YR 9 COMMERCE NOTES

Consumer and Financial Decisions

a consumer is someone who purchases goods and services to satisfy their wants and needs. Consumers have
unlimited needs and wants but limited resources (time and income).
 Needs are necessities that everyone must purchase (food, shelter, clothes).
 Wants are things that consumers desire to have and are unlimited. They also vary from one another (car,
phone, laptop)
 Goods are things that are purchased and are tangible (can be physically) e.g., tv, car
 Services are activities provided by other people, they are intangible (cannot be physically touched) e.g.,
plumber, dentist, doctor
Types of Goods:
Durable Goods- something that can be used many times (long life span) e.g., fridge, car, tv
Non-durable goods- something that can only be used once (short life span) e.g., sandwich, food, petrol
Resources:
Land: resources that are naturally occurring e.g., forest, col, fertile soil
Labour: human effort used in production e.g., tree cutters
Capital: anything produced which can help in the production of something else e.g., tractor because it’s used
to produce crops
Enterprise: the ability of combine the other resources of land, labour, capital so as to earn profit e.g., Kmart/
any business.
These resources are limited or scarce. Some resources can be over utilised and become limited e.g.,
overfishing
Factors Influence on consumer and financial decisions
Advertising and Marketers strategically target their products or services to their audience through
marketing billboards, commercial etc
Age Age and lifestyle will affect a consumer’s preferences, needs and wants. E.g., interest
I cars will differentiate between a man with a family and a man who just graduated.
Convenience Having multiple stores within a store complex, online shopping, close retailer outlets
and suitable shopping hours influence when, where, and what consumers buy
Culture Culture influences the tastes and preferences of an individual. E.g., a Hindu bride
wears red, maroon, or bright coloured saree, whereas a Catholic bride traditionally
wears a white gown at her wedding
Customer Good customer service makes you feel valued which will result in you constantly
service buying from that store. Poor service has an opposite effect.
Disposable The amount a person is willing to pay is affected by their income, current financial
income obligations, durability, and the quality of a product.
Environmental The demand of eco-friendly products has increased which influences you to purchase
considerations a product based on its sustainability, ethical inputs, production practices, carbon
footprint, and waste management.
Social media Being a part of a social media network influence culture and impacts individual tastes
and preferences. This is due to online business advertisements, trends, and celebrity
influence

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 Fixed expenses are regular payments that are for the same amount. They are predictable and easier to
budget for, e.g., rent, loan payments, contracted mobile plans
 Variable expenses are those payments where the costs may change over time depending on use, e.g.,
food, transportation, clothing
making decisions
individuals constantly make decisions by determining their needs and wants, resources, collecting
information and comparing options
 Consumers need plans (budgets) so that they will have enough money to take care of their needs and
satisfy their wants. A plan might cover income and spending for a week, month, etc
Why save?
 Being prepared for unexpected expenses, e.g., emergency funds such as medical expenses
 Saving for a specific goal, e.g., buying a car, deposit for property, holiday
 Saving for retirement
Decisions to save vary according to:
 Level of income: more a person earns, greater capacity to save
 Level of expenses: costs such as groceries, rent
 Age: different life stages influence how much a person saves or spends
 Wealth: more assets a person has, more financial security which influences their need to save
 Lifestyle choices: some people may use disposable income on going out, movies, restaurants
 Location: many spending will vary from city, remote area, climate, activities.
 Personal values, experience, goals: whether someone thinks saving is important will influence their
spending and saving, e.g., did they grow up saving
Types of goods and services
Goods Tangible products such as books, pens, hat
Services Activities provided by other people, e.g., doctor, lawyer
Substitute products Two products that could be used for the same purpose, e.g., coco pops and rice
bubbles (cereals)
Complementary Goods that are used together, e.g., car and petrol
products
Luxury products Make life more pleasant – as income rises, demand for this increase. E.g., designer
clothing, sport cars.
Collective services Provided or funded by government to all members of public, e.g., national
defence, police, public schools/hospitals
Buying locally, regionally, interstate, globally
Locally: local convenience store, containing takeaway, newsagent, possibly fruit/veggie store will be used
by consumers who live nearby
Regionally: department stores, discount department stores and supermarkets are usually in large regional
shopping complexes, e.g., Westfield shopping centres
Interstate or globally: consumers in search of a specific item, cheaper prices, or greater variety will often
decide to purchase from a global marketplace
Types of retail outlets
Convenience stores Prices at these stores are usually higher than supermarkets and have less choice
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 available. Near residential areas. E.g., 7-eleven
Specialty stores Specialise in one type of product, service, or a limited range of few products. e.g.,
Dymock, the body shop
Discount variety Offer basic customer service and are cheaper than department stores. Attract a lot
stores of customers because of cheaper price, large range of stock, convenient location.
E.g., Target
Factory Outlets Goods sold at discount because costs of transportation and wholesales aren’t
included in distribution chain. Big saving on goods. E.g., DFO
Department stores Large stores with variety of goods and services. E.g., Myer, David jones
supermarkets Large grocery stores. E.g., Woolworths, Coles

Online shopping
Advantages Disadvantages
- convenience of being able to shop from homes - security of payment details
anytime - cost of shipping
- ease of ‘shopping around’ for best value deal - risk of non-delivery
For retailers and businesses: - exchange rates
- reaches greater market and increase sale - consumer rights and protection (Aus. laws only
- reduce expenses of rent, store fit outs, stock apply in Aus.)
management, and staffing
Different payment options (tables are adv + disadv)
Cash: tangible notes and coins issued by federal government
- Track spending - Unhygienic
- Legal tender (accepted almost everywhere) - Hard to carry loose change
- Can get stolen /lost
Credit cards: allow consumers to borrow up to a certain limit with an agreement to make regular minimum
repayments. Most incur annual fee. Some offer consumer interest free day period whilst others incur interest
from first transaction.
- Helps you establish good credit history - Easy to overspend
- Helps avoid carrying large amounts of cash - More expensive than other forms of credit
- Convenient payment for online shopping - Can damage credit history
Debit card: payment method using your own money.
EFTPOS  Electronic Transfer at Point of Sale
- No interest - Can lose card
- No debt since your own money - Operating account fee
- Track spending - Reliant on tech (card decline if no internet

B-Pay: electronic payment method to transfer money from your account to a business over the phone or
internet
- Easy + convenient - Surcharge + fees
- Safe + secure - Accidentally pay wrong biller
- Details are saved - Internet/data reliant
Cheque: order to a bank to pay a stated sum from a drawers account, written on a specially printed form
- Safer than carrying cash - Not accepted everywhere
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 - Can be posted safely - Cheques take time to process and clear
- Only named recipient can pay cheque - Bank charges are involved with having a
cheque book
Lay-By: making regular payments over time for a product put aside for you
- No interest charged - Takes time to cancel
- Don’t get product until payment over
- Cancellation fees
Book-up: credit provided by a retailer so you can purchase goods from the retailer’s store and pay the
account at a later date.
- Purchase goods and pay for them later - Some form of security required
- Interest not charged unless you apply for an - You many overspend
extension of time - Charge accounts can only be used in that store
- You can spend purchase over week/fortnight
Afterpay: allows consumer to purchase something at a current price and pay amount in 4 instalments every
2 weeks.
- Instant online approval and no instalment fees - Significant fees are charged if you miss a
- No annual fees and no extra payments in you on payment
time
- Purchaser receives good immediately
Using credit to make purchases
Credit card Plastic card issued by a financial institution linked to a credit account which
e.g., Mastercard, allows account holder to purchase goods/services on credit (with borrowed money
Visa card which must be repaid)
Store cards Credit cards offered by a specific retailer or department store which may also offer
special discounts, interest free periods or other rewards to encourage consumers to
buy on credit
Personal loan Useful for buying one-off larger items (e.g., cars) and are usually over a fixed term
(3-5yrs)
Home loan Long-term loan secured by property – usually over a 25-30 year period
(mortgage)

Lending institutions
Banks A ‘shareholder owned’ financial institution licensed to Commonwealth,
receive deposits and make loans Westpac, st George
Credit unions, A ‘customer owned’ banking institution. Each customer is a Teachers mutual bank,
building member of the credit union (pays a membership fee), and police credit union, ME
societies, any profits are reinvested into the business bank
mutual banks
Peer to peer An online platform (website) matches people who have Lending hub, rate
lending money to invest with people who are looking for a loan seller, society one
Payday lenders Business that lends customers small amounts of money at Nimble, cash train
high interest rate, on the agreement that that loan will be
repaid when the borrower receives their next pay

Consumer Protection
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Consumer laws are designed to protect consumers in their transactions with business and deal with unfair
business practices, unfair sales tactics, and unsafe products
Need for consumer protection
- Increased competition in consumer markets
- The growing number of businesses and brands that consumers interact with
- Influence of tech (payment methods, mobile phones)
Legal selling techniques
Businesses engage in a range of influences to buy their products which includes product features and
branding, price strategies and promotions such as advertising and publicity.
Simple contract: an agreement made between two or more parties that is legally enforceable. They can be
written or verbal. Examples include signing a document, selecting a product in a shop, and paying for it at
check-out counter, clicking ‘I agree’ at webpage.
A valid contract requires three key components:
- Offer an acceptance: offer is an open call to anyone wanting to accept the promise of the offer with its
terms and conditions. Acceptance occurs where a person agrees to the terms of the offer.
- Intention: a contract must have a clear intent that its purpose is legally bind the parties to the term
- Consideration: contracts need to benefit both parties involved. This means both parties get something
that they’ve agreed to ‘seal the deal’ e.g., something of value like money
What makes a contract invalid?
- Duress: contract requires free will. Contract invalid if they are forced.
- One party isn’t recognised as having ‘legal capacity’ to agree on contract, e.g., prisoners, people with
mental impairments, minors
- Contract that allows one party to alter the terms but not the other

Legal rights and responsibilities of consumers

The Australian Consumer Law (Act 2011) and the Competition and Consumer Act 2010 protect consumers
against undesirable business practises and prohibits various unfair (restrictive) business practices in
Australia.
The Competition and Consumer Act is administered and enforced by the Australian Competition and
Consumer Commission (ACCC) and relevant state and territory consumer agencies.
consumer and consumer Act 2010 protects consumers from:
- misleading and deceptive advertising: e.g., false claims, fine print, and environmental claims
- unfair contract terms: terms and conditions must be legible, readily available, presented clearly &
reasonably plain language
- Bait advertising: can't advertise goods at specified price with low stock in supply
- Price displays: price should be genuine, see price clearly. If wrong price business has to fix it or sell you
item for lowest price.
- implied condition: must be fit for purpose, acceptable appearance and finish, free from defect, safe
durable
- must have warranties
- Safe Product: mandatory standards, product safety information.
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Protection agencies and independent bodies and organisations
Federal government

The Australian Competition and Consumer Commission (ACCC) has been given the power under federal
legislation to independently administer the Australian consumer laws. They investigate complaints and bring
legal action against businesses that have allegedly breached laws.
State government
NSW Fair Trading offers information regarding Australian Consumer Law with easy-to-understand
explanations on the rights of consumers. They offer dispute resolution services and formal complaint
methods.
Independent organisations
CHOICE provides consumers with both valuable consumer information about products and services
available in the marketplace. they campaign for consumer rights.
Consumer redress
- ACCC website and NSW Fair Trading website provide information to consumers which is important to
understand before seeking redress.
- Sometimes a consumer purchases a good which does not meet the basic legal standards of being fit for
purpose, matching description and/or safe to use. The ACCC website suggest a process for consumers to
follow when seeking redress or remedy (solution to your consumer problem).

ACCC suggests following steps seeking redress

1. Contact seller or service provider
- Contact the business to explain the problem and the outcome you want (best to visit or call)
- Business might ask for proof of purchase and discuss if its minor/major problem to determine a
repair, replacement, or refund
- Best to write a complaint letter since you also have record of contact
2. Contact ACCC or third party
- If still having difficulties resolving problem, seek assistance
3. Take legal action
- Consider getting independent legal advice about what options are available
- You may be entitled to take complaint to small claim court or tribunal
- For dispute involving large sums of money, private legal action is best. However, make sure you get
legal advice first because legal action is expensive and there is no guarantee you’ll be successful
Common remedies consumers are presented with:
- Refund of purchase price
- Repair of product
- Replacement of product
- If product causes physical harm, customer is entitled to compensation

Financial management
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Consequences of poor financial management
Poor financial management through a lack of budgeting an excess borrowing can lead to financial stress,
income shortages and lack of funds to pay for necessities.
Financial and legal consequences
Consumers struggling with repayments due to excessive debt can apply for a ‘hardship variation’ –
adjustments and payment can be negotiated.
Failure to repay debts might lead to being contact by debt collector who may:
o Demand payment or explain consequences of non-payment
o Offer to settle the amount and make alternative payment arrangements
o Inspect or recover goods (if they have right to do so) – repossession

Legal action can be taken by those who lend an individual money to recover the money they are owed. If
person can’t pay back debts, they can apply to court as bankrupt. They are then classified as bankrupt for 3
years and a trustee assists them in managing debts.
Social and wellbeing consequences
People who are financially stressed are less satisfied with their lives and more likely to underperform at
work. They also undergo negative mental and physical health issues such as family breakdown and
substance abuse. This can lead to social disengagement and isolation.

Role and importance of long-term financial strategies

Financial planners (financial advisors)
- Person or authorised representatives of an organisation, licensed by ASIC, to provide advice on some or
all of these areas: taxation, insurance, investing, superannuation, retirement planning and risk
management.
- They can help individuals to clarify their goals and create a plan to achieve them in both long and short
term.
Superannuation (‘super’)
- Compulsory money put aside and saved while you’re working to enjoy income after retiring.
- Currently 9.5% p.a of your wage/salary goes to your superannuation
Effective financial management
Budgeting: a plan which details expected income and expenditures over a set time period and plans to
manage money so essentials can be paid. An effective budget aims to have enough left over to save for
extras, e.g., luxury items or pay off credit card/loans faster
Saving/superannuation funds: plan to save a set amount each pay and open a high interest savings account
to help money grow. This will ensure you have emergency money available or to help towards a goal
Monitoring and record keeping + avoiding over commitment:
- Track spending through a diary or copies of receipts. Most people aren’t aware of exactly where all their
income is spent, small things (e.g., coffee/ takeout) add up.
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- This helps creating wise decisions about finances. By thinking carefully before making a commitment
(e.g., going on holiday/buying a car), you can avoid overcommitments which can cause financial stress
when bills and debts build up to unmanageable levels.
Managing mobile phone costs
Buying a phone can lead to over commitment due to the ongoing cost of mobile phone service and cost of
the phone itself
Things to consider before buying a mobile phone
- Which phone to buy and the cost/features
- Whether to be on a plan or prepaid. Prepaid is easier to manage costs and you cannot accidentally build
up on the phone bill through extra calls or data usage.
- Inclusions: if choosing a plan, be clear on included calls, SMS, MMS, data, and charges for going over
included amount
- Roaming costs: if going overseas be aware of overseas charges
- Contracts: most plans are for 24 months, so breaking out early may have charges
- $0 up front for the phone: cost off phone can be made into 24-month contract, so you’re still paying if
you break/lose it

Budgeting using digital technologies

ASIC: budget planner and trackmySPEND app
Created by ASIC (Australian Securities and investment commission) to help individuals to:
- Work out on where their money is gong
- Save their results online or use excel budget spreadsheet
- Simplify their budget by using the ASIC budget planning wizard
ASIC has created app to let individuals enter their weekly spending limit and add expenses as they occur to
track their own progress
Bank websites
Internet banking apps allow customers easy access to current information about their bank accounts which
helps with decision making as well as monitoring income and spending.
Pocket book personal finance expense tracker app
Free app that links a person’s bank accounts, credit cards, and loans and then keeps track of their spending.
It automatically sorts transactions into categories (groceries, bills etc) which helps track spending and
making choices about saving money
Options for addressing financial difficulty
Negotiate a payment plan
If struggling with payment of bills or other financial commitments, then it’s important to get in touch with
your creditor (business owed money), explain your circumstances and negotiate an arrangement based on
what you can afford to pay. Most organisations are willing to negotiate payment plans to help manage
repayments only if the plan is reasonable and the individual keeps up with agreed payments

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Seek support from a financial institution
- Financial counselling Australia offers free financial counselling via phone and has a website which has
an interactive map to find a face-to-face counsellor and its consumer website has resources
- Financial counsellors provide information, support, and advocacy to assist people in financial difficulty.
- National debt helpline: a not-for-profit service that helps people in Australia tackle their debt problems.
They aren’t lenders and don’t ‘sell’ anything or make money from you. Their professional financial
counsellors offer free, independent, and confidential service to help you get back on track
- ASIC MoneySmart website: provides information on supporting friends or family experiencing money
stress, covering topics such as talking about money, working on budget, and finding right support
- The Australian psychological society has tips for managing stress, a booklet on understanding and
managing stress and a link to find a psychologist if needed.

Work and wellbeing

Working is good for our health and wellbeing. It contributes to our happiness, helps build confidence and
self-esteem, and rewards us financially. It is beneficial for a society to have as many people in work as
possible because work contributes to their wellbeing and as well as being for the economy by increasing
consumer spending and stimulation economic growth.
Relationship of work to quality of life
Disposable income
Working provides us with money to support ourselves and survive. Disposable income is the amount of
money available for spending and saving after paying taxes. It is used on necessities such as housing, food,
bills etc. discretionary income is the money left after paying necessary expenses. It is used on whatever the
income earner chooses (e.g., vacation, saving). However discretionary income is the first to shrink amid a
job loss.
Health:
People in work tend to enjoy happier and healthier lives than those who are not in work. It is important that
employees feel physically and mentally healthy, safe, and valued at work to perform their best since they
spend about 60% at work. Work-life balance is important aspect of a healthy work environment as it helps
reduce stress ad helps prevent burnout in workplace.
Household economic wellbeing and being able to manage a household
Household financial position has significant impact on wellbeing. Employment allows household to acquire
goods and services required to meet needs and maintain acceptable standard of living such as clothing,
education, leisure activities. Not working increases risk of household experiencing financial difficulties in
times of need and unexpected expenses.
Superannuation accrual (increase/accumulate something over time)
Working helps increase superannuation because employers pay 9.5% of your salary into your super fund.
You can also top up super by making your own contributions. This helps post retirement as you can rely on
superannuation instead on age pension to support lifestyle.
Contribution to individuals’ self-esteem and non-material living standard

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Working increases a person’s self-esteem because it makes you feel important. Work is central to individual
identity, social roles, and social status. Being in work:
- Keeps us busy, challenges us ad gives us the means to develop ourselves
- Gives us a sense of pride, identity, and personal achievement
- Enables us to socialise, build contacts and find support
Redistribution of income through taxation and government expenditure
Redistribution of income is levelling the distribution of income by transferring income from rich to poor in
the aim of alleviating social vices and cost of extreme poverty.
The Australian government uses tax revenues to redistribute income and provide different types of
assistance to groups in the economy to improve their standard of living.

Tax revenue is used for a wide range of government responsibilities:

o Age pension
o Unemployment benefits
o People with disability (disability support)
o Education (subsidised childcare, pre-school, school, technical and university education)
o Healthcare (subsidised doctors and pharmacists, free public hospitals, subsidised private
insurance)
o Housing
o Families and parents (single parent, low income, baby bonus)
Types of work and work arrangements (refer to work as well on adv and disadv)
Full time - Works for 38 hours a week or more
- Range of entitlements such as sick leave
- Job security
- Good income
Part time - Number of hours is fewer than 38 hours
- Entitlements based on pro rate basis (no. of hours worked)
- Job security
- Flexible working hours
Casual - Work on irregular hours (whenever needed)
- No entitlements but loading pay to recompensate
- Lack of job security
- irregular income (hard to budget)
Self – employed - work for yourself
- tax advantages
- work flexibility / more free time
- no guaranteed income
- lack of financial and job security
Voluntary - involves no payment
- work flexibility / free time
- community work
- self-satisfaction
Apprenticeship Training that involves following and studying a qualified practitioner
- paid while working
- may become career in short period
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 - poor pay
- earn a qualification
Traineeship Combining employment and training in order to gain employment
- paid whilst working
- can be promoted after obtaining qualification
- non-supportive environment (non-trade area)
- expensive
Forms of income
Wages - employer receives in exchange for labour or service
- fixed regular payment paid in increments
- casual work = paid per hour
- part/full time = paid per week/fortnight/month part of salary

Salary - total package of money paid for work to an employee.

- Include base pay as well as superannuation, leave allowances and other financial
elements such as bonuses
- Overtime payment not included
Commissions - Fees earned by brokers, salespeople, and agents who make a sale or close a deal
- Can be percentage of a sale or can be flat amount based on sales volume
- To ensure that workers earn regular income, they are usually paid a retainer (fee
paid in advance to someone to secure their services)
Profits - People who operate their own business are self-employed. They make their own
income from profit of business.
- Money left over from sales revenue once all expenses are paid.
Profit = revenue – expenses
Dividends - Sum of money paid regularly by a company to its shareholders out of its profits
changes in work (read revision booklet + textbook for extra info)
women in workforce: has increased significantly in comparison to 1982 due to the increased job
opportunities, access to higher education, and economic necessity (increased cost of living). This has
influenced the nature of family life which has led to an increase in demand for childcare services.
Employees have had to implement family friendly practices such as flexible working hours to keep their
good female staff.
Change in Work patterns: Since workers are now expected to work longer and harder, there has been an
increase in self-employment, part time, and casual work. this is due to employees taking their work-life
balance more seriously. Another factor is the introduction to various employment opportunities in different
services that offer workers a greater range and choice in work hours. E.g., healthcare, professional services,
retail, and hospitality.
Ages of workers: has significantly changed. More older people are entering the workforce due to the
improved health availability of more flexible and less physically demanding forms of employment.
However, the age of younger people has increased from 15, in 1900, to 18 years old due to the increase in
financial support from both parents making the child dependent on them until they start uni/finish education.
The law has also changed to younger workers as it now doesn’t let you start working young.
Various participants in the workplace
Employees: Employees provide labour and time to employer
- Someone who works for another person or entity in return for financial compensation
- Undertake specific jobs
- Different workplace arrangements: casual, part time, full time
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Employers: Employers provides income to employees
- Must ensure they provide a safe workplace
- Adequate financial compensation for work completed
- Provide necessary and relevant education and training
- Contribute to superannuation
- Essential rights of employer
- Must follow legislation such as Fair work act 2009
Contractors:
- Hiring labour for a specific time for a specific skill set
- E.g., visual merchandiser contracted to set up Christmas display for Christmas
Employer association:
- Employers join together to protect their common interests
- Their main role is:
o Represent employers in dealing with trade unions
o Give advice and assistance on a wide range of issues such as taxation, industrial relations,
employment legislation
o Lobby government with their membership views
o Employer association will negotiate with trade unions to establish a new set of pay and
conditions
Trade Unions:
- Represent the collective interests of employees usually withing an industry, trade, or occupation
- Can create industrial action with a large number of active members to put pressure on government and
employers
- They generally aim to
o Protect interests on union members
o Improve working conditions of members
o Ensure fair treatment at work
o Promote quality of life issues
Government
- Federal, state, and local government agencies can support if it isn’t possible through trade unions and
employer associations
- They enforce employment standards such as minimum wage, entitlements, superannuation
- Governments often have greater power and influence over job markets

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