Chapter 5 Personal Finance. Vocabulary APR – Annual percentage rate, cost of borrowing money on...
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Transcript of Chapter 5 Personal Finance. Vocabulary APR – Annual percentage rate, cost of borrowing money on...
Chapter 5Personal Finance
Vocabulary APR – Annual percentage rate, cost of
borrowing money on an annual basis. Buyer’s Remorse – regretting a purchase
soon after making it. Brand Recognition - is the extent to
which a brand is recognized for stated brand attributes or communications.
Financing – to buy an item with credit, and you pay it back over time.
Vocabulary Finite – having a beginning and an end;
money is finite, it has limits. Impulse Purchase – buying something
that you were not planning on buying. Opportunity Cost – the true cost of
something in terms of what you have to give up to get an item: the benefits you would have received by taking the other action.
Vocabulary Rule of 78 – pre-payment penalty in a
financing contract; the portion of a “90-days same-as-cash” agreement that states that the entire loan amount plus the interest accumulated over the first 90 days becomes due immediately.
Significant Purchase – an amount of money you spend, usually $300.00 or more, that causes some pain to part with.
Popular techniques used in ads. Bandwagon – Persuading people to do
something by telling them that others are doing it, too. “Don’t be left out”
Testimonial – Famous people say they use a product or persuade you to use a product.
Transfer/Fantasy – By using the names or pictures of famous people, but not their direct quotations, the ad is trying to convey that the product will help the consumer imitate the famous person in the ad.
Popular techniques used in ads. Repetition – The product name is
repeated at least four times. Emotion – Words are used in the ad to
evoke strong feelings about someone or something.
Nostalgia – Creates a sentimental tone while pointing back to “the good old days”
Popular techniques used in ads. Statistics – Facts and statistics are
shown. Humor – Makes people laugh so they
have a positive association with the product.
Sense Appeal – Sounds or pictures that are pleasing to the eye.
Ways companies compete for your business Personal selling Financing as a marketing tool TV, radio, internet and other media
advertising Product positioning
Brand recognition Color Packaging Shelf position
Opportunity cost Opportunity cost is the value of the next
best choice that one gives up when making a decision.
What do you have to give up in order to make a purchase?
Significant purchase Causes some pain For most people over $300.00 Bodies go through physiological
changes
5 steps to help you make a significant purchase1. Wait overnight before making a
purchase2. Carefully consider your buying motives3. No amount of stuff equals contentment
or fulfillment4. Never buy anything that you do not
fully understand5. Consider the opportunity cost
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