Forms and methods of competition

2024 Author: Howard Calhoun | [email protected]. Last modified: 2023-12-17 10:16

What are competitive methods? Even people who are far from entrepreneurial activity and economic sciences have general ideas about this issue. In this article we will talk about what are the methods of competition in the market, discuss its various types and forms. Such information can be useful both to a wide audience and to aspiring entrepreneurs or economics students.

After all, we are faced with manifestations of the competitive struggle of firms every day, whether they are small enterprises or large well-known companies, foreign or domestic organizations. They all compete with each other, and this manifests itself in completely different ways.

What is competition?

There are many bulky scientific papers, various studies, articles, and literature on this topic. In addition, there are a lot of definitions for the concept of "competition", they are given by different economists and scientists, but at the same time they all carry a similar meaning. Competitive methods are often the most important issue covered in this topic.

So most definitions of competitionIt boils down to the fact that enterprises strive to occupy a leading position in their market, thereby covering more consumers, which, in turn, will bring additional profit. Based on this, we can conclude that the struggle for the client is competition. Competitive methods include a large number of ways to increase your position in the market. For example, these can be price methods of competition or mixed forms based on various tricks and tricks. There can be a lot of options and combinations, and their effectiveness is determined by the ability to adapt to the market situation.

Types, methods of competition

Depending on the markets and their scale, there are many forms for the development of competition. Touching upon the types of competition, as a rule, they imply perfect and imperfect competition, and in the conditions of the modern economy there are many examples of its manifestations. All it takes is a quick look at different markets and industries.

As for the methods of competition, they are divided into price and non-price. Both are used and improved in business, while taking on new forms, changing and adapting to new realities. Next, the methods of competitive struggle in the market will be highlighted.

Price

Their implementation is the simplest in terms of the activities that the organization should carry out. Price methods of competition include, as a rule, reductionthe cost of the goods. The result of such actions may be an increase in consumer attention to products, an increase in sales and demand for goods. However, it should be remembered that everything has its own resource and border, when crossing which the opposite effect occurs.

The main disadvantage of the price method is that, firstly, the company must budget, initially planning to reduce prices, or the cost of production must be colossally low in order for the business to be profitable. Therefore, these methods are good as long as the business remains profitable.

The second disadvantage will be such a factor as the attachment of the price to the consumer properties of the goods. It is quite possible to sell products for almost nothing compared to competitors, but no one has canceled the fact that if the quality of a product is so unsatisfactory, then it may not be in any demand at all. It turns out that in order to use price methods, a product or service must meet at least minimum quality requirements, and sales must generate income.

Non-price

Speaking of these ways to increase competitiveness, very often they mean a wide range of different actions. For example, it can be marketing activities, and improving the consumer properties of the product, it also includes improving quality, service, warranty service, and so on.

In the conditions of the modern economy, non-price methods of competition are much more effective. The point is that a simple reductionPrices are often perceived by consumers as a sign of low quality, and some products, such as mobile phones, as a sign of status, so lowering the price in this case can scare off potential users. Next, specific methods of competition that are non-price will be described.

Brand Awareness

The most effective way to increase competitiveness is to create products that the consumer will recognize. You don’t even need to give names, just simply describe the industry, and examples will come to mind, because there are a lot of such goods - there are world-famous cars, there are food industry products (carbonated drinks, various snacks), clothes, shoes, stationery and, of course, smartphones. Most readers probably think of the same brands, car concerns and groups of companies, because their products are well known.

Such methods of competition not only allow you to maintain your position in the market, but also deter new firms. It is quite possible that the consumer will never know that the new company makes better products, corny because of the lack of trust in it.

Quality

If before we were talking about brand awareness, now we should move on to that aspect, without which it can become a business failure. Without quality products, it is impossible to achieve recognition. Recognition can work both ways, and if a product has poor consumer properties, then it will not only not be bought, but also reportedthis to other potential clients.

Quality is not only formalities and compliance with all norms and metrological standards, but also the satisfaction of consumer expectations. If the properties of a product or service are not enough to make the customer satisfied, then they need to be upgraded.

Service and Maintenance

A firm's competitive methods may include an emphasis on product support. This is especially true for high-tech products such as computers, smartphones, cars, and some services such as communications.

Product support can come in many different forms depending on the industry. For example, these could be hotlines, repair shops, service stations, and even staff who will fix a product problem at home.

Prestige

As stated above, brand awareness is a great competitive advantage. Prestige follows from the same, because most prefer to use products with a rich history, be it the same cars or carbonated drinks. The status of a thing is very important for a certain category of customers, and competent marketing activities and market positioning will help make the product so.

Advertising

Competitive methods include many powerful tools. Advertising is one of them. In the modern world, there is a lot of scope for marketing activities. Thanks to the development of technology, advertising has come a long way. Now it's not just newspaper columns orbillboards, as well as television and radio. A wide scope for showing your product is provided by the Internet and social networks. A large number of Internet resources will help not only to inform about yourself, but also attract more additional audience, which may be looking for exactly your offer.

Extend product life

Very often, consumers complain that relatively new products quickly become unusable. As a rule, we are talking about household appliances, electronics, and sometimes about clothes. An excellent competitive advantage will be either an improvement in the quality of manufactured products, or a longer warranty period for the product. A good attitude towards the client is a guarantee that he will return to buy your products again.

Types of competition

Returning to this topic, we should again note the existence of both perfect and imperfect competition.

In the first case, a free market is implied, where firms can safely enter and exit with their products. In addition, in the case of free competition, enterprises cannot significantly affect the cost of goods in their segment, which gives rise to a breadth of choice for the buyer.

There is another group of signs of free competition, it includes such factors as the free exchange of information, the exceptionally honest behavior of enterprises in relation to pricing policy, in addition, here we can include the high mobility of organizations in the context of the fact that firms can free to change youractivities.

Imperfect competition implies the absence or distortion of the above conditions, as well as the emergence of various collusions, increased pressure and control of some industries, the emergence of monopolists (the only firms in their industry).

One of the most common types of imperfect competition today is oligopoly. In this case, it means a limited number of different manufacturers and sellers that dominate their industries. This situation occurs, for example, among manufacturers of automobiles, some foodstuffs, and cosmetics. Entry thresholds for these markets are quite high for new firms.

What gives competition

Methods of competition, due to their characteristics, are of great benefit to society. If competition is developed, consumers receive either the best product or products at a lower price compared to the offer of other market participants.

This is due to the endless struggle of market participants for leading positions, which gives a huge plus for the development of society and the economy, both at the smallest levels and on an international scale. It is important to remember that the main goal of a business is to generate and maximize profits, however, a large number of participants in the battle for customers demand advantages over other firms. Organizations must create such products and provide such services that will interest potential buyers. The main methods of competition in the implementation process themselvesimpose peculiar restrictions on the business, preventing the provision of goods of inadequate quality, and regulate the price.

Results

Modern market cannot exist without competition. Yes, it takes various forms, and the methods of competition - depending on industries and areas - are also different. They are constantly being improved, and organizations are forced to adapt to the dynamics of what is happening in the external environment.

Depending on economic, technical, social and political factors, some industries choose perfect competition while others move towards monopoly or even oligopoly. The task of enterprises is to recognize the changes in time and adapt to them.

These are natural processes, the actions of firms generate competition. The methods of competition in this case are only a consequence of environmental changes, as well as the spirit of the times.