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LIBF Unit 2 > Topic 1 - Needs, Wants + Aspirations > Flashcards

Topic 1 - Needs, Wants + Aspirations Flashcards

(71 cards)

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1
Q

What are needs?

A
  • ‘must have’ items in order to survive
  • e.g. water, food + shelter
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2
Q

What are wants?

A
  • optional ‘nice to have’ items
  • desirable not essential
  • e.g. jewellery, going cinema
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3
Q

What are aspirations?

A
  • hopes for future
  • items/experiences ppl wish to have in medium/long term future
  • e.g. exotic holiday, sharing a flat w friends
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4
Q

What causes needs + wants to change when growing older?

A
  • their lifestyle
  • the prevailing culture of society they live in
  • family size
  • ability to afford products
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5
Q

What is the life cycle stage of a 0-2yr old?

A

Birth + infanthood

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6
Q

What is the life cycle stage of a 2-5 yr old?

A

Childhood - preschool

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7
Q

What is the life cycle stage of a 5-12 yr old?

A

Childhood - school

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8
Q

What is the life cycle stage of a 13-19 yr old?

A

Teenager

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9
Q

What is the life cycle stage of a 18-25 yr old?

A

Young adult

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10
Q

What is the life cycle stage of a 26-40yr old?

A

Mature adult

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11
Q

What is the life cycle stage of a 41-60 yrs old/55-65 yrs old?

A

Middle age to late middle age

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12
Q

What is the life cycle stage of a 66+ yr old?

A

Old age/retirement

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13
Q

What are the main types of financial product to satisfy medium + longer term needs, wants + aspirations?

A
  • MT + LT savings
  • investments
  • pensions
  • LT borrowing
  • insurance
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14
Q

What are medium + longer-term savings for?

A
  • to save over a longer period (> 3 yrs)
  • to cover future needs, wants + aspirations
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15
Q

What are investments for?

A
  • saving for a longer-term want/aspiration
  • more risky than LT savings product but may bring a higher return
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16
Q

What are pensions for?

A
  • save money in pension scheme for retirement
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17
Q

What are longer-term borrowing products for?

A
  • to finance a large purchase + pay back over a long period
  • e.g. a mortgage or a hire purchase
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18
Q

What is insurance for?

A
  • covering LT risks
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19
Q

Why do ppl buy financial products?

A
  • enables ppl to satisfy their needs, wants + aspirations
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20
Q

What is the key internal factor that affects someone’s choices?

A
  • own personal set of values, beliefs + attitude
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21
Q

What are values?

A
  • general feelings or beliefs about desirable behaviour + goals
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22
Q

What 2 sig. functions do values fulfil in regard to buying financial products?

A
  • help ppl distinguish between what they consider as needs + wants, + to form aspirations
  • help ppl plan finances + decide between diff. alternatives
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23
Q

What are beliefs?

A
  • the way ppl think things are
  • more specific + detailed than values
  • can be religious but also inc.: free speech, fairness
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24
Q

What can beliefs influence?

A
  • the way ppl see financial services + the firms providing them
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25
What are attitudes?
- how, at a given time + place, ppl think + feel about another person, event or issue
26
What can attitudes be changed by?
- circumstances - events - experience - advice
27
What do ppl’s perceptions represent?
- their understanding of the wrld around them (physical surroundings + social envi.)
28
Where do ppl get their perceptions from?
- sensory inputs (sight, sound, smell, tough + taste) - non-sensory inputs
29
What do perceptions affect?
- feelings ab. products - financial products that could help buy these products - banks + other financial institutions providing financial services
30
What do preferences for particular products depend on?
- personal values, beliefs + attitudes
31
What is 1 way customers can express a preference about financial products?
- by the distribution channel they choose to use (branch, by phone or online)
32
What are major external factors influencing needs, wants + aspirations?
- marketing + advertising - peer pressure - trends, fashion + role models
33
What is marketing?
- activities companies do to promote buying + selling of a product/service - inc. advertising, selling + delivering products to customers/businesses
34
What can marketing be subdivided into?
- promotion - public relations (PR)
35
What is promotion?
- paid for marketing activities, inc. advertising
36
What are the aims of the activities included in promotion?
- communicate w ppl - inform them of goods + services - persuade them to buy
37
What is advertising?
- used to inform customers about available products + persuade them to buy product - can carry explicit + implicit messages
38
What types of media carry advertisements?
- TV + radio (broadcast media) - newspapers + magazines (print media) - online (electronic + social media) - cinema - hoardings - posters + billboards
39
What types of promotion may businesses use?
- carrying out product trials - offering ‘money off’ coupons or ‘buy 1, get 1 free’ offers - running customer competitions - sponsoring teams/events + offering special credit terms - bank may offer cash back to customers choosing its credit card
40
Why should ppl be careful when choosing a financial product?
- always lots of ‘small print’: terms + conditions - sometimes bonus/discount only available in certain circumstances (may be misleading)
41
What is public relations known as?
- ‘below the line’ expenditure
42
What is public relations (PR)?
- advertising not paid for directly but keeps a business’s product in the public eye
43
What are e.g. of PR?
- businesses having an agreement w a celeb. to use their products/marketing merchandise at public events - feature a celeb. in its magazine/website
44
What are the 2 other aspects of PR?
- public placement - sponsorship
45
What is public placement?
- product appearing on a TV show/film
46
What is a sponsorship?
- business paying for a sporting/entertainment event/venture
47
What do peers determine?
- the acceptable behaviour within our particular group
48
What do trends affect?
- way ppl pay for goods + services (e.g. cards or cash) - ppl’s attitudes to saving - how ppl view using credit
49
What is a major influence on attitude?
- social networking sites (e.g. Facebook + twitter)
50
What is culture about?
- norms: behaviour + attitudes across social groups
51
What does culture indicate?
- what society considers to be acceptable + unacceptable
52
What culture is strong in the UK?
- home ownership
53
Why is culture important?
- influences what ppl consume + what financial services products ppl buy
54
What is the feedback effect?
- link between thoughts, feelings + behaviour, can be traced back to attitudes + so out personal values
55
What is the feedback effect linked to?
- expectations
56
What does the feedback effect refer to?
- ppl’s own attitudes mean they affect the outcomes of events
57
What are financial examples of the feedback effect called?
- expectations-led’ events
58
What is a financial examples of the feedback effect?
- if ppl expect a share price to fall, they’ll start to sell the shares: if enough ppl sell them, price falls
59
What are some examples of how values can affect an individual’s thoughts, feeling, behaviour + decision-making?
- ethical investing - managing finance - religious beliefs
60
What is ethical investing?
- someone choosing to save money to use on what that individual considers to be good purposes
61
What are ethics?
- set of ideas ab. what ppl think is right
62
How can ppl manage their finance?
- forward planning + budgeting
63
What are financial choices affected by?
- how well they feel they can manage the costs + consequences - a person’s attitude to risk + reward
64
What is an example where religious beliefs affect financial decisions?
- Islamic law prohibits payment of interest on debt: Muslims not allowed to borrow money via a western-type mortgage/loan - all major banks provide compliant financial products
65
What are implications when someone purchases a financial services product?
- responsibilities the customer must afford to meet their obligations - for a specified time period
66
In the case of a medium/long-term loan why can a person not by certain they can afford to pay the money back?
- their circumstances may change (lose job/become ill + unable to work)
67
What are examples of when affordability needs to be considered?
- buying insurance policies - in relation to saving - borrowing money
68
What are most ppl’s attitude to risk?
- some degree of risk tolerance, but also limit risk they’re exposed to
69
What are the 2 extremes of attitudes to risk?
- risk tolerant - risk adverse
70
How do ppl who are risk tolerant act?
- find it exciting to take risks - engage in hazardous activities + don’t insure anything
71
How do ppl who are risk adverse act?
- cautious, avoid risky situations + take precautions in situations they can’t avoid

LIBF Unit 2 (10 decks)

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