buyer beware: understanding marketing to help spending choices

Posted : April 17, 2018
Last Updated : September 20, 2021

buyer beware: understanding marketing to help spending choices

As a teen or young adult, it’s important to become wise consumers. Learn how to recognize the ways companies compete for your money, describe how peer pressure influences spending choices, and define marketing.

Spending Habits

Buying stuff can be fun! Walk into any store or mall and you are surrounded with so many different things you could buy. What are some of the things that catch your eye? What do you buy with your money? How do you compare to other teenagers who are also out buying stuff? According to surveys, clothing and food (including specialty coffees) share first place at or just over 20% of the total amount of money spent by teens.

Why are the spending habits of teens so important – and who really cares? Actually, businesses do care about what kinds of things you spend your money on. Based on the things you typically buy, companies will create ads specifically targeted to you. These ads make you feel as if the companies are talking directly to you and know all about your wants and needs. With all of this going on, it is important to learn to be a smart shopper.

Competing for Cash

There are so many things you can buy, but you only have so much money and you can’t buy everything (even if you wanted to). Companies know this. That is why they spend a lot of money on marketing. And that includes all of the ads you see repeated over and over. Repetition is one of the powerful marketing tactics used by companies. When they can get you to remember the ad and product slogan, they have planted a marketing image in your brain.

When a company pays to market their product or service, they are trying to get you to buy their product or service instead of a similar item from another company. Actually, marketing is all around you. Names, logos, and labels are on everything. And, for a lot of people, those names and labels turn into brand loyalty. Have you ever heard someone say, “I will only buy ‘this brand’ of cell phone or ‘that brand’ of computer”? Consumers develop a lot of their brand loyalties during their teen years, and that is why so much advertising is targeted toward teens.

Product placement happens when a company pays money – a lot of money – to a movie or television show to make sure the characters will drink a certain type of drink, eat a certain type of food, wear certain types of clothing, or buy certain things. The company or product names are clearly displayed. The idea is that if you see an actor drinking, eating, wearing, or buying a certain type of thing, then you will be more likely to do the same. We all have purchased things as a result of product placement. When was the last time you bought something because your favorite celebrity endorses it or uses it? So, the next time you watch a movie or your favorite show on television, look for examples of product placement.

How Teens Spend Their Money

According to a Piper Jaffray survey, teenagers spend as much money on food and drinks as they do on clothing. Here’s a look at the overall breakdown of teen spending:

Clothing – 21%
Food – 20%
Accessories/Personal Care – 10%
Shoes – 8%
Car – 8%
Electronics/Gadgets – 8%
Video Games/Systems – 7%
Music/Movies – 6%
Events – 6%
Books/Magazines – 2%
Furniture – 1%
Other – 3%

Choosing What to Buy

There are a lot of factors that go into deciding what you are going to buy. But the most important factor according to teens, especially teen girls, is what their friends and peers think. For example, if your best friend really likes a certain brand of clothing or shoes, chances are pretty good that you will like – and purchase – that same brand. That’s what companies hope will happen.

Another type of peer pressure comes from social media. Between all the different sites, there are almost 2 billion photos uploaded every day! And a bunch of those photos show people (your friends) promoting things they really like – candy, a fancy dessert, or a new article of clothing. Sometimes we many find ourselves just staring at all the pictures of things we don’t have, and, before we know it, we really want those things. And all of that promotion on social media is just free marketing for the companies that are trying to sell you their products.

High-Priced Ads

A well-produced and well-placed ad for a product can lead to a lot of profit in sales depending on the number of consumers who buy something as a result of watching the ad. That’s why companies are willing to spend millions of dollars to put an ad in the middle of your favorite show or sporting event.

Final Thought

Be careful not to let clever product marketing lead you to buy on impulse. Those impulse purchases can bust your budget and lead to debt.

Source: Ramsey Solutions
Education Loan Finance

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