PART 2: THE BASICS OF MONEY MANAGEMENT
At the conclusion of this lesson you should be able to:
1. Understand and identify basic advertising techniques and appeals.
2. Understand and identify deceptive or questionable advertising techniques.
3. Give examples of commonly-seen misleading advertisements and identify
the deceptive or questionable appeals and techniques used in each.
4. Discriminate between facts and unsupported claims in print
advertisements and in television commercials.
5. Be a smart shopper, a wise consumer, and avoid impulse shopping.
Now that you have identified your financial goals and
developed your plan to achieve them, you will want to learn
the art of smart shopping. You can acquire the skills to become
a wise consumer and avoid the impulse shopping that can
wreck your financial plan. After you finish this lesson you will
be better able to spot misleading advertisements and evaluate
the difference between facts and unsupported claims in print advertisements
and in television commercials. You will then be a smart shopper!
COMMON ADVERTISING TECHNIQUES
Advertising techniques are designed to attract your interest in a specific product or
service. They are designed to appeal to your emotions, wants, or needs, and inspire
or motivate you to act on the suggestions you see or hear (by spending your money).
Advertising techniques can be purely informational, but more often they can exploit
the “information” they present. It is very important for you to tell the difference
between facts (information that can be proved) and opinions, beliefs, or even
SOME SPECIFIC ADVERTISING TECHNIQUES
The presentation of simple, direct information.
The product is associated with those who have status
and who are successful. This technique entices you to
buy more car or house than you can really afford. The
product is shown with people who enjoy and understand the “finer things in life.”
It attempts to appeal to your desire to be like someone else, someone with more
money, or greater influence, or power, or social status.
This ad technique uses friendship and social popularity. Not using the product
implies that you will not be popular or influential.
The product is shown with a well-known person. It attempts to convince you that if
you just bought this product, you could be like or accepted by someone that
everyone else likes, accepts, or admires.
The product is supposed to increase your sexual
appeal. You are led to believe that you need to have
this product to attract romance, find love, or be
admired. It is intended to make you feel unattractive
the way you are.
Join the Gang
Everyone else uses this product. Everybody accepts it.
You should, too.
This technique promotes entertainment or temporary distraction. It masks long-term
satisfaction with feelings of temporary enjoyment.
“Smart” people who can’t be fooled by gimmicks. This technique implies that if you
don’t use this product, you are not smart or are somehow being duped.
Indicates that people who think and act for themselves use this product.
This is a tricky one. “Works better in poor driving conditions!” Who says it works
better — and better than what?
Catch Phrases and Slogans
The emphasis of this advertisement is on a catchy phrase, slogan, or tune which
distracts your attention from the true facts.
Activity #1: What Appeals To You?
Collect examples of ads you like and dislike, also paying attention to TV commercials.
Pay particular attention to facts versus unsupported claims in ads.
When you’ve reviewed a number of different ads, write in your answers to these
• What do you like about the print ads? Why?
• What do you dislike about the print ads? Why?
• What do you like about the TV commercials you’ve seen? Why?
•What do you dislike about the TV commercials you’ve seen? Why?
COMMON SALES TECHNIQUES
Advertisers use sales techniques to get you to buy a product or service once you have
been tempted by the advertising messages.
• Sales — Are they bargains or are they seconds and left-overs?
• Coupons — If you have to buy the coupon books, are they REALLY a bargain?
• Rebates — Will you remember to send in the rebate coupon?
• Package Deals — Do you need EVERYTHING in the package or are you paying for
some items you wouldn’t normally buy?
• Loss-Leaders — Are you lured into the store by a 15-cent discount and find
yourself buying other items that you hadn’t intended to buy?
• Premiums — Get a free “_______” with every purchase
of $50 or more.
• Contests — What is your real chance of winning? Is
it worth the time it takes you to enter or the cost of
entry? Do you really need it? Could you get it for the
same price by shopping smart?
• The ad or sales person claims the product is “the best” and exaggerates the value of
the product. The sales person may appear to be excited, but he/she is really just a
cheering section for the advertiser — not for you.
• Repetitions — It’s you! It’s you! It’s really you!
• Deadlines — One day only! Once in a lifetime! From 6 a.m. to 9 p.m. only!
• Limited Offers — While supplies last!
• Inside Groups and Clubs — Only a select few are invited.
• Guarantees — Abundant use of statements such as “lifetime guarantee” and
“satisfaction guaranteed or your money back.”
• Beautiful People or Celebrities — I want to be just like him or her!
• Having Fun — You will have fun if you use this product.
• Editing out the Failures — 6 out of 10 got better ... what about the other 4?
• Fear — Are you REALLY safe without it? Are you more protected if you buy it?
What is your real risk?
• Pride — Yes! That is who I want to be!
• Guilt — Your mother would want you to buy this.
• Grief — Then you see a plain wooden casket…
• Sex Appeal — Everyone will envy the new you.
• Anger — Are you tired of being ripped off?
• Confusion — Don’t confuse me with facts!
APPEAL TO CHILDREN
• Things the children want for themselves. Examples: toys, clothes, sporting goods,
food, games, books and tapes, and all Name Brands!
• Getting the kids to influence the family. Examples: what to eat and where to eat.
These usually feature a playground, hero mugs, and toys.
• Offers are accompanied by certificates for “free” or very low-cost travel.
• Offers only vaguely describe the services and/or
• Pros and Cons — All Pro, No Cons.
• Little White Lies — Statements which aren’t quite true.
• Selling Air — Have you ever noticed how little cereal there really is in
those big boxes?
• Sunny Side Up — The lean meat shows on the top of the roast, the
fat is on the bottom.
• Down Sizes — Ever notice that a “one pound can” of coffee really
only contains twelve ounces?
• The Fine Print — Have you ever read the words on the bottom of the
ad or contract?
• Add-Ons — Oops! It comes as a package and you also have to
purchase these other items.
• Plus Tax, Shipping, and Handling — It was a mail order bargain until you added
• Batteries Not Included — You may have bought it on sale but how much does it
really cost after you add on the cost of the extras needed to make it work.
• Unproven Scientific Claims — “Nine out of ten” may sound good, but many such
claims cannot be proven.
• Free or “Premiums” — Nothing is ever entirely free.
• “Zero Percent Interest” — Repeat, nothing is free, especially purchases paid out
• Bait And Switch — “We’re out of that item we advertised right now, but we DO
have this more expensive product ready now.”
• Incomplete Products — Where’s the power cord? Printer cable?
• Misrepresentation — Uses a name similar to a nationally-recognized brand.
• Merchandise arrives automatically unless the consumer takes steps to stop shipment
and billing. Often used by book, video, and record clubs.
• Promises of overnight medical cures and treatments. Products “are
developed after years of research” and “proven to provide
immediate positive results.”
• Testimonials are provided by “medical experts” and “satisfied
• The Hook — Plays on your greed to get more.
• A Huge Savings — Ask yourself HOW can they sell it so cheap?
• Huge Return On Investment — A useful rule of thumb is the greater the gain, the
higher the risk… always!
• Emergencies — Price gouging in a crisis. For example, out of town contractors
flock into town after a hurricane and do poor, slipshod work because they don’t
intend to stay after the job is done.
Activity #2: Fraudulent or Misleading Advertisements
Test your advertising “street smarts” by completing this activity.
1. Collect several print ads that you think are fraudulent or misleading.
2. List the fraudulent or misleading sales and/or advertising techniques used in each
of these ads. (There is often more than one technique used.)
BUYING FEVER — A.K.A. Impulse Buying
Some common items for which we catch “the fever” (or buy on an impulse) are
houses, cars, clothes, travel, and hobby and recreational equipment.
You know you’ve got “the fever” when you tend to — or want to — overlook
weaknesses and defects in products or services or when a product occupies your
thoughts until you get it.
HOW DO YOU CURE “BUYING FEVER”
• Remind yourself you don’t have to buy today.
• Commit to shop and compare at other stores.
• Negotiate for the best deal.
• Remember that the salesperson is working for the seller, not you.
• Walk away. Take your time. Sleep on it.
Remember: Never buy anything — especially a large, important purchase — on the spur of the moment.
Activity #3: The Worst Purchase I Ever Made …
Complete this activity to examine just why made your most regretted purchase.
1. What’s the worst purchase you’ve ever made in your life? What went wrong? How
did you make such a bad deal?
2. List some reasons why you’ve spent your money in the past on things that, looking
back, were not that great a deal.
3. Why do you know now that they weren’t such a good deal?
4. Looking back on some of those purchases, do you feel like you should have known
HOW CAN YOU BE A SMART CONSUMER?
Plan ahead and stick to your plan of what to buy, when to buy,
and where to buy. Go shopping only when you have a specific
purchase to make that fits within your budget and is part of
your overall financial plan. Go through each of these steps
1. Plan at Home. This is where good buying begins. Keep the following in mind:
• What you have
• What you need
• When you really need it
• How the item will be used
• What size, color, quantity, and quality you want
• The price you want to pay
2. Make a Shopping List. Organize your list by the location of stores and the
location of things within the store. This will save backtracking, prevent forgetting
something, and help you avoid buying something you don’t need.
3. Decide on Quality. When you decide the type and quality you want in an item,
• How you will use the article
• How long you will use it
• How you will care for it
• How it looks
• Can you get the same quality somewhere else for less?
A guarantee is only as good as the people who give it. Know
the “if’s, and’s, or but’s” connected with any
• Understand terms of the guarantee
• Make sure the manufacturer can back it up
Read the guarantee carefully. What does it cover? How long will it be in force? Is the
whole item included or just a part of it? Who is making the guarantee? Remember,
keep the receipt as a dated receipt will help you make a claim.
Think several times before you buy an additional service warranty. What is the
possibility the unit will need a repair that costs as much as the “warranty” during the
next three years?
Note: The sellers of a warranty expect to make money. They figure the odds are in
their favor that they will get to keep your money and NOT have to do the work. This
generally means the odds are in your favor if you don’t buy the additional warranty.
Sales are held for many reasons: to make room for new goods, to sell surplus or
shop-worn goods, to get you into the store, and to introduce new products.
However, the best sales are usually held by established stores because they want to
keep your good will and your business.
When You Buy at Sales
• Consider the time, energy, and expenses of getting to the sale.
• Shop at the start of the sale for the best selection.
• Be sure the sale price is an actual reduction from the regular price.
• Watch for imperfect or damaged articles.
• Check styles. Items likely to go out of style may be poor buys.
• Remember, nothing is a bargain unless you need it.
YOUR RESPONSIBILITY AS A SHOPPER
Be an Informed Shopper
• Report your wants, likes, and dislikes to dealers and
manufacturers so they can serve you better.
• Praise and buy from dealers who sell better goods and services at
• Avoid hasty buying which causes unnecessary returns.
• Pay bills promptly.
• Inform proper agencies of dishonesty, fraud, or violations of the law.
Avoid Impulse Buying
Decide what you will buy before you get to a store. Spur-of-the-moment decisions
can wreck your family spending plan. To avoid impulse buying:
• Have a spending plan and stick with it.
• Include in your spending plan the amount you can spend “just for fun.”
• Just walk away or hang up the phone if you know the purchase isn’t in your plan.
• Make a list and stick to it.
• Shop for food yourself or train others in the family to shop wisely.
• Ask questions such as, “When will I use it?” and, “Where will I store it?”
• Make a rule to “sleep on” a major purchase. The offer should be just as good the
• Don’t shop on payday, when you’re tired, or for food when you’re hungry.
• Take your time. Try not to shop when you have to hurry.
• YOU DON’T HAVE TO BUY IT TODAY!
• NO ONE CAN MAKE YOU BUY ANYTHING!
• STICK TO YOUR PLAN!
Lesson 5 >>