Dumping is a risky way to deal with competitors

Dumping is a concept related to market behavior in a highly competitive environment. In literal translation from English means "dropping". The term was borrowed in the early 20th century. It represents a deliberate decline in prices to below the market average.

The purpose of such events is to attract more consumers of goods (services), a desire to strengthen market positions, get rid of stale goods, move to a lower price category, cause similar behavior of competitors, drive them out of the segment, etc. In such a state of affairs, consumers primarily benefit.

Under the legislation of some countries, dumping is an unacceptable (unscrupulous) method of price competition. Against it at the international level is the WTO.

Often dumping is used to break into and consolidate in a foreign market (another country or region). There are two main types of dumping: price and value. The first type is the sale of goods for export at prices lower than in the national market. The cost of dumping is the sale of goods for export at a cost that is lower than the cost of producing it.

Sporadic dumping (in the form of sales for the purpose of reducing illiquid stocks of goods) and constant (systematic sale of goods in order to obtain comparative advantages) are also singled out.

Often dumped by private producers, when they participate in the tender for public procurement. Their goal is to gain access to federal funding.

Dumping - this is such an instrument to influence the current situation, which can bring both benefit and harm. Young, recently opened companies compete with stronger competitors in this way will be very difficult. However, this is the most obvious solution, since it does not require additional investment (such as advertising in the media). But dumping is also a certain risk. Reducing prices can also damage the reputation of the company, since most consumers believe that cheap goods are of low quality. On the other hand, the price game is able to set up competitors against you.

Currency dumping is the difference between the depreciation of the national currency in comparison with the smaller decrease in its value (purchasing power) within the country. Exporters due to this situation have the opportunity to sell goods purchased at low domestic prices in the foreign market for hard currency, and then earn on exchange profit by exchanging it for the national currency.

If your competitors are dumping, this does not mean that you must necessarily enter into a "price war". More sensible is the policy of allocation on the market due to the unique qualities of your product. Even "black dumping" (mass or wholesale sale of goods at reduced prices) may not lead to an agiotage demand, since the market is not always large enough for this. Therefore, often dumping becomes a way to bankruptcy.

From dumping in general, and sufferers, and individual sellers, and governments of countries that do not receive taxes.