5 Simple Ways You Can Create Competition that will Benefit Consumers

April 27, 2007

Low price competitors lost me over $100 this week! eBay was running a 24 – hour auction promotion for sellers and as I priced and listed items for sale late into the evening, I was reminded of why competition is great for consumers.

Low Price Strategy
My competitive strategy on eBay is pretty simple, sell for the lowest price. On several occasions I ran across items that I had to sell for $50 – $90 off retail to come in lower than some person in California or Florida. I’ll tell you, as a seller I moan every time I see someone out there unloading stuff super cheap because it means lost income for me. However, as a consumer, market forces like this help me find great deals.

Is There Enough Competition?
It seems there has been an uptick in merger and acquisitions lately. The more mergers you hear about the less competition there is for the product or service provider. I started wondering how we consumers can increase the amount of competition out there; here is what I came up with.

How To Create Competition to Benefit Consumers

1) Favor Small Businesses
This one is hard because sometimes the big retailers can offer it for a lower price but if the price is pretty close, go with the small business. Small businesses are often looking to make a big sale so you could offer to buy a lot at once if they’ll lower the price. A small business owner will often prioritize winning you as a long term customer over making a few extra bucks on a sale.

2) Mention the Competition
The example I like to use is pitting cable companies like Comcast against satellite TV companies like DirectTV. I mention the competition every time I call in to save money on cable TV and it works every time.

3) Tell Your Friends
If you find a product or service you really like tell your friends about it. The more people that use it, the more competitors will take note. This will make life better for you as competitors try and differentiate through innovation, customer service, or price. Many companies offer a referral program so you can even make some money by telling others about the product or service.

4) Use Multiple Services
Google Checkout and Paypal recently offered customers free money in return for using their service. Obviously their goal is to win you over as an exclusive customer; however, if you keep using both services they’ll probably continue innovating to win you over and may give out more free money.

5) Try New Products or Services
A key point in the lifecycle of a product is getting from the market introduction phase to the growth phase. Trying new products and services as they come out will help new companies move their products from one phase to the next. If it achieves the growth stage then guess what, competitors will start to worry. If you really like the product you can use the “Tell Your Friends” step to help spread adoption and move into the growth phase.

Extra Credit: Start Your Own Business
Obviously this one is a lot more work but if you see a need that’s not being met or something you think you could do a better job of then throw your hat in the ring. Not only do you stand to potentially make some money out of it but you’re providing more options for us consumers.

What are some other ways we consumers can leverage or increase competition among retailers or service providers?

Ben

Will this article help you save or earn more money? Get others like it simply by entering your email address below. Your email is used only for delivering daily money tips and you can opt out of delivery at any time. Click here to see all your free subscription options.

  

Ben

Ben Edwards, the founder of Money Smart Life, saved up enough to buy a Nintendo back when he was 12 years old. When he used the money to buy shares of Wal-Mart stock instead, he knew he wasn’t like the other kids… His addiction to personal finance has paid off for his family and now he’s helping you to afford the life that you want. Check him out on the web at Google Plus, Twitter and Facebook.


All posts by

Comments

One Response to 5 Simple Ways You Can Create Competition that will Benefit Consumers

Trackbacks/Pingbacks

  • The Sunday Review #18: Parents Of Obese Children Edition