THE CONSUMER’S IMPACT ON BUSINESS Objective Two Notes Objective 2.01: Analyze government's role in consumer protection and how it affects consumers’ rights. I. Rights and Responsibilities of Consumers As Defined by the Federal Government A. To be informed B. To choose carefully C. To use products safely D. To speak out and be heard E. To seek remedy and have problems corrected F. To consumer education G. To learn consumer skills Federal Consumer Protection Agencies A. Consumer Information Center B. Consumer Product Safety Commission C. Federal Trade Commission D. Department of Transportation E. Department of Agriculture F. Food and Drug Administration G. U.S. Postal Service H. Attorney General I. 0SHA J. EPA K. SEC STATE CONSUMER PROTECTION A. Public Utilities Commission B. Licenses C. Weights And Measures or Division of Standards D. Attorney General
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IV. PRIVATE CONSUMER PROTECTION ORGANIZATIONS A. Consumer Federation of America B. Consumer Reports C. Better Business Bureau
Consumer Rights The Right to Be Informed Consumers should be given the facts needed to make informed choices and can be protected from unfair or misleading advertising, labeling, or sales practices. The Right to Choose Consumers should have access to a variety of goods and services at competitive prices. The Right to Safety Consumers should be protected against goods that are hazardous to life or health. The Right to Be Heard Consumers should be assured that their interests will be considered in the making of laws which might affect them. The Right to A Remedy Consumers should be entitled to quick, fair remedies for consumer problems. The Right to Consumer Education Consumer should be taught how to use the rights and responsibilities to the greatest satisfaction and failure for the money. Consumer Responsibilities The Responsibility to Be Informed Consumers should compare and evaluate information on brands in models of products. The Responsibility to Choose Consumers should shop around to compare prices and products in order to find the best product or service at the best price. The Responsibility to Use Products Safely Consumer should follow instructions on package labels to safeguard themselves, others, and the environment. The Responsibility to Speak Out Consumers should express their opinions about businesses and their products. The Responsibility to Seek Remedy Consumer should seek correction for products or services that are defective or do not perform as stated. The Responsibility to Learn Consumer Skills Consumer should understand where to find information on learning consumer skills and should follow these tips: Read information on labels Compare prices Consult media for awareness of illegal practices Use consumer information publications Attend sessions on consumer issues
FEDERAL PROTECTION AGENCIES CONSUMER INFORMATION CENTER Provides information on government publications on topics of interest to consumers CONSUMER PRODUCT SAFETY COMMISSION Promote safety from unreasonable risk of injury from products; set safety requirements; test products; conduct research and education programs U.S. POSTAL SERVICE Enforces laws against fraud by mail; Exxon complaints from individuals; helps consumers recover money; provides information on common mail fraud scheme FOOD AND DRUG ADMINISTRATION Sets and maintains purity and safety standards for foods, drugs, and cosmetics; researches contents new health and drug products; inspects food and health aide plants; ensures accurate labeling; removes unsafe products from the market DEPARTMENT OF TRANSPORTATION The national highway traffic safety administration is part of this group - they are responsible for setting requirements for motor vehicle safety, maintenance, and fuel economy; testing vehicles and other automobile products for compliance with laws; conducts research on ways to save fuel an increase highway safety; investigates consumer complaints about vehicle safety ENVIRONMENTAL PROTECTION AGENCY Works with businesses to reduce pollution and make our environment healthier
State Consumer Protection Agencies Public Utilities Commission Regulates rates utility companies can charge; utility companies include gas, oil, water, electricity, and telephone Weights and Measures Or Division of Standards Maintains scales, packages, gasoline pumps, and labels to guarantee true weights and measurements Licenses Gives a person the right to conducting business or practice the profession Attorney General Protects states citizens from fraud and criminal acts Private Consumer Detection Organizations Consumer Federation of America Consumer Reports Better Business Bureau
Objective 2.02: Examine purchasing decisions and various products with value, service, maintenance and price. I. Market Economy Terms A. Market Economy B. Price C. Market (Marketplace) D. Demand E. Supply F. Law of Demand G. Law of Supply H. Surplus I. Shortage J. Equilibrium Price II. How Wants And Needs Affect Supply And Demand III. How Price, Supply And Demand Are Interrelated
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IV. How Price, Demand, Supply, Law of Demand, Law of Supply, Surplus, and Shortage Affect Consumer Purchasing V. How and Why Consumers Make Purchasing Decisions A. Discretionary Income B. Nondiscretionary Income VI. Types Of Goods A. Convenience Goods B. Shopping Goods C. Specialty Goods VI. The Value Of Specific Goods A. Brand Names B. Store Brands C. Generic Brands VIII. The Differences Offered By Various Merchandisers A. Department Stores B. Mass Merchandisers C. Off Price Outlet D. Limited Line Retailers E. Superstores/Hyperstores F. Warehouse Stores G. Catalogs H. Internet/Electronic Shopping IX. How Pricing, Services By Merchandisers, And Value Affect Purchasing Decisions
Market Economy Terms Market Economy—Basic economic decisions are based on the actions of buyers and sellers in the market. Price—The amount of money given or asked for, when goods or services are bought or sold. Market or Marketplace—Any place where individuals buy and sell goods and services. Demand—The amount of goods or services consumers are willing and able to buy. Law of Demand—Consumers will buy less of an item at a higher price than at a lower price. Supply—Amount of goods or services that producers will provide. Law of Supply—The higher the price the more producers will supply and the lower the price the less producers will supply. Surplus—An over supply of a product. Producers are producing more of a product than consumers will buy. Shortage—An under supply of a product. Consumers are demanding more of a product than producers are producing. Equilibrium Price— The price at which the amount supplied and the amount demanded come together. Nondiscretionary and Discretionary Income Nondiscretionary Income—Income used to purchase items to meet basic needs Discretionary Income—Income left over after a consumer’s basic needs have been met Types of Products Convenience Goods Goods consumers buy regularly without spending much effort. Usually inexpensive Examples: milk and bread Shopping Goods Goods consumers buy after spending time looking around and comparing products. Usually more expensive than convenience goods Examples: vehicles and designer clothing Specialty Goods Goods that consumers select by brand or company which require a special sales effort. Usually expensive Examples: digital cameras, stereo equipment, and perfume
Types of Merchandisers Department Stores Stores have different departments selling a variety of products – men’s, women’s, children’s clothing, home furnishings, jewelry, and services are examples Goods are moderately priced, salespeople are in each department, special services are available (gift wrapping, delivery), elaborate merchandise displays and may even have a salon Examples: Macy’s, Nordstrom’s, Saks Fifth Avenue Mass Merchandisers Sells a variety of items at reasonable or low prices; often are nationwide stores; practical displays and not always very organized; some service is available Examples: Target, Sears, Wal Mart Off-Price and Outlet Stores Off-price stores usually buy from producers with surpluses; therefore, carry many manufacturers’ brands or manufacturer’s overruns Prices are discounted at 20-70% off; merchandise can be slightly imperfect or discontinued; limited service is available Example: TJ Maxx Outlet stores are operated by the manufacturer and carry only that manufacturer’s brand or an affiliated manufacturer Examples: Easy Spirit, Carter’s, Peaches and Cream, Corning Limited Line Retailers Sell only one kind of merchandise – clothing stores, athletic goods stores, home appliance stores, hardware stores; services vary, selling methods and prices vary Examples: Limited, GAP, Foot Locker, Best Buy Superstores/Hyperstores Superstores: Extremely large (30,000 sq feet), similar to supermarkets, but also sell mass merchandise items like clothing, garden products, and books; no customer services Examples: Kroger, Harris Teeter, Lowes Food Store, Food Lion Hyperstores: Larger than Superstores (200,000 sq feet) UNIT PRICING Product A—20 oz/$1.15 Product B—8 oz/$1.04 Product C—10 oz/$0.99
Unit Price (per oz) = Total Cost / Number of Ounces Be sure all weights are in the same unit (ounces, pounds, liters, etc.) Divide the price by the weight of each item. Be sure to divide to 3 decimal places if necessary.