PRINCIPLES OF WISE BUYING
Buying is exchanging goods/services for money by a consumer.
Ways of obtaining information used to enable a consumer wisely are:
- advertisement
- acquaintances, friends and associates
- by window shopping before buying any item
Principles of wise buying
- set goals/priorities of things one wants and limit of money to spend
- prepare a budget to meet set goals and priorities. It will also help control and facilitate expenditure
- before buying any item, consider its suitability in relation to its intended use,
- it should be durable for consumer to be able to determine wear and tear of an item
- it should be versatile for it to serve more than one purpose, e.g a table that can be used for study as well as food services
- price should match its quality. always window shop to compare prices for similar items
- always have a shopping list to:
- ensure no important item is forgotten and
- unnecessary ones are not bought
- to control impulse buying
- item must be attractive in colour and design (overall appearance should be attractive)
- Learn to interpret and use advertisements wisely e.g being careful when choosing persuasively/deceptively advertised goods
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PRINCIPLES OF WISE BUYING
FACTORS INFLUENCING CONSUMER BUYING
- Income
When income is low only basic needs will be catered for e.g food, shelter and clothing. Reduction – Increase reduces/improves purchasing power of a household.
- Price fluctuation
Prices of some items vary depending on time of year e.g fruits and vegetables, so it affects allocation of income
- Substitute products
are products with same use as others available in market e.g margarine and butter. – Butter is more expensive so a consumer chooses the affordable product.
- Complementary product
- are ones that one needs to use together with other products e.g sugar and tea
- if one needs ones product it creates need for the other. One can’t be used without the other.
- Time and energy
- if one has limited time and energy it affects shopping. She may not have time to compare prices and get best value of her money.
- Family set up (the stage in family life cycle)
- a family with babies/young children has different needs from that of grown ups. – This influences type of items bought and amount of money spent on them.
- Rural/urban set up
- different set ups affect family and individual needs depending on what is available in certain areas e.g fruits and vegetables are cheaper in rural areas.
- Inflation
- it is where prices increase while income is same,
- increase in price reduces purchasing power of a person (inflation)
- Customs and traditions
They involve spending of money e.g feasts, graduations, Christmas and burials.
- Need to define a certain self image
One has a desire to lice above her means to portray a certain status so influenced to spend above her means.
COMMON METHODS OF BUYING GOODS AND SERVICES
(a) Credit buying Forms of this
- Hire purchase
- Use of Credit cards
- Use simple non-installment credit
Goods are obtained and payment done later;
Types
- Installment (Hire purchase)
- Non-installment Credit
(i) Hire purchase (Installment)
– it is where goods are obtained after paying a certain percentage of cost price as deposit, then balance paid later through equal installments over a period of time.
Advantages:
- consumer gets immediate use of article
- consumer acquires item after paying deposit
- consumer is able to acquire other services e.g repair and maintenance after payment
- buying of a durable item becomes an immediate saving for family
- one can buy items which she/he wouldn’t have managed to buy on cash
Disadvantages
- final cost price is higher than buying at cash because interest is charged
- can lead to family overspending by buying many items using the method
- item if not durable may wear out before final payments are done.
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PRINCIPLES OF WISE BUYING
Use of Credit cards
The consumer uses a card to buy goods and services
Payment is from consumer’s bank account.
Advantages
- services/goods can be acquired in case of emergency
- used at any time, day or night
- some give cash credit
Disadvantages
- lead to over spending
- leads to impulse buying a consumer can buy unnecessary items
- consumer fails to follow her prepared budget
- it can’t be used to obtain some services e.g vegetables from market
- high interest charged when one isn’t able to pay for the goods
(iii) Simple non installment credit
It is where one gets goods and services for a period of time then pays up when the bill arrives. E.g water and electricity bills at month end/consumer picking items from shop then pay after sometime.
Advantages
- consumer don’t pay for goods/services immediately
- consumer has enough time to budget for payments
- has not interest charged
Disadvantages
- services are withdrawn if one doesn’t pay
- payment sometimes not negotiable
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PRINCIPLES OF WISE BUYING
(b) Cash buying
It is where money is paid in full as one obtains goods/services;
Advantages
- buyer sometimes gets a discount on buying price
- prevents over spending
- prevents impulse buying
- one is able to follow a budget strictly
Disadvantages
- one is unable to buy an item unless she has all the money,
- it is not safe to carry large amounts of money for items that need a lot of cash e.g a car,
- takes too long/is difficult to buy some items e.g a house etc.
ALL HOMESCIENCE NOTES FORM 1-4 WITH TOPICAL QUESTIONS & ANSWERS
