Topic 1: needs, wants + aspirations

Question 1

Needs

Answer 1

• essential items everyone requires to survive
• don’t change much over the life cycle

Question 2

Wants

Answer 2

• optional desirable items
• can’t be fulfilled until needs are met

Question 3

What are needs and wants related to?

Answer 3

• price of products
• peoples ability to buy them

Question 4

Aspirations

Answer 4

• hopes for the future
• items/experiences
• can be realistic (new car) or unrealistic (yacht)
• usually become more realistic as you move through life

Question 5

Values

Answer 5

• what a person considers important to them
• may change throughout life cycle
• affects persons wants/aspirations
• changes how they manage their money

Question 6

As the life cycle progresses, needs and wants change according to what?

Answer 6

• lifestyle
• culture of society they live in
• family size
• ability to afford products

Question 7

Ways to finance needs, wants and aspirations?

Answer 7

• medium and long-term savings (3+ yrs)
• investments (more risky but can bring higher returns)
• pensions (to finance retirement)
• longer-term borrowing (larger purchase: longer borrowing term)
• insurance (cover long-term risks)

Question 8

Internal factors

Answer 8

• come from within people
• affects their choices
• personal set of values, beliefs + attitudes
• may change with circumstances throughout life cycle

Question 9

Values

Answer 9

• feelings/beliefs about desirable behaviour/goals
• help people distinguish between their needs, wants + aspirations
• help people plan finances + decide between alternatives

Question 10

Beliefs

Answer 10

• more specific + detailed (than values)
• the way people think things are
• can be absolute or casual (how one events causes another)
• can influence how you see financial services/firms

Question 11

Attitudes

Answer 11

• how (given place/time) people think/feel about a person/event/issue
• usually limited to socially significant general issues/events
• can be changed by circumstances, events, experience, advice
• may be deeply embedded
• no attitude towards something: neutral attitude

Question 12

Risk

Answer 12

• likelihood of a particular event happening
• what people may gain/lose from particular financial product

Question 13

Perceptions

Answer 13

• represent their understanding of the world around them (physical + social)
• gathered from range of inputs (sensory + non-sensory)
• affect the way they feel about financial products/institutions/services

Question 14

Preferences

Answer 14

• depend on personal values, beliefs + attitudes
• businesses must provide range of goods to suit all tastes

Question 15

External factors

Answer 15

• not within your control
• marketing/advertising
• peer pressure
• trends, fashions, role models

Question 16

Marketing

Answer 16

• form/maintain relationship with consumer
• activities associated with buying/selling products/services
• includes advertising, selling, delivering products
• influences people subtly
• subdivided into promotion + public relations (PR)

Question 17

Promotion

Answer 17

• paid-for marketing activities
• communicate with people
• inform of goods/services
• persuade to buy
• e.g. advertising informs/persuades + can be explicit/implicit + carried by media
• e.g. product trials, coupons, offers, competitions, sponsorship, cash-back etc
• adds to business costs

Question 18

Small print

Answer 18

• read terms + conditions carefully when choosing financial products
• otherwise consequences eg paying fines may occur

Question 19

PR (public relations)

Answer 19

• part of promotion
• ‘below the line’ expenditure
• advertising not paid for directly
• keeps business’s product in the public eye
• implicit message
• may link with a celebrity
• product placement
• sponsorship

Question 20

Peer pressure

Answer 20

• forms perceptions of what is the norm/acceptable behaviour (within our particular group)
• young people are more likely to want to fit in so buy similar things to friends

Question 21

Trends + role models

Answer 21

• sum up the mood of the times ie attitudes/values people hold
• influence people to buy

Question 22

Financial trends affect

Answer 22

• way people pay for goods/services
• attitudes to saving
• how people use credit

Question 23

Culture

Answer 23

• behaviour/attitudes across social groups deemed acceptable
• heavily influenced by culture of society they live in
• modern societies have a consumerism culture
• influences financial behaviour
• indicated what’ll be successful

Question 24

Feedback effect

Answer 24

• self fulfilling expectations: people’s own attitudes affect the events outcomes
• feelings affect behaviour

Question 25

Ethical investing

Answer 25

• ethics: what people believe is right
• save so money is used for ‘good purposes’