch is an ad that attracts is an ad that attracts

consumers with a low priced product (Bait), then consumers with a low priced product (Bait), then tries to sell them a higher-priced product (switch).tries to sell them a higher-priced product (switch).

Car dealerships are notorious for this! Car dealerships are notorious for this! For Example: For Example: Pete Moore is advertising a 2007 Chevy Impala Pete Moore is advertising a 2007 Chevy Impala

for $10,000. You go to Pete Moore to buy an for $10,000. You go to Pete Moore to buy an Impala for the advertised price. When you get Impala for the advertised price. When you get there the salesman points out that the Impala for there the salesman points out that the Impala for that price has no radio, no CD player, no A/C, no that price has no radio, no CD player, no A/C, no Heat, no power Steering. So he then directs to the Heat, no power Steering. So he then directs to the $21,000 Impala.$21,000 Impala.

Bait and SwitchBait and Switch

This practice is both deceptive and This practice is both deceptive and sometimes illegalsometimes illegal

How do you think car dealerships get How do you think car dealerships get around this?around this?

By stating the real price in small By stating the real price in small print, ALWAYS READ THE SMALL print, ALWAYS READ THE SMALL PRINT!PRINT!

Pros and Cons of AdvertisingPros and Cons of Advertising

Write on sheet of paper three things Write on sheet of paper three things that are good and three things that that are good and three things that are bad about advertising.are bad about advertising.

Compare your answers with the Compare your answers with the people at your table, see what people at your table, see what answers were most popularanswers were most popular

Elect a representative to share the Elect a representative to share the most prominent answer at you table.most prominent answer at you table.

Comparison ShoppingComparison Shopping

After you have gathered the After you have gathered the information about the make and information about the make and model you want, you must decidemodel you want, you must decide wherewhere to buy it to buy it

It is generally worthwhile to get It is generally worthwhile to get information on the types and prices information on the types and prices of products available from different of products available from different stores or companies, This is known stores or companies, This is known as as comparison shoppingcomparison shopping..

Comparison ShoppingComparison Shopping

To efficiently comparison shop you To efficiently comparison shop you should:should:

Read the newspaper adsRead the newspaper ads Make telephone callsMake telephone calls Browse the webBrowse the web Visit StoresVisit Stores Armed with prices you can negotiate with Armed with prices you can negotiate with

local merchants to get them to match (or local merchants to get them to match (or come close to) the lowest price. come close to) the lowest price.

WarrantiesWarranties

When comparison shopping When comparison shopping obviously the price will influence you obviously the price will influence you decisiondecision

However don’t forget to find which However don’t forget to find which store offers the best warranty.store offers the best warranty.

The The warrantywarranty is the promise made is the promise made by the manufacture or seller to by the manufacture or seller to replace a product if it is found to be replace a product if it is found to be faulty within a certain time faulty within a certain time

Brand Name or Generic ProductsBrand Name or Generic Products

Another choice to be made is the Another choice to be made is the choice between brand name or generic choice between brand name or generic brands.brands.

Brand name is a word, picture, or logo Brand name is a word, picture, or logo on a product that helps consumers on a product that helps consumers distinguish it from similar productsdistinguish it from similar products

Such as The Jordan Symbol, or the Such as The Jordan Symbol, or the Reebok symbolReebok symbol

These product are usually sold nation These product are usually sold nation wide and backed by major companieswide and backed by major companies

Brand Name or Generic ProductsBrand Name or Generic Products

Some companies produce and sell Some companies produce and sell generic brands generic brands which means there which means there is a general name for a product is a general name for a product rather than a specific brand name rather than a specific brand name given by the manufacturer given by the manufacturer

For Example:For Example: “ “Rice Cereal” would be the generic Rice Cereal” would be the generic

cereal for Kellogg's “Rice Krispies” cereal for Kellogg's “Rice Krispies”

ReviewReview

1.1. What are the 3 basic buying principles What are the 3 basic buying principles that can help you obtain the most that can help you obtain the most satisfaction from your limited income?satisfaction from your limited income?

2.2. When gathering information for a When gathering information for a purchase, how much information do you purchase, how much information do you need?need?

3.3. What's the difference between What's the difference between Competitive & Informative Advertising?Competitive & Informative Advertising?

4.4. How does the bait and switch advertising How does the bait and switch advertising method work? method work?

5.5. What is comparison shopping?What is comparison shopping?

IntroductionIntroduction

Because of the problems of scarcity your goal Because of the problems of scarcity your goal should be to obtain the most satisfaction should be to obtain the most satisfaction from your limited income and timefrom your limited income and time

In this section you will learn about three basic In this section you will learn about three basic buying principles that can help you and all buying principles that can help you and all consumers achieve this goal. They are:consumers achieve this goal. They are:

Gathering InformationGathering Information Using Advertising wiselyUsing Advertising wisely Comparison ShoppingComparison Shopping

How Much Information Do you How Much Information Do you Need?Need?

Information is costly because it involves Information is costly because it involves your timeyour time

You need to figure out how much You need to figure out how much information you needinformation you need

You only need as much information as is You only need as much information as is worthwhile.worthwhile.

Informative AdvertisingInformative Advertising

Advertising that attempts to Advertising that attempts to persuade consumers that a product persuade consumers that a product is different and/or superior to any is different and/or superior to any other is other is Competitive Competitive AdvertisementAdvertisement

Informative Advertising Informative Advertising benefits benefits consumers by giving information consumers by giving information about a productabout a product

Bait and SwitchBait and Switch The The Bait and SwitchBait and Switch is an ad that attracts is an ad that attracts

consumers with a low priced product (Bait), then consumers with a low priced product (Bait), then tries to sell them a higher-priced product (switch).tries to sell them a higher-priced product (switch).

Comparison ShoppingComparison Shopping

After you have gathered the After you have gathered the information about the make and information about the make and model you want, you must decidemodel you want, you must decide wherewhere to buy it to buy it

It is generally worthwhile to get It is generally worthwhile to get information on the types and prices information on the types and prices of products available from different of products available from different stores or companies, This is known stores or companies, This is known as as comparison shoppingcomparison shopping..

HomeworkHomework

Find an advertisement in a magazine, Find an advertisement in a magazine, newspaper, or internet.newspaper, or internet.

Analyze and answer the questions using Analyze and answer the questions using the checklist on pg 68 (Figure 3.7)the checklist on pg 68 (Figure 3.7)

Tell me if you thought the ad was Tell me if you thought the ad was successful in influencing your consumer successful in influencing your consumer behavior. Then tell me why or why not.behavior. Then tell me why or why not.

Bring in the Ad with a sheet of paper that Bring in the Ad with a sheet of paper that has the answers the questions on the has the answers the questions on the check listcheck list

Class WorkClass Work

Pg 70 #1,2,3,4Pg 70 #1,2,3,4