Topic 1

• Internal factors


  Those that come from within people themselves
• Key internal factor affecting choices

  • Personal set of values, beliefs and attitudes
  • May change with circumstances and life cycle stages
  • Tend to be fairly stable
• Values, beliefs and attitudes

  Affect the way people manage their money
• Perception of a situation


  Influenced by own experiences, values and attitudes
• Values


  • General feelings or beliefs about desirable behaviour and goals
  • Involve concepts of 'good' and 'bad'
  • How people think things ought to be
• Functions of values


  • Help distinguish needs and wants, form aspirations
  • Help plan finances and decide between alternatives
• Values


  • Living in the present vs planning for the future
• Beliefs


  • More specific and detailed than values
  • About how things are, not how they ought to be
  • Can be 'absolute' or 'causal'
• Beliefs about financial services and firms

  Influenced by events like the 2007 financial crisis
• Attitudes


  • How people think and feel about another person, event or issue
  • Usually limited to socially significant issues
  • Can be changed by circumstances, events, experience or advice
• Attitudes


  • Towards saving for retirement
• Perceptions


  • People's understanding of the world around them, from sensory and non-sensory inputs
  • Affect feelings about products, financial services and institutions
• Preferences


  • People's preferences for particular products
  • Depend on personal values, beliefs and attitudes
  • Businesses must provide a range of products to suit all tastes
• Financial services products


  • Savings accounts with different interest rates, features
• External factors


  Those that are not within your control, but are imposed from outside
• Major external factors


  • Marketing and advertising
  • Peer pressure
  • Trends, fashions and role models
• Marketing


  The activities associated with buying and selling a product or service, including advertising, selling and delivering products to people
• Marketing can influence people in subtle ways, such as how the same event is reported differently in different media to appeal to their target readership
• Marketing can distort people's understanding of the frequency of events, such as a single case of a dissatisfied bank customer leading to the impression that all customers are dissatisfied
• Promotion


  Paid-for marketing activities, including advertising, that aim to communicate with people, inform them of goods and services, and persuade them to buy
• Advertising


  Part of promotion, used to inform and persuade customers that a product is available and try to persuade them to buy it
• Advertising media


  • Television and radio (broadcast media)
  • Newspapers and magazines (print media)
  • Online (electronic and social media)
  • Cinema
  • Hoardings, posters and billboards (other media)
• Other promotional activities


  • Product trials
  • Money-off coupons
  • Buy one, get one free offers
  • Customer competitions
  • Sponsoring teams or events
  • Offering special credit terms
• Promotional activities add to the costs of a business and are directly related to the product being marketed
• People should be careful when choosing financial products as there is often a lot of "small print" - terms and conditions that can determine the amount of interest received or charged
• Public relations (PR)


  A specific part of promotion that is 'below the line' expenditure - advertising that is not paid for directly but which keeps a business's product in the public eye
• PR activities


  • Photos of celebrities using a business's products
  • Celebrities using a business's products or marketing merchandise
  • Featuring celebrities on a business's website or in its magazine
• Product placement


  A PR activity where a product appears on a TV show or in a film
• Sponsorship


  A PR activity where a business pays for a sporting or entertainment event or venue, and can advertise at the event and in promotional materials
• PR activities cost money but contribute to the general reputation of a business and are not directly related to the brands that the business sells
• Peer pressure


  The influence of people in the same position as us, such as schoolmates, on our perception of what is the norm and acceptable behaviour
• Peer pressure can be particularly important for young people, who like to have the same things as their friends, which can be expensive and involve saving or borrowing money
• Trends and role models


  The desire to own the same or better products than our peers, influenced by current fashions and attitudes
• Trends and fashions can influence financial behaviour, such as how people pay for goods and services, their attitudes to saving, and their use of credit
• Culture


  The norms and acceptable behaviours across social groups, which influence financial behaviour and indicate what financial products will be successful
• In the UK, there is a strong culture of home ownership, with many people now seeing paying back a mortgage as normal, whereas this was not the case 50 years ago