Coursework: Price and non-price competition in the economic strategies of Russian business. Competition and its role in a market economy. Price and non-price competition

Competition can be divided into two types: price and non-price.

Price competition

Price competition - this is such a rivalry of sellers, when everyone seeks to win at the expense of a price that is more acceptable to the buyer. Simply put, the seller tries to offer a product at a price that is lower than the competitive one.

Through price competition, sellers influence demand mainly through changes in price. The more unique a product's offering is from the point of view of consumers, the more freedom marketers have to set prices higher than competing products.

In price competition, sellers move along the demand curve by raising or lowering their price. It is a flexible marketing tool as prices can be changed quickly and easily based on demand, cost or competition factors. However, of all the marketing variables controlled by competitors, this one is the easiest to duplicate, which can lead to a copy strategy or even a price war. Moreover, the government monitors pricing strategies.

The main condition for successful competition with the help of prices - this is a constant improvement of production and a reduction in the cost of production. The winner is the manufacturer who has a real chance to reduce the cost of production.

The mechanism of price competition is as follows. The manufacturer sets prices for its products below market prices. Competitors cannot follow it, they cannot stay in the market and leave it or go bankrupt. In the case when the economic power of competitors is the same, price maneuvering is applied. It consists in providing customers with various discounts, lowering prices for products, setting the same price for goods of different quality or their convergence. competition price elasticity non-price

Non-price competition

Non-price competition - a method of competitive struggle, which is based not on price superiority over competitors, but on achieving more High Quality, technical level, technological excellence, with greater reliability, longer service life and other more advanced consumer properties. A significant role in non-price competition is played by: design, packaging, subsequent Maintenance, advertising.

Non-price competition minimizes price as a consumer demand factor by highlighting goods or services through promotion, packaging, delivery, service, availability, and other marketing factors.

For example, a company is trying to attract potential buyers with more beautiful packaging or offer the consumer more favorable conditions compared to a competitor. The most important element of non-price competition is advertising. Advertising can help a company increase its market share and attract consumers.

In non-price competition, the most important are unique properties product, its technical reliability and high quality. It is this, and not price reduction, that allows you to attract new customers and increase the competitiveness of the product. The main goal of non-price competition is the continuous improvement of products, the search for ways to improve their quality, technical reliability, improve appearance, packaging. Thus, non-price competition, unlike price competition, is not destructive, but constructive. In non-price competition, sellers shift consumer demand curves, focusing on distinctive features its products. This allows the firm to increase sales at a given price or sell the original quantity at a higher price. The risk is related to the fact that consumers may not consider the seller's offers as better than those of competitors. In this case, they will purchase cheaper goods, which, in their opinion, are similar to more expensive ones. A price competitive firm must cut prices to increase sales.

The ratio of price and non-price competition.

1) Price and non-price competition are interchangeable. Example: A and B. A's product price is lower than B's, but B offers free shipping and provides a guarantee not for a year, like A, but for two. Thus, the situation in prices is balanced by non-price factors.
2) Non-price competition with a deeper and more complete consideration is price. The easiest way to come to this conclusion is to look at ways of financing non-price factors (advertising, after-sales service, etc.). Example: firm A offers a certain product at a certain price, firm B offers the same product at the same price, but offers to deliver it free of charge within the city. All other indicators do not differ between firms. Therefore, B's "net price" is less.

Nowadays, competition plays a fundamental role in the economy of any country. The modern market economy is a complex organism, consisting of a huge number of various industrial, commercial, financial and information structures interacting against the backdrop of an extensive system of business legal norms, and united single concept - market.

Market relations characterize a special type of organization National economy, in which between the producer and the consumer there are no intermediate managers, planning or other administrative institutions that regulate the activities of producers and consumers. The key concept expressing the essence of market relations is the concept of competition (lat. concurrere - to collide, compete).

Competition- this is a competition between manufacturers (sellers) of goods, and in the general case - between any economic, market entities; the struggle for markets for goods in order to obtain higher incomes, profits, and other benefits.

The competition is very effective tool stimulation of personal initiative, enterprise and productivity social labor. The threat of huge losses forces the entrepreneur to "achieve the impossible" and adjust his costs to low market prices. T.o. it is market competition in prices that compels the entrepreneur to turn to his latent reserves.

Exist different types competitive behavior of market entities:

Creative (creative) - behavior aimed at creating preconditions that provide superiority over rivals;

Adaptive - taking into account innovative changes in production (copying) and proactive actions of rivals;

Providing (guaranteeing) - behavior aimed at maintaining the achieved positions.

Competition is one of the most important ways to improve efficiency as a whole economic system, and all its links. Like any phenomenon, it has its positive and negative sides.

Positive aspects of competition:

competition makes you constantly look for and use new opportunities in production;

competition requires the improvement of technique and technology;

competition stimulates the improvement of the quality of goods;

competition drives down costs (and prices);

competition requires suppliers of goods (sellers) to reduce prices for the offered goods;

competition focuses on a range of goods in high demand;

competition improves product quality (the customer is always right);

competition introduces new forms of governance.

Negative aspects of competition:

in competition, ruthlessness and cruelty towards the loser are observed;

numerous "victims" in the form of bankruptcies and unemployment.

The following factors influence the competitiveness of a product

a) during its production:

labor productivity;

The level of taxation;

Implementation of scientific and technical developments;

The amount of profit of the enterprise;

The amount of wages.

b) when consumed:

Selling price of the goods;

Quality;

Novelty;

After-sales service;

Level of pre-sale preparation.

The fiercer the competition in the domestic market, the better prepared national firms are to compete for markets abroad, and the more advantageous are consumers in the domestic market both in terms of prices and product quality. After all, competitive products should have such consumer properties that would favorably distinguish them from similar products of other competitors.

efficient and modern form competition is the struggle for the quality of the goods offered on the market. The arrival on the market of products of higher quality or new use value makes it difficult for a competitor to respond, since the “formation” of quality goes through a long cycle, starting with the accumulation of economic, scientific and technical information.

Currently received very great development various kinds marketing research, the purpose of which is to study the needs of the consumer, his attitude to certain goods, since the knowledge of this kind of information by the manufacturer allows him to more accurately represent future buyers of his products, more accurately represent and predict the situation on the market as a result of his actions, reduce the risk failures, etc.

Due to the large impact on the public funds mass media, press, advertising is the most important method of conducting competition, because with the help of advertising, you can in a certain way form the opinion of consumers about a particular product, both for the better and for the worse.

The value and role of competition in the system of market relations is incomparably great. Firstly, it contributes to the establishment of an equilibrium price, the equation of supply and demand. On clean competitive market individual firms exercise little control over the price of products, have such a small share of the total volume of production that an increase or decrease in its output will not have a tangible effect on the price of the goods. The manufacturer, as well as the buyer, must always be guided by the market price. Thus, competition contributes to reaching a compromise between sellers and buyers. Here it can be noted that competition creates the identity of private and public interests.

Secondly, competition maintains socially normal conditions for the production and sale of goods and services. It seems to suggest to commodity producers how much capital they should invest in the production of this or that commodity. Competition maintains normal conditions of production for the whole society, and under conditions of competition, resources are distributed efficiently.

Thirdly, competition stimulates scientific and technological progress and increased production efficiency. Since competition serves as an equalizer of prices, it can be concluded that in market competition the one who has high-quality goods with the lowest possible cost will win. And for this it is necessary to constantly update the conditions of production, to spend large investments on improving technology. Consequently, with the development of competition, the efficiency of production increases every year.

Fourthly, with the confrontation of market entities, their socio-economic stratification intensifies. The competition involves many small owners who are just starting to run their own business. economic activity. Many of them, without sufficient capital, modern means production and other resources, cannot withstand this rivalry and after a while suffer losses and go bankrupt. And only a few of them increase their economic power, expand their enterprises and become full-fledged and quite significant and respected market participants.

Depending on the ratio between the number of producers and the number of consumers, there are the following types competitive structures.

1. Big number independent producers of some homogeneous commodity, on the one hand, and a mass of isolated consumers of this commodity, on the other. The structure of relations is such that each consumer, in principle, can purchase a product from any manufacturer, in accordance with his own assessment of the usefulness of the product and its price. Each producer can sell goods to any buyer, according to his own benefit. No consumer acquires any significant share of the total supply, and no producer can satisfy any significant share of the total demand. This market structure gives rise to the so-called perfect competition.

2. Peculiar and widespread type imperfect competition observed in almost all developed countries, is an monopolistic competition. To a certain extent, it resembles perfect competition. Monopolistic competition is characterized by relatively a large number seller who produce differentiated products ( women's clothing, furniture, books). Differentiation is the basis for creating favorable conditions for sales and product renewal.

3. A huge number of isolated consumers and a small number of producers, each of which can satisfy a significant share of the total demand. This market structure gives rise to the so-called imperfect competition - oligopoly.

4. The limiting case of this structure, when a mass of consumers is opposed by a single producer capable of satisfying the total demand of all consumers, is monopoly.

There are two main groups of competition methods according to the method of competition: price and non-price.

Price competition is the rivalry of entrepreneurs to extract additional profit by reducing the costs of production and sale of certain products, lowering prices for these products without changing their range and quality.

Non-price competition includes: a) changing the properties of products, b) imparting qualitatively new properties to products, c) creating new products to meet the same needs that did not exist before, e) updating the properties of the goods, which are a symbol of fashion, prestige (changes in the quasi-quality of goods), f) improving services, related product(demonstration, installation, warranty repair, etc.).

Let's consider each of the groups of competition methods separately.

Price competition - this is such a rivalry of sellers, when everyone seeks to win at the expense of a price that is more acceptable to the buyer. In other words, the seller tries to offer the goods at a price that is lower than the competitive one.

Through price competition, sellers influence demand mainly through changes in price. How more unique offer products from the point of view of consumers, the more freedom in setting prices higher than that of competing products.

the government monitors pricing strategies.

The main condition for successful competitive struggle with the help of prices is the constant improvement of production and the reduction of production costs. It is advisable to resort to price competition if there is confidence that the price is a decisive factor for a potential consumer when choosing between competing products. Usually, companies that have achieved industry leadership in costs resort to price competition - in this case, you can make a profit even at such prices when all other players are already operating at a loss.

Distinguish:

- direct price competition with wide notification of price reductions;

- hidden price competition, when a new product with improved consumer properties is launched on the market with a relatively slight increase in price.

Non-price competition - a method of competitive struggle, which is based not on price superiority over competitors, but on the achievement of higher quality, technical level, technological excellence, with greater reliability, longer service life and other more advanced consumer properties. A significant role in non-price competition is played by: design, packaging, subsequent maintenance, advertising. Non-price competition minimizes price as a consumer demand factor by highlighting goods or services through promotion, packaging, delivery, service, availability, and other marketing factors.

With non-price competition, the unique properties of the product, its technical reliability and high quality come to the fore. It is this, and not price reduction, that allows you to attract new customers and increase the competitiveness of the product. The main goal of non-price competition is the continuous improvement of products, the search for ways to improve their quality, technical reliability, appearance, and packaging. Thus, non-price competition, unlike price competition, is not destructive, but constructive.

In non-price competition, sellers shift consumer demand curves, emphasizing the distinctive features of their products. This allows the firm to increase sales at a given price or sell the original quantity at a higher price. The risk is related to the fact that consumers may not consider the seller's offers as better than those of competitors. In this case, they will purchase cheaper goods, which, in their opinion, are similar to more expensive ones. A price competitive firm must cut prices to increase sales.

Thus, it has been established that the main methods of non-price competition are product differentiation, improvement of its quality and consumer properties, advertising. We also found out that the main condition for successful competition with the help of prices is the constant improvement of production and cost reduction. Wins only the entrepreneur who has a real chance of reducing production costs. Summarizing the above, we can draw the following conclusion: competition is a complex multifaceted phenomenon. There are many types and methods of it. This element of the economy should be assessed as vital and most powerful force economic development.

The development of competition today is becoming a very urgent task for manufacturers. The problem of studying various types of competition necessitates the study of factors influencing the formation competitive advantage goods or services. Given that the level of income of potential consumers is quite low, but at the same time, the principles of the Western way of life are being actively formed in society, at this stage of economic development, one of the most important questions is the price of different kinds products of similar quality.

In the context of the development of the modern economy, the issues of competition are of particular relevance. This is due to a number of different factors, among which the rapid growth of information and communication technologies, which allow the consumer to have information about a large number of possible sellers, should be highlighted; globalization of the world economy, making it possible to supply relatively inexpensive goods from remote regions, liberalization international trade. These factors determine the increase in the number and density of contacts of competing types of products in the same markets, and also, very often, the weakening of the positions of local producers who are not able to compete in their markets with the products of transnational corporations and major manufacturers. The aggravation of competition, the development of which can be predicted for the future, makes the question of what forces an individual manufacturer can oppose to this, how he should act in the current situation, urgent. The answers to this and similar questions actualize the problem of studying various types of competition, as well as how one or another chosen strategy can affect the well-being and future development of an enterprise. A feature of most Russian markets is that the level of income of potential consumers is often quite low, while the principles of the Western way of life, the corresponding standards of consumption and product evaluation are being actively formed in society. Therefore, at this stage of economic development, one of the most important is the question of the price of various types of products of similar quality. As you know, non-price competition involves the offer of a product of a higher quality, which fully meets the standard or even exceeds it. Among the various non-price methods include all marketing methods of enterprise management. In accordance with the stages of the consumer's decision to purchase a particular product, the following types of non-price competition can be distinguished:

1. Desires-competitors. Exist a large number of alternative ways investments by a potential buyer of their funds;
2. Functional competition. There are many alternative ways to satisfy the same need;
3. Interfirm competition. Is the competition the most effective ways meeting existing needs;
4. Intercommodity competition. It is competition within the product line of products of the same firm, usually acts to create an imitation of significant consumer choice.
5. Illegal methods of non-price competition. These include: industrial espionage, luring specialists, the production of counterfeit goods.

More succinctly, it can be concluded that non-price competition is “a market approach in which the cost of production is minimized and other market factors are maximized.

Price competition develops in the market in close connection with the conditions and practices of non-price competition, acts in relation to the latter, depending on the circumstances, the market situation and the policy pursued, both subordinate and dominant. This is a price based method. Price competition “goes back to the days of free market competition, when even homogeneous goods were offered on the market at the most varied prices. Price reduction was the basis by which the seller distinguished his product ..., won the desired market share. In conditions modern market"price war" is one of the types of competitive struggle with a rival, and such a price confrontation often acquires a hidden character. “A price war in an open form is possible only until the firm exhausts the reserves of the cost of goods. In general, price competition in an open form leads to a decrease in the rate of profit, a deterioration in the financial condition of companies. Therefore, companies avoid open price competition. It is currently used usually in the following cases: by outsider firms in their fight against monopolies, for which outsiders have neither the strength nor the opportunity to compete in the field of non-price competition; to enter markets with new products; to strengthen positions in the event of a sudden aggravation of the sales problem. With hidden price competition, firms introduce a new product with significantly improved consumer properties, and raise prices disproportionately little. At the same time, it should be noted that in the conditions of functioning of different markets, the degree of significance of price competition can vary significantly. As a general definition of price competition, the following can be given: “Competition based on attracting buyers by selling at more than low prices products that are similar in quality to competitors' products.

The framework that limits the possibilities of price competition is, on the one hand, the cost of production, on the other hand, the institutional features of the market that determine the specific structure of sellers and buyers and, accordingly, supply and demand. The selling price consists of the cost of production, indirect taxes included in the price, and the profit that the seller expects to receive. At the same time, the price level is set in the market by the ratio of supply and demand, which determines one or another level of return on assets and profitability of the products produced by the enterprise. To date, the most common pricing strategy, which is chosen by about 80% of companies, is “following the market”. Enterprises that use it set prices for their products, focusing on a certain average price list. However, it is difficult to call it a conscious choice. Most of the time it's just not possible to do otherwise. As a rule, "to be like everyone else" is for those who work in mass markets, where competition is very high. This provision fully applies to the meat market. In the current situation, buyers react very painfully to any noticeable rise in the price of goods, which does not allow overpricing, and competitors respond harshly to any attempt to change the existing proportions of sales, which makes another pricing strategy dangerous - “introduction to the market”.

Speaking about the implementation of pricing measures in the framework of competition, it must be said that, basically, pricing for Russian enterprises Completely different bodies and persons are involved: a director, an accountant, an economist, a sales manager, a supply manager, a specialist in the marketing department, etc.

Unfortunately, there are still few precedents, at least in regional practice, for the use of professional analysts-consultants who have special skills and experience in competent pricing, able to take into account the full range of factors affecting the price. Therefore, it is not uncommon for enterprises to go to extremes when building their pricing policy. Here is a list of such extremes that can be encountered in practice:

- almost all enterprises use only the price competitive strategy taking into account its cost - competition based on prices, but not quality. Accordingly, prices are set either at the level of the leading competitor in the market, or at the level of average prices among competitors, or at a level below all competitors;
- there are enterprises mindlessly using the strategy of price dumping. In certain areas (for example, the provision of telecommunications data services), the latter method may be predominant. Naturally, such “pricing” in a short time can lead the enterprise not only to fundamental changes in pricing policy, but also to fatal consequences. - Some enterprises use only the "Cost +" method. Their prices do not correlate much with the existing market level. The cost price and the margin that the entrepreneur would like to receive are taken into account.

Professional pricing consultants are approached by those entrepreneurs who want to optimize the efficiency of their investments, increase the likelihood of their payback in the most short time. Large enterprises can introduce a special position in the staff and keep a specialist on a permanent basis. This is justified when the enterprise a large assortment products and services, when the volume of their sales and prices depend on the seasonal factor and other external factors. For example, when purchasing materials, services and selling finished products are produced in different currencies. And you have to build a separate strategy for tracking rates and responding to their changes. Small and medium-sized enterprises, as a rule, need one-time services and resort to them from time to time. Last, when choosing a specialist to build pricing policy, the following conditions must be met:

1. The consultant is obliged to possess a proven technology for solving problems and the necessary professional skills.
2. The consultant must be independent of the enterprise: from the traditions prevailing in the organization, from the policy of the management apparatus. Thus, it is expedient to solve the issues of pricing management within the framework of price competition using professional staff. If it is impossible to maintain such employees, it is recommended to resort to outsourcing this function.

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Economic methods of competition

There are two key approaches: playing with costs, with prices. Influence through prices is such an option when a company resorts to a floating pricing policy. The main task is to force the opponent to leave this niche. Often, in order to achieve the goal, the company puts the price of the goods much lower than the norm. The competition method gives the greatest effect if the decline occurs sharply, unpredictably for rivals. The company adheres to such a pricing policy until it manages to squeeze out a competitor from a niche. Equally satisfied are the options when the opponent completely stops his activity, and when he chooses a different direction as an attempt to avoid the barony.

If the applied methods of competition gave the desired result and the competitor was removed from the market, prices can be restored to the previous level. In some cases, the company can afford to raise the cost above the previous standard. This makes it possible to recover those losses with which the period of competitive struggle was hidden.

Advantages and disadvantages

The most weak side described approach to eliminate rivals is the fact that the opposite side can also resort to a similar line of behavior. Competition in the market is often unpredictable, and an accurate assessment can be given in advance only if there is voluminous and correct data on financial condition competitor.

The winner is the one who has a large supply of money for the period of the beginning of the "battle". As soon as the first signs of competition appear in the niche where the company operates, it is necessary to tune in to the struggle, from which only one can emerge victorious. However, as practice shows, only large monopolies currently seriously compete in this way, while most of companies of medium and small size simply adjust to the generally accepted price level. For such market participants, other forms and methods of competition are relevant.

Costs as a way to deal with an opponent

The main idea of this method of competition is to reduce to a minimum the costs associated with the production process and sales of products. Enterprises resort to all legally acceptable tools that allow them to at least slightly reduce the cost component of the business. It is taken into account that the manufacture of the same product different ways can be very costly or vice versa. Influenced technological features production, automation of work lines, streamlined workflow. It becomes very important for an entrepreneur to establish an organized working day - this is one of the methods of non-price competition.

In an effort to minimize costs in the production and sale process, many people try to use the most inexpensive raw materials. This often leads to low quality of the finished product, which, as practice shows, does not stop firms that plunge headlong into competitive methods in an attempt to win a place in the market.

At any price!

The widespread practice of reducing the costs associated with the production and sales process is to attract cheap labor. This option is often contrary to the current legal norms of the country. This is not only about the law on the protection of competition, but also about the rules of employment. Enterprises hire illegal, semi-legal workers who are willing to work full-time hard work at low wages. However, you should not expect that such employees will work really well, producing a quality product.

Like an appeal to cheap labor force, and other methods of non-price competition can reduce the cost of the enterprise. This means that, adhering to equal prices with rivals in the vast market, the company can count on big profits. This technique is quite typical for both small businesses and medium-sized enterprises.

Conditionally economic: considering in more detail

There are several methods combined in this group to increase the competitiveness of an enterprise. If the previously described allowed to influence the opponent, then this group is designed on the idea of attracting more buyers.

The simplest way, which is completely subject to the law on protection of competition, is legal, correct and does not lead to an underestimation of the quality of services - this is the expansion of the range. The company thus forms a line of offers so that the client can find anything for himself, regardless of wishes, no matter how specific they may be. This applies not only to names, but also to packaging. For example, a classic milk package is one liter, but to meet the needs of a certain category of customers, containers of 100 ml, 330 ml, half a liter or one and a half are produced.

Choice and pricing policy

As they say in the course of economics in any specialized educational program, apply knowledge of the concept, types of competition is possible to improve the position of the company in the market. How does this happen in the framework of the approach described above? As it was possible to reveal, the sale of goods present in stock in different options form, always more than that which is only in one form.

For the company, this type of competition is beneficial, as well as for the client: for small packages, prices can be set that are higher in terms of the net weight of the product. The company makes a profit, the client - the goods he needs. Additional tools for this type of competition (the concept was given to it above) is a change in design decision. The more modern, brighter the product looks, the more willingly they buy it. It is worth considering fashionable music, popular films - in a word, even aspects of social life that are not directly related.