Year 10 Economics and Business: Influencing Consumers Study Guide

Course Overview and Assessment Structure

• Instructional Context: The course is Year 10 Economics and Business, led by Ms Van Oirschot (Ms Van O).
• 2025 Assessment Units:   - Unit 1: Economic Performance: Evaluated via an Exam in Week 7, worth $20\%$ of the final grade.   - Unit 2: Living Standards: Evaluated via an Investigation Report, worth $20\%$ of the final grade.   - Unit 3: Influencing Consumers: Evaluated via a Workbook/Test, worth $20\%$ of the final grade.   - Unit 4: Government Management of the Economy: Evaluated via a Feasibility Report, worth $20\%$ of the final grade.   - Unit 5: Improving Business Productivity: Evaluated via an Exam in Term 4.

Academic Skill Requirements in Economics and Business

• Describe: The student's ability to describe the business situation.
• Explain: The student's ability to explain the business concepts that relate to the business situation.
• Analyse: The student's ability to produce data and factual evidence that relates to the business situation.
• Synthesise: The student's ability to relate that information to the business situation.
• Evaluate: The student's ability to make an evaluation about the best ways to handle the business situation.
• Communicate: The student's ability to clearly communicate business knowledge in each specific aspect of the tasks mentioned above.

Module 2: Business Influences on Consumer Decisions

• The Power of Advertising:   - Advertising and marketing exercise incredible power over consumer lives and decision-making.   - Case Study (Coca-Cola): A silhouette of a proprietary bottle shape can trigger immediate brand recognition even without colors or logos. This is attributed to previous marketing campaigns run by global giant Coca-Cola, which has dominated the soft-drink market for over $100$ years using creative and distinctive strategies.
• The Four Main Factors Influencing Consumer Choice:   1. Psychological Influences: Internal factors within an individual.      - Perception: Consumers act on their perceptions of reality rather than reality itself. Marketers must create a positive perception; consumers typically avoid products perceived as poor quality.      - Motives: Reasons for buying, including comfort, health, safety, ambition, taste, pleasure, fear, amusement, cleanliness, and the approval of others.      - Attitude: A person's overall feeling about an object or activity; this determines the success or failure of a marketing strategy.      - Personality: The collection of characteristics and behaviors that influence the brands a person selects.   2. Sociocultural Influences: Forces exerted by other people.      - Family and Roles: Roles within a family or community influence buying behavior. Market research indicates women still make the majority of purchasing decisions for healthcare, food, and laundry supplies.      - Peer Groups: Groups with whom a person identifies. Behavior often moves to align with the group's beliefs and attitudes.      - Social Class: Determined by education, occupation, and income; it influences the type, quality, and quantity of purchases.      - Culture and Subculture: Shared values and traditions that determine what people wear, eat, and where they live. Subcultures (e.g., goths) differentiate themselves from the larger culture.   3. Economic Influences:      - During an Economic Boom, consumers spend more due to job security and income confidence.      - During a Recession, consumer spending falls to very low levels.   4. Government Influences:      - Economic policy measures influence general spending habits.      - Government regulations (e.g., laws against misleading and deceptive advertising) have a direct impact on business practices and consumer protection.

Strategic Marketing and Target Markets

• Defining Marketing: The process of providing goods and services to satisfy needs and wants at the right place and time with correct promotions.   - A "catchy" definition: "The right product, in the right place, at the right time, at the right price."
• The 4Ps of Marketing:   - Product   - Price   - Promotion   - Place
• Essential Marketing Elements:   - Research: Gathering info on consumer needs/wants.   - Publicity: Providing info on new products.   - Promotions: Assisting product launches (e.g., events).   - Advertising: Promoting new behaviors (e.g., anti-littering, Quit smoking campaign, road safety).   - Evaluation: Determining the success of the product or campaign.
• Expert Advice (Janine Allis, Founder of Boost Juice):   - Surround yourself with experienced people to avoid costly mistakes.   - Put a promise to the brand.   - Ensure the company name identifies what you do.   - Be passionate about the company name.   - The brand must crystallize the message.   - Identify and promote clearly to the target market.   - Note: Changing a brand name causes angst and heartache; update existing branding to reflect growth instead.
• Integrated Marketing Plans: A plan where all departments work together toward business objectives. Plans must be realistic (given the current situation) and achievable (given resources and budgets).
• Target Markets and Segmentation:   - Demographic Segmentation: Based on age, gender, income, occupation, education, or geographical location.   - Psychographic Segmentation: Based on how product/brand choices reflect the user's personality and lifestyle.   - Example: A fashion retailer targeting females, aged $40+$, with middle incomes (Segment $2$).

Module 3: Consumer Choice, Protection, and Ethics

• Consumer Protection Organizations:   - CHOICE: Founded in $1959$ as a magazine by the Australian Consumers' Association (ACA). Provides independent reviews and product tests (choice.com.au).   - Australian Competition and Consumer Commission (ACCC): A federal government body that operates independently of political bias. It monitors competitive marketplaces, regulates economic conduct (like price setting), and publishes investigations into product standards.   - State Government Bodies: Each state/territory has a consumer affairs department to fulfill regional roles for the ACCC.
• Ethical and Environmental Consumerism:   - Ethical Factors in Food Choice: Nutritional content (fiber, fat, protein), soil quality, convenience vs. farm source, travel distance, budget, mood, level of hunger, allergens, ingredients (fillers/preservatives), organic vs. conventional, attractiveness, health perception vs. reality, and worker compensation.   - Animal Welfare: How animals were raised (hormones, antibiotics, GMOs), how they were housed (caged, free-range, grass-fed vs. grain-fed), and how they were slaughtered (quickly, humanely).
• Case Study: Thank You Water:   - Founded to fund safe water projects globally. Profits go to water access, sanitation, and hygiene programs.   - Impact: Contributed more than $6.2 \times 10^{6}\,\text{dollars}$ ($6.2\text{ million dollars}$).   - Growth: Increased production from $40,000$ bottles/year in $2008$ to $320,000$ bottles/year in $2013$.   - Note: Stopped producing bottled water in August $2020$ due to the environmental impact of the market.
• Case Study: FIJI Water:   - Generates $10\%$ of Fiji's total export income.   - Ethical conflict: $53\%$ of Fijians lack access to clean drinking water. The processing plant diverts water from local communities and damages agriculture.   - Result: Companies documented on sites like "Shop ethical!" may suffer significant revenue loss due to consumer ethical choices.

Module 4: Making Major Purchases (Selecting and Financing a Car)

• Preliminary Research:   - Identify needs based on lifestyle (e.g., surfboard transport vs. limited garage space).   - Resources: RedBook, Carsales, and the "How safe is your car?" website.   - Legal requirement: Sellers of used cars must provide a Roadworthy Certificate.   - Professional inspections: Available via RACQ, NRMA, or insurance companies.
• Costs of Ownership:   - Initial Costs: Purchase price, stamp duty (state government fee), and dealer charges.   - Ongoing/Ancillary Costs: Re-registration (for used cars), insurance, additions (sound systems, tinting), and roadside assistance.   - Insurance Types:     - Comprehensive: Protects the owner regardless of who is at fault.     - Third-party: Compulsory; protects others if you are at fault and protects you if others are at fault.   - Depreciation: The loss in car value over time as technology improves and the vehicle ages.
• Financing and Loans:   - Interest: The amount paid by a borrower to a lender for the privilege of borrowing money.   - Comparative Calculation:     - Loan Amount: $\$15,000$     - Interest Rate: $7.25\%$     - Loan Term: $5\,\text{years}$     - Monthly Repayments: $\$299$     - Total Amount Payable: $\$17,927$     - Interest Profit for Bank: $\$2,927$   - Scale Comparison: While a car loan interest profit is small, a $\$500,000$ home loan at $5.5\%$ over $30\,\text{years}$ generates over $\$500,000$ in interest profit for the bank.
• Decision Making: Short-term vs. Long-term. A cheap older car (e.g., $\$2,000$) may actually be more expensive due to lack of fuel efficiency and high repair costs compared to a newer car.

Key Business and Economic Terms

• Bias: Prejudice or leaning towards one view; favoritism.
• Boycott: Choosing to avoid purchasing specific brands for ethical, moral, or political reasons.
• Consumer Attitude: A person's overall feeling about an object or activity.
• Culture: Learnt values, beliefs, behaviors, and traditions shared by a society.
• Ethical Consumerism: Purchasing decisions based on a company's values and behaviors.
• Loan: Temporary lending of money, usually by a financial institution.
• Marketing: The process of planning/executing development, pricing, promotion, and distribution to create satisfying exchanges.
• Motives: The reasons why individuals do something.
• Operations: Activities engaged in producing goods and services.
• Peer Group: A group a person identifies with, adopting their attitudes and beliefs.
• Personality: Collection of behaviors and characteristics making up a person.
• Profit: Revenue remaining after all business expenses are deducted.
• Psychological Factors: Influences within an individual affecting buying behavior.
• Quality: Degree of excellence and fitness for a stated purpose.
• Roadworthy Certificate: Official proof a used car is safe to operate.
• Sociocultural Influences: Forces exerted by other people affecting behavior.
• Stamp Duty: Compulsory state government fee (percentage of purchase price).
• Technology: Use of scientific knowledge to develop machinery/devices for business problems.