What are the methods of competition? Even people who are far from entrepreneurial activity and economic sciences have common ideas about this issue. 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 for a wide audience, as well as for beginning entrepreneurs or economics students.
After all, we are faced with manifestations of the competitive struggle of firms on a daily basis, whether it be 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 cumbersome scientific papers, various studies, articles, and literature on this subject. In addition, there are many definitions of the concept of "competition", they are given by different economists and scientists, but at the same time they all carry a similar meaning. Methods of competition are often the most important issue addressed in this topic.
So, most of the definitions of competition come 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. Competition methods include a large number of ways to increase your market position. For example, it can be price methods of competition or mixed forms based on various techniques 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 size, there are many forms for the development of competition. Touching on the types of competition, as a rule, they mean perfect and imperfect competition, and in the conditions of the modern economy there are many examples of its manifestations. A quick glance at various markets and industries is enough for this.
As for the methods of competition, they are divided into price and non-price. Both of them are used and improved in business, while taking new forms, changing and adapting to new realities. Next will be highlighted methods of competition in the market.
Price
Their implementation is the simplest in terms of the activities that the organization should conduct. Price methods of competition include, as a rule, reducing the cost of 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 border, at the intersection of which the opposite effect occurs.
The main drawback of the pricing method is that, firstly, the company must lay the budget, initially planning to lower prices, or the cost of production should be colossally low for the business to be profitable. Therefore, these methods are good as long as the business remains profitable.
The second drawback will be such a factor as price attachment to the consumer properties of the product. It is possible to sell products for almost nothing compared to competitors, but no one canceled the fact that if the quality of the 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, the company must meet at least the minimum quality requirements, and sales must generate income.
Non-price
Speaking about these methods of increasing competitiveness, very often they mean a wide range of different actions. For example, it can be marketing events, and improving the consumer properties of the goods, also this includes improving the quality, service, warranty service and so on.
In today's economy, non-price methods of competition are much more effective. The fact is that consumers often perceive a simple reduction in prices as a sign of poor quality of goods, and some types of products, such as mobile phones, as an indicator of status, so a decrease in cost in this case can scare potential users. Next will be described specific methods of competition, which are non-price.
Brand recognition
The most effective way to increase competitiveness is to create products that the consumer will recognize. It’s not worth even giving names, it’s enough just to describe the industry, and examples will come to mind, because there are a lot of such products - there are cars with a worldwide reputation, there are products of the food industry (carbonated drinks, various snacks), clothes, shoes, stationery and, smartphones, of course. Most readers probably thought about the same brands, automobile concerns and groups of companies, because their products are well-known.
Such methods of competition can not only maintain their market position, but also hold back new firms. It is possible that the consumer will never know that the new company is making better products, corny because of a lack of trust in it.
Quality
If before this it was about brand recognition, now we should move on to that aspect without which it could 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 just not be bought, but it will also be reported to other potential customers.
Quality is not only formalities and compliance with all norms and metrological standards, but also customer satisfaction. If the properties of the products or services are not enough to ensure that the customer is satisfied, then they need to be modernized.
Service and maintenance
Competitive methods of a firm may include 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, such as communications.
Product support may be expressed in different ways depending on the industry. For example, it can be hotlines, repair points, service stations and even staff who will fix the problem with products at home.
Prestige
As stated above, brand recognition is a great competitive advantage. Prestige follows from the same, because most people 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 as such.
Advertising
Competition methods include many powerful tools. Advertising is one of them. In today's world, there is great scope for marketing activities. Thanks to the development of technology, advertising has advanced far. Now it is not just columns in newspapers or billboards, but also 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 communicate about yourself, but also attract more additional audience, who may be looking for exactly your offer.
Extension of product life
Very often, consumers complain that relatively new products are quickly deteriorating. As a rule, we are talking about household appliances, electronics, and sometimes about clothes. An excellent competitive advantage will be either improved product quality or a longer warranty period for the product. A good attitude towards the customer is the guarantee that he will return to buy your products again.
Types of competition
Returning to this topic, the existence of both perfect and imperfect competition should be noted again.
In the first case, a free market is meant, where firms can calmly make entries and exits with their products. In addition, in the case of free competition, enterprises cannot significantly affect the cost of goods in their segment, which creates a breadth of choice for the buyer.
There is another group of signs of free competition, it includes factors such as free exchange of information, extremely honest behavior of enterprises in relation to pricing policy, in addition, it can include high mobility of organizations in the context of the fact that firms are free to change their activities.
Imperfect competition implies the absence or distortion of the above conditions, as well as the emergence of various conspiracies, increased pressure and control of certain industries, the emergence of monopolists (the only companies in their industry).
One of the most common types of imperfect competition today is oligopoly. In this case, it implies a limited number of different manufacturers and sellers who dominate their industries. This situation occurs, for example, among car manufacturers, some food products, and cosmetics. The thresholds for entering these markets are high enough for new firms.
What gives competition
Methods of competition, in view of 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 a leading position, which provides a huge plus for the development of society and the economy both at the smallest levels and internationally. It is important to remember that the main goal of a business is to obtain and maximize profits, but a large number of participants in the battle for customers require advantages compared to other companies. Organizations should create such products and provide services that interest potential buyers. The main methods of competition in the implementation process by themselves impose peculiar restrictions on the business, not allowing to provide goods of inadequate quality, and regulate the price.
Summary
A modern market cannot exist without competition. Yes, it takes various forms, and the methods of competition - depending on industries and spheres - 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 a monopolistic or even oligopoly. The task of enterprises is to recognize changes in time and adapt to them.
These are natural processes, the actions of firms give rise to competition. The methods of competition in this case are only a consequence of environmental changes, as well as the spirit of the times.