Forms and methods of competition

What are the methods of competition? General ideas about this issue are even among people who are far from business and economic sciences. In this article we will talk about what are the methods of competition in the market, we will discuss its various types and forms. Such information can be useful to a wide audience, as well as to beginning entrepreneurs or economist students.

After all, we are faced with the manifestations of the competition of firms on a daily basis, whether they are small enterprises or large well-known companies, foreign or domestic organizations. All of them compete among themselves, and this manifests itself in completely different ways.

What is competition?

There are many cumbersome scientific papers, various studies, articles, and also literature on this topic. In addition, there are very many definitions of the concept of "competition", they are given by different economists and scientists, but all of them carry a similar meaning. The methods of competition are often the most important issue addressed by this topic.

So, most definitions of competition are reduced to the fact that enterprises tend to occupy a leading position in their market, thereby covering more consumers, which, in turn, will bring additional profit. Proceeding from this, it can be concluded that the struggle for the client - there is competition. Methods of competitive struggle include a large number of ways to improve their position in the market. For example, it can be price methods of competition or mixed forms, based on various techniques and tricks. Variants and combinations can be mass, and their effectiveness is determined by the ability to adapt to the market situation.

Types, methods of competition

Depending on the markets and their scales, there are many forms for the development of competition. Affecting the types of competition, as a rule, imply perfect and imperfect competition, and in the modern economy there are many examples of its manifestations. For this, a quick glance at the various markets and industries is enough.

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

Price

Their implementation is most simple in terms of the activities that the organization should carry out. Pricing methods of competition include, as a rule, a reduction in the cost of the goods. The result of such actions can be increased consumer attention to products, increased sales and demand for goods. However, it should be remembered that everything has its own resource and boundary, at the intersection of which the opposite effect occurs.

The most important disadvantage of the price method is that, firstly, the company must lay the budget, initially planning to reduce prices, or the cost of production must be colossally low, so that the business is 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 possible to sell products for almost nothing, compared to competitors, but nobody canceled the fact that if the quality of the goods is so unsatisfactory, then it may not use any demand at all. It turns out that for the use of price methods, a product or service firm must meet at least minimum quality requirements, and sales must bring in revenue.

Non-price

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

In the modern economy, non-price methods of competition are much more effective. The fact is that consumers often perceive a simple price reduction as a sign of poor quality of the product, and some types of products, such as mobile phones, as a status indicator, so a cost reduction in this case can scare off potential users. Next, specific methods of competition will be described that relate to non-price methods.

Brand recognition

The most effective way to increase competitiveness is to create products that the consumer will recognize. It is not even worth mentioning the names, it's enough just to describe the industry, and examples will come to your mind, because there are a lot of such goods - there are cars with a world-wide name, there are food products (carbonated drinks, various snacks), clothes, shoes, stationery, Of course, smartphones. Probably, most readers thought about the same brands, car concerns and groups of companies, because their products are heard.

Such methods of competition allow not only to maintain their position in the market, but also restrain new firms. Quite possibly, the consumer will never find out that the new company is making better products, it is trite because of lack of confidence in it.

Quality

If before it was a question of brand recognition, now it is necessary to pass to that aspect, without which it can become a failure of business. Without quality products, it is impossible to achieve recognition. Awareness can work in both directions, and if the product has bad consumer properties, then it will not simply not be bought, but also will inform about it to other potential customers.

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

Service and maintenance

Methods of competitive struggle firms may include an emphasis on technical support of the goods. This is especially true for high-tech products, such as computers, smartphones, cars, as well as some services, for example, communications.

Product support can be expressed in different forms depending on the industry. For example, it can be hot lines, repair points, service stations and even personnel who will fix the problem with products at home.

Prestige

As mentioned above, brand recognition is an excellent competitive advantage. Prestige comes from the same, because most people prefer to use products with a rich history, whether they are the same cars or carbonated drinks. The status of a thing is very important for some category of clients, and competent marketing actions and positioning on the market will help make the product so.

Advertising

Methods of competitive struggle include many powerful tools. Advertising is one of them. In today's world there is a lot of scope for marketing activities. Thanks to the development of technology, advertising has moved far ahead. Now it's not just columns in newspapers or billboards, but also television and radio. A wide scope for showing your product, gives the Internet and social networks. A large number of Internet resources will help not only to communicate about themselves, but also attract more additional audience, which, perhaps, is looking for your proposal.

Extension of service life of goods

Very often consumers complain that relatively new products quickly become worthless. 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 the products produced, or a longer warranty period for the product. A good attitude towards the customer is a pledge 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 make entries and exits with their products. In addition, in the case of free competition, enterprises can not 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 free information exchange, exceptionally fair behavior of enterprises with regard to pricing policy, in addition, it can include high mobility of organizations in the context of the fact that firms can freely change their activities.

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

One of the most common types of imperfect competition to date is oligopoly. In this case, there is a limited number of different producers and sellers that dominate their industries. This situation occurs, for example, among car manufacturers, some food products, cosmetics. The thresholds of entrances to these markets are quite high for new firms.

What gives competition

The methods of competition, in view of their characteristics, are of great benefit to society. If competition is developed - consumers get either the best product or products at a lower price, compared to the supply 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 economy, both at the smallest levels and internationally. It is important to remember that the main objective of the business is to obtain and maximize profits, but a large number of participants in the battle for customers require advantages over other firms. Organizations should create such products and provide such services that will attract potential buyers. The basic methods of competitive struggle in the process of implementation themselves impose specific restrictions on business, not allowing to provide goods of inadequate quality, and regulate the price.

Results

The modern market can not exist without competition. Yes, it takes various forms, and methods of competitive struggle - depending on industries and spheres - are also different. They are constantly improving, 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 toward monopolistic 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 changes in the environment, as well as the trend of time.