Commerce Notes 2024 PDF

COMMERCE NOTES 2024 What is commerce? → The effective process of exchanging products or services using some monetary aspects as well as the logistical process → The exchange of goods or services among two or more parties → The activity of buying and selling, especially on...

COMMERCE NOTES 2024 What is commerce? → The effective process of exchanging products or services using some monetary aspects as well as the logistical process → The exchange of goods or services among two or more parties → The activity of buying and selling, especially on a large scale → “Commerce examines how people earn their income, how they spend their money, and how and what goods and services are produced. It also investigates the ways in which governments and the law influence people's commercial behaviour”- textbook lol Commercial choices: → In our daily lives, we are constantly making commercial choices; these commercial decisions can include things such as: what to buy what to produce where to live what career to follow where to invest funds how much money to save Other definitions: → Consumer: A consumer is someone who purchases goods and services to satisfy their needs and wants. → Ecommerce: Companies and individuals that buy and sell goods/services over the internet → Trade: The process of selling and exchanging goods → Industry: Any activity of an economic nature → Consumer needs and wants: The things that the buyers actually need, and the stuff that isn’t essential but is desired. Consumer needs are necessities, whereas wants are desires and less limited- as in, they are unlimited → Goods and services: The stuff we consume/buy. Goods are products, a service is something somebody may do for you. - Goods are things that are produced and can be physically touched. - Services are things that one person will do for someone in return for payment. → Resources: What is available, the things put into creating other things → Scarcity: The lack of something. Lack of availability of a product, not enough to satisfy → Choice: The word for when you have options and you pick one. You need to decide. Choices whether or not to buy something, decisions you make related to finance. → Opportunity cost: What an individual gives up in order to satisfy a need or want is known as opportunity cost. → Income: Income is money received on a regular basis from work, property, business, investment or welfare. → Impulse buying: When you buy something straight away or quickly without thinking and researching extensively or enough and check if it is good quality, or if there is a better price for it elsewhere. Why is impulse buying bad? → Pressures you into buying something quickly. Making a quick decision will usually result in you wasting your money. Purchases made on the spur of the moment can often turn out to be unsatisfactory. You may be left with a product which does not meet your requirements and which you may never use. Rules for wants (Do i really want it, Can I afford it, Are there better options) → Budgets: - To gain the greatest possible satisfaction from their income, many people develop a financial plan. - A financial plan with a list of incomes and expenditures → Comparison shopping: - Shopping around to obtain the best deal - If you know the cheapest price in the marketplace, you are in a better bargaining position. - Thoroughly researching and finding the best deal The eight rules for comparison shopping: 1. Think carefully about what you want. 2. Shop around for the best deal. 3. Investigate the product’s features. 4. Decide beforehand how you want to pay. 5. Check the refund and returns policy. 6. Do not sign anything you do not understand or a blank form. 7. Compare after-sales service and guarantees. 8. Keep all receipts and invoices. → Caveat Emptor - A latin term meaning ‘let the buyer beware’ - In the context of consumer law and sales - Caveat emptor places the responsibility on buyers to be aware of the risks associated with a purchase and understand that they buy at their own risk, particularly when purchasing from private individuals → Garnishee order: - An order that allows creditors to recover debts through third parties like the bank or debtor's employer → Writ of Execution: - An order in which the court seizes properties owned, and sells them in order to pay off debt → Bankruptcy: - Process through people who cannot pay their debts can get relief from some or all of their debts → Bankruptcy order: - Step 1: A court order confirming that the individual is declared bankrupt - Step 2: The order where if you cannot pay the amount you owe creditors, your assets are sold and paid to the creditors - Step 3: Any debts after that, you are exempted from them, and you are granted further protection from creditors The four types of resources: → To satisfy our needs and wants, producers use resources to manufacture the goods and services that we desire. The four types of resources are: Land — these resources occur naturally, such as forests, coal and fertile soil. Labour — this includes both the physical and mental effort of people who are working. Capital — these resources are goods used to make other goods. For example, a tractor is a capital good because it is used to produce crops. Enterprise — this is the ability to combine the other resources of land, labour and capital so as to earn a profit. → These resources are limited or scarce. → At times, some resources can be over utilised and become even more limited. Durable and Non-durable goods: → A durable good is one that can be used many times, such as a car or television. Non-durable goods are those that can be used only once, such as a sandwich or a litre of petrol. What can influence consumer decision making? → All consumers have individual needs and wants. Therefore, what people buy varies from one person to another. → These are some influences: Media/Social media: ○ Advertisements on TV ○ Social influences care people with as large audience who post regularly on social media promoting products ○ Influences followers purchasing decisions Marketing/Advertisements: ○ If marketing campaigns are successful, consumers will be influenced into thinking they need the products being advertised Disposable income: ○ Refers to the amount of money that households have available for spending and saving after income taxes have been accounted for ○ A buyer with higher disposable income will spend more on luxury/lifestyle items, or travel/vacation/tours. Gender: ○ Even though males and females have similar wants, a person's gender can influence some purchases ○ E.g. Female consumers may spend more time looking at cosmetics than males Age: ○ As a baby, you want toys. As a teen, you want a phone. At 18, a car may be an important want. ○ Our wants change over time Environment: ○ Consumers are becoming aware of problems in nature ○ E.g. problems caused by throwaway packaging, you may be influenced to purchase a product that has minimal packaging/recycled packaging. customer service:  ○ Good pre-sales and after- sales service. You feel good and buy from them ○ Also deals if u join e.g is flybuys for woollies Financial situation/price: ○ If the price is good, you buy from them. ○ Consumers want the best value for money, i.e they want to pay less for good quality Convenience: People will choose the stores that are: ○ Easiest to get to ○ Based on the number of stores located within one shopping complex, ○ Have suitable shopping hours ○ These factors will influence when, where and what consumers buy. ○ Can also relate to being able to shop online or to have access to an app Culture: ○ Cultural factors are the set of basic values, perceptions, wants and behaviours of a particular community or group of individuals. ○ The culture of an individual influences the way they behave. ○ What an individual learns from their parents and relatives as a child becomes their culture. ○ Cultural factors have a significant effect on an individual’s buying decisions. Every individual has different sets of habits, beliefs and principles that they develop from their family status and background. Other factors: - Health - Family - Friends - Peers - Requirements - Quality Question: Why would some consumers pay a high price for a product while others wouldn’t even buy it for a lower price? → Brand loyalty → Necessity → Budget  Needs vs. Wants: → Needs: Needs are those things that everyone must purchase because they are essential for our survival → Wants: Wants are things we like to have NEEDS: WANTS: → Are necessities/essentials → Are desires → Essential for survival → Not essential for survival → Do not change over time → Change over time → Non-fulfilment can lead to adverse → Non-fulfilment may result in mental outcomes distress → All individuals have the same basic needs → Wants may differ according to different → Limited individuals → Are unlimited 5 needs: 5 wants: → Food → Books → Sleep → Milkshake → Water → Airpods → Education → Stickers → Clothes → Cat Spending and saving: → We spend to: Satisfy our needs and wants Purchasing budget priorities Replacing broken items → We save to: Ensure sufficient money is available to cover day to day bills For future spending (e.g. retirement) Precautionary saving (e.g. accidents) Shops & Brands: → Some types of shops are cheaper than others. → department stores (Myer), discount variety stores (Target and Big W) and large specialty stores (Harvey Norman and JB Hi-Fi outlets) are usually cheaper than small, independent retailers because larger stores can carry more stock. → most small retailers focus on high levels of assistance and after-sales service → Some brands are cheaper than others → Well-known, highly reputable brands tend to be more expensive than those brands that are not well known. → This does not always mean that a cheaper product is of inferior quality → Generally, expensive products are better quality and will last longer Manufacturers, retailers, and wholesalers → Manufacturers produce the product → usually distributed to wholesalers, who buy the product in large quantities → sell it in smaller quantities to retailers → Retailer sells it to consumers → Wholesalers add their costs and a profit to the price they charge the retailer. → Retailers, too, add their costs and a profit to arrive at the recommended retail price. → The recommended retail price is the normal price at which shops sell the product → The discount price is the price that is less Distribution Chain: →“At each stage in this distribution chain, the seller needs to make a profit. This is done by selling the products at a higher price than the price at which they were bought. This means that the final price consumers pay depends on the price the seller paid and the profit he or she makes, or at which stage in the chain consumers buy the goods. Sometimes, for example, the consumer can buy products at a cheaper price directly from the manufacturer or wholesaler.” Mail Order: → a system of shopping in which the consumer completes and posts an order form, usually from a magazine or catalogue, and receives products through the mail. → Advantages: - a greater range of products is available than found in retail stores - the convenience for consumers with a disability or those who live in remote communities. → Disadvantages: - losing money if a business does not send the product - products being different in reality from the way they appear in the catalogue - experiencing problems tracing a business that uses only a post office box number if a refund is required. → The electronic version of a mail order catalogue is online shopping or television channels dedicated to showing product demonstration commercials. Online shopping: → Advantages: - available to consumers anywhere, and people can buy almost anything from anywhere in the world - It is quick and easy if you know what you are looking for, or have to decide between only a few products. - an increase in the range of sources from which you can buy - comparison shopping can be done from the comfort of your home and at a convenient time - the product may be cheaper - it allows for quick price comparisons - relatively quick delivery times even from overseas sites - allows the use of mobile devices and apps which make online shopping easier. → Disadvantages: - Online shopping can become time-consuming and boring if you are making a purchase that requires lots of comparisons over many sites. - The risk of impulse buying is also great when you shop online because you can get bombarded with targeted advertising aimed at tempting you to splurge on something you really don’t need. - a website may not be permanent and tracing the owner if anything goes wrong may be impossible  - a delivery charge may be added to the price - the return of a faulty product will take time and effort - supplying credit card details can be risky unless the site is secure; that is, personal information is coded - the proliferation of scams and internet fraud. → Recommendation - you should use a separate credit card with a low limit to make online payments instead of debit cards. That way you can protect your bank account should your card number be compromised. Type of retail outlets: → Convenience/corner stores: - Commonly attached to service stations now. - Sell a variety of products, like food items and newspapers and magazines. - Prices are usually higher than at supermarkets, and there is less choice available. - They are convenient. → Speciality stores: - Specialise either in one type of product or service or a limited range of a few products. - E.g. the Body Shop, Dymocks…etc. - The main advantage of purchasing goods from a specialty store is the service and product knowledge provided by the sales staff. - Some specialty stores are part of a larger franchise chain → Discount variety stores: - These stores are of a plain design and offer basic customer service. - Their products are normally cheaper than those of department stores - Kmart and Target are both examples of this type of retailing. - Discount variety stores attract a large number of customers because of their convenient location, large range of stock and cheaper prices. → Factory outlets: - often near the factory where the goods were manufactured.  - The goods are normally sold to the public at a discount because the costs of transportation and wholesalers are not involved in the distribution chain - Factory outlets usually offer big savings on goods. → Department stores: - sell a large range of products within the one store. - Because they buy in bulk, their prices are often cheaper than at specialty stores. - However, because they offer some sales assistance on the shop floor, their prices tend to be higher than those of a discount variety store. → Supermarkets: - large, self-serve stores such as Woolworths, Aldi and Coles. - Originally selling only food items, they are now becoming more like discount variety stores, offering a large range of items for sale. - Some supermarkets that have expanded to sell an even larger range of products have evolved into hypermarkets. Buying locally, regionally, interstate and globally: → Locally: - The local convenience store or shopping arcade, containing a takeaway, newsagent and possibly a fruit and vegetable store, will frequently be used by consumers who live nearby. - People travelling to and from school or work often shop here because of the convenient location. - However, their purchases are restricted to only a few basic items. - For a larger variety of goods, they will need to shop at a regional centre. → Regionally: - Department stores, discount department stores, and supermarkets are often located in regional shopping complexes, like Westfield and Castle Towers. - They are often surrounded by a number of speciality stores - located under the one roof, air-conditioned for consumer comfort and, most importantly, provide plenty of parking. - Often, cinemas and food halls are part of the shopping complex. - Customers from the surrounding region travel to these complexes. → Interstate of globally: - Mainly due to the ease of online shopping, nowadays consumers can purchase goods from another state or country  - Consumers are no longer restricted to their local or regional shopping centres - Consumers in search of a specific item, cheaper prices or greater variety will often decide to purchase from a global marketplace. Different payment methods: → Cash - This is the notes and coins (money) issued by the federal government. - Consumers normally use cash to pay for relatively inexpensive items such as a newspaper, bus fare or soft drink. - Consumers rarely use cash for expensive items such as a car or a house. - The main advantages of cash include: it is accepted almost everywhere some stores offer a discount for cash there are no hidden costs (for example, interest charges) there is reduced risk of getting into debt. - The main disadvantages of cash include: it can be easily lost or stolen it may not be safe to carry around if no ATM is available, a consumer may not be able to make a desired purchase if they don’t have enough cash on them. → Credit - Credit is the supply of money now in return for the promise of paying it back later. - Credit allows you to buy what you want immediately and pay for it later, either in full or in monthly payments. - Because you are using money you do not have, you will be charged interest for its use unless you pay the total balance back to the credit card company before the end of the interest-free period, usually one month. - The main advantages of paying by credit card are that they: avoid the necessity to carry around large amounts of cash are a convenient payment method for online and telephone purchases help you establish a good credit history offer cheap use of funds, provided you always pay your balance in full. - However, there are disadvantages. Credit cards can: make it easy to overspend and consequently build up your debt be more expensive than other forms of credit such as a personal loan damage your credit rating if you continually make late payments.  - Care should be taken with your credit card. If the card is stolen, you must ring the bank immediately and cancel the card in case someone else tries to use it to purchase goods unlawfully. - Learning to use credit wisely is very important. Getting into debt can lead to many problems. You may end up losing your goods, being sued or even made bankrupt. - Managing credit and debt is a necessary skill in today’s complex commercial society. Whenever you use credit there is one important thing to remember: - buy now, pay MORE later, unless you manage the credit carefully by repaying the total balance owing before the end of the interest-free period. → Store Credit - Some large stores or retail groups issue their own cards that operate like regular credit cards. These cards usually are associated with special deals, discounts, bonuses and a rewards program. - However, these cards usually have higher interest rates and fewer interest-free days than regular credit cards. - Another example of store credit is when you buy a faulty item and instead of being offered a refund or new product, you are offered credit where you can purchase anything in the store for that same price → PayPal - Most online merchants accept PayPal as one of their methods of payments. PayPal is an intermediary whereby you end up paying for the good using your credit card, bank account or money stored in your PayPal account. - PayPal’s advantage lies with its security and ability to obtain a refund if a dispute about the transaction arises. → Electronic funds transfer: debit cards and BPAY® - There is a great deal of difference between a debit and a credit card. With a credit card, you use other people’s money and are charged interest. - With a debit card, you are using your own money, by electronically accessing money already in your account. - You pay no interest, only an account operating fee, and can spend up to your account balance. The most common way of using your debit card for purchases of goods is by EFTPOS (electronic funds transfer at point of sale). - EFTPOS is a computerised system in which money is transferred from a consumer’s account to the business’s account. It is important that EFTPOS  receipts are kept for checking against account statements. Often businesses will also allow you to withdraw extra cash with EFTPOS. - BPAY® is another type of electronic payment method. This system uses the telephone or internet to transfer funds from your cheque, savings or credit card account to the account of the business you wish to pay. First a consumer keys in a login and password to access their internet or phone banking account. Then they enter the transaction details, including a special customer reference number written on the bill, so money is transferred from their bank account directly to the business’s account. → Direct Debit - you can schedule bill payments from your nominated bank account. - Bank automatically withdraws (debits) the funds from your account and electronically transfers the funds to the business requiring payment. - Advantages: - Helps overcome the problem of forgetting to pay an account. - payments can normally be set up and terminated by using internet banking. - Disadvantages: - must make sure you have enough money in your account to pay the bill or the payment will be refused. - may also be charged by your bank if you don’t have enough funds in your account to pay. - Relying on direct debit also means that some consumers do not actually check whether their bills are accurate. → Cheque - a written communication ordering your financial institution, called the drawee, to pay a person a specific amount of money. - The person being paid is called the payee. - The person authorising the transaction is termed the drawer. - are issued in a numbered order, called a chequebook. - When writing a cheque, no blank spaces should be left before or after the amount. This prevents words or numbers being added later. - Advantages: - they are safer than carrying cash - they can be posted safely - only the named recipient is able to cash the cheque, again making them safer. - Disadvantages: - they are not accepted everywhere - cheques take time to process and clear (more than a day)  - bank charges are involved with having a cheque book. → Lay-by - When you buy goods using lay-by, you first pay a deposit and then the store puts aside the good/s for you. - You then make regular payments over a fixed period of time. Unlike cash or credit card purchases, you do not take possession of, or own the good/s, until you pay off the last instalment owing. - If you cancel the lay-by before paying the full purchase price, the store must be notified in writing. - The store is required, under the Lay-By Sales Act, to provide a refund after deducting storage, handling and depreciation costs. If you do not complete payment by the agreed date, the store can cancel the lay-by. - A good option when you want to secure something you desire. - Because no interest is charged, it is cheaper than other options such as using a credit card. - Being replaced by ‘buy now, pay later’ providers like Afterpay and ZipPay. → Book up - credit provided by a retailer so that you can purchase goods from the retailer’s store and pay the account at a later date. - You must pay back this amount within a set period of time. - E.g. Tradespeople such as plumbers and builders usually have an account with a hardware supplier where they can book up materials and equipment. People living in remote locations may also use book-up because they experience difficulty in accessing alternative methods of payment. - Advantages: - you can purchase goods and pay for them later - interest is not charged unless you apply for an extension of time - you can spread your purchases over a week or fortnight. - Disadvantages: - some form of security may be required - unless you keep accurate records, you may overspend - charge accounts can be used only in that store. → Afterpay - a digital service linked to a customer’s credit or debit card and enables consumers to ‘buy now, pay later’. - available to consumers over 18 years,  - allows consumers to purchase something at the current price and pay this amount off in four equal instalments every two weeks. - Advantages: - instant online approval and no application fees - no annual fees, and no extra payments if you pay on time - the purchaser receives the good or service immediately. - Disadvantages: - Significant fees are charged if you miss a payment. Afterpay charges a standard $10 late fee per missed payment, and a further $7 if the payments are not received within seven days.