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3 6 8 16 15 20 19 18 17 Financial Planning Money Managementand Economy intheGlobal Insurance Strategies Savings andInvestment Credit Services Banking andFinancial

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A M business outside the box

Multimedia Medical Information: A to Z Health care organizations, includ- professionals, consumers, the Within a few months of starting ing hospitals and medical centers, media, and students. to look at international opportuni- are spending millions to develop A major product of A.D.A.M. ties, the company sold its interac- user-friendly, content-rich web is its extensive multimedia medi- tive medical software in Singapore, sites for a wide range of audiences. cal encyclopedia database covering Switzerland, and Malaysia. They Rather than developing all of thousands of diseases and condi- also have representatives in Spain, their own content, they are buy- tions. Other products include Chile, Japan, Korea, Mexico, ing some content from sources graphics, 3-D image models, virtual Norway, and Sweden. such as A.D.A.M. (Animated tours of the human body, and broad- Dissection of Anatomy for cast-quality animation. Physician- Think Critically Medicine). This Atlanta-based reviewed text ensures the highest Create a plan to provide profes- company provides interactive quality of medical information. sionals and consumers with other medical information for health Efforts by A.D.A.M. for global types of vital information they care organizations, medical expansion have been successful. might need in their daily activities.

A Sweet Idea Joe Semprevivo worked in the ice supermarket managers and con- condition. Today, Joseph’s Sugar- cream shop owned by his parents, vinced them to carry the product. Free Cookies come in eight flavors. but was not able to eat the product He explained that his product His product line has expanded to he served to others—he had had would serve the needs of diabet- include sugar-free cakes, brownies, juvenile diabetes since he was nine ics and other health-conscious syrup, sweeteners, and peanut but- years old. Joe was motivated to consumers. ter and fat-free cookies. change that. By age 12, he devel- Joe also wanted to have a snack oped the first sugar-free ice cream. he could take with him to school. Think Critically Within three years of creating the At age 15, he and his parents What are some special needs ice cream, Joe placed his product developed a cookie appropriate that might be met with new in about 75 stores. He visited with for those with his same medical products?

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3 7 0 15-3 15-2 15-1 Economy Consumers intheGlobal

Consumer ProtectionActions Consumer RightsandResponsibilities Consumer BuyingDecisions

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A M Planning a Career in… CUSTOMER SERVICE

Each day, millions of customers seek service, all kinds Needed Skills of service. For example, they might want to purchase • Educational requirements vary. Most customer ser- a computer, return a defective toaster, exchange a vice positions require only a high school diploma. gift, schedule a delivery, complain about poor service, Some employers require an associate or bachelor’s request information, apply for a loan, or pay a park- degree. ing ticket. Employment opportunities in customer • Basic computer skills are required and advanced service include careers in business, in government, skills are necessary for some positions. or with a nonprofit organization. Customer service employees work directly with customers in places • Good oral and written communication skills along such as banks, hospitals, and retail stores. They also with interpersonal and problem-solving skills are work in offices and call centers. The specific focus of needed. customer service positions vary widely. For example, • Most customer service positions require a basic there are customer service professionals who help understanding of business activities, marketing, people check into hotels, buy products, make insur- and consumer behavior. ance claims, and register for social services. They even offer suggestions for how to cook a turkey. What’s it like to work in . . . Customer Service Employment Outlook Before he even takes off his coat, • Employment in customer service is expected to Brian starts his day by checking e- increase faster than the average through 2014. mail messages. Today, several mes- • Bilingual job seekers have increased opportunities sages request information about for jobs. identity theft. Yesterday, it was • There are many new openings expected as well as complaints about online auctions. the need to replace experienced customer service Tomorrow, it could be comments about a proposed consumer protec-

representatives who transfer to other occupations. © Getty Images/PhotoDisc tion law. Related Job Titles As an Internet customer service specialist with the state office, Brian must be • Customer Service Representative ready for a variety of activities. Research, responding • Bank Teller to requests, and report preparation are just a few of • Catalog Sales Agent his daily responsibilities. • Computer Support Specialist When talking to people about his job, Brian • Customer Assistance Coordinator always mentions the satisfaction he gets from helping others. He also mentions how much he likes having • Customer Service Specialist variety in his day. He never knows what he will find • Financial Service Representative in his mailbox. • Internet Customer Service Representative What about you? Would working in the field of cus- • Hotel Desk Clerk tomer service be of interest to you? • Receptionist • Retail Sales Clerk

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Goals Key Terms Focus on Real Life Identify major unit price “I am going on a wilderness retreat with a com- sources of consumer munity service group and I have to buy a sleeping bag,” brand information. Kristen said to Joshua. impulse buying “I don’t know much about sleeping bags, but I want to get Explain wise buying the best one for my trip. I stopped by the sporting goods store and actions. they had many varieties and prices. I was confused. Can you help?” “I don’t know much either, but I expect your choice depends Describe the main on where you will use the bag,” said Joshua. “Did you gather infor- types of shopping mation before you began looking? There are consumer groups locations. that test products. If you want, I can help you look online, or we can go to the library to find magazine articles.” “That sounds like a good idea,” Kristen replied. “A salesperson at the store might be able to help, but researching in advance should help me ask the right questions.”

main idea CONSUMER INFORMATION The Association of Home Appliance SOURCES Manufacturers (AHAM) develops and Identify major maintains performance standards for sources of consumer Consumers have the power to decide to information. appliances such as refrigerators, air con- buy or not to buy. Businesses must serve ditioners, and freezers. The AHAM seal the needs of consumers. Without satisfied indicates that a product has met perfor- consumers, businesses would not make mance standards. The Carpet and Rug sales, earn profits, or remain in business. Institute and the Motorist Assurance Several information sources are avail- Program issue other seals of quality. able to help consumers with their buying Consumers Union reports scientific, decisions. technical, and educational information about products and services. This nonprofit Product Testing organization performs independent tests Organizations on consumer goods. It publishes articles in a Product testing organizations test prod- monthly magazine called . ucts and services for the benefit of con- sumers and business. Manufacturers pay Media Sources these organizations to perform safety tests Each day, you have access to a range on products. Underwriters Laboratories of media sources offering consumer tests electrical components of products information. from all over the world for fire and electri- Print Publishers Many magazines cal safety. The UL symbol indicates that and newspapers provide various types the product has been tested and judged of consumer assistance. General interest safe for normal use. magazines such as Consumers Digest, Good

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337272 112/21/072/21/07 9:37:139:37:13 AMAM Housekeeping, and Parents provide articles and product information. For money management, financial planning, and investment advice, you could read Money or Kiplinger’s Personal Finance Magazine. The U.S. federal government maintains one of the most Specialty magazines and newspapers comprehensive web sites with information for consumers. Go to the web site shown below and click on the link for also provide information about specific Chapter 15. Select a specific consumer topic. What types types of products or services. These of information are available on this topic? What federal publications cover topics such as motor agencies provide this information? Describe some specific vehicles, computers, boats, electronic suggestions for consumers related to this topic. equipment, travel, and education. Readers school.cengage.com/business/introtobiz can obtain a better understanding of the technical aspects of these products and services. (FDA), Consumer Product Safety Broadcast Organizations Radio and Commission (CPSC), National television are valuable sources of con- Highway Traffic Safety Administration, sumer information. Most stations carry Department of Housing and Urban programs to inform you about product Development, and Environmental safety, care and use of products, and shop- Protection Agency. ping tips. Every state has consumer protection The Internet Online information agencies. These agencies have web sites has become a very valuable resource for consumers. Most consumer informa- tion sources can be accessed through the Internet. The use of a search engine allows you to obtain specific answers for your consumer questions.

Government Agencies Federal, state, and local governments also inform consumers. The federal govern- ment has the Consumer Information Center, which serves as headquarters for consumer information. This agency puts out a quarterly catalog of publications. It also maintains an extensive web site to assist consumers. The United States Department of Agriculture (USDA) offers publications and online information about food buy- ing, meal planning, and nutrition. The USDA also inspects and grades meat and other foods. It makes that information available to consumers. Other federal government agencies

that provide consumer information © Getty Images/PhotoDisc Name some ways in which you are protected on a daily basis by the include the Federal Trade Commission activities of a government agency. (FTC), Food and Drug Administration

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337373 112/21/072/21/07 9:37:259:37:25 AMAM to provide information and handle con- Product Labels A label, attached to sumer questions. State departments of or printed on a product, provides useful banking and insurance are available to information. A label will report the nature assist with those areas. Large cities and or content of a product. The label will also counties also have consumer assistance likely tell you what the product is made offices. of, its size, how to care for it, and when and where it was made. Clothing labels Business Sources must tell you what the product is made of As a public service and in an effort to sell and must give instructions for washing or goods and services, businesses make con- cleaning. sumer information available. Customer Service Departments Many Advertising Advertising is widely avail- businesses have special departments able. It is a popular source of consumer focused on customer service. Some firms information. The main purpose of an provide customers with booklets on a advertisement is to encourage you to range of consumer topics. For example, buy. Because of this, you should carefully banks and insurance companies publish evaluate this information source. booklets to help consumers manage their Advertising can be helpful. Useful money. Some large retail firms provide advertisements tell you what the product printed materials to help consumers with is, how it is made, and what it will do. their buying problems. Advertisements give facts that you can use Better Business Bureau The Better to compare the product with other com- Business Bureau (BBB) can provide help- peting products. Beware of advertising ful information. If you plan to buy a used claims that really tell you nothing about car from a particular dealer, you could the product. If an advertisement states call the BBB to find out what experiences that a product is better, ask, “Better than others have had with that dealer. If con- what?” sumers have reported problems with the firm, you could find out about these com- plaints. BBBs give facts only. They do not recommend products or firms. Personal Contacts An often-used information source is “word of mouth.” This includes infor- mation received from other people. You often trust information provided by oth- ers who have bought and used a product. When planning a purchase, you may talk to someone who already owns the product or has used the service. This word-of- mouth consumer information can be a valuable resource when making consumer decisions.

chec kpoint ›››› © Getty Images/PhotoDisc Would you find more reliable information in an advertisement or on a product label? What are the main sources of consumer How do you know? information?

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337474 112/21/072/21/07 9:37:459:37:45 AMAM WISE BUYING STRATEGIES location, variety, reputation, and main idea other factors. Whenever you plan to buy something, Explain wise buying think about several key decisions. These 3. Determine your desired satisfaction. actions. include the following. Do you really need You should develop answers to ques- the item now or can you wait? Which tions such as, “How much am I will- stores should you consider? What quality ing to pay?” “What quality level do I do you want? What price are you will- want?” and “How long am I willing to ing to pay? Should you pay cash or use wait for the item?” credit? If you make the purchase, what 4. Evaluate alternatives. At this stage, you other important item may you have to do will shop for the products and services without? that could satisfy your needs. You will compare them in terms of the criteria you have identified. Use Decision-Making Steps 5. Make the decision. Decide whether to As a consumer, you should follow the buy or not. Determine what product decision-making steps when making a or service is most satisfying. Decide purchase. from which business you will make the 1. Identify your needs or wants. Be able purchase. to state clearly why you intend to buy Good buying skills will make you a something. better consumer. You can get greater 2. Know the choices available. These value for your money each time you make choices include price, quality, a purchase.

Tec hnology in Action

Electronic Package Tags

You are walking along and suddenly by airlines. They are also used in In the future, RFIDs could be you receive a text message on your warehouses to monitor the loca- used in homes to turn on appli- cell phone. You are informed that a tion of inventory. Companies are ances and monitor heating and certain item is on sale at a store as able to identify the exact location of security. Tagging of individual you walk by that exact store. This their products. Using RFID technol- consumer products and clothing is message could be both convenient ogy reduces theft and misplaced also expected. A purchase you make and frightening. inventory. could be tracked from the store to Radio frequency identification Two components make up an your home and everywhere else it is devices (RFIDs) in clothing labels RFID system. First, the data-loaded used. and other products will allow keep- tag (called the transponder) is ing track of things and people. attached to the item to be tracked. Think Critically Currently, RFIDs are being used in Second, a reader (the transreceiver) 1. What are possible uses of RFIDs highway toll lanes, and for pet iden- captures the tag’s data using radio that could benefit consumers? tification, library book circulation waves. These data are then sent to a 2. What concerns might be associ- and retrieval, and baggage tracking computer for processing. ated with RFIDs?

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337575 112/21/072/21/07 9:37:589:37:58 AMAM Comparison Shopping Smart consumers are comparison shoppers. They compare price, quality, services, and brands. Compare Prices A unit price is a price per unit of measure. Most stores help consumers compare among various brands and sizes of the same product. Shelf labels show both the total price and the price of one standard measure, or unit, of the product. If you need to calculate a unit price, divide the price of the item by the number of units per mea- sure. For instance, in the super- market, you see that a 16-ounce © PhotoDisc/Getty Images Name an instance when you spent time comparing prices, bag of Golden Frozen Corn costs quality, and service on an item before making a purchase. How $1.26. An 8-ounce box of Yellow did you determine which item was the best choice? Perfection Corn sells for $0.69 per box. Which is the better buy for the dollar? if you buy a lower-quality pair of shoes, If you compare the total prices only, they may wear out in a short time. You it is not easy to decide. Because stores will have to replace the lower-quality usually post the cost per ounce, the unit shoes sooner. You may end up buying price, you could quickly compare the two two pairs of low-quality shoes in a short package sizes. In this case, the 16-ounce span of time. bag would show a unit price of 7.9 cents Compare Services Most businesses try an ounce ($1.26 ÷ 16). The 8-ounce box to provide good service, but types of ser- would be 8.6 cents per ounce ($0.69 ÷ 8). vices can differ. Some businesses sell for Unit pricing would quickly tell you that cash only. Others offer credit. Some busi- the 16-ounce bag is a better buy per ounce nesses provide free delivery. Other services for the dollar. offered may include layaways, repairs, and Prices of products can vary greatly. special orders. Service is important, but be The cost of the same item often dif- careful not to pay for more service than fers from store to store and in different you need. geographic regions. For example, an Compare Sales The word “sale” is per- identical camera may be available haps the most overused, and least trusted, with prices ranging from $25 to more word in marketing. You have probably than $40. These price differences seen sale signs a thousand times. When emphasize the need for comparison an item is really on sale, it is offered at a shopping. price lower than its normal selling price. Compare Quality High-quality Some “sales” may not really be sales at all. products and services often cost more. Promotional sales are used to pro- Buying lower-quality items can some- mote the selling of regular merchandise times turn out to be more expensive than with short-term price reductions. This buying higher-quality items. For example, type of sale may be used when a new

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337676 112/21/072/21/07 9:39:069:39:06 AMAM store opens or when new products are and fancy packaging. These lower costs introduced. Retailers may use promo- result in lower prices. Differences in qual- tional sales in hopes that customers will ity between generic and branded products buy the sale items as well as other prod- may be small, making these items a good ucts not on sale. value. A clearance sale is used to clear mer- chandise that stores no longer wish to Wise Buying: A Summary carry. This may be end-of-season items, Skillful consumers are efficient in their odd sizes and models, or discontinued shopping activities. They save time, merchandise. Clearance sales usually offer energy, and money by planning. some bargains. Be sure that you need a sale Take Your Time “I just don’t have the item before you buy it. time” is something many people say. Compare Brands A brand is a Spending time planning purchases usu- name given to a product or service to ally results in savings. Taking your time distinguish it from other similar and will allow you to look for the best values. competitive items. The company that As a good shopper, you should refuse to makes the product or service usually be hurried. Then, you can avoid buying creates a brand name. Brand names things that you really do not want or are designed to help build customer need. loyalty. National brands are advertised all over the country. They are sold in almost every community. Among these goods are items such as food, clothing, shoes, tools, and cosmetics. Manufacturers of such goods often place brand names on the items they make. Well-known brand names include Kellogg’s, Jell-O, Colgate, The Gap, and L’Oreal. Recognizing national brand names allows you to expect uniform quality. Buying brand- name goods is especially helpful when it is hard to inspect for quality, such as pack- aged products. Some stores have their own brand names, called store brands or private label brands. For example, Craftsman has long been one of the brand names on tools sold by Sears. Store brands are usually sold at a lower cost than national brands. Buying store brands may save you money and offer good quality at the same time. Stores may also carry unbranded items

at reduced prices, called generic prod- © Digital Vision ucts. Generic products are less expensive Compare different brands of similar items. Name similarities because they do not require advertising and differences. Is one better than the other? Why?

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337777 112/21/072/21/07 9:39:179:39:17 AMAM Work as a Team SHOPPING LOCATIONS Today, consumers have more ways to buy than When deciding where to buy, you have ever before. Using the three main categories many choices. The types of stores and of buying locations (traditional retailers, con- other buying locations expand every day temporary retailers, and non-store shopping), because of competition and technology. create a list of businesses in your community. Then, discuss the advantages and disadvan- tages of using each of the three categories. Traditional Retailers Many of the stores in which you shop have developed over the past 100 years. main idea Time Your Purchases For some items, Department stores have an extensive prod- prices are lowest at predictable times. uct line and emphasize service. They may Describe the main Certain seasons and conditions favor have personal shoppers, make deliveries, types of shopping locations. goods and services being sold and wrap gifts. at reduced prices. Some examples Discount stores emphasize lower prices include: on their products. Most discount stores • Fresh fruits and vegetables are usually base their success on a high volume of lower in price during the peak of their sales and low prices. If service is not growing season. important to you, this may be where you should shop. • Winter clothing is often on sale in Specialty stores have a special line of January. products for sale. They carry a wide vari- • Firewood often costs less in the ety of products in a narrow line such as summer. sporting goods, jewelry, or women’s shoes. Consumer information sources can Some specialty stores may also be discount help you add to this list. stores. Avoid Being Impulsive The opposite In food retailing, a supermarket is the of spending time and effort is buying large, full-service store that carries many too quickly and is called impulse brands. stores are small stores buying. Impulse buying should be that emphasize the sale of food items, an avoided. It often happens when an item accessible location, and long operating is nicely displayed where customers are hours. These stores usually stock popular likely to see it, such as near the checkout items at higher prices. counter. Some impulse buying is harmless when Contemporary Retailers the cost is small and the item is worth the Today, specialty superstores offer low price. Be aware that buying more expen- prices and a wide variety of a limited sive items on impulse can be costly. One product line. These include retailers of the best ways to avoid impulse buying is such as OfficeMax, Home Depot, and to use a shopping list. You can save money Best Buy. with a list whether it is for groceries, hard- Discount stores have expanded to ware, or clothing. include a wide array of food products. These superstores may also include other chec kpoint ›››› retail services such as a bakery, restaurant, What decision-making steps should be pharmacy, video rentals, and banking. taken when making a purchase? The warehouse club is a no-frills outlet focusing on the sale of large quantities at

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 337878 112/21/072/21/07 9:39:269:39:26 AMAM reasonable prices. Products are displayed in simple settings resembling a warehouse. These stores target small business owners who are looking to buy various supplies and equipment. Factory outlets have been popular. These stores have a reputation for selling high-quality merchandise at low prices. Products are direct from the factory and sometimes have minor flaws.

Non-Store Shopping Shopping at home started with door-

to-door sales. Then, mail order catalogs © Getty Images/PhotoDisc became very popular. People sent in What are some advantages to shopping in a store rather than using a catalog or shopping online? their orders by mail and later called by telephone. Now, you can buy using your television, computer, or fax to flowers and toilet paper from a vending machine. machine. Non-store shopping also includes vending machines. Each year, more and different products are available through chec kpoint ›››› What are the main categories of shop- these automated devices. In Japan, a per- ping locations? son can buy everything from eggs and toys

15-1 Assessment school.cengage.com/business/introtobiz

Key Concepts 3. Which of the following is an example of a non-store shopping location? Determine the best answer. a. club warehouse c. factory outlet 1. The most reliable consumer information source b. vending machine d. hypermarket will usually be a. advertising Make Academic Connections b. comments from salespeople c. comments from other consumers 4. Math A 12-ounce package of cereal is priced at $3.20. d. reports from consumer testing organizations A larger container of the cereal costs $5.20 for 1½ pounds. What is the unit price for each item? 2. The first step in the buying decision-making process is to 5. Communication Select several advertisements. a. identify product alternatives Develop a list of questions to ask when evaluating b. evaluate the services at different stores advertising. Use these guidelines to evaluate the ads c. decide whether to use cash or credit you selected. Prepare a one-page summary of your d. identify your needs findings.

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Goals Key Terms Focus on Real Life Explain the consumer Juan met Michelle after school. “Hi, Michelle. Have you decided which computer to buy?” movement. “I don’t know,” replied Michelle. “I looked at the comput- fraud ers at Bayside Computer Store and they have the lowest price. Explain seven guarantee But I got the impression they didn’t take me seriously because of consumer rights. my age.” express warranty Young people often comment that businesses do not respect Describe consumer implied warranty them as customers or treat them as well as adults. Successful responsibilities. businesses recognize that teens are a powerful consumer group with purchasing power. They not only choose where they want to spend their money, but often influence the buying decisions of family and friends. Businesses that ignore or disrespect younger customers jeopar- dize sales. They may also lose long-term customers who don’t feel comfortable when shopping in these stores. You can be sure that businesses that are aware of consumer rights and buying power will welcome teen customers.

main idea THE CONSUMER MOVEMENT fifth right to the list. In 1975, President Gerald R. Ford added the sixth. In 1994, In the past, some businesses were viewed Explain the consumer President William J. Clinton added the movement. as often trying to take advantage of seventh. consumers. False claims were sometimes made about products. Prices were often too high. Some products were Consumer Bill of Rights unsafe. To fight against unfair business practices, consumers united to demand 1. The right to be informed. fair treatment from businesses, giving 2. The right to safety. rise to what is known as the consumer 3. The right to choose. movement. Because of this movement, public 4. The right to be heard. and private agencies, policies, laws, 5. The right to a remedy. and regulations were developed to protect consumer interests. In 1962, 6. The right to . President John F. Kennedy presented his 7. The right to service. Consumer Bill of Rights and declared that every consumer has the first four FIGURE 15-1 rights shown in Figure 15-1. In 1969, Give examples of how your rights as a consumer are President Richard M. Nixon added the respected.

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338080 112/21/072/21/07 9:39:389:39:38 AMAM services. Several agencies work to assure chec kpoint ›››› the safety of consumers. The Consumer What are the seven rights of consumers? Product Safety Commission has the authority to set safety standards, ban hazardous products, and recall dangerous YOUR CONSUMER RIGHTS products from the market. main idea The Food and Drug Administration As a consumer, you have the right to (FDA) makes certain that food, drug, and Explain seven expect honesty and fair treatment from cosmetic products are not harmful to con- consumer rights. businesses. Few businesses are intention- sumers. This federal agency enforces laws ally dishonest. Being a skilled consumer and regulations that prevent the distribu- means that you know the Consumer Bill tion of unsafe or misbranded foods, drugs, of Rights and how to exercise these rights. and cosmetics. The Right to Be Informed The FDA also works to ensure that product labels do not mislead consum- Most products and services are described ers. The United States Department of in advertisements, on labels, or by a sales- Agriculture (USDA) helps ensure con- person. You have a right to know what sumer safety by setting quality standards the product or service is and what it will for farm products. The USDA also con- do for you. trols the processing, inspection, and label- Fraud occurs when consumers are ing of meat products. given false information in an effort to make a sale. If a salesperson knowingly The Right to Choose sells you a car on which the odometer has The right of consumers to choose been turned back 30,000 miles, fraud has from a variety of goods and services has occurred. become well established. In fact, one of Not all product information you the main activities of the Federal Trade receive can be expected to be perfectly Commission (FTC) is to prevent one accurate. Suppose you were looking firm from using unfair practices to force for a used car for transportation to and competing firms out of business. When a from school. If a salesperson told you business has no competitors and controls she thought the car would get about 20 the market for a product or service, it is miles to the gallon but it only got 18, said to have a monopoly. Competing firms you were not deceived. The salesperson encourage customers to buy from them by may not have been accurate in estimat- ing gas mileage, but no guarantee was made. When a salesperson exaggerates the good qualities of a product and says, “It’s the best” or “It’s a great buy,” there is no fraud. On the other hand, if the salesper- son tells you a car has new brakes and it does not, this is fraud.

The Right to Safety © Getty Images/PhotoDisc Consumers have a right to be safe from Why is it important for consumers to have choices? harm associated with using products or

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338181 112/21/072/21/07 9:39:449:39:44 AMAM Work as a Team Several federal government agencies, such as the FTC, also assure your right to Your consumer rights are commonly taken for be heard. As a consumer, you can com- granted. As a team, create a table with three columns and seven rows. List the seven con- plain directly to the FTC if you believe sumer rights in the left column. In the center that your consumer rights have been column, describe situations in which each con- violated. The FTC regulates advertising sumer right is involved. In the right column, and encourages informative and truthful describe actions that people can take to more advertising. effectively use each consumer right. State government agencies, such as the Office of the Attorney General or offering a choice of products and services the Department of Consumer Affairs, at a range of prices. By driving away this have responsibility for protecting the competition, monopolies limit the right rights of consumers. They can prosecute to choose. businesses for breaking state consumer protection laws. These offices also inspect The Right to Be Heard advertising practices. They handle con- Most businesses have a customer service sumer problems related to automobile department to hear the concerns or com- repairs, credit, and door-to-door sales plaints of customers. Some smaller busi- practices. nesses have a specific person assigned to Privately funded groups also help that duty. Businesses are usually happy to to make certain you are heard. Various take care of problems you have with their national and local groups inform and products or services. protect consumers in a variety of

A QUESTION OF ETHICS

Frauds by Consumers

Most people are familiar with bait- • Making photocopies of sheet technology. While new electronic and-switch tactics, work-at-home music and passing them out to devices have improved store schemes, and “lose weight fast” all the members of your chorus security, this equipment has also scams. These frauds against consum- added to business costs and higher Buying clothing, wearing the ers result in lost money for consum- • prices. item, and then returning it ers and are usually illegal. Various actions by consumers can also cause • Asking for a cup for water and Think Critically higher prices. People who would not using it to take a soft drink from 1. What other actions by consum- think of shoplifting may be dishon- a self-serve dispenser ers can result in higher prices for est in other ways. Deceptive actions • Switching price tags from lower- the things you buy? by consumers include the following. priced items and putting them 2. Describe how businesses and on the more expensive items individual consumers might help • Eating items in a store without reduce these actions that result paying for them While most of these actions are in higher prices for everyone. • Buying a book, reading it, and illegal, all affect the operating costs returning it for a full refund of businesses. Each of these “frauds by consumers” results in higher Sitting on the floor in a • prices. Many of these practices bookstore and reading an entire have become more difficult with magazine without buying it

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338282 112/21/072/21/07 9:39:559:39:55 AMAM purchasing areas. Some groups special- ize in auto safety or consumer credit. Others will assist with any consumer problem. The Better Business Bureau is con- cerned with problems arising from false advertising or misrepresented products and services. Dues paid by member busi- nesses support BBBs. They work to maintain ethical practices and combat consumer fraud. If you believe your con- sumer rights have been violated, you can get help from one of 120 Better Business

Bureaus around the country. After report- © Brand X Pictures/Jupiter Images ing your concern, the bureau will try to Discuss a time when you had difficulty returning an item. How many persuade the business to fix the problem. people did you speak with? Were you successful, or did you give up? Why? Most businesses willingly carry out the BBB request. are sometimes called express warranties. An express warranty is made orally or in The Right to a Remedy writing and promises a specific quality of The Fair Packaging and Labeling Act, performance. National Traffic and Motor Vehicle You should review the guarantee Safety Act, Truth in Labeling Act, and before buying an item. You can also Fair Debt Collection Practices Act all require the business to put in writing protect consumers. These and other laws any other guarantees that have been are designed to provide assurances that offered orally. Written guarantees are consumers can seek a legal remedy when a useful if you need to return a faulty problem occurs. product. Read the guarantee carefully to Consumers also have protection find out exactly what is covered and for provided through a guarantee. With what period. some purchases, a consumer can expect Some guarantees are not written. They a guarantee or a warranty. A guarantee are called implied warranties. An implied is a promise by the manufacturer or warranty is imposed by law and is under- dealer, usually in writing, that a product stood to apply even though it has not is of a certain quality. A guarantee may been stated. In general, the law requires apply to the entire item or only to some certain standards to be met. For example, parts of it. It may promise that defective it is implied that health care products parts will be replaced only if a problem purchased over the counter at a pharmacy occurs during a specified period. No will not harm you when used according to guarantee covers damages caused by the directions. misuse. When making a purchase, a skillful consumer asks about a guarantee. A guar- antee is frequently in the form of state- FFYIYI ments like these: “The working parts of Teenage consumers spend more than $200 billion each year. The this watch are guaranteed for one year.” main categories of their spending are food and snacks, clothing, “This sweater will not shrink more than entertainment, school items, and automobile expenses. 3 percent.” These kinds of guarantees

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338383 112/21/072/21/07 9:40:079:40:07 AMAM main idea The Right to Consumer Education YOUR CONSUMER Although individual buying decisions are Describe consumer RESPONSIBILITIES important, educated consumers need to responsibilities. Just as some businesses have not met their understand how their choices affect the responsibilities to consumers, some con- economy. Consumer education should sumers try to take advantage of businesses. take into account how buying actions Even consumers who are not unethical create an interaction between consumers or dishonest may have expectations that and producers. Educated consumers are businesses cannot meet. Consumers aware that their decisions not only also have responsibilities in business affect their personal situation, but relationships. also have economic and social implications. Be Honest The Right to Service Most people are honest, but those who This latest right suggests consumers can are not cause others to pay higher prices. expect convenience, courtesy, and respon- Shoplifting losses are estimated to be in siveness to consumer problems and needs. the billions of dollars each year. Businesses The right to service encourages businesses make up losses from shoplifting by charg- to take steps necessary to ensure that ing higher prices. products and services meet the quality As a responsible consumer, you must and performance levels claimed for those be as honest with a business as you want it products and services. to be with you. You should be as quick to tell the cashier that you received too much change at the checkout counter as you are chec kpoint ›››› to say that you received too little. How does an express warranty differ from an implied warranty? Be Reasonable As a buyer, you are usually responsible for what you buy if the business has been honest. If you are dissatisfied and wish to complain, you should complain in a rea- sonable way. You should first be sure that you have a cause for complaint. Be sure that you have followed the directions for using the product. After you have confirmed the details of your complaint, calmly explain the problem to an employee of the busi- ness from which you bought the item. In most cases, the business will be glad to correct the problem because it does not want to lose you as a customer.

Be Active As a responsible consumer, you should report unethical business practices to © Digital Vision What kind of service should you expect from the company that sells you a cell phone? prevent other consumers from becom- ing victims. By reporting the matter to

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338484 112/21/072/21/07 9:40:319:40:31 AMAM a consumer agency, you might be able to you have a responsibility to participate get the shop to keep its word both to you in government, which starts by being an and to future customers. informed voter. As a consumer, you also have respon- Be Informed sibilities. When the opportunity arises, The most important responsibility you make your concerns known to govern- have as a consumer is to be informed. Just ment officials or consumer agencies. Only having the right to be informed will not when you become involved as a consumer make you an . You can agencies do their jobs and legislative must find and use the information avail- bodies pass appropriate laws. able to you. You have an obligation to society to You should also keep informed about be a wise and efficient consumer. The your rights as a consumer. Learn about world has only a limited supply of natural the laws and agencies that protect your resources such as petroleum, metals, clean rights and how to report a violation of air, and clean water. Sometimes, unin- your rights. Being an informed consumer formed consumers unnecessarily waste is hard work, but the extra effort spent in these resources and contribute to damag- making your dollars go as far as possible ing the environment. will be worth it. chec kpoint ›››› Be Involved What actions can be taken to be an In the United States, involvement is an involved consumer? important consumer activity. As a citizen,

15-2 Assessment school.cengage.com/business/introtobiz

Key Concepts Make Academic Connections Determine the best answer. 5. Research Go to the web site of the FTC’s Bureau of Consumer Protection. What services does this govern- 1. True or False. The U.S. Consumer Product Safety ment agency provide? How do you and other consum- Commission is responsible for regulating the safety of ers benefit from the actions of the FTC? food. 2. True or False. An implied warranty is usually printed in 6. Law The Truth in Labeling Act requires that certain the owner’s manual of a product. information be presented on food labels. Using a label from a food product in your home, identify some of 3. A person who compares product information on labels these required items. How would you make food labels is using the consumer right to more informative for consumers? a. service b. be informed c. be heard d. a remedy 4. If a person returns an item as new for a refund after using it, this violates the consumer responsibility to be a. honest c. informed b. involved d. active

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Consumers Union Imagine 24 different washing machines all operating in the same room. Envision 32 digital cameras being used by a small group of people. These are scenes you might encounter in one of the 50 testing laboratories of Consumers Union in Yonkers, New York. Consumers Union was created in 1936 to provide information on products and services to help buyers get the most for their money. Today, Consumers Union continues to sort out low-quality and unsafe prod- ucts from those items that will give you the best value. Each month, the results of these consumer tests are reported in Consumer Reports maga- zine and on the Consumer Reports web site. Consumers Union also conducts extensive testing on motor vehicles. Each year, the organization buys the vehicles the same way you would buy a car. That is, Consumers Union has shoppers bargain with dealers © 2007 by Consumers Union of U.S., Inc. Yonkers, NY 10703-1057, a nonprofit organization. Reprinted with permission from www.ConsumersUnion. for the best price. After an inspec- org for educational purposes only. No commercial use or reproduction permitted. www.ConsumerReports.org, and www.ConsumersUnion.org. tion of the vehicle’s features, road testing occurs on a 195-mile course. lawyers, and other personal and finan- educational programs on consumer Engineers record various perfor- cial services. topics. This group also publishes mance data. Finally, crash tests are Consumers Union is involved with reports, organizes conferences, and conducted to assess safety and the protecting consumers in other ways. testifies at government hearings. possibility of a rollover. All of these Offices in Washington, DC, California, findings are then published to help and Texas promote improved Think Critically consumers make wiser car-buying consumer protection laws. The 1. How do the activities of Consumers choices. Washington office works to build sup- Union assist consumers? In recent years, as consum- port for laws related to telecommu- 2. Conduct research to create a list of ers spend more of their income nications, product safety, food safety, current consumer issues that are on services, Consumers Union has financial services, health care policy, of concern to Consumers Union. expanded its activities. Every month energy, international trade, and other in the magazine, consumers are pro- consumer issues. vided with information about bank- The advocacy arm of Consumers ing services, health care, insurance, Union conducts research and offers

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338686 112/21/072/21/07 9:40:419:40:41 AMAM 15-3 Consumer Protection Actions

Goals Key Terms Focus on Real Life List common mediation Monica Robinson bought an expensive leather consumer concerns. purse. Unfortunately, after she used the purse for a few arbitration weeks, the zipper broke. She took the purse back to the store Describe the steps class action suit from which it was purchased. Monica very politely and calmly of the consumer described to the salesperson how the zipper broke. She also had small claims court complaint process. her receipt from the purchase to show that the purse was only six weeks old. The salesperson looked at the purse and the receipt Explain legal actions and offered Monica a replacement, a store credit, or a refund. available to assist Monica chose a replacement. consumers. This consumer problem had a pleasant ending. Most of them do. You should not get upset or angry in order to get satisfactory results from a business. In fact, most businesses are eager to solve problems that consumers have. They want happy, satisfied cus- tomers who will return. Solving consumer problems is usually a matter of practicing good two-way communication. Let the business know what you want. The job of the business is to tell you what you can expect to get. If both consumer and business are honest and fair, the prob- lem can be solved.

COMMON CONSUMER complaints involve the following types of main idea business. PROBLEMS List common Consumers hope that their purchases • Motor vehicle purchases, repairs consumer concerns. will always result in a satisfactory transac- • Debt harassment tion. Still, problems sometimes arise. The • Identity theft and credit card fraud item may have been damaged in transit. The wrong size sweater may have been • Guaranteed and advance-fee loans shipped. These types of consumer prob- • Credit repair scams lems are usually resolved quite easily. • Telemarketing, catalog, and magazine Sometimes, problems that are more sales serious might occur. Your credit card pay- ment may not be properly recorded to • Internet auctions, online purchases your account. A product you purchased • Prizes, sweepstakes, and phony lottery might stop working after just a few days promotions of use. • Work-at-home and start-your-own- Sources of Complaints business opportunities Various consumer agencies report • Travel and vacation promotions that the main sources of consumer • Health and diet gimmicks

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338787 112/21/072/21/07 9:40:519:40:51 AMAM purchases made by telephone. The seller must send you the item within 30 days or FFYIYI within another period specifically stated by the company. If there is a delay, the “Phishing” is a high-tech scam that uses spam or pop-up messages seller must notify you. You then have the to deceive you into revealing your credit card number, bank account information, Social Security number, passwords, or other sensitive right to cancel your order. information. The Federal Trade Commission warns consumers never If an unreceived or returned item to disclose personal data online to a questionable source. is billed to your credit card, you have 60 days to dispute it. The credit card company then has 30 days to respond. Deceptive Business Activities Within 90 days of your letter, the credit Consumer fraud can be discovered in card company must investigate the mat- media ads, in the mail, or even on a city ter and explain why the bill is correct or street corner. Various scams, cons, and incorrect. swindles have been around for a long You do not have to pay the part of time. When a deal seems like it’s too your credit card bill under dispute until good to be true, it probably is! Each the matter is resolved. To avoid finance year, federal government agencies report charges, you must pay the rest of your bill consumers losing billions of dollars on on time. phony investments and other deceptive offers. The Internet has become the num- chec kpoint ›››› What are sources of common consumer ber one source of fraudulent offers. complaints? Consumers may not know the identity or location of all online merchants. This makes it difficult to track down the con artist after you have already lost your money. The most common online scams involve sales of Internet services and general merchandise. Online auctions, non-delivery of products, credit/debit card scams, and work- at-home offers are also common sources of fraud. Internet scams can also take the form of prizes, sweepstakes, and credit card offers. Consumers have lost as much as $10,000 through Internet fraud. Be cautious when making your online purchases.

Protection for Shoppers With the increasing popularity of e-commerce comes the concern for

consumer rights. Federal laws that © Digital Vision Describe some Internet scams or other suspicious schemes. How protect Internet and TV shoppers do you know that they are probably not legitimate offers? are the same as those that govern

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338888 112/21/072/21/07 9:40:559:40:55 AMAM THE COMPLAINT PROCESS consider using the services of a consumer main idea agency or public interest organization. While no one wants consumer prob- Contacting a local, state, or federal gov- Describe the steps of lems, they do occur. When they happen, the consumer com- ernment agency can encourage the busi- a person should be prepared. Consumer plaint process. ness to take action. protection experts suggest four steps Some agencies and organizations spe- when trying to resolve a purchasing cialize in specific consumer topics such problem. as consumer credit, health care, motor vehicles, or telecommunications. Other Step 1 Contact the Place of groups, such as state consumer protection Purchase offices, will help you with almost any con- Most consumer complaints are settled by sumer concern. returning to the place of purchase. Calmly explain the situation. Provide evidence of Step 4 Take Legal Action your purchase and the problem. A receipt When the first three steps do not work, or other dated documents will help you more extreme actions may be required. convince the store to take action in your Several legal actions are available to consum- favor. ers. These include the use of a third party for dispute resolution, class action suits, Step 2 Contact the Company small claims court, and hiring a lawyer. Headquarters If communicating with the place of pur- chec kpoint ›››› chase does not bring satisfaction, you List the steps of the should move up in the organization. process. Contact the customer service department or other office within the company. The address, phone, and e-mail of most organizations can be obtained on the package or through a search. When contacting the company, once again provide facts about the situation. Tell what hap- pened in a brief letter or e-mail. Include copies of any documents that back up your story. Be specific about what action you would like them to take.

Step 3 Involve a Consumer Agency

If communication with © Digital Vision the business fails to Why might someone decide not to pursue a lawsuit against a company even when the company has been fraudulent? satisfy your demands,

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 338989 112/21/072/21/07 9:41:079:41:07 AMAM Work as a Team If the parties agree to it in advance, another third-party action may be used. Each day, many consumers encounter con- Arbitration results in a decision that is sumer difficulties. Based on your experiences and observations, prepare an individual list of legally binding. After hearing both sides consumer problems of which you are aware. and considering evidence, the arbitrator Then, compare your list with others on your makes a decision. Both the consumer and team. How did most people become aware business must abide by the arbitrator’s of various consumer problems? What actions verdict. were taken to resolve some of these concerns?

Class Action Suits main idea LEGAL ACTIONS FOR What would you do if you are Explain legal actions CONSUMERS overcharged a couple of dollars? available to assist If contacting the business or a consumer Maybe nothing, but what if this same consumers. agency does not resolve the problem, vari- injustice occurred to thousands of ous legal actions may be considered. consumers? A class action suit is legal action Third-Party Settlements by one party on behalf of a group of A third party may be used to settle con- people who all have the same grievance. sumer differences. Mediation involves the In this type of lawsuit, one person or a use of a third party who tries to resolve small group represents the interests the complaint between the consumer of many others (the class). The settle- and the business. A mediator suggests ment may result in a refund to all con- a compromise between the two parties. sumers involved. If they cannot all be This process helps the parties work out identified, the funds are sometimes their own mutually agreeable solution to given to public education programs or the dispute. schools. © Getty Images/PhotoDisc Name some benefits of joining a class action suit rather than trying to win a case alone.

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 339090 112/21/072/21/07 9:41:149:41:14 AMAM Small Claims Court In every state, a court system exists to resolve cases involving small amounts. These courts are called small claims court. In these courts, disputes are resolved quickly and inexpensively. The rules are simple and informal, and the dispute involves less than a set amount. The limits for cases heard in small claims court vary by state. The amount ranges from less than $1,000 in some states to $10,000 in others. Most often, lawyers are not involved. © Getty Images/PhotoDisc Name some types of cases that would be appropriate for small Individuals present the facts of the situ- claims court. ation and provide written and other evi- dence. Witnesses may also be used. Before using the services of a lawyer, you should ask various questions. Is the Using a Lawyer lawyer experienced in this type of case? If all else fails, a final step might be Will you be charged a flat fee or an hourly to hire a lawyer. When a situation rate? When will you be required to make involves larger amounts of money or payment for services? severe injuries from a product, the use of an attorney may be appropriate. chec kpoint ›››› Information about potential lawyers NameHow some does types mediation of cases that woulddiffer be from appropriate for may be obtained from advertisements or smallarbitration? claims court. referrals from other people. © Getty Images/Photodisc

15-3 Assessment school.cengage.com/business/introtobiz

Key Concepts Make Academic Connections Determine the best answer. 3. Visual Communication Create a poster or other visual that communicates the four steps in the con- 1. Most consumer complaints are resolved by sumer complaint process. Use a specific consumer a. taking legal action problem as the basis for your visual presentation. b. using arbitration c. hiring a lawyer with consumer protection 4. Research Use library materials or an Internet search to experience determine the small claims court limit amount in your d. returning to the place of purchase state. Also, obtain information about filing a case in 2. A company refused to refund $10 to more than 4,000 small claims court. customers. This situation might result in the use of a. mediation b. arbitration c. a class action suit d. small claims court

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school.cengage.com/business/introtobiz Business Notes 15-1 CONSUMER BUYING DECISIONS 5. The Consumer Bill of Rights declares that every 1. The main sources of consumer information are consumer has the right to be informed, to safety, product-testing organizations; media sources to choose, to be heard, to a remedy, to consumer such as print publishers, broadcast organizations, education, and to service. Being a skilled con- and the Internet; government agencies; business sumer means that you know the Consumer Bill of sources such as product labels, customer service Rights and how to exercise these rights. departments, and Better Business Bureaus; and 6. Consumers also have responsibilities in business personal contacts. relationships. The five basic responsibilities of 2. Comparison shoppers will evaluate price, consumers are to be honest, to be reasonable, to quality, service, sales, and brands when mak- report unethical practices, to be informed, and to ing a purchase. Wise consumers take their be involved. time when making purchases, buy when prices are lowest, and avoid impulse buying 15-3 CONSUMER PROTECTION ACTIONS with shopping lists. 7. The main consumer complaints are related to 3. The main shopping locations used by consum- automobiles, deceptive investments, identity ers can be viewed in three categories. Traditional theft and consumer credit, telemarketing and cat- retailers include department stores, discount alog sales, work-at-home schemes, contests, vaca- stores, specialty stores, supermarkets, and con- tion promotions, phony diets, and buying online. venience stores. Contemporary retailers include 8. Four steps are suggested when encountering a specialty superstores, warehouse clubs, and fac- consumer problem: (1) contact the place of pur- tory outlets. Non-store shopping options include chase, (2) contact the company headquarters, door-to-door, mail order, phone, computer, and (3) involve a consumer agency, and (4) take legal vending machines. action. 9. A variety of legal actions is available to help con- 15-2 CONSUMER RIGHTS AND RESPONSIBILITIES sumers. Mediation and arbitration involve the use 4. The consumer movement emerged to fight unfair of a third party to resolve a consumer complaint. business practices. Because of this movement, Class action suits allow a small group of consum- public and private agencies, policies, laws, and ers to act on behalf of many. Small claims court regulations were developed to protect consumer allows a person to take legal action without the interests. use of a lawyer.

Communicate Business Concepts 1. Why do you think most businesspeople like to 5. One autumn day, a woman and a man came to have well-informed customers? Carrie Franklin’s door. They said they were chim- ney sweeps and would like to clean her chim- 2. Do you go through all of the steps of comparison ney before she began using her fireplace. The shopping on every purchase you make? Explain. man said it would be inexpensive and make her 3. List factors you might consider when evaluating home safer, reducing the chances of a chimney the usefulness of a consumer information source. fire. Mrs. Franklin looked out her window and saw the name “Chim Chim Chimney Sweeps” on 4. If you were planning to buy a cellular phone, what their truck. How can she find out if the firm is information sources might be most valuable? reliable?

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445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 339292 112/21/072/21/07 99:41:34:41:34 AMAM 6. When would you consider an impulse purchase a that it is only walnut veneer glued over less harmless activity? expensive plywood. c. The person who sells an electric corn popper 7. What are some factors you might consider when says it is completely washable. Before using it, deciding where to shop? you put it into a sink filled with water to wash 8. Which of the consumer rights have you recently it. The first time you try to make popcorn, used? there is a flash and the popper’s electrical unit catches fire. When you return the popper to 9. Why, with all of the laws and organizations to the store, the salesperson tells you that she protect consumers, do you continue to hear of did not mean the popper could be put under examples of consumer fraud? water. She says you should have known that 10. Which of the following situations would be con- electrical appliances should not be put in sidered fraud? Why? water. She refuses to give you either a refund or an exchange. a. A salesperson says the sound system you are looking at is the best on the market. After you 11. Describe situations in which a person might use buy it, you find it rated in a consumer maga- (a) a class action suit and (b) small claims court. zine as second best. 12. When might you use a lawyer to resolve a con- b. An advertisement for a bookcase cabinet sumer dispute? What are some of the pros and claims it is made of solid walnut. Upon close cons of using a lawyer versus other dispute reso- inspection after buying the bookcase, you see lution methods?

Develop Your Business Language Match the terms listed with the definitions. 23. Guarantees imposed by law that are not stated orally or in writing and that require certain stan- 13. Use of a third party who attempts to resolve the dards to be met. complaint between a consumer and business. 24. Banding together of consumers to demand fair 14. Buying too rapidly without much thought. treatment from businesses. 15. A name given to a product or service to distin- guish it from other similar products or services. KEY TERMS 16. A legal system for resolving cases involving small a. arbitration monetary amounts. b. brand 17. The price per unit of measure of a product. c. class action suit d. consumer movement 18. When false information is given to a customer in e. express warranty an effort to make a sale. f. fraud 19. A lawsuit brought by one party on behalf of a g. guarantee group with the same grievance. h. implied warranty i. impulse buying 20. Guarantees made orally or in writing that promise j. mediation a specific quality of performance. k. small claims court 21. Third-party settlement resulting in a decision that l. unit price is legally binding. 22. A promise by the manufacturer or dealer, usually in writing, that a product is of a certain quality.

CHAPTER 15 ASSESSMENT 393

445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 339393 112/21/072/21/07 9:42:009:42:00 AMAM Make Academic Connections 25. LAW Prepare a summary of various federal con- a. What would be the price of the new phone sumer agencies and laws designed to protect con- with the discount? sumers related to product safety, motor vehicles, b. What percent of the price of a new telephone food, medical products, and consumer credit. is the price of the reconditioned phone? c. How much money would Berri save by pur- 26. Select a magazine VISUAL COMMUNICATIONS chasing the reconditioned phone? advertisement. Create a poster describing various elements of the ad. Highlight the sections of the ad 30. TECHNOLOGY Conduct an online search of Internet that would be useful or deceptive to consumers. frauds. What types are most common? How can a person avoid these deceptive online business 27. Collect examples of advertisements RESEARCH practices? with the word “sale” included. Group the ads into categories based on the type of sale being dis- 31. MATH The Jones family ordered a new car from played. What types of sales are most common? Germany. The express warranty said the average driver would get 48.3 kilometers for every 3.85 28. Design a label for a food product with your ART liters of gasoline used. own brand, product name, graphics, nutritional information, and other features. a. How many miles per gallon is this? b. If they traveled 90 miles and used 10.5 liters of 29. MATH Berri purchased a new cell phone that gas, did the car perform better or worse than stopped working one month after the warranty the warranty claimed? expired. When she returned to the store, she was offered the choice of purchasing a new phone 32. HISTORY Conduct research on the way that people for 5 percent off the list price of $98 or a recondi- shopped in the 1800s to mid-1900s. Comment tioned phone that carried the same warranty as a on some of the cultural, geographic, economic, new phone for $75. and social factors that contributed to these customs.

Linking School and Community Talk to people in your community about the types of to resolve the problem? What suggestions do they have consumer problems they have encountered. What was for other consumers? Prepare a short written or oral the nature of the situation? What actions did they take summary of your findings.

Web Workout Many web sites provide online reviews from cus- Think Critically tomers. Reading reviews by satisfied and dissatis- 1. Identify two different web sites that use customer fied customers can be helpful when a consumer is reviews or ratings to help others with their pur- researching or planning to purchase a product or chase. Write a brief description of the sites and service. Past customers can post their positive and how their systems work. negative comments and even, in some cases, pho- 2. Explain how the number of opinions offered tographs. Some web sites allow customers to rate might influence consumer purchasing decisions. products or services using a scale such as one to five Also address the issue of fraud or manipulation stars. of review and rating systems.

394 CHAPTER 15 CONSUMERS IN THE GLOBAL ECONOMY

445610_15_Ch15_p368-395.indd5610_15_Ch15_p368-395.indd 339494 112/21/072/21/07 9:42:169:42:16 AMAM Decision-Making Strategies Pierre needs a new digital camera to take on his trip to 33. What sources of information could Pierre use to Mexico as an exchange student. He is not a photography find out what cameras are in his price range? expert, but he has taken some pictures for the school 34. What two sources of information do you believe newspaper. He intends to use the camera to take indoor are best? Why? and outdoor pictures of people as well as scenery. Pierre has about $150 to spend on the camera. He wants the camera to be sturdy, easy to use, and to take good-quality pictures.

Global Marketing Team Event Marcella is interested in providing nutritious meals You will be that are easy to prepare. She has created a line of evaluated for your meals called Marcy’s Gourmet. These meals do not • Knowledge of require freezing. Each meal takes into consideration demographics in the international market a well-balanced diet. Selections include meat and vegetarian choices. Each meal takes five minutes to • Understanding of the marketing mix prepare in a microwave or 20 minutes in an electric • Understanding of economic, social, legal, and oven. Prices for Marcy’s Gourmet meals range from technological trends $3.00 to $5.00. • Use of appropriate research and accompanying Your team of two will develop an international documentation marketing plan for this new product. The market- • Description of timeline for business success ing plan must not exceed 10 single-spaced pages. For more detailed information about performance Team members will present before a panel of indicators, go to the BPA web site. judges (class members) and a timekeeper. The length of the presentation will be no more than 10 Think Critically minutes. The completed plan should include, but 1. Can the product be a success in America, is not limited to: Title Page and Table of Contents, internationally, or both? Synopsis or mini-plan, Company Goals, Description 2. What groups of individuals will this product of Customers and Their Needs, Description of appeal to (consider gender, age, education, and Pricing Strategy, Competition, and Price Selection income)? Methods. 3. What is the most appropriate method of distribu- PERFORMANCE INDICATORS EVALUATED tion for this product? 4. What demographic and cultural issues must be • Develop an international marketing plan. considered when marketing this product? • Identify a customer base, including consumer 5. Will the name “Marcy’s Gourmet” have any effect and organizational markets. in the international marketplace? • Illustrate fundamentals of consumer behavior in different cultures. http://www.bpanet.org/

Portfolio Activity Access the web site shown here to find portfolio activities for this chapter. Use the school.cengage.com/business/introtobiz activities to provide tangible evidence of your learning.

CHAPTER 15 ASSESSMENT 395

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