AT1 Resources - Commerce Topic Test

Commerce

Commerce is the exchange of goods and services, including buying and selling, occurring through in-person transactions or online purchases. Consumers, who buy goods to meet their needs, significantly impact the economy by influencing market demand. Their demographics affect preferences and spending power. Income, received from work or investments, funds daily expenses and varies widely among groups based on factors like education, profession, and economic conditions.

Needs vs. Wants

• Needs are necessities designed with a specific purpose for life, while wants are items that enhance one’s quality of life but are not critical for survival. For instance, while a person needs food to live, they may want gourmet meals or dine at fine restaurants.

• Personal wants are luxuries desired by an individual, which can vary greatly from person to person. These might include hobbies, personal care items, or entertainment forms like vacations or the latest technology gadgets.

• Collective wants are goods and services provided by governments for the community, such as public parks, schools, and transportation systems. These wants highlight the societal aspect of commerce, where collective needs for infrastructure and community services are essential for overall well-being.

• High income allows individuals to satisfy both needs and wants comfortably, leading to a higher standard of living and greater access to opportunities for personal and professional growth.

• Lower income may make it difficult to meet needs and impossible to satisfy wants, often resulting in stress and limited choices for individuals and families. Economic inequality can therefore have significant social implications.

Income

• The disparity in income levels can greatly affect consumer behavior and access to resources, shaping the overall economic landscape and influencing policy decisions made by governments.

• Disposable/discretionary income is money remaining after essential expenses, used for satisfying wants.

Goods

• Goods are tangible items that satisfy needs and wants.
• Perishable goods must be consumed quickly to avoid spoilage.
• Non-perishable goods have a long shelf life.

Services

• Services are intangible assistance or activities provided in exchange for money (e.g., repairs, insurance).

Resources

• Resources are anything used to satisfy needs and wants.
• Producers utilize resources to create goods and services.

Scarcity

• Scarcity arises when unlimited wants exceed limited resources, leading to higher prices for scarce items.
• Scarcity forces consumers to make choices about spending, considering opportunity costs and financial stability.

Four Types of Resources

• Land includes natural resources like timber and minerals.
• Labor refers to human resources or employees.
• Capital encompasses man-made tools, machines, and facilities.
• Enterprise involves resources that manage business processes, such as HR and customer support.

Opportunity Cost

• Opportunity cost is what is given up when a choice is made to obtain something else.

Impact on Consumer Decisions

• Consumer decisions involve choices about spending money on goods and services.
• Positive pre- and post-sales service enhances customer value.
• Personal preferences influence a customer's inclination towards a product.
• Demographics, like age and lifestyle, affect purchasing decisions.
• Price can significantly impact consumer spending habits.
• Convenience in shopping, including accessibility, can outweigh price.
• Cultural traditions, beliefs, and values shape consumer habits.
• Marketing strategies aim to create value and influence consumer choices. The average customer sees 500 adverts per day.
• Finance options, such as loans, can attract or deter consumers based on interest rates.
• Age influences consumer choices as needs and wants evolve.
• Gender impacts purchasing decisions based on different needs, such as grooming products.
• Disposable income determines the type of products consumers can afford.
• Environmental concerns encourage consumers to buy recyclable products.
• Social media promotes trends and can lead to impulse buys.

Financial Decisions

• Consumers decide how much income to save versus spend.
• Higher income allows for more savings and recreational spending.
• Lower income limits savings and increases stress over necessities.

Shopping Strategies

• Comparison shopping involves assessing quality, features, and cost of different products. Online shopping has simplified this process.
• Impulse buying is making unplanned purchases on a whim.
• Small retailers focus on personal service but may be more expensive.
• Large department stores prioritize price and convenience due to higher stock volumes.

Types of Retail Stores

• Convenience stores offer limited, general items with quick checkout.
• Specialty stores focus on specific merchandise categories.
• Discount variety stores offer a wide range of products at reduced prices.
• Factory outlets sell products directly from manufacturers at lower prices.
• Department stores offer diverse products like clothing and home goods.
• Supermarkets specialize in groceries with wide selections of necessities.

Product Chain

• Natural resources are unprocessed materials extracted from the land.
• Suppliers provide natural or semi-finished goods to manufacturers.
• Manufacturers convert semi-finished goods into finished products.
• Wholesalers store and sell large quantities of products.
• Retailers sell products directly to consumers.
• Consumers decide to purchase based on their needs and wants.

Economies of Scale

• Economies of scale are cost advantages gained by increasing production volume, reducing the average cost per unit.

Mail Order

• Mail order involves selling and ordering goods by post using catalogs.

Distribution Channels

• Distribution channels are the routes that goods or services take to reach customers, either directly or indirectly.
• Direct channels allow consumers to buy and receive goods directly from the manufacturer.
• Indirect channels use intermediaries to deliver products to consumers.
• Products move from manufacturers to wholesalers, then to retailers, and finally to consumers, with added costs and profits at each stage.

Shopping Considerations

• Shopping local supports the local community, increases jobs, and reduces carbon footprint.
• Buying regionally can offer access to unique items and promote local craftsmanship.
• Buying internationally provides a wider selection and competitive pricing.

Payment Methods

• Layby involves a fixed price and payment plan, with the product given after full payment.
• It is good for budgeting but may have cancellation fees.
• Cash is immediate and universally accepted however, can get lost
• EFTPOS is convenient and widely accepted, but may have transaction fees.
• Credit allows for immediate possession with deferred payment, but can accrue interest.
• Direct debit is convenient for recurring payments, but carries a risk of overdraft fees.
• Cheques can be sent by mail, but have long processing times.
• Afterpay offers installment payments, enabling impulse buying and accumulating credit, but late fees can apply.

Online Shopping Disadvantages

• Online shopping may incur extra shipping costs and delays.
• Lack of interaction with salespeople
• Increased risk of fraud.

Consumer Rights

• Consumers have the right to request a repair, replacement, or refund for faulty products or services under the Australian Consumer Law (ACL).
• The ACCC enforces consumer law and provides scam information via Scamwatch.
• Cth stands for Commonwealth, indicating that the law applies to all Australian states.
• Scamwatch, provided by the ACCC helps consumers protect themselves from scams.

Scams

• One in twenty Australians are affected by scams, with $851 million lost in 2020.
• Scammers use sneaky approaches to steal personal details to then commit identity fraud.
• Scams often target consumers and businesses involved in products and services.
• Romance scams exploit individuals seeking romantic partners through websites, apps, and social media.
• Fake charities impersonate genuine organizations to collect donations after natural disaster or major events.
• Investment scams make fake money-making opportunities.
• Job scams trick victims into paying money.
• Scammers often threaten life or threaten their computer to steal money for economic gain
• Scammers invent convincing, illegitimate opportunities for surprise money.
• Phishing scams target individuals into providing personal information through compromised links or scam websites.
• Consult a financial advisor before making investments. Consumers can protect themselves by researching and doing background checks.

Contracts

• A contract is a formal, legally binding agreement between two or more parties that outlines the terms and conditions of a transaction
• The essential elements of a simple contract are offer, acceptance and consideration
• Caveat Emptor, meaning 'let the buyer beware,' implies that consumers are responsible for the goods they purchase and cannot recover damages from the seller for defects. The consumer has a right to safe products, which include a proper use direction and testing to standard. Accurate product information ensures that consumers are informed about the goods To protect consumers the full disclosure of terms of sales (including full price), is always displayed. Consideration requires each party giving something of value. Acceptance is when the offeree agrees to the offer Oral agreements are verbal agreements while written agreements are formal documents used for significant transactions, such as buying a car or house.

Consumer Law

• The ACL (Australian Consumer Law) protects consumers from undesirable business practices, including misleading advertising and false claims.
• Consumer guarantees are rights ensuring goods are of acceptable quality and fit for purpose
• The law mandates that consumers can expect a refund or exchange if a product is faulty, and it is unlawful to sell products with a 'no refunds/no exchange' sign.
• Merchantable quality means that goods must be fit for their purpose and match their description.
• Consumer guarantees also apply to services, ensuring they fit the purpose, are provided with reasonable skill and care, and are delivered in a reasonable time.
• Independent organizations like CHOICE provide assistance to consumers by offering information, resources, and advocacy on consumer rights and protections.
• Main components in the Competition and Consumer Act 2010; misleading advertising, unconcionable conduct and unfair practices
• Policies developed on important issues, laws put these policies into action, and regulations monitor and enforce the laws.