[A] Refuse Gimmicks
[B] Be Wary of Price Levels
[C] Say No to Useless Things
[D] Never Pay List Price
[E] Stand up to Temptations
[F] Switch — or Threaten to
[G] Don’t Buy on Impulse
In recent years the basic market principles of competition and choice have expanded into new aspects of American life. Consumers now face a bewildering array of options for air travel, phone service, medical care, even postal service. Car buyers can shop on the Internet for the best price at any dealership in their area. In some parts of the country, homeowners can purchase electricity from a menu of companies. All this choice translates into unprecedented consumer power.
One of the persistent myths of capitalist culture is that business people love competition. They don’t. They spend their waking hours plotting ways to avoid it, and keep prices high. These days they use information technologies that give them intricate data on individual shoppers, and then present multiple prices to get each consumer to cough up the maximum he is willing to pay. The airlines have mastered this game, offering many levels of fares.
So how can you make the most of your new power as a consumer? Here are rules to help you find your way.
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In the New Economy, competition is so strong that fewer stores and services are immune to price pressure, so sharpen your bargaining skills. Ask retailers to match prices you’ve seen on the Internet. Ask at the checkout counter if there are any coupons or discounts you can use. Ask hotel clerks if there are better rates available. You’ll be surprised how often the answer is yes.
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As competition heats up and pushes prices down, businesses scramble to boost their profits by heaping on extras: rust proofing your car, service contracts on your appliance, prepaid gasoline for your rental car. These stunts are devised to make you pay more at the last minute and probably aren’t a good deal.
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The information highway is a two-way street. As a consumer, you can get more data. But while you are roaming the Web, businesses are studying your habits and vulnerabilities.
Have a weakness for chocolates? Don’t be surprised if Amazon. Com offers to sell you a box while you’re browsing for books. They’re using a wrinkle on the last-minute marketing pitch perfected by McDonald’s: “Would you like fries with that?” The ploy works remarkably well.
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Versioning is a tactic used by businesses to separate status-conscious consumers from the bargain-hungry ones — since the former mean bigger profit margins. “Deluxe” and “platinum” are code words used to entice status seekers to open their wallets.
Add a third price level and the purses of even bargain-hungry shoppers can be pried open. Research shows that many consumers who might pick the lower-priced option when given just two choices will choose the medium-priced alternative if given three. “Consumers try to avoid extreme options,” write Carl Shapiro and Hal R. Varian in their book Information Rules.
Consumers in .the New Economy face more demands on their time and attention than ever before, so they’re inclined to make the most familiar choice. Consider this: it had been a decade and a half since the breakup of AT＆T, yet it is still by far the largest long-distance provider — even while other phone companies offer $ 50 worth of free service for switching. More than ever, it pays to change services and brands.
If you don’t want the hassles of switching remember that businesses are eager to hang on to consumers. The next time you get a tempting offer from a credit-card issuer or a phone company, call your current provider and ask them to match the deal. You’ll be pleased to find how often they’ll agree.