Price and non-price competition. Big encyclopedia of oil and gas

To understand the mechanism of competition great importance has a correct identification of the reasons due to which it is possible to bypass . In business practice, it is customary to single out price and non-price factors, as well as the corresponding types of competition, as such reasons.

Price competition is a form of competition based on a lower (cost) offered product or service. In practice, it is applied big companies, focused on mass demand, firms that do not have sufficient strength and capabilities in the field of non-price competition, as well as in the course of penetrating markets with new products, while strengthening their positions in the event of a sudden aggravation of the problem. In direct price competition, firms advertise widely the price reductions of manufactured and commercially available goods. With hidden price competition, the market brings new product with significantly improved consumer properties, while the price increases slightly. The extreme form of price competition is "price wars" - crowding out competitors by gradually reducing prices based on the financial difficulties of competitors offering similar ones, the cost of which is higher.

Non-price competition is widespread where quality, its novelty, design, packaging, play a decisive role. form style, subsequent service, non-market methods of influencing the consumer, i.e. factors indirectly related or not at all dependent on price. During the 80s and 90s leading place the list of non-price factors includes reduced energy consumption and low metal consumption, complete absence or low pollution environment, crediting the delivered goods as a down payment for a new one, advertising, a high level of warranty and post-warranty service, the level of related services.

Sony on early stages mass marketing of its products on the Russian market faced a problem in the field of non-price competition. The problem was that under the existing internal warranty rules for products sold in Russia, consumers can only return faulty equipment after five attempts to repair it. Russian rules trade, however, allow the consumer to return the goods as soon as defects are discovered. All trading companies in Russia are subject to these rules. In order to increase sales with confidence, Sony has not only adjusted its warranty policies to regional requirements, but also significantly reduced the warranty period for the most requested products. As a result, the company strengthened its position in the non-price sphere of competition.

Illegal methods of non-price competition include industrial espionage; enticing specialists who own trade secrets; release of counterfeit goods.

In general, unfair competition can be attributed to one of the types of non-price competition, since it creates advantages in the non-price spectrum through actions that are contrary to fair practices in industrial and trade affairs. In accordance with Art. 1Obis of the "Paris Conference on the Protection of Industrial Property" these include all acts capable of causing confusion in any way with respect to the establishment, goods, industrial or commercial activities of a competitor; false statements while exercising commercial activities capable of discrediting an enterprise, goods, industrial or trading activity competitor indications or statements, the use of which in the course of commercial activities may mislead the public about the nature and method of manufacture, properties, suitability for use or quality of the product. At the same time, ignorance, delusion and other similar reasons are not justifying circumstances. Russian Law on Competition. ..” similarly treats unscrupulous.

Usually, the presence of powerful non-price competition is associated with a high level of development of market relations. In most stable markets of economically developed countries non-price competition is the most common form of competition. Against, Russian market more often characterized by the predominant development of price competition. The low solvency of consumers makes it possible to compete effectively at the expense of lower prices.

Since the competitiveness of a product is determined by its ability to withstand competition, competitiveness factors directly follow from the methods of competition. According to the methods of implementation, competition is divided into price and non-price.

Price competition

Such competition involves selling products at lower prices than competitors.

• 1. Offering products at a lower price compared to competitors means use in the enterprise latest technology , allowing to produce more products per unit of time and reduce the level of expenditure of resources, which ensures a lower level of production costs. Timely renewal of the active part of fixed assets makes it possible to prevent obsolescence of the first type, which, in turn, preserves price competitive advantages without increasing the price of products. Integrated mechanization and automation of production contribute to the release of labor and reduce the share of labor costs in the structure of product costs.
• 2. Another factor that contributes to reducing the cost of products, and hence the possible reduction in prices for it, is the organization of logistics at the enterprise. The success of companies that do not practice building and managing a well-established logistics supply chain can be called into question, because competition is becoming more and more fierce. Efficiently Built supply chain ensures the movement of materials and inventory that minimizes the formation of unnecessary buffers, such as excess inventory finished products in stock, at manufacturers or wholesalers, i.e. avoidance of money "tied" for as long as the product is not sold.
• 3. Speaking of price competition, it should be noted that the buyer is interested in the full costs of acquiring and operating products, i.e. This is the consumption price, which includes the selling price and operating costs for the entire life of the product.

Non-price competition

Non-price competition is based on distinguishing feature products compared to competitors.

Non-price factors of competitiveness include: ensuring product quality, brand (product recognition), organization of product sales channels, advertising, brand, after-sales service, product novelty.

In modern market economy Of particular importance in ensuring the competitiveness of products are the parameters associated with the implementation process, logistics and reducing the costs of distribution, after-sales service. The competitiveness of products is manifested through the image of the company, i.e. customer perception of the firm based on its business reputation as a manufacturer and supplier.

Speaking about the quality of products, we single out such parameters as technical, aesthetic and regulatory.

1. To the group technical The parameters that are used in the analysis of competitiveness include destination parameters and ergonomic criteria.

Destination Options determine the technical properties of the product, its scope and functions that it is intended to perform. They allow you to judge the content of the beneficial effect achieved by using this product in specific conditions of consumption. Assessment of the technical level of the product is especially important for industrial goods and durable goods. Destination parameters generally characterize the possibility of using products in a particular country.

Ergonomic criteria characterize products in terms of compliance with the properties of the human body in the process of performing labor operations and interacting with the machine. They are divided into hygienic, physiological, psychological.

• 2. Aesthetic criteria serve to model the external perception of the product; they reflect just such external properties that are most important for the consumer.
• 3. In addition to the requirements put forward by each individual consumer, there are requirements that are common to all products and must be met. it normative parameters that are set by the current international (ISO, IEC, etc.) and regional standards, national, foreign and domestic standards, current legislation, regulations, technical regulations of the exporting country and the importing country, establishing requirements for products imported into the country, standards of manufacturers of products, patent documentation. For example, electrical appliances must operate at the voltage that is supplied to the network and comply with the requirements of fire safety and explosion safety, and their design is determined by the conditions of the process being carried out.

Patent-legal indicators determine the patent purity of products (the degree of implementation in the product of original technical solutions that are not subject to patents in a particular country). If at least one of the requirements is not met, then the product cannot be brought to the market. Normative indicators include: the share of finished products, parts and parts local production in the proportion established by law; the degree of unification of products and the use of standard parts in it, etc. When a positive result analyzes of regulatory parameters move on to the analysis of competitiveness in specific markets.

• 4. Of great importance in ensuring the competitiveness of goods are commercial criteria (organizational and commercial conditions for the sale), which can be conditionally divided into methods of promoting goods and factors of product distribution: the amount of discounts from prices, delivery times, the scope of services provided to buyers in connection with the supply of goods, forms and methods of trading in specific markets.
• 5. Image is the perception of a company or its products by society. An effective image has a huge impact on the consumer's perception of a product: (i) it conveys an exceptional "message" that underpins the consumer's suggestions about the product's quality and benefits; (2) he will convey this message in a specific way, so that he is not affected by similar messages from competitors; (3) it carries an emotional load and therefore affects not only the mind, but also the heart of the consumer.

Developing a strong image requires creativity and hard work. An image cannot be introduced into people's minds in just one night, one viewing of a commercial. It must be constantly disseminated through all available channels of communication with consumers. Companies that are inconsistent in maintaining an image leave the consumer confused and thus may draw his attention to the messages of competitors. The image of a product depends on the image of the organization that produces it, the corporate image can be traced in business reputation, in the company name, in the emblem, symbols, uniforms of employees and much more.

In positioning the organization and products, creating their image, a lot of work is given; advertising aimed at:

• (1) informing potential customers about the firm and its products;
• (2) convincing potential customers that the company's products represent the best solution to customer needs;
• (3) reminding consumers of available options to meet their needs.

Most valuable quality modern marketers call the ability to create a brand. The well-known marketing scientist F. Kotler defines a brand as follows: a name, concept, sign, symbol, design, or a combination of them, designed to identify the goods offered by the seller. The trademark conveys to the buyer information about the product, for example, the trademark "Mercedes" speaks of such properties of the product as "well-designed", "reliable", "prestigious", "expensive". The best trade marks carry a guarantee of quality. The consumer perceives the brand as an important part of the product, so the use of the brand can increase its value, for example, most consumers perceive a bottle of Opium perfume as a high-quality expensive product, but they will consider the same perfume in a bottle without a name to be of lower quality, even if the scent of the perfume is exactly the same .

Well-known brands have buying privileges. They may be preferred, refusing substitute products, even if they are offered at lower prices. It is important that the consumer is loyal to the brand, not the manufacturer. In the field of electronics, such successful brands as Panasonic, JVC, Hyundai, Goldstar, Samsung can be mentioned.

Companies that create branded products are better protected from competitors in promoting them to the market. But even if your company and products have a great image, advertising program, which gives a very large influx of buyers, it is important to determine the factors commodity circulation , create and implemented, here is the competitive advantage. We are talking about distribution channels, forms and terms of deliveries and after-sales service. Each intermediary that brings the product closer to the end consumer represents one of the levels of the product distribution channel. There are zero-level channel, single-level, two-level, three-level distribution channels.

Channel zero level consists of a manufacturer that sells its products directly to the end consumer. Examples are peddling, mail order.

single level the channel includes one intermediary, such as a retailer. AT two-level There are two intermediaries in the distribution channel. In the market for consumer products, they are usually wholesalers and retailers. three-level the channel includes three intermediaries. For example, in the meat processing industry, a link of small-scale wholesale trade appears between wholesalers and retailers. Small wholesalers buy products from distributors and sell them in small batches to businesses retail. There are also longer distribution channels for products.

The competitor's lack of a retail network is seen as its weak point. Retail network is a place of direct contact with both consumers and products sold. The organization of retail trade, especially at the initial stage, is associated with high costs, but there are certain market conditions that force you to open Retail Stores(dealer centers):

• (1) the market is poorly understood, and the manufacturer's firm does not have financial resources for study and sales work;
• (2) the amount of pre-sales and after-sales service is negligible;
• (3) the number of market segments is small;
• (4) product range is wide;
• (5) product features determine the small multiplicity of one-time purchases.

For large scale production and promising business it is advisable to have two-level distribution channels - wholesale and retail trade in goods.

A serious criterion of competitiveness is the speed of order fulfillment, the ability to express delivery products and service efficiency. Profitable offer for the supply of products increase its competitiveness. Western marketers believe that the main reason for a customer to leave is unsatisfactory service and the fact that most people are willing to pay more (up to 10% or more) for good service. In some cases, good after-sales service can reduce the cost of consumption (the weight of the costs associated with both the purchase of a product and its use during life cycle). Some manufacturers offer low-interest credit for purchases, longer warranties, or free service and ongoing repairs. Recently, this practice has become widespread in the automotive industry, manufacturers of durable products and small electrical appliances. On competition in the field of services and provision additional services trying to secure a competitive edge for cell phone companies.

In the world market, intense competition between manufacturers of goods constantly exists, but in order to be as successful as possible on foreign markets, it is necessary to constantly increase the competitiveness of domestic products. Using the competition of foreign sellers when importing allows you to achieve the most favorable conditions for purchases.

The concept of competition

Competition (from the Latin "to collide") is the struggle of absolutely independent economic entities for limited economic resources. It is such an economic process in which enterprises operating on the market enter into economic interaction with each other in order to provide the best opportunities for selling their products, while satisfying the most diverse needs of consumers.

The concept of competition is so voluminous that it cannot be adjusted to any one universal definition that clearly expresses its essence. This is both a way of managing, and a special existence of capitals, when one of them competes with another.

There are 5 components of business competition:

• when potential market participants compete;
• already existing players or participants in the market;
• market pressure of buyers aimed at lowering the price;
• rivalry between surrogates of services or goods (for example, sellers of leather and leather substitutes);
• market pressure from suppliers to increase prices.

Competition as a Catalyst for Economic Development

In competition, there is a main distinguishing feature- a property of commodity production, as well as a method of development. In addition, competition plays the role of a spontaneous regulator of all public productions goods and services, and as the ultimate goals, competition leads, on the one hand, to the aggravation of market relations, and on the other hand, to a constant increase in the efficiency of production and economic activity.

There are two types of market competition - price and non-price. Both of these types have their own goals and methods of implementation, which differ significantly from each other.

Non-price competition uses higher product reliability than its rivals, more modern and attractive design, and many others as methods to achieve such goals. For example, many buyers prefer to overpay for a well-established foreign product than inexpensive and favorable conditions buy analogue goods of local production. Non-price methods of competition also include the provision to the consumer of a large range of services, such as staff training, payment of the first installment for the purchase of goods, and others, for example, reduced metal consumption or prevention of environmental pollution. One way to implement this is advertising, whose role in modern world cannot be underestimated.

Use of illegal methods

Non-price competition often uses illegal methods, such as industrial espionage, to achieve its goals. Sometimes they poach specialists from other firms, promising higher wages, in order to seize some trade secrets in the field of technology.

Illegal methods of competition also include the release of counterfeit goods, which, according to external data, are similar to genuine ones, but much worse in quality.

Price competition

In the global economy, competition is usually divided into price and non-price.

As a rule, price competition is based on an artificial reduction in prices for any type of product. In this case, the method of price discrimination is often used, which is effective only when a particular product is sold at different prices, and such price differences cannot be justified by differences in production costs.

Price discrimination, as one of the types of price competition, takes place under three conditions:

1. When the seller is a monopolist or has a certain degree of monopoly power.
2. The seller distributes buyers into groups that differ in purchasing power.
3. The original buyer does not have the ability to resell the product or service received.

In most cases, price discrimination is applied in the service sector (cleaning, lawyers, hotel business and others), in the provision of services for the transportation of finished products; the sale of goods that cannot be redistributed from one market to another (this, as a rule, applies to perishable products).

Price competition strategies

Price competition comes from those distant times of market rivalry, when similar goods were sold at a variety of prices, and reducing their cost was the factor due to which the seller, as it were, singled out his product from all those existing on the market, attracted the attention of the consumer to it and won himself the main overall market share.

This does not mean that there is no price competition in the market today. It certainly exists, but it always has various forms. Open competition can exist only if the moment has not come when the company has not exhausted its reserves to reduce production and, accordingly, increase profits.

But when a certain price equilibrium is established, any attempts by manufacturers to reduce prices entail a decrease in the cost of their products and from other manufacturers. Thus, some of them notice a gradual decline in production, which eventually leads to complete bankruptcy. And this, in turn, opens the way for other firms to the market.

Monopolies as an example of competition

In most cases, price competition as a method of competition itself is used by the so-called outsider firms in their fight against monopolies, which they have neither the strength nor the opportunity to fight with other methods.

Price methods of competition are also used to penetrate markets with the offer of new, previously unproduced goods, which is often not neglected by monopolies in those areas where the advantage is not on their side.

An example of price competition is monopolies that have the ability to control the production and sale of one or more varieties of goods or services. Such enterprises are endowed with a lot of privileges in the markets, they are structures in which there is no competition.

Thus, during direct price competition, manufacturing firms try by all available methods to report a price reduction for new, as well as for services and goods already on the market. It is important to understand that the modern consumer has a wide choice.

Federal Agency for Education of the Russian Federation

Kazan State Technological University

Coursework in the discipline "Marketing"

"Price and non-price competition"

Kazan 2007

Introduction

I chapter. The essence and significance of price and non-price competition.

Fundamentals of competition

The concept and types of competition

Competition Methods

The use of marketing in competition

Using marketing in different competitive environments

Three strategies without which you cannot win the competition

Ways to win buyers

Pricing Strategies

Non-price methods of promotion

II chapter. Research program to determine the impact of price and methods of non-price competition on consumer choice.

Determining the impact of price on consumer choice on the example of the dairy market

Determination of the influence of non-price competition methods on the choice of buyers on the example of the men's clothing market

Conclusion

Bibliography

Introduction

The relevance of research.

Nowadays, competition is mainly based on price, as more and more new products appear on the markets, and price competition is mainly used to enter the market with a new product. Competition is also used to strengthen positions in the event of a sudden aggravation of the sales problem.

But the methods of price competition are sometimes impossible to apply, and non-price competition comes to replace it in the market. This type of competition is most often used in the car market, in the furniture market. In this case, the leading position can be maintained not by lowering the price, but by improving the quality of service, the quality of goods, and reducing the metal consumption.

It can be concluded that competition provides consumers with the opportunity to choose and great amount goods at present. Competition is currently the most topical issue in any market for goods and services.

Illumination of the problem.

The topic of competition has become widespread in both economic and marketing literature. Almost any book reveals all the basic concepts and types of competition, as well as its methods, ways to win customers. Also the practical application of competition is now very often used. Almost all markets for goods and services use some form of competition. Competition is well considered in the books of Kotler F., Golubkov E.P., Ambler Tim gives practical studies of competition. Except scientific literature competition has become widespread in the periodical literature, which provides marketing research in various markets, and assesses the degree of competition of a particular product.

Targets and goals.

aim my term paper is a more accurate consideration of price and non-price competition, both in its theoretical use and in practical application in the market for goods and services.

tasks my coursework are:

1. Give a more precise definition of competition;

2. Consider the types, methods of competition;

3. Consider the use of marketing in competition;

4. Consider price methods of competition;

5. Non-price methods of competition;

6. Methods of winning buyers;

7. Spend marketing research competition in the market of goods and services and draw conclusions.

Work structure.

The topic of my course work is "Price and non-price competition". In my work I will consider:

· Concept, types, methods of competition;

· Use of marketing in competitive struggle;

·Methods of winning consumers;

All these questions will be considered by me in the framework of " Theoretical part, in addition, there will be a marketing research within the framework of Chapter II, which is called "Practical part". At the end of my work, I will draw conclusions that will be considered in Conclusion. All my work will be completed list of literature used by me.

I chapter. The essence and significance of price and non-price competition.

The concept and types of competition

Competition refers to the competition between individuals, economic units in any field, interested in achieving the same goal.

Soviet foreign trade organizations and enterprises are forced by force of circumstances to engage in competition in foreign markets with firms selling the same (and not only the same!) goods. This competition follows inevitably from the fact that both our firm and its rivals seek to capture the attention of buyers and induce them to purchase a product. As K. Marx noted, people acquire goods not because it (the commodity) “has a value, but because it exists” “use value” [№ 2 p. 144] and is used for certain purposes, it goes without saying :

1. that use-values ​​are "evaluated", that is, their quality is investigated (just as their quantity is measured, weighed);

2. that when different varieties of commodities can substitute for each other for the same purposes of consumption, one variety or another is given preference……;

And, therefore, since we want preference to be given to our product, we are obliged to compete (compete!) with manufacturers of other similar products in achieving this goal.

In commodity production, competition, as F. Engels noted, forces industrialists to “reduce the prices of goods that, by their nature or quantity, do not correspond to social needs at the moment,” and the need for such a reduction is a signal that they have produced items “that are either not needed at all or they are needed in themselves, but produced in unnecessary, excessive quantities. Finally, it is competition that leads to the fact that the improvement of machines turns into a "coercive law", the neglect of which is extremely costly for the manufacturer of goods.

Since competitors can very strongly influence a firm's choice of the market in which it will try to operate, it should be noted that competition in marketing can be of three kinds.

Functional competition arises because any need, generally speaking, can be satisfied in a variety of ways. And accordingly, all products that provide such satisfaction are functional competitors: those found in a sports store, for example, are just that. Functional competition has to be taken into account, even if the firm is a manufacturer of a truly unique product.

Species competition - a consequence of the fact that there are goods intended for the same purpose, but differing in some essential parameter. Such, for example, are passenger 5-seater cars of the same class with engines of different power.

Subject competition - the result of firms producing essentially identical products that differ only in workmanship or even the same quality. Such competition is sometimes called interfirm competition, which is true in some cases, but it should be borne in mind that the other two types of competition are usually interfirm as well.

Competition Methods

In the economic literature, it is customary to divide competition according to its methods into price and non-price, or competition based on price and competition based on quality (use value).

Price competition dates back to those distant times of free market rivalry, when even homogeneous goods were offered on the market at a wide variety of prices. Price reduction was the basis by which the manufacturer (merchant) singled out his product, drew attention to it, and, ultimately, won the desired market share.

In today's world, when markets are monopolized, divided between a small number of large firms that have captured key positions (IBM, for example, owns 70% of the computer market in the United States), manufacturers are trying to keep prices constant for as long as possible in order to purposefully reduce costs and expenses. on marketing, to ensure an increase in profits (maximization). In monopolized markets, prices, economists say, lose their elasticity.

This does not mean, of course, that modern market the “price war” is not used [No. 2, p. 145], - it exists, but not always in an explicit form. "Price War" open form is possible only until the moment when the firm exhausts the reserves of reducing mass production and the corresponding increase in the mass of profits. Once equilibrium has been established, any attempt to lower the price leads to the fact that competitors react in the same way: the position of firms in the market does not change, but the rate of profit falls, financial condition firms in most cases deteriorate, and this leads to a decrease in investment in the renewal and expansion of fixed assets, as a result, the decline in production intensifies, instead of the expected victories and crowding out competitors, unexpected ruins and bankruptcies occur.

That is why today we often observe not a decrease in prices as the scientific and technical revolution develops, but their increase: the increase in prices is often not adequate to the improvement in the consumer properties of goods, which, of course, cannot be denied.

Price competition is used mainly by outsider firms in their fight against monopolies, for competition with which outsiders do not have the strength and opportunities in the field of non-price competition. In addition, price methods are used to penetrate markets with new products (this is not neglected by monopolies where they do not have an absolute advantage), as well as to strengthen positions in the event of a sudden aggravation of the sales problem. With direct price competition, firms widely announce price cuts for goods produced and available on the market (usually by 20-60%).

Have you noticed that in different stores the prices for the same goods, albeit slightly, but still differ? This is price competition. Such a move is used by almost all sellers: from single sellers in the markets to reputable stores and companies.

Of course, price competition today is significantly limited, since its size is minimal and sometimes amounts to fractions of a percent. But not taking it into account would still be erroneous. In world practice, there are many examples of cheapening of goods, fast and even large-scale (electronic household equipment, semiconductors, ceramics, products, etc.).

Usually, a quick and cascading "dump" of prices is a rare, forced and economically detrimental (unprofitable) event. More preferably, of course, price fixing, ie. keeping them unchanged. Significant price reductions are only possible in two cases: either the seller immediately “inflates” the cost (puts up the goods at a price significantly higher than the manufacturer’s price) and therefore can afford discounts on purchases (especially wholesale), or regularities come into force. As for the second option, then this is understandable: obsolete products (especially household electronic equipment), not being sold cheaper today, will not be sold at all tomorrow, since demand for them will fall.

The emergence of new, more complex products leads to the transformation of the very concept of price, as such. Here we are already talking about the multi-element price of the consumer, which reflects the possible amount of expenses of the main buyer, which sellers are guided by and which is an indicator of demand and full consumption of the goods.

Prices with a basis lying outside the cost become the object of competition, which can be directly attributed to the price.

As a result, the understanding of price as a basis (or as a center), around which consumer preferences should fluctuate, is in some way transformed, giving way to seemingly non-price concepts such as quality, novelty, progressiveness, compliance with standards, design, efficiency in maintenance etc. Today, it is these parameters that form new system values ​​for the consumer and it is on them that price competition is primarily based. This applies both to individual exporting firms and to entire countries acting as exporters.

Expanding the range of consumer requirements dictates more stringent requirements for the exporter, for its competitiveness. This is a regularity: only a competitive firm can produce, which, in turn, requires certain conditions, characterized by the competitiveness of the country. As you can see - an inextricable chain, a vicious circle.

This regularity has been noticed for a long time and has been studied for a long time. The European Forum on Problems in Management regularly conducts studies to assess the competitiveness of Western countries, and the concept of "competitiveness" includes the ability to design, manufacture and, of course, market goods that, in terms of characteristics (both price and non-price), are most attractive to the average consumer.

In the struggle for the consumer (and hence for profit), the main methods of competition are used - non-price competition and price competition.

Price competition is a natural struggle of sellers based on lowering prices to a level lower than that of competitors. The result, by the way, is not always predictable (a decrease in profitability, or "pulling" some consumers to their product and an increase in profits) and depends on the actions of competitors, who will either respond with their price cuts or leave prices the same.

Competitors do not always respond by lowering their prices. It is often non-price competition that wins, based on more high quality, higher reliability, more attractive design (agree, if you have enough money, you will prefer a good Japanese car without even looking at a domestic one).

Price competition is based on the fulfillment of two conditions:

1) if the price for the buyer is a decisive factor;
2) if the company has become a leader, has "earned a name" and can afford price cuts, sometimes even to its own detriment.

Only then is it possible to make a profit, even though other companies at the same prices suffer losses.