For the first time, serious talk about competition began only after the fall of the Iron Curtain, which was associated with a significant decline in the competitiveness of enterprises. Since that time, studies of this area have been actively conducted, during which many factors of competitiveness of economic entities were revealed.
The concept and essence of competition
Competition is considered to be the center of gravity of the whole system of market activity, as well as the form of interaction between producers in relation to the formation of the price aspect, the volume of production, as well as the overall market situation. Undoubtedly, it is competition that accelerates the process of promotion of goods and allows to provide the market with products in full.
The process under consideration consists in the rivalry between individual subjects of the market structure for the best terms in terms of the benefits of both production and sales of products. It is important to note that in a market economy this kind of collision is inevitable. This provision can be fully justified by the following factors:
- A large number of absolutely equal economic actors in the market.
- Their isolation in terms of carrying out their activities.
- Dependence of these subjects on market conditions.
- Confrontation between actors for the satisfaction of buyers' demand.
Types of competition by 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 the prices for products in order to ensure maximum demand. When reflecting the presented process on the demand curve, you can observe that vendors move along it, then lowering, then increasing the price of their goods. But the winner is the entrepreneur who has all the chances of costs for the production of the product.
The intensity of price competition is primarily affected by the interest rate, the degree of economic risk, the differentiation of products, as well as limiting the strength of sellers in the market.
Non-price competition presupposes the assignment of the role of price to the second plan, while the main component of the "battle" is fundamentally other factors. Among them are the unique properties of products, its reliability in technical terms, and also high quality.
Why are price battles unprofitable today?
It is important to note that the current conditions of a market economy have made the price competition unprofitable, especially for small companies, because they have insignificant financial resources compared to Western giants, so they are not able to sell their goods at a low price for a long period of time. Thus, the price war can turn into a real struggle for financial exhaustion, which hits heavily in the most vulnerable places of industry, often without it, weakened by the crisis and endless non-payments.
In addition, the demands of modern consumers compared to previous periods have become much higher, which entailed a wide variety 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 price. The main thing here is the company's interest and the search for interesting ideas.
Forms of non-price competition
The following items should be classified as the main forms of non-price competition:
Methods of non-price competition
Non-price are the following complexes of methods peculiar to the corresponding competitive actions of economic entities:
- Maintaining your own status in the formed sets of values, as well as entering into new chains of similar values. In this case, the companies, as it were, continue to compete around the product, nevertheless, consumers, and counterparties, including partners in the conduct of a common business, do not enter into relations with them.
Non-price competition in practice
As it turned out, price and non-price competition have fundamental differences, which determine the nature of the behavior of a company in order to increase the demand for its product. In the previous chapters it was noted that in the current conditions the price category was eclipsed by non-price competition. Examples of this situation are quite numerous. So, any research involves first determining the goals, then building a plan, analyzing the data and, of course, summarizing.
Let's say that 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 the basic preferences in terms of wardrobe and other circumstances influencing the purchase (income, opinion of close relatives), after which tasks are formed, due to which the expert finds out the basic preferences of men. Non-price competition is not an easy task, but the company that will be able to implement all of the above operations competently and qualitatively will certainly benefit.