Making Consumer Decisions

Chapter 22

In your opinion, what are the pros and cons of brand name and generic products?

Brand Name vs. Generic

Brand Name – word or name on the product that distinguishes it from competitors.◦ Usually in colorful displays or cartoons

◦ Nike swoosh, McDonalds’ Golden Arches

Brand Name vs. Generic

Generic – plainly labeled, unadvertised, and sold at lower prices.◦ Most are either medicines or grocery items

◦ On the average, generic products cost 40 percent less than name-brand products.

Why?

The name main reason is because they are not advertised but are usually the same as brand name.

Which would you buy?

Can you identify the company?

When to buy?

Winter clothes◦ Why?

Summer clothes?◦ Why?

A new car◦ Why?

Where to buy?

Department stores◦ Sell a wide variety of goods

◦ Have different “departments”

◦ Examples

Sears

JC Penny

Discount stores◦ Sell wide variety of goods, but at lower prices

◦ Offer fewer services, but stock a lot of merchandise

◦ Examples

K-Mart, Wal-Mart

Where to buy?

Off-Price & Outlet Stores◦ Brand name products at lower prices

◦ Items may have flaws or defects

◦ Examples

TJ Maxx

Nike Outlet Stores

Limited-Line Retailers◦ Sell large assortment of goods in one type of product

◦ Examples

Foot Locker

Lids

Where to buy?

Superstores/Hypermarkets◦ Sell groceries and department store items

◦ Examples

Super Wal-Marts

Meijer

Warehouse Stores◦ Huge selection of food and non-food items

◦ Sold in bulk

◦ Examples

Sam’s Club

Costco

Where to buy?

Showroom Retailers◦ Samples of products are displayed in a “showroom”

◦ You purchase item, but it is delivered to you at a later date

◦ Examples

American Mattress

Any type of furniture store

Shopping at Home◦ Using Internet, TV, catalogs

◦ Examples

Home Shopping Network

TV Infomercials

Comparison Shopping

Checking the price and quality of a product in more than one store.

Most important when making a major purchase ◦ Examples

car, computer, appliance, television, etc.

Which is the better buy?

Tide Detergent

Powder 33 oz $5.15

Powder 87 oz $11.55

•Unit Price: the cost of an item for a standard unit of

measurement

• per ounce

• per pound

Which is the better buy?

Tide Detergent

Powder 33 oz $5.15 $.1561/oz

Powder 87 oz $11.55 $.1328/oz

www.netgrocer.com

Unit Price

Being a smart consumer

Rational advertising◦ Ad tries to convince you using facts

◦ Mac vs PC

Emotional advertising◦ Ad tries to appeal to your feelings

◦ Nike Training

Being a smart consumer

Read consumer magazines◦ Consumer Reports

Rate products

Shop during sales◦ Can save up to 15%

◦ Promotional sale: give you a special buy on a new product

◦ Clearance sale: sale to clear out goods to make room for new ones

◦ Loss Leaders: advertised products that sell for a loss to bring customers to the store

Wal-Mart is notorious for using loss leaders

Being a smart consumer

Use shopping lists◦ Cuts down on unplanned purchases

◦ Impulse buying: purchasing things on the spur of the moment

Resist pressure from salespeople◦ Free gifts

◦ Adds on like socks, shoes, shoe laces

◦ Added warranty or services

Being a smart consumer

Warranty◦ States rights and responsibilities of the buyer and seller

◦ Full warranty

Good for a stated period of time

90 days, 1 year, 10,000 miles

◦ Limited warranty

Cover only certain parts of a product

What is a target market?

Businesses want to reach a certain group of customers a business ◦ So they decide how to create advertising (commercials, print ads, radio ads, online ads) to aim its marketing efforts and ultimately its merchandise towards.

Target markets are based on:◦ Age

◦ Gender

◦ Interests

◦ What the competition offers

◦ Socioeconomic status