Ayob4847: 2012

ayob aghazi 4849
Business Responsibilities Towards Customers
Within the Automotive Industry
Development of Consumerism

Introduction

It was only a few years ago where the “buyer beware” attitude was practiced by a great many

retailers and service providers. These people seemed to believe that they could treat their

customers how they liked, and to a certain extent, they did. But with new legislation giving the

consumer increased power, and with increased competition, retailers have been forced to look very

closely at their attitude and how they do things
Key Factors in the Development of Consumerism

There is no “one” factor that can be attributed to consumerism, but rather a number of factors.

Each of these have contributed in there own way. We will look at each in turn.

Purchasing Power

of people and families has increased immensely over the last two decades;

with both partners working, people staying in the workforce longer, better wages, and younger

people obtaining higher paying work.

Buyer Demand

increases in line with purchasing power. Because of new wealth there is increased

spending, which has had an affect on almost every industry; two cars, more clothes, appliances,

TV’s, videos, etc..
Extended Trading Hours

means consumers have more time to

spend, but it has also given retailers a chance to change consumer

habits. Why spend “family time” at home, when you can go shopping

and spend money! Retail Facilities

such as shopping malls are a natural progression of the

extended trading hours, i.e., weekends. This allows customers to shop at a

time that best suits them. To attract customers they provide coffee facilities,

special customer parking, restrooms, children’s play areas, special displays,

etc. In order to compete, small retailers have had to change their store’s

operating hours to accommodate customers and compete with other retailer

Transportation can be looked at from different ways:

• Transport of product to retail outlet - the speed and efficiency in transporting products from

manufacturer’s to you, in such a way as to keep the products affordable.

• Transport of consumer to retail outlet - that - roads, public transport, parking, etc, allows

customers easy access to your business.

Knowledge of business responsibilities towards customers

Advertising and Media Development

is perhaps one of the strongest factors in consumerism. It

takes your product to your customers, and “suggests” that there is a place in your customer’s life

for that product. With increased coverage by TV, radio, computer/inbternet, telephone and printing

technology, you can now reach your customers in a quicker, more colourful, more detailed and

over a wider area than ever before.

Trade Development

- Over the years, some industries urged the Government to protect local

businesses from foreign competition. Protection was given by imposing tariffs and import quotas on

various products. But now the duty tax imposed on goods from various countries has changed, as

trading relations with some countries have altered.

extended trading hours, i.e., weekends. This allows customers to shop at a

time that best suits them. To attract customers they provide coffee facilities,

special customer parking, restrooms, children’s play areas, special displays,

etc. In order to compete, small retailers have had to change their store’s

operating hours to accommodate customers and compete with other retailer

Transportation can be looked at from different ways:

• Transport of product to retail outlet - the speed and efficiency in transporting products from

manufacturer’s to you, in such a way as to keep the products affordable.

• Transport of consumer to retail outlet - that - roads, public transport, parking, etc, allows

customers easy access to your business.

Unitec @ 2006 3

Knowledge of business responsibilities towards customers

Advertising and Media Development

is perhaps one of the strongest factors in consumerism. It

takes your product to your customers, and “suggests” that there is a place in your customer’s life

for that product. With increased coverage by TV, radio, computer/inbternet, telephone and printing

technology, you can now reach your customers in a quicker, more colourful, more detailed and

over a wider area than ever before.

Trade Development

- Over the years, some industries urged the Government to protect local

businesses from foreign competition. Protection was given by imposing tariffs and import quotas on

various products. But now the duty tax imposed on goods from various countries has changed, as

trading relations with some countries have altered.

Economic Development

- One of the key areas where Government has intervened, concerns

money and finance. The nationalisation of the Reserve Bank and the use of regulations to govern

the degree of money available in the economy is a well-accepted tool for controlling levels of credit

and the rate of growth within the economy.

Consumer Behaviour Patterns

We have looked at some of the factors that have contributed to consumerism. Now we are going to

look at the behaviour patterns of consumers.

Consumers behave in ways based on their particular “needs”, i.e.:

• A person who has a need for a relaxing time may read a book ($$$), have something to eat

or drink ($$$), go to a movie ($$$), stay home in front of the TV.

• A person who has a need to expend energy may go for a run, or go to the gym ($$$).

How consumers behave, is determined by a number of factors.

Purchasing Power

- the amount of money a person has to spend determines their purchasing

behaviour; i.e., if a person has a need for a relaxing time and it’s a week away from pay day, then

maybe they will watch TV rather than go to the movies.

People’s purchasing power can be determined by:

• Their earning capacity

• Earning capacity on investments

• Earning capacity of spouse, partners, children

• Availability of store credit

• Availability of bank credit

Lifestyle Changes

both positive and negative have affected consumer behaviour.

Positive Changes

• A greater range of sporting options (hand gliding, bungy jumping, indoor/outdoor, all ages)

• More entertainment (restaurants, movies, theatre)

• Holiday destinations (cheaper fares, easier travel)

Negative Changes

• More family breakdowns

• Increased crime

The products themselves

Manufacturing technology - better quality, more

quantity

Transportation (air, sea, land)

Accounting systems.

If we look at some of the previous factors and relate it to consumer behaviour:

• TV, radio, telephone and computer selling may prompt a customer to consider buying the

product.

• Money machines, EFT-POS, etc, prompts the consumer to buy now. If the consumer must

get money from the bank or has to plan ahead to have the cash, then their resulting

behaviour could be to walk out of the store without buying.

Manufacturing Technology

has improved the quality of the finished product. The resulting

behaviour again is to buy, because consumers feel secure in the knowledge that the product is well

made.

Work and Leisure Hours

and the pursuits during these, has led to behaviour, which some

retailers have been able to capitalise on.

For example:

A person, who works 40 hours per week, has a family who play sport and plays sport themselves,

is a very busy person. Service stations and parts departments identified these people as being a

large part of their customer base. They had to address this busy person’s needs and make it easier

for them to shop, hence them opening 7 days a week.

Extended Trading Hours

has turned “shopping” into a lifestyle. It has given the consumer the

chance to decide their own shopping patterns, based on their needs, not those of the retailer. The

Friday night rush has now been replaced by more relaxed weekend shopping.

Unitec @ 2006 5

Knowledge of business responsibilities towards customers

Technology in the Development of Consumerism

We look again at the role technology has had in the development of consumerism. Its major role is

to make life easier.

The following are some of the technological and lifestyle options, which have contributed to this

“ease” of selling.

Computerised Registers and Bar Coding

has made the process of

paying for the product easier. It has reduced over and under-charging by

checkout operators. It also gives detailed receipts.

Electronic Fund Transfer at Point of Sale (EFT-POS)

has enabled

customers access to their bank accounts at all times (24 hrs), a secure

method of transferring money (compared to cash or cheques), by use of

a plastic EFT-POS card and a pin number.

This ease of transferring funds (from the customers account to your

company account) is reflected in peoples shopping habits. Because they

are handing over a piece of plastic rather than “cash”, the sale takes on a

different feel.

Promotional Video’s

are used to help demonstrate the

product in such a way as to show the customer the real

benefits of that product. Customers are always looking for

ways to make their life easier. The benefit of using

promotional videos is it can show the product in use,

thereby making it easier for the customer to decide

whether to purchase. This method of presentation is

thoroughly checked out before the video’s release, so that

all details are correct. This gives protection to the

customer that they are being given the right information on

which to make a buying decision.

Computer Shopping

can be accessed through the

Internet. A smart card is in the process of being developed for use with the Internet for the:

• Convenience of the customer

• Security of their transferred funds

Debit and Credit Cards

allow customers access to funds, without the worry of having to carry a

large amount of cash with them.

Unitec @ 2006 6

Knowledge of business responsibilities towards customers

Theory self test 1.

Using the warranties itemised on the previous pages, answer the following questions.

1. List the key factors in development of consumerism.

...

Purchasing Power

of people and families has increased immensely over the last two decades;

with both partners working, people staying in the workforce longer, better wages, and younger

people obtaining higher paying work.

Buyer Demand

increases in line with purchasing power. Because of new wealth there is increased

spending, which has had an affect on almost every industry; two cars, more clothes, appliances,

TV’s, videos, e
Extended Trading Hours

means consumers have more time to

spend, but it has also given retailers a chance to change consumer

habits. Why spend “family time” at home, when you can go shopping

and spend money!
Retail Facilities

such as shopping malls are a natural progression of the

extended trading hours, i.e., weekends. This allows customers to shop at a

time that best suits them. To attract customers they provide coffee facilities,

special customer parking, restrooms, children’s play areas, special displays,

etc. In order to compete, small retailers have had to change their store’s

operating hours to accommodate customers and compete with outher retailers

2 Name the key factors in consumer behaviour.

Purchasing Power

- the amount of money a person has to spend determines their purchasing

behaviour; i.e., if a person has a need for a relaxing time and it’s a week away from pay day, then

maybe they will watch TV rather than go to the movies.

People’s purchasing power can be determined by:

• Their earning capacity

• Earning capacity on investments

• Earning capacity of spouse, partners, children

• Availability of store credit

• Availability of bank credit
Lifestyle Changes

both positive and negative have affected consumer behaviour.

Positive Changes

• A greater range of sporting options (hand gliding, bungy jumping, indoor/outdoor, all ages)

• More entertainment (restaurants, movies, theatre)

• Holiday destinations (cheaper fares, easier travel)

Negative Changes

• More family breakdowns

• Increased crime

3 What are the main developments in consumerism technology

.....

Computerised Registers and Bar Coding

has made the process of

paying for the product easier. It has reduced over and under-charging by

checkout operators. It also gives detailed receipts.
Electronic Fund Transfer at Point of Sale (EFT-POS)

has enabled

customers access to their bank accounts at all times (24 hrs), a secure

method of transferring money (compared to cash or cheques), by use of

a plastic EFT-POS card and a pin number.

This ease of transferring funds (from the customers account to your

company account) is reflected in peoples shopping habits. Because they

are handing over a piece of plastic rather than “cash”, the sale takes on a

different feel.
Promotional Video’s

are used to help demonstrate the

product in such a way as to show the customer the real

benefits of that product. Customers are always looking for

ways to make their life easier. The benefit of using

promotional videos is it can show the product in use,

thereby making it easier for the customer to decide

whether to purchase. This method of presentation is

thoroughly checked out before the video’s release, so that

all details are correct. This gives protection to the

customer that they are being given the right information on

which to make a buying decision.

Computer Shopping

can be accessed through the

Internet. A smart card is in the process of being developed for use with the Internet for the:

• Convenience of the customer

• Security of their transferred funds

Debit and Credit Cards

allow customers access to funds, without the worry of having to carry a

large amount of cash with them.

Unitec @ 2006 7

Knowledge of business responsibilities towards customers

Element 2 - Demonstrate Knowledge of an Automotive Business’s Responsibilities to the Customer

Some of the responsibilities you have to your customers are covered by legislation, where as others are

ethical considerations.

Responsibilities Relating to Goods and Services being Provided

Unitec @ 2006 6

Knowledge of business responsibilities towards customers

Unitec @ 2006 7

Knowledge of business responsibilities towards customers

Element 2 - Demonstrate Knowledge of an Automotive Business’s Responsibilities to the Customer

Some of the responsibilities you have to your customers are covered by legislation, where as others are

ethical considerations.

Responsibilities Relating to Goods and Services being Provided

Your legal responsibilities are clearly laid out in the booklet Consumer Guarantees Act 1993. We will briefly

look at these:

Repair

of any item that you have sold should be carried out within

a reasonable time (the nature of the product will determine what is

a reasonable time). If you cannot repair your customers product

within a reasonable time, they can get the repair done elsewhere

and then charge you.

Returns

- your customer has the right to return products and obtain

a refund in full when:

• The product is faulty and cannot be easily repaired.

• When the product does not do what the customer thought it

would do.

You are not able to put a time limit on returns, but any goods returned should be made within a reasonable

time. E.g., it would be reasonable to return a car seat cover that perished after only 2 months use. You may

also have to pay for the cost of the return of the goods, i.e., transport.

Replacements - the Consumer Guarantees Act clearly sets out your rights and the rights of the customer

when dealing with replacements. You must:

• Replace the faulty product if you are unable to repair it within a reasonable time.

• Replace the faulty product if it is not repairable.

• You have the right to choose to repair or replace the product, so long as the repair can be done in a

reasonable time.

Refunds

- your organisation may have a Customer Service Policy in place, to deal with refunds. Detailed

below are the legal requirements associated with refunds. You must:

• Give the customer a refund if you are not able to repair or replace the product within a reasonable

time.

• Your refund must be in

CASH. Unless your are returning your customer’s original cheque, cancelling a

credit card, EFT-POS or store credit entry, the refund must be in cash.

• Your customer

DOES NOT have to accept a credit note, other products or gift vouchers.

Credit

- many organisations now offer “store credit” as part of their customer service policies. When you offer

this as an alternative form of purchasing, you must inform your customer of:

• All the relevant details regarding the use of their credit facilities - Minimum payments

- Interest rates

- Any other charges

- Late payment penalties

- What happened when the customer defaults?

- Terms of “credit”

• Their rights to undisturbed possession

• Your rights to repossession if the payments are not made

Your customer should be made to feel comfortable, in that, should something go wrong, they have the support

of an organisation committed to providing quality customer service.

Your customer should retain all receipts as proof of purchase, however, they still have a case should they

lose their receipt and something goes wrong.

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Knowledge of business responsibilities towards customers

Ethical Considerations

Your customers have the right to expect a certain standard of behaviour from your

organisation. They should not expect to be lied to, sold inferior products under the disguise

of quality, sold product, which does not meet legal requirements, etc. When selling

something, think to yourself “how would I feel ...?” If you feel “ripped off” then your

customer will probably feel the same!

Inferior Quality

- your customers depend on you for the information they need to make a purchasing

decision. They have to believe what you say, therefore to misinform or mislead them in anyway, not only

contravenes the Fair Trading Act, but also shows you and your organisation to be unethical. Unethical

standards are:

• Claiming that a product is of better quality than it actually is.

• Knowingly sell products that are not going to perform or do what the customer wants.

• Knowingly sell products that will not stand-up to reasonable wear and tear, with regard to the price

paid.

• Provide replacement parts of a lesser quality.

Non-compliance with NZ Safety Standards

- you may find that you sell imported products, which must

comply with NZ Safety Standards. E.g. Seat belts, windscreens and tyres.

No Servicing Facilities/Spare Parts Availability

- you MUST tell your customer about your ability to offer

servicing and spare parts. You are breaking the law if you do not. Even if you can only offer spare parts and

servicing for a limited time. But that’s not all your customer may expect. They should be able to:

• Access service facilities with reasonable ease (i.e., not have to travel 30 km to the garage).

• That prices charged, reflect current market prices.

• That there could be provision to “contract” to another organisation in certain circumstances.

Responsibilities Relating to Information given on Goods and Services

Your customers will make purchasing decisions based on information supplied. This information can be

gained in a number of different ways. It could be through personal selling, pamphlets, radio, TV, flyers, packaging,

etc. That being the case, you have a duty to provide information in such a way as not to confuse or

mislead your customers. The Fair Trading Act clearly sets out your legal responsibilities in this area.

The following are some of the areas where special attention

now, could save a lot of misunderstandings and

lost business later.

Ticketing

- the price is usually a major factor in your customers decision to buy. That’s why the way you

display your price is so important. Your price tickets should:

• Show the total cash price.

• Identify any excluded cost, i.e., installation, registration.

• Not mislead in anyway, i.e., show a “six” pack, but price is for one.

• The price displayed is the same as the price in the computer

• That any claims are not misleading, i.e., “the cheapest in town ....”

when they are not.

• If GST is excluded - show “GST EXCLUSIVE” in print comparable to

• Identify any excluded cost, i.e., installation, registration.

• Not mislead in anyway, i.e., show a “six” pack, but price is for one.

• The price displayed is the same as the price in the computer

• That any claims are not misleading, i.e., “the cheapest in town ....”

when they are not.

• If

GST is excluded - show “GST EXCLUSIVE” in print comparable to

the price.

Unitec @ 2006 9

Knowledge of business responsibilities towards customers

Advertising

- there are very clear guidelines regarding advertising. The Fair Trading Act governs these

guidelines. For the purpose of this unit, we will briefly look at some of your responsibilities in this area.

Because advertising, whether through the radio, TV, letterbox, in-store, etc, goes quite a way to helping your

customer make a purchasing decision, we must get it right at the beginning. Your advertising should:

• Be tasteful, not offensive.

• Be for the product you can supply

• Not mislead as to the condition of goods.

• Not mislead through creative use of the product, i.e., colour, size, performance.

• Include informative “copy” that is factual.

Selling

- this is the point where all previous efforts on your part and the part of the organisation come

together. In making a sale you may feel that the pressure is on you to get the sale, no matter what! This is

where you may lose sight of your responsibilities. When selling you should:

• Sell with the customers needs in mind.

• Ensure the customer is in a relaxed and comfortable environment, in no way feeling pressured to buy.

• Not over or under sell just to make the sale.

• Ensure that any claims you make about the product, i.e., “the newest”, “the best”, “the cheapest” are

factual.

Servicing

- although the Consumer Guarantees Act sets out your responsibilities regarding spare parts,

associated with that, comes some ethical responsibilities regarding servicing. When you offer servicing, you

should ensure:

• That the service facilities promote a quality service, i.e., the customer does not have to return later

because the job was not done properly in the first place.

• The service is provided as efficiently as possible.

• Any quotes given prior to the work commencement reflect a reasonable price.

• All prices charged are reasonable.

• Replacement parts are of a high standard.

• Offer “replacements” while the product is being serviced.

• That the collection/pickup time is accurate, i.e., the customer is told that the product will be ready to

collect at 4 pm today, only to find they have to wait 2 days.

Condition of Warranties

- the type of warranties offered also play an important part in the

buying process. Therefore manufacturers, as well as retailers, need to ensure that your

customers understand all conditions of any warranty. You should:

• Understand the terms and conditions of all of the warranties you offer.

• Ensure these terms and conditions are taken into consideration when selling.

• Ensure that special conditions are pointed out prior to purchase.

• Ensure that your customer understands any special terms and conditions.

• Ensure that the actual warranties do not limit your customers rights, i.e., “all faults must be reported

within 7 days of purchase”.

Current Consumer Legislation is Identified

Perhaps the strongest force behind consumerism is the consumer legislation, which governs so many aspects

of the buyer/seller relationship. The current legislation has gone a long way to improving both the rights

of the consumer, as well as the rights of the seller.

For the purpose of this unit, we will briefly look at the most important aspects of consumer legislation.

These include:

• The Fair Trading Act

• The Lay-by Sales Act

• The Hire Purchase Act

• The Consumer Guarantees Act

Unitec @ 2006 10

Knowledge of business responsibilities towards customers

Fair Trading Act 1987

- This Act enforces laws relating to misleading and deceptive conduct, unfair trade

practices and consumer information.

It’s designed to ensure that when you make claims about your products, you understand that your audience

will include some people who are more easily mislead than others.

The Act is there to protect everyone, including those who may be gullible or poorly educated. Therefore, you

must be careful when preparing your advertising.

The Fair Trading Act:

• Prohibits people in trade from engaging in misleading or deceptive conduct, such as:

- Advertising goods when they have no intention of supplying them.

- Comparing prices when those comparisons are not on similar products.

- Misleading customers as to the condition of the goods.

- Using the fine print of document to modify a “big print” headline. - Misleading the customers as to

the origin of the goods.

- Using pictures/or images, which do not accurately reflect the product.

- Using exaggerated statements about a product, i.e., being “the fastest” or “the best” when the

product is clearly inferior.

• Prohibits certain types of false or misleading representations, such as:

- Comparing prices in that the previous price is a realistic or actual marked price, i.e., “was/or

recommended price $300, now $99”. $300 must either be realistic, or have been the actual price

charged.

- Ensuring that any goods advertised as “free” are actually free and that the cost of the free goods

has not been included in the cash price.

- All costs which affect the true cost to the buyer are disclosed, i.e., packaging, legal fees,

administrations charges, delivery, essential parts, etc.

- Misleading price ranges “up to $100 off’ when only a few items actually qualify, the majority having

only $20 off.

- Using the word “sale”. This word represents to most shoppers a special buying opportunity, which

if missed, cannot reasonably be expected to appear again in the short term. To avoid breaking the

Act, goods offered in the sale must be priced below normal levels.

- Advertising “specials” when they are in fact not special, or advertising “specials” when only a very

few people could take advantage of them, i.e., cheap credit from a bank for those customers who

earn over $100,000 pa.

• Prohibits certain unfair practices

- Making claims about a customers “need” for a product. “You need to carry ABC product”, when in

fact you don’t.

- Using harassment or coercion to make customers feel they have to buy, just to be rid of you.

- Using packaging to lead customers to think they are getting more than they actually do

- Offering gifts and prizes, which you either do not intend to supply, or the customer has to “pay” to

use the free gift. E.g., “free cell phone” but it may cost $400 to hook up.

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Knowledge of business responsibilities towards customers

The Lay-by Sales Act 1971

- Lay-by selling can be convenient for both your customer and you. It allows

your customers to take advantage of securing a product while “paying it off’. We all know how difficult it can

be to save at times, even when we want a particular product. Seems as though something else will always

come along and interrupt our saving!

There are clear guidelines regarding lay-by, which are detailed below: Terms and Conditions of Lay-by Sales:

• The Act does not cover motor vehicles.

• The Act does not cover any item priced over $1000.

• The customer does have the right to cancel at any time during the term of the lay-by.

A lay-by sale is a contract between you (the seller) and your customer with the following conditions:

• The seller holds the goods until the total price is paid or

• The seller holds the goods until a specified proportion of the price is paid and

• The price is paid in instalments or is to be paid at the end of a set period and

• The price of the goods is $1,000 or less

Cash Price

- The customer will pay only the cash price of the goods. However, other fees such

as storage may be charged, but these charges must be clearly laid out and understood by the

customer before the contract is finalised.

Deposit

- The customer will normally be asked to pay a deposit, which is normally (but not always) 20-25%

of the total price of goods. The retailer then agrees to hold the goods until payment is complete. The retailer

decides the amount of the deposit. It is not specified in the law.

Term

- The Act does not stipulate the term for a lay-by transaction. This is negotiated at the time of the

contract. In practice, the retailer sets the term (usually three months) and the purchaser agrees.

You must ensure the customer understands the term and the consequences of not completing the contract

within that term.

Payments

- The amount and frequency of payments can be negotiated between the customer and the

retailer. However, from the point of effective management of Lay-bys, retailers will have set policies regarding

this.

You must also ensure the customer clearly understands the payment terms, weekly, monthly, and the

consequences of failing to make the payments.

Cancellations

- The purchaser can cancel verbally or in writing at anytime, and without explanation. The

retailer can only cancel if the customer fails to keep up payments.

If you want to cancel the contract because the customer has failed to keep the payments up, you

MUST tell

the customer that you are cancelling (preferably in writing).

Statement

- The customer is entitled to request and receive a written statement every 30 days. The law says

that a customer should request the statement in writing and pay 25 cents for it and that you must provide the

statement within seven days. Normally, retailers will provide a statement for a customer who calls in to the

shop.

The statement must show:

• The price of the goods.

• What the customer has paid so far.

• The current balance owing.

• The current retail value of the goods and any subsequent loss in value that has occurred since the

goods were put on lay-by.

• The selling costs.

• The amount of the refund in the lay-by is cancelled.

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Knowledge of business responsibilities towards customers

You will need to keep a record of payments made by the customer to be able to supply a statement when

requested.

Legal Ownership

- With a lay-by transaction, the retailer has both property and possession until the goods

are paid for in full.

Refund

- For any item priced over $5, the purchaser may be entitled to a refund, but not necessarily all the

money paid. The retailer is entitled to deduct any selling costs and any loss in value of the goods, for goods

that have been on lay-by for more than one month.

Selling Costs

- Selling costs are the actual costs associated with the lay-by sale, such as the cost of storing

the goods and the staff time taken in preparing receipts. These costs may be calculated in several different

ways, but the simplest method is to assign an amount to each of these items. For example, the retailer

might estimate that the sale took five minutes and that the customer making two payments took another 10

minutes. The retailer can then calculate the cost of 15 minutes of the shop assistant’s time and add to this any

storage costs. In a court case in 1985, the Chief Justice ruled that if a retailer’s estimate of selling costs

is challenged, he or she must be able to show that the estimate is a reasonable one that takes into account

only the actual selling costs associated with that particular sale.

Loss in Value

- Loss in value is the loss in the retail value of the goods. Goods may lose value because they

are no longer in season or because a new model has been produced.

No Loss in Value

A customer lay-bys a car stereo system costing $200 with a deposit of $50. They have three months to pay

at $25 per fortnight. They have made three payments totalling $75 when they decide to cancel the deal. The

stereo system is still the current model so there is no loss in value and the retailer deducts only selling costs

from their refund.

This is the calculation: (Deposit + Payments) - (Selling Costs) = Refund

($50 + $75 = $125) - ($7) = $118

Loss in Value

If, at the time of cancellation the retailer is selling that particular model of stereo at a marked down price of

$50.00 (a loss in value), then the refund that the customer is entitled to, will be less the selling cost plus the

loss of value.

This is the calculation: ($50 + $75 = $125) - ($5 + $50) = $70 refund

Stores would rarely, if ever, charge a customer for any loss in value even though the Act states that they can.

A store may elect to carry the loss rather than loose a valuable customer. The principles of good “customer

service” prevail.

Other Aspects

When only a deposit is paid

• If you work out that the selling cost and loss in value are greater than the deposit, you can keep the

deposit.

You cannot ask for more!

Lay-by cancelled within one month
The Lay-by Sales Act 1971

- Lay-by selling can be convenient for both your customer and you. It allows

your customers to take advantage of securing a product while “paying it off’. We all know how difficult it can

be to save at times, even when we want a particular product. Seems as though something else will always

come along and interrupt our saving!

There are clear guidelines regarding lay-by, which are detailed below: Terms and Conditions of Lay-by Sales:

• The Act does not cover motor vehicles.

• The Act does not cover any item priced over $1000.

• The customer does have the right to cancel at any time during the term of the lay-by.

A lay-by sale is a contract between you (the seller) and your customer with the following conditions:

• The seller holds the goods until the total price is paid or

• The seller holds the goods until a specified proportion of the price is paid and

• The price is paid in instalments or is to be paid at the end of a set period and

• The price of the goods is $1,000 or less

Cash Price

- The customer will pay only the cash price of the goods. However, other fees such

as storage may be charged, but these charges must be clearly laid out and understood by the

customer before the contract is finalised.

Deposit

- The customer will normally be asked to pay a deposit, which is normally (but not always) 20-25%

of the total price of goods. The retailer then agrees to hold the goods until payment is complete. The retailer

decides the amount of the deposit. It is not specified in the law.

Term

- The Act does not stipulate the term for a lay-by transaction. This is negotiated at the time of the

contract. In practice, the retailer sets the term (usually three months) and the purchaser agrees.

You must ensure the customer understands the term and the consequences of not completing the contract

within that term.

Payments

- The amount and frequency of payments can be negotiated between the customer and the

retailer. However, from the point of effective management of Lay-bys, retailers will have set policies regarding

this.

You must also ensure the customer clearly understands the payment terms, weekly, monthly, and the

consequences of failing to make the payments.

Cancellations

- The purchaser can cancel verbally or in writing at anytime, and without explanation. The

retailer can only cancel if the customer fails to keep up payments.

If you want to cancel the contract because the customer has failed to keep the payments up, you

MUST tell

the customer that you are cancelling (preferably in writing).

Statement

- The customer is entitled to request and receive a written statement every 30 days. The law says

that a customer should request the statement in writing and pay 25 cents for it and that you must provide the

statement within seven days. Normally, retailers will provide a statement for a customer who calls in to the

shop.

The statement must show:

• The price of the goods.

• What the customer has paid so far.

• The current balance owing.

• The current retail value of the goods and any subsequent loss in value that has occurred since the

goods were put on lay-by.

• The selling costs.

• The amount of the refund in the lay-by is cancelled.

Unitec @ 2006 12

Knowledge of business responsibilities towards customers

You will need to keep a record of payments made by the customer to be able to supply a statement when

requested.

Legal Ownership

- With a lay-by transaction, the retailer has both property and possession until the goods

are paid for in full.

Refund

- For any item priced over $5, the purchaser may be entitled to a refund, but not necessarily all the

money paid. The retailer is entitled to deduct any selling costs and any loss in value of the goods, for goods

that have been on lay-by for more than one month.

Selling Costs

- Selling costs are the actual costs associated with the lay-by sale, such as the cost of storing

the goods and the staff time taken in preparing receipts. These costs may be calculated in several different

ways, but the simplest method is to assign an amount to each of these items. For example, the retailer

might estimate that the sale took five minutes and that the customer making two payments took another 10

minutes. The retailer can then calculate the cost of 15 minutes of the shop assistant’s time and add to this any

storage costs. In a court case in 1985, the Chief Justice ruled that if a retailer’s estimate of selling costs

is challenged, he or she must be able to show that the estimate is a reasonable one that takes into account

only the actual selling costs associated with that particular sale.

Loss in Value

- Loss in value is the loss in the retail value of the goods. Goods may lose value because they

are no longer in season or because a new model has been produced.

No Loss in Value

A customer lay-bys a car stereo system costing $200 with a deposit of $50. They have three months to pay

at $25 per fortnight. They have made three payments totalling $75 when they decide to cancel the deal. The

stereo system is still the current model so there is no loss in value and the retailer deducts only selling costs

from their refund.

This is the calculation: (Deposit + Payments) - (Selling Costs) = Refund

($50 + $75 = $125) - ($7) = $118

Loss in Value

If, at the time of cancellation the retailer is selling that particular model of stereo at a marked down price of

$50.00 (a loss in value), then the refund that the customer is entitled to, will be less the selling cost plus the

loss of value.

This is the calculation: ($50 + $75 = $125) - ($5 + $50) = $70 refund

Stores would rarely, if ever, charge a customer for any loss in value even though the Act states that they can.

A store may elect to carry the loss rather than loose a valuable customer. The principles of good “customer

service” prevail.

Other Aspects

When only a deposit is paid

• If you work out that the selling cost and loss in value are greater than the deposit, you can keep the

deposit.

You cannot ask for more!

Lay-by cancelled within one month

• It’s assumed that there is no loss in value; therefore you should only deduct selling costs.

Unitec @ 2006 13

Knowledge of business responsibilities towards customers

The Hire Purchase Act 1971

The Act is a complex one, intended to protect both parties. If you fmd that the organisation you work for

offers hire purchase, they will give you a more in-depth understanding of what the Act requires you to do.

For the purpose of this unit, we will look at the main points only.

When a customer buys goods on hire purchase, both you and your customer must sign a written agreement.

This agreement tells your customer:

• How repayments are to be made

• Description of goods

• All costs associated with the hire purchase agreement

The hire purchase agreement

MUST:

• Tell your customer about payments - How many payments

- How often to pay

- When to pay

- Options or where to pay

• Show the amount financed (the amount of credit/money your customer is

borrowing)

By

adding the cash price of the goods and the charges - Freight

- Installation

- Statutory fees

- Repayment insurance

- Other charges (accessories)

By

deducting

- Your customers deposit

- The value of any trade-in

• Show the total cost of credit by adding

- Interest

- Booking fees

- Other insurance

- Other charges (fee to check credit rating)

• Show the additional cost of the transaction over the cash transaction

• Show the finance rate (the finance rate is not to be confused with the interest rate; it is the true cost of

using credit; this rate is calculated on a chart/table and displayed with your hire purchase file, for easy

reference).

You MUST explain:

• Your customers right to an early rebate in interest if repaid early.

• Your customers right to cancel the contract.

• Your customers right to transfer their rights and obligations to another person.

• What happens when the payment stops/defaults.

• How to return the goods if the customer cannot pay (this is normally included in the fine print on the

back of the agreement).

• Your customers right to undisturbed possession.

Unitec @ 2006

14

Knowledge of business responsibilities towards customers

Consumer Protection Agencies

There are a number of agencies, government departments and advisory bodies which are set up to assist

customer’s as well as provider’s in dealing with issues surrounding the buying and selling of goods.

In the next part we will look at the major ones and how each of them work.

The Disputes Tribunal

The Disputes Tribunal is a place where people bring disputes before a trained referee and try to reach

agreement.

It is

NOT A COURT, so there are no lawyers or judges and no legal jargon is used.

This makes it a lot easier to understand proceedings, as well as being less

expensive and less time consuming (you may only have to wait 5-8 weeks for a

hearing).

If the people concerned cannot reach agreement, the referee will make a decision

that is legally binding and the people concerned must abide by it.

Because of the way the Tribunal is set up, it can only deal with money claims of a

limited amount.

The following are the type of disputes, which

can be taken to the Tribunal:

• Work not done properly

• Faulty goods

• Goods bought which are not fit for the purpose you bought them for

• Goods bought which were not the one asked for

• Goods bought which don’t match their description

• The price changed for work done

• Disputes about a contract you signed without realising what you agreed to

• A contract which is too tough

• Damage to property

• The recovery of property

• Misleading advertising or misleading statements made by someone selling goods or services

• Hire purchase in relation to repossession or harsh contracts

• Boundaries

The Disputes Tribunal

cannot hear disputes about:

• Criminal matters

• Collecting bad debts

• Parenting or care of children

• Wills or estates

• Tenancy matters

• Trade secrets or intellectual property (ideas)

• Employment matters

• Gifts

• Ownership of land

• Value of goodwill when a business is sold

• Issues over six years old

Unitec @ 2006 15

Knowledge of business responsibilities towards customers

What you can Claim

• Money up to $3,000 or with agreement between both parties $5,000

• That you don’t have to pay money

• The return of property

• That work be done

• Consequential loss or the indirect loss you suffered as a result of someone else’s actions

How the Disputes Tribunal Operates

The two parties are given an opportunity to discuss the issues disputed and reach an agreement.

If they reach agreement, the referee will check what is fair to both parties and make the agreement the

tribunal’s decision.

If they cannot reach agreement, the referee thinks about what is fair for both parties, considers the evidence

and makes a decision, which is legally binding, on all parties.

In each case the referee must consider the:

• Laws relevant to the case

• Evidence which has been presented

• Merits and justice of the case

If the party is unhappy about the Tribunal’s decision that person can appeal to the District Court within 28

days. A District Court judge must review the case and decide if the referee conducted the hearing in a way

that was unfair to one party.

The Ministry of Consumer Affairs

The Ministry works toward making the buying and selling of goods and services as fair and hassle-free as

possible.

They endeavour, through publications, telephone contact etc, to keep consumers informed about:

• Their legal rights

• How to get help with a problem

• How to fix the problem

Consumer Advice Service

This service is offered free and can give information and help when consumers have problems with:

• Goods they have bought, i.e.,

- Cars or car parts

- Household goods

- Clothes

• Services they have paid for, i.e.,

- Trade services - plumbing/servicing

- Financial services - hire purchase/loans

- Professional services - lawyers, dentists

- Other services - travel booking, electricity

• Buying goods by, i.e.,

- Credit/hire purchase

- Lay-by

- Door-to-door

- Mail order

Unitec @ 2006 16

Knowledge of business responsibilities towards customers

The Ministry is active in pursuing legitimate business practices by:

• Investigating reports of unsafe consumer products

• Checking trades weights and measures are accurate

• Investigating complaints from the public

Commerce Commission

The Commerce Commission’s objective is to bring about compliance with two Acts - The Commerce Act

1986 and the Fair Trading Act 1986.

These two Acts promote competition and fair-trading in New Zealand markets.

As you will have discovered earlier in this unit, the Fair Trading Act promotes fair trading by setting standards

which:

• Prohibit misleading and deceptive conduct

• Providing for the creation of product safety and consumer information standards

• Allow consumers to make purchasing choices based on information which is not misleading

• Protect consumers from unsafe products

Commerce Commission Act

The Act promotes competition by prohibiting:

• Certain practices which restrict competition, like “price fixing”

• Business acquisition (mergers) which lead to a dominant position in the market

How does the Commission do this?

Investigation

- by investigating complaints from consumers or other traders

Enforcement

- by enforcing the Act and taking court action when the Act is breached. Court action will result

based on a number of factors:

• How misleading or deceptive the practice is seen to be

• How extensive the loss to consumers or damage to competition is

• The past behaviour of the person or trader concerned

If the Court finds there has been a breach of either of these Acts they may:

• Impose monetary penalties

• Issues injunctions

• Order a variety of other remedies

• Award damages to any person affected by a breach of the Acts

• Order the company trader to undertake corrective advertising

There are also other organisations that make it their business to see that consumers get a fair deal.

Examples of these are:

Consumers Institute

Citizens Advice Bureau

Trade Associations

Unitec @ 2006 17

Knowledge of business responsibilities towards customers

Consumers Institute

The principal aim of the Institute, as stated in its rules, is “to

collect and disseminate information of benefits to consumers;

and in doing so to advance the interests of its subscribing

members and those of consumers generally”. This is done

through research, the publications of magazines, and public

advocacy on behalf of all New Zealand consumers.

Citizens Advice Bureau

The Citizens Advice Bureau provides a service to ensure that individuals do

not suffer through ignorance of their rights and responsibilities, or of the

services available, or through an inability to express their needs effectively.

They offer free consumer advice and act as consumer advisers for the

Ministry of Consumer Affairs.

Trade Associations

There are many Associations that have been formed to represent individual

trades and areas of the Automotive Industry such as the Motor Trades

Association (MTA), etc. Let’s look at the Motor Vehicle Dealer’s Institute (MVDI)

as an example.

The MVDI is set up under the Motor Vehicle Dealer’s Act 1975. It has a

statutory role to administer the workings of the Act. It also has the power to

discipline its members for breaches of the Act and may even cancel a dealer’s

licence to operate.

Unitec @ 2006 18

Knowledge of business responsibilities towards customers

Theory self test

2

1 What are your responsibilities under the Consumers Guarantees Act when a customer returns a recently

purchased item for repair?

Repair

of any item that you have sold should be carried out within

a reasonable time (the nature of the product will determine what is

a reasonable time). If you cannot repair your customers product

within a reasonable time, they can get the repair done elsewhere

and then charge you.
Returns

- your customer has the right to return products and obtain

a refund in full when:

• The product is faulty and cannot be easily repaired.

• When the product does not do what the customer thought it

would do.

You are not able to put a time limit on returns, but any goods returned should be made within a reasonable

time. E.g., it would be reasonable to return a car seat cover that perished after only 2 months use. You may

also have to pay for the cost of the return of the goods, i.e., transport.

Replacements - the Consumer Guarantees Act clearly sets out your rights and the rights of the customer

when dealing with replacements. You must:

• Replace the faulty product if you are unable to repair it within a reasonable time.

• Replace the faulty product if it is not repairable.

• You have the right to choose to repair or replace the product, so long as the repair can be done in a

reasonable time.

2 Describe FOUR unethical selling acts that contravene the Fair Trading Act.

...........

Claiming that a product is of better quality than it actually is.

• Knowingly sell products that are not going to perform or do what the customer wants.

• Knowingly sell products that will not stand-up to reasonable wear and tear, with regard to the price

paid.

• Provide replacement parts of a lesser quality.

..

3 When describing a warranty to a customer, what conditions must you ensure that the customer

understands?

..
Condition of Warranties

- the type of warranties offered also play an important part in the

buying process. Therefore manufacturers, as well as retailers, need to ensure that your

customers understand all conditions of any warranty. You should:

• Understand the terms and conditions of all of the warranties you offer.

• Ensure these terms and conditions are taken into consideration when selling.

• Ensure that special conditions are pointed out prior to purchase.

• Ensure that your customer understands any special terms and conditions.

• Ensure that the actual warranties do not limit your customers rights, i.e., “all faults must be reported

within 7 days of purchase”.

Unitec @ 2006 19

Knowledge of business responsibilities towards customers

4 What is the purpose of the Fair Trading Act?

.........
Condition of Warranties

- the type of warranties offered also play an important part in the

buying process. Therefore manufacturers, as well as retailers, need to ensure that your

customers understand all conditions of any warranty. You should:

• Understand the terms and conditions of all of the warranties you offer.

• Ensure these terms and conditions are taken into consideration when selling.

• Ensure that special conditions are pointed out prior to purchase.

• Ensure that your customer understands any special terms and conditions.

• Ensure that the actual warranties do not limit your customers rights, i.e., “all faults must be reported

within 7 days of purchase”.
The Fair Trading Act:

• Prohibits people in trade from engaging in misleading or deceptive conduct, such as:

- Advertising goods when they have no intention of supplying them.

- Comparing prices when those comparisons are not on similar products.

- Misleading customers as to the condition of the goods.

- Using the fine print of document to modify a “big print” headline. - Misleading the customers as to

the origin of the goods.

- Using pictures/or images, which do not accurately reflect the product.

- Using exaggerated statements about a product, i.e., being “the fastest” or “the best” when the

product is clearly inferior.

....................................................................................................................................................

.............................................................................................................................................................

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.............................................................................................................................................................

.............................................................................................................................................................

.............................................................................................................................................................

5 A lay-by sale is a contract between the seller and the customer, with what conditions?

.....
The Lay-by Sales Act 1971

- Lay-by selling can be convenient for both your customer and you. It allows

your customers to take advantage of securing a product while “paying it off’. We all know how difficult it can

be to save at times, even when we want a particular product. Seems as though something else will always

come along and interrupt our saving!

There are clear guidelines regarding lay-by, which are detailed below: Terms and Conditions of Lay-by Sales:

• The Act does not cover motor vehicles.

• The Act does not cover any item priced over $1000.

• The customer does have the right to cancel at any time during the term of the lay-by.

A lay-by sale is a contract between you (the seller) and your customer with the following conditions:

• The seller holds the goods until the total price is paid or

• The seller holds the goods until a specified proportion of the price is paid and

• The price is paid in instalments or is to be paid at the end of a set period and

• The price of the goods is $1,000 or less
Cash Price

- The customer will pay only the cash price of the goods. However, other fees such

as storage may be charged, but these charges must be clearly laid out and understood by the

customer before the contract is finalised.

Deposit

- The customer will normally be asked to pay a deposit, which is normally (but not always) 20-25%

of the total price of goods. The retailer then agrees to hold the goods until payment is complete. The retailer

decides the amount of the deposit. It is not specified in the law.

Term

- The Act does not stipulate the term for a lay-by transaction. This is negotiated at the time of the

contract. In practice, the retailer sets the term (usually three months) and the purchaser agrees.

You must ensure the customer understands the term and the consequences of not completing the contract

within that term.

Payments

- The amount and frequency of payments can be negotiated between the customer and the

retailer. However, from the point of effective management of Lay-bys, retailers will have set policies regarding

this.

6 Name THREE consumer protection agencies.

i.....
The Disputes Tribunal
The Ministry of Consumer Affairs
Consumer Advice Service

7 What claims can be made to the Disputes Tribunal?

....

The following are the type of disputes, which

can be taken to the Tribunal:

• Work not done properly

• Faulty goods

• Goods bought which are not fit for the purpose you bought them for

• Goods bought which were not the one asked for

• Goods bought which don’t match their description

• The price changed for work done

• Disputes about a contract you signed without realising what you agreed to

• A contract which is too tough

• Damage to property

• The recovery of property

• Misleading advertising or misleading statements made by someone selling goods or services

• Hire purchase in relation to repossession or harsh contracts

• Boundaries

Unitec @ 2006 20

Knowledge of business responsibilities towards customers

With your employer’s permission answer the following questions:

8a Name a product sold by your company and describe the manufacturers guarantee for that product.

..my compony was sealing car parts wichis alternator and starter motor becose of a lots of warranty he sold busness .

8b Does your company have its own guarantee policy? YES/

8c What is your company’s policy regarding guarantees?

All units carry a12 month or 20000KM warranty which ever occurs first.

Q9 What is your company’s policy regarding the “ethical” treatment of customers?

Any potential clim must be discussed with Auto Electrical Spares first by telephon befor any further action can be taken.



Parts list	Cost

Master cylinder	55.6
Wheel cylinder	11.34
Brake shoes	15.5
Brake pads	18.45
Wheel bearing – inner	8.25
Wheel bearing – outer	6.75
Hub seal	3.25
Rear trailing arm bush	11.25
Front lower ball joint	45.8
Front upper ball joint	52.1
Shock absorber – rear	85.5
Strut- front left	102.89
Strut – front right	102.89
Strut – rear left	99.11
Strut – rear right	99.11
Brake fluid500cc bottle	5.25
Anti-sieze grease	4.34
Anti-squeal grease	3.89
Tyre – 14 in –	123.5
Tyre- 15 in	135.79
Tyre- 17 in	148.25
Anti-freeze	5.89
Engine oil / litre	12.34
ATF fluid / litre	23.46
Brake caliper kit	19.3
Brake caliper piston	11.2
Brake Caliper	280.8

Ayob4847

Wednesday, 28 November 2012

Treaty of Waitangi and Sustainability

Treaty of Waitangi and Sustainability Worksheet

Article the first [Article 1]

Article the second [Article 2]

Article the third [Article 3]

Tuesday, 27 November 2012

4849 job sheet

4849