Fair competition: definition of the term, types and features, examples

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

Fair competition is one of the key engines of the economy, which can work both globally and locally. It is thanks to this phenomenon that the country's economic growth occurs, as well as a constant improvement in the quality of products and services. In addition, competition helps to develop the latest forms of business and produce fundamentally new products with simplified functions. In our article, we will consider examples of fair competition and its types.

Terminology and Positives

From the school social science course, we know that competition is the types of interactions between participants in the economy, which are rivalry and struggle for the attention of buyers. Competition is vital for the normal existence and development of any entrepreneurial activity. Without such a phenomenon, prices forgoods will steadily rise, and its quality will fall. In addition, there is no question of any increase in technological progress.

Also, the positive aspects of competition include the following phenomena:

• development of initiative in economic entities, stimulation of product quality improvement, development of new production technologies;
• distribution of services, jobs, goods in those places and regions where the local population needs them most;
• manufacture of the most popular and modern products that are in great demand in the modern world;
• Protection of start-up entrepreneurs from possible criminalization in the market, use of unscrupulous methods to fight for customers.

Based on the foregoing, we can conclude that competition is the main engine of the economy and technological progress. It is competition that allows us to improve ready-made technologies and look for new solutions in order to reduce production costs, and hence the final cost of the product.

Does competition have downsides?

So, fair competition is a method of fighting for a buyer that does not contradict the law and moral and ethical principles formed by modern society. However, it should be noted that this phenomenon also has a number of negative aspects, the most relevant of which are described in the list below:

1. Competition disrupts stablea situation that has persisted on the market for several years. Even very large and well-known companies can suffer if a brand or service appears that attracts customers more than what the corporation has to offer.
2. Most of the participants in business relations tend to monopolize their particular segment. This trend is leading to limited opportunities for start-up entrepreneurs to break into the market, even if their products are really very good.
3. The desire to earn more is pushing most of the entrepreneurs not to develop the economy, but to slow it down. For example, companies can significantly reduce the cost of their services to capitalize on the number of customers.

Thus, fair and unfair competition has both positive and negative aspects. However, one thing can be said with particular confidence - without such a phenomenon, the economy simply will not develop, and scientific and technological progress will stop. Even people will stop improving their skills, as they do in a competitive environment.

Principles of fair competition

To better understand what this phenomenon is and how it differs from unfair competition, we recommend that you familiarize yourself with its basic principles. Here are just some of the top methods entrepreneurs and companies can use to grab the attention of potential buyers:

• use of fundamentally newproduction elements that provide the best product quality;
• development of marketing strategies and moves aimed at attracting the attention of customers;
• providing consumers with a quality guarantee for the goods, as well as various additional services;
• manipulating product prices in order to promote a product or service in a given region.

It is by these principles that fair competition can be distinguished, examples of which will be given in the next section. All of them do not have contradictions with the law and the rule of law. The key principle is to maintain the quality of goods at the highest level through the improvement of production technologies, the use of quality raw materials and so on.

Examples of fair fight for the customer

Now you are familiar with the concept of fair competition, as well as its basic principles. It's time to give specific examples that will help consolidate the knowledge gained and distinguish a fair struggle for a buyer from an unfair one. Here are just some of the methods that are actively used by large companies and individual entrepreneurs:

• improving the quality of services and goods offered;
• additional services (free delivery, connection, assembly);
• warranty service of purchased products;
• carrying out various advertising campaigns and events;
• improvement of service and gifts for regular customers;
• carrying outsales, promotions and all sorts of discounts.

These are just the basic methods that are used most often. To attract the attention of potential buyers, some manufacturers use a variety of methods, some of which are against the law. Such actions are called unfair competition and are contrary to generally accepted business practices.

Examples of unfair competition

Fair and unfair price competition plays an important role in the development of the state economy, but the latter type is severely punished. But in order for our readers to have a clear idea of how unfair attraction of buyers to your product differs from good faith, we recommend that you familiarize yourself with examples of prohibited competition:

• industrial espionage - dishonestly obtaining trade secrets from competing companies;
• counterfeiting products under well-known brands and creating names consonant with well-known trademarks (Abibas, Lokoste, Naike, etc.);
• blackmail competitors and their employees in all possible ways - threats to family and friends, acts of a violent nature;
• knowingly disseminating false and negative information about competing companies, as well as the quality of their products;
• deceiving consumers by providing false information about their own products in advertising or in life.

In most civilized countries, such actions are prohibited and punishable by criminal or administrative pen alties. Typically, the statutory wording is as follows: "Illegal acts carried out for the purpose of gaining a business advantage or causing damage to competing companies." Pen alties for such misconduct may include fines or imprisonment.

Methods and strategies of competition

Any aspiring entrepreneur must have a strategy that will allow him to win a place in the market among competing companies. Such a strategy can be developed using various methods, the main ones are listed below:

1. Fair price competition. The main tool to attract the attention of potential buyers. Try to attract customers with various promotions, seasonal sales, bonus offers, and so on. Design your strategy to profit from the number of customers, not the difference between cost and price.
2. Conduct effective advertising. In order for the client not only to learn about your product, but also to become properly interested in it, it is necessary to work out an advertising policy in detail, based on studying the values of the target audience. You can advertise your product on various platforms: the Internet, television, radio, and so on.
3. Improving the quality of a product or service through the use of the latest technical developments. For example, an increasing number of hotels have becomeuse washing vacuum cleaners for cleaning, which allow you to simultaneously get rid of dust and carry out wet cleaning of the room. Well, clean and fresh rooms are the key to the success of such a business.

Also, if you want to market a new product or service that is not yet in high demand, you can offer customers various opportunities. For example, to sell a new phone model, arrange a promotion in your city: "We accept a smartphone back if you don't like its functions." Of course, such a service should take into account a number of nuances, but advertising language of this type will force many customers to test your products.

Formation of strategies from general methods

In order for a start-up enterprise to successfully develop in the market, it is necessary to form a strategy based on the methods of fair competition that were described in the previous section. Use them if you are a business owner or self-employed.

If we talk about the types of fair competition, then two main types of rivalry can be distinguished:

• perfect - following the principle of information secrecy, as well as the absence of obstacles for the emergence of new participants in the market;
• imperfect - it includes oligopoly and monopoly, and the characteristic features are high product differentiation.

Every aspiring entrepreneur should understand that the formation of a strategy for combat is inextricably linked with the types ofcompetition. For example, in an imperfect market, it will be quite difficult to get ahead through advertising, as competing companies will constantly lure customers with special offers. However, the three main types of strategy can be implemented in any case.

1. Optimization. Try to adjust the production process in such a way as to reduce the cost of goods, as well as achieve high quality.
2. Differentiation. You can endow the product with special characteristics and properties that will be useful for the target audience.
3. Concentration. Try to capture only those sites and regions where the sale of a product or service will be most profitable.

And most importantly - do not forget that you are criminally or administratively liable for using unfair competition methods.

Is a manufacturing monopoly really that bad?

In our article, we have repeatedly mentioned this concept in a negative context, as a result of which readers might have an opinion that a monopoly only harms the development of the state economy, but this is not entirely true, especially if it is not about all, but about most of the market. This phenomenon is characterized by the following features:

• monopolist has the right to regulate the prices of its products, as well as control the quantity of goods on the market;
• the consumer has no right to choose, so he is forced to purchase a service and product from a particular company or do without it at all;
• the entire industry is represented by onemanufacturer, which prevents other companies from squeezing into the market.

However, we should not forget that in a monopoly, competition can still exist, but not in the form in which we are used to seeing it. For example, many companies may produce a similar service or product that will be an alternative for the consumer.

Negative aspects of monopoly for the economy

Of course, any monopoly has a negative impact on the development of the economy of any state, since competition drives scientific and technological progress forward. Experts identify the following disadvantages that are characteristic of a monopoly:

1. All leading positions are occupied by one structure, which has the right to dictate its terms to the consumer, based on its own preferences.
2. The market completely loses its free status, and all manifestations of independence on the part of other companies become almost impossible.
3. The lack of competition negatively affects the development of innovative scientific developments that could significantly improve the production process.
4. Very often monopolists "play" with the quality of products sold, changing it to please only their own interests. For example, a manufacturer may use cheap and low-quality raw materials.
5. Monopoly is accompanied by a dictatorship of prices, which very often exceed the real cost of goods by several times. However, the population has no choice and it purchases goods at high prices.prices.

Summing up the above, we can confidently say that the monopoly has a negative impact on the development of the state economy, but if a responsible person acts as a monopolist, then very often this phenomenon benefits the population.

Conclusion

We hope you now have a better understanding of what constitutes fair competition and how to conduct business in order to keep up with competing companies. Remember that dishonest methods of struggle can lead to serious consequences. Therefore, create your own innovative programs and strategies and capture the market in a fair way.