The essence of market relations is expressed by the concept of "competition". It is a type of relationship between manufacturers that determines prices and volumes of offers in the market of goods and services. On the other hand, there is competition between consumers, and it is it that forms market prices and demand volumes. The desire of man to surpass others is the main motive and incentive in the competition. The competitiveness of a company determines its share in the market sphere, and competition is a dynamic process that stimulates the provision of the market with new and better products and services.
The competitiveness of the organization is determined by the means used in the competition, which can improve the organization's position in the market. These include: price and quality of products, product range and after-sales service, terms of payments and deliveries, as well as advertising and information.
The competitiveness of the entrepreneur or manufacturer is determined by the efforts he makes to satisfy the consumer. Therefore, competition in a market economy is a determining factor in ordering prices, as well as a serious incentive for introducing new inventions, technologies, and ideas into production. In addition, it promotes the rational and efficient use of resources, ensures the displacement of inefficient enterprises from production, and serves as a guarantee of preventing the dictates of monopolies in relation to consumers.
The functions of competition are regulation, motivation, distribution and control.
The term “competitiveness” applies not only to a single product or service, but also to an industry or enterprise. Competitiveness is the subject of study by specialists in the field of management, marketing, micro and macroeconomics, as well as commodity science.
The basic concept of competition in a market economy has been and remains the competitiveness of products (goods), which is a relative characteristic that reflects the fundamental difference between the goods (products, services) from the goods of a competing organization and reflects the degree of costs of its production. Costs in this case include the price of consumption, which includes the costs of the buyer, as well as all associated costs for its use or consumption.
Competitively, competition is divided into fair and unfair competition. The main methods of its bona fide form are: lower prices and improve the quality of goods and services, the active use of advertising and the development of after-sales services, the creation of new goods using the achievements of scientific and technological progress.
One of the traditional forms of competition - “price war” - can be carried out by lowering prices, seasonal sales, local changes in pricing policies, increasing the term of a consumer loan, providing an expanded range of services without increasing prices for them. This kind of competition is designed to push uncompetitive, weaker rivals out of the market, as well as to penetrate the developed market for goods and services.
But the most effective form of competition for sales markets is to improve the quality of goods and services offered on the goods market. At the same time, the appearance on the market of higher-quality products makes it very difficult to take response from competitors, since the release of a new product involves a long-term program, including the accumulation of scientific, technical and economic information, development and production.