Dave Ramsey Ch 6: Consumer Awareness

The promotion of a product or service by identifying it with distinct characteristics; usually associated with public perception, quality or effectiveness
branding
To buy an item with credit; paying over time
financing
Refers to the financial opportunity that is given up because you choose to do something else with your money
opportunity cost
An amount of money you spend, usually $300, that causes some pain to part with
significant purchase
The process of communicating the value of a product or service to customers
marketing
Refers to the publicʹs ability to recall and recognize a brand by its logo, jingles, packaging, etc
brand recognition
Feeling regret or concern after making a large purchase
buyerʹs remorse
An economic system based on a free market, profit motive, open competition and private ownership of the means of production
capitalism
The persistent increase in the cost of goods and services or the persistent decline in the buying power of money
inflation
A spur-of-the-moment, unplanned decision to buy a product or service
impulse buy
A good salesperson
always answers a question with a question
If something seems to good to be true
It probably is
Only buy something
If you understand it
Big Purchases
Should not be impulsive: talk it out with someone and wait overnight
Inflation
effects your buying power
Budgets are not successful
If you cannot control your spending/purchases
Peers or Friends
Strongest influence over Teen’s purchase decisions
Repetition
Effective marketing tool
0% Financing & 90 days same as cash
Good Marketing Tool using Financing
Need
Something essential for survival: housing, food, heat, water
Advertising
Teases, Informs, and Persuades the consumer
Personal selling
Effective marketing strategy. Example: Car salesman
No interest offers
puts the cost of the financing into the price of the item
Companies and Marketing
Spend millions of dollars, extensive research, use all angles to compete for your money and competition is fierce
Opportunity Cost
“Money spent here cannot be spent there”
Method for competing for your money: reputation for holding its value
Product Positioning
Method for competing for your money: Car salesman
Personal Selling
Method for competiting for your money: TV commericals
Media
Things to consider when making a significant purchase
Buying motives, opportunity cost, can you pay cash for it
Product Position
Shelf positioning, Packaging and Color, Brand Recognition
“Power over Purchase”
Wait overnight, consider opportunity cost, Seek advice
Latin Term for ” Buyer Beware”
Caveat Emptor
As a consumer you should consider inflation in your investment and retirement planning T or F
T
If you don’t have cash on hand, financing a significant purchase is a good option T or F
F
The purpose of advertising
Inform, Tease and Persuade the consumer
Common Marketing strategies
providing financial options, personal selling, repetition, product positioning
why is financing a purchase a bad idea
you end up paying more, especially if you miss a payment, prevents you from building wealth and going into debt is never a good idea
why should you always consider the opportunity cost when making a significant purchase?
make sure you choose making a payment that would be most beneficial for you
Five steps you should take before making a significant purchase
1. wait overnight
2. consider your buying motives
3. never buy anything you don’t understand
4. consider the opportunity cost of your money
5. seek wise counsel
what effect does inflation have on purchasing power
your buying power erodes
summarize factors that influence consumer decisions
advertisements, peer referrals, brand recognition
First Step
Wait Overnight
Second Step
Buying Motives
Third Step
Don’t buy anything you do not understand.
Fourth Step
Consider the opportunity cost for your money.
Fifth Step
Seek wise counsel