For the first time, they began to talk seriously about competition only after the fall of the Iron Curtain, which was associated with a significant decrease in the competitiveness of enterprises. Since then, research in this field has been actively conducted, during which many factors of competitiveness of economic entities have been revealed.
The concept and essence of competition
Competition is considered to be the center of gravity of the entire system of market activity, as well as a form of interaction of producers with regard to the formation of the price aspect, production volumes, as well as the overall market situation. Undoubtedly, it is competition that speeds up the process of product promotion and allows to provide the market with products to the full.
The considered process consists in rivalry between individual subjects of the market structure for the best in terms of the benefits of the conditions of both production and sales of products. It is important to note that in a market economy such collisions are inevitable. This provision can be fully justified by the following factors:
- A large number of absolutely equal economic entities in the market.
- Their isolation in terms of their activities.
- The dependence of these subjects on market conditions.
- Confrontation between subjects for meeting the demand of customers.
Types of competition on the nature of development
Today, price and non-price competition are fundamentally different forms of the category under consideration. So, when using the first option, it is appropriate to change prices for products in order to ensure maximum demand. By reflecting the presented process on the demand curve, one can observe that the sales firms move along it, then reducing, then increasing the price of their goods. But the winner is the entrepreneur who has all the chances of the costs of producing the product.
The intensity of price competition is primarily influenced by the interest rate, the degree of economic risk, product differentiation, and the limitation of the strength of sellers in the market.
Non-price competition implies that the role of price plays a secondary role, while the fundamentally different factors become the main component of the “battle”. Among them are the unique properties of products, their reliability in technical terms, as well as high quality.
Why today price fights are unprofitable?
It is important to note that the current conditions of the market economy have led to the unprofitability of price competition, especially for small companies, because, compared with Western giants, they have little financial resources, so they are not capable of selling their goods at low prices for a long period of time. Thus, the price war can turn into a real struggle for financial exhaustion, which severely hits the most vulnerable places of the industry, often without this weakened by the crisis and endless non-payment.
In addition, the demands of modern consumers compared to previous periods have become much higher, which resulted in a wide variation of products on the market, their high quality and overall attractiveness. And this is non-price competition. It is important to note that it costs businesses much cheaper than pricing. Here the main thing is the interest of the company and the search for interesting ideas.
Forms of non-price competition
The main forms of non-price competition include the following points:
Non-price competition methods
Non-price are the following sets of methods characteristic of the corresponding competitive actions of economic entities:
- Maintaining one’s own status in formed sets of values, as well as entering new chains of similar values. In this case, companies, as it were, continue to compete around the product; nevertheless, it’s not the consumers who enter into relations with them, but the counterparties, including partners in the conduct of the common business.
Non-price competition in practice
As it turned out, price and non-price competition are fundamentally different, which determine the nature of the behavior of a company in order to increase the demand for its product. In previous chapters it is noted that in modern conditions non-price competition has overshadowed the price category. Examples of such a situation are quite numerous. So, any research involves defining goals for a start, then building a plan, analyzing data, and, of course, summarizing.
For example, the central object of research is men's clothing. It is the responsibility of the marketer to study the relevant category of the population with respect to basic preferences in terms of wardrobe and other circumstances affecting the purchase (income, opinion of close relatives), after which tasks are formed that, as a result, the specialist finds out the main preferences of men. Non-price competition is not an easy task, but the company that will be able to carry out all the above operations competently and efficiently will certainly benefit.