Difference between price competition and non-price competition. About the costs of price competition

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Price competition occurs when competing firms use price policy as the main lever of competition. Moreover, it can be carried out either directly, openly, through a public statement about reducing prices for their products, or hidden, when the price reduction threshold is not subject to publicity. Recently, price competition is increasingly giving way to non-price competition due to changes in the nature of the vast majority of markets and their transformation into buyer's markets.  

Price competition involves selling goods or services at prices lower than those of competitors, due to a temporary decrease in profits. Thus, in order to win or retain customers, firms can use various types of discounts compared to the list price for different categories of buyers (for example, large firms that have a foothold in the market for some time may generally refuse to make a profit and, in order to block the invasion of new competitors, establish so-called limiting prices for its products, i.e. prices below the minimum point of the long-term average cost curve of a potential competitor.  

Price competition occupies an important place in the trade of perfumes and cosmetics. Companies strive to offer consumers prices that are not only acceptable to them, but also, if possible, lower, even if only slightly, than competitors’ prices for similar products.  

Price competition involves selling goods at more low prices than competitors. A price reduction is theoretically possible either by reducing production costs or by reducing profits. Small and medium-sized companies often agree to small profits to stay in the market. Large monopolies can afford to give up making profits altogether for some time in order to ruin their competitors and force them out of the market with the help of cheap products.  

Price competition involves selling goods and services at prices that are lower than those of a competitor. A price reduction is possible either by reducing costs or by reducing profits, which only large firms can afford.  

Price competition plays a secondary role in the textbook market. First, unlike most markets, in this case someone else chooses the product for the consumer.  

Price competition comes in two forms.  

Price competition can be started not only by a company with a dominant position in the market, but also by a small enterprise in order to survive in a competitive environment.  

But price competition can also turn into price wars. By lowering the price slightly, one of the companies can attract the majority of buyers.  

There is strong price competition among sellers.  

In price competition, local small firms benefit, which, taking advantage of the fact that prices on the Norwegian market are 15 - 20% higher than in other European countries, provide customers different types discounts  

An example of price competition (Bertrand competition) with power restrictions is illustrated in Fig. 7.3. In the figure, D(p) is the demand curve. The two vertical lines represent the capacity of each firm. The third vertical line k k2 reflects the total capacity in the industry.  

Introduction 3

Chapter 1. The essence and features of market competition in the modern economy 5

1.1. Concept and main indicators of competition. 5

1.2. Scope and methods of competition 7

Chapter 2. Analysis of methods of price and non-price competition 9

2.1. Price competition 9

2.2. Non-price competition 22

2.3. Pack 28

Chapter 3 Realization of effective competitiveness of Russia in the global economy 30

3.1. Russia's competitiveness in the world market. thirty

3.2. Price competition in Russia in world markets: positions of domestic firms 37

3.3.Competition of Russian financial and industrial groups in world markets 43

3.4. Competitive advantages and disadvantages of Russia 46

Conclusion 48

References 50

Introduction

The topic of this work is “Price and non-price competition».

The relevance of the chosen problem is that the market, with the help of three mechanisms - competition, supply and demand, pricing - sets the economic system in motion and gives it incentives for further development. The market forces business entities to enter into competitive relationships and constantly supports competition between them. The market mechanism stimulates entrepreneurs to continuously create new products.

Through the pricing mechanism, the market continuously supplies entrepreneurs with information about changes in the market, the emergence of new conditions, etc. It influences all market participants, displacing weak entrepreneurs and rewarding the strongest, using various methods of competition. Competition is an effective mechanism of competition in the market. It acts as a coercive force, forcing entrepreneurs to fight to increase profits on capital by searching for new forms and methods of production, using the latest technologies, new ways of organization and management.

The purpose of the study is to study the essence of price and non-price competition.

There are two types of competition in the market - price and non-price.

Through price competition sellers of goods and services influence the consumer through changes in price, i.e. they move along the demand curve, either raising or lowering the price. It is a flexible marketing tool that allows you to change prices based on demand, cost or competition factors. Currently, along with giant monopolies, medium-sized, small and even the smallest firms are entering the competition, which is the result of the internationalization of economic life. Non-price competition minimizes price as a factor in consumer demand for goods or services and focuses efforts on promotion, packaging, delivery of goods, availability service and other factors. The more unique the offer of products or services is from the point of view of consumers, the greater the possibility of setting higher prices than those set for competitors' products.

Job objectives:

Consider the theoretical foundations and features of market competition in the modern economy

Study the mechanisms of price and non-price competition. Their forms, types and methods.

Explore the practical basis for the formation of mechanisms of price and non-price competition in Russia on the world market, using factual material.

The subject of the work is competition as the most important phenomenon market economy.

The object of the work is methods of competition, the operation of mechanisms of price and non-price competition.

Structurally, the work consists of an introduction, three chapters, a conclusion, and a list of references.

Chapter 1. The essence and features of market competition in the modern economy

1.1. Concept and main indicators of competition.

Competition - (from the Latin Concurrere - to collide) - the struggle of independent economic entities for limited economic resources. This is an economic process of interaction, interconnection and struggle between enterprises operating on the market in order to provide better opportunities for marketing their products, satisfying the diverse needs of customers. There is always intense competition between producers on the world market. Successful performance in foreign markets requires a significant increase in the competitiveness of the domestic goods offered. When importing, the use of competition foreign sellers allows you to achieve more favorable purchasing conditions. Competition(from Lat. competition - to face) - competition between producers of goods and services for the sales market, the conquest of a certain market segment, this is the struggle between private producers for more favorable conditions for the production and sale of goods, for obtaining the highest profits. Competition- is an integral part of the market environment, a necessary condition for development entrepreneurial activity, this is the center of gravity of the entire market economy system, the type of relationship between producers regarding the establishment of prices and volumes of supply of goods on the market. This is competition between manufacturers. Competition between consumers is similarly defined as relationships regarding the formation of prices and the volume of demand in the market. The incentive that motivates a person to compete is the desire to surpass others. Competitive fight- this is a dynamic (accelerating movement) process that serves to better supply the market with goods.

But the concept of competition is so ambiguous that it is not covered by any universal definition. This is both a way of managing and a way of existence of capital when one capital competes with other capital. Competition is seen as both the main essential feature, the property of commodity production, and the method of development. In addition, competition acts as a spontaneous regulator of social production.

The struggle for economic survival and prosperity is the law of the market. Competition (as well as its opposite - monopoly) can only exist under a certain market condition. Different types of competition (and monopolies) depend on certain indicators of market conditions. The main indicators are:

Number of firms (economic, industrial, trading enterprises with rights legal entity), supplying goods to the market;

Freedom for an enterprise to enter and exit the market;

Differentiation of goods (giving a certain type of product for the same purpose different individual characteristics - by brand, quality, color, etc.);

Firms' participation in market price control.

Market competition is one of the most important categories of modern economic theory. Not a single model of the market functioning mechanism can do without this concept. Moreover, the theory of market competition, unlike many other branches of economic theory, finds and has found before, during at least the last three centuries, the widest practical application. Starting from mercantilists to modern legislative provisions in the field of antimonopoly policy, states with traditional market economies are trying to regulate the market, providing it with a certain competitive environment.

Competition, as a scientific concept, is associated with the name A. Smith. The market regulation mechanism, which he called the “invisible hand,” forms the prices of goods under the influence of demand, supply and competition. Let us note that his main work, “An Inquiry into the Nature and Causes of the Wealth of Nations,” which brought A. Smith world fame, was directed, first of all, against the policy of mercantilism, customs restrictions and fiscal policy of the state, which, according to his concepts, should generally abandon from interference in economic life.

From the very beginning, competition was assigned not only a function of market regulation, but also a stimulating role. In other words, it was considered as a factor in the development, improvement of production and the quality of the produced commodity mass. Although the physiocrats, based on their theory of the natural order, did not consider merchants and industrialists as a productive class, A. Smith overcame this limitation, which allowed the classics to expand the “functional capabilities” of competition, giving it the role of a productive force and a factor in social development or progress, understood since the growth of public welfare.

The ideal market, according to A. Smith's theory, did not take place. It turned out that it was impossible to free the state from interference in market processes. Contradictions between employees and capital owners ultimately forced the state to adopt certain regulatory legislation. Similar phenomena occurred in the field of customs policy and in the field of maintaining a sustainable competitive market.

IN Everyday life We increasingly come across the words: “competition”, “competitive struggle”, “competitiveness”, “competitive market”. These strings are sometimes given different meanings, but they can all be boiled down to two concepts - "competition" and "competitive market". The first concerns the ways in which individual firms behave in the market, the second concerns market structures and covers all aspects of the market for any goods that affect the behavior and activities of firms (the number of firms in the market, production technology, types of goods that are sold, etc.).

Market competitiveness is determined by the boundaries within which individual firms are able to influence the market, that is, the conditions for selling their products, primarily prices. The less individual firms influence the market where they sell their products, the more competitive the market is considered. The highest degree of market competitiveness is achieved when an individual firm does not influence it at all. This is only possible if there are so many firms operating on the goods market that any of them in particular cannot influence the price of the goods in any way, and perceives it as such that it is determined by market demand and supply. Such a market is called completely competitive. And firms that operate in a completely competitive market do not compete with each other. If individual firms have the opportunity to influence the conditions for the sale of their products (primarily prices), then they compete with each other, but the market where this opportunity is realized is no longer considered entirely competitive.

1.2. Scope and methods of competition

In terms of scale of development, competition can be:

individual (one market participant strives to take “his place in the sun” - to choose the best conditions for the purchase and sale of goods and services);

local (conducted among commodity owners of some territories);

sectoral (in one of the market sectors there is a struggle to obtain the greatest income);

intersectoral (competition between representatives of different sectors of the market to attract buyers to their side in order to extract more income);

national (competition of domestic commodity owners within a given country);

global (the struggle of enterprises, business associations and states of different countries in the world market). According to the nature of development, competition is divided into: 1) free and 2) regulated.

According to the methods of conducting market competition is divided:

On price(market positions of rivals are undermined by lowering prices) Price competition occurs, as a rule, by artificially driving down prices for a given product. At the same time, price discrimination is widely used, which occurs when a given product is sold at different prices and these price differences are not justified by differences in costs. Price discrimination is possible under three conditions:

1. The seller must be a monopolist or have some degree of monopoly power;

2. The seller must be able to distinguish buyers into groups that have different purchasing power;

3. The original purchaser may not resell the product or service.

Price discrimination is most often used in the service sector (doctors, lawyers, hotels, etc.), when providing services for transporting products; when selling goods that cannot be redistributed from one market to another (transportation of perishable products from one market to another).

AND non-price(victory is won by improving product quality, better customer service, etc.). 1

Chapter 2. Analysis of methods of price and non-price competition

2.1. Price competition

In economics, 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 competition, when even homogeneous goods were offered on the market at a wide variety of prices. Reducing prices was the basis by which the industrialist (merchant) highlighted his product, attracted attention to it and, ultimately, won the desired market share.

When markets are monopolized, divided among themselves by a small number of large firms that have captured key positions, producers strive to keep prices constant as long as possible in order to purposefully reduce costs and marketing expenses to ensure an increase in profits (maximization). In monopolized markets, prices become less elastic. This does not mean, of course, that there is no “price war” in the modern market - it exists, but not always in an explicit form. A “price war” in open form is possible only until the company exhausts the reserves for reducing the cost of goods arising from the expansion of the scale of mass production (Texas Instruments set the price for a portable calculator in 1972 at $149.95, and in 1977 reduced it to 6-7 dollars)* and a corresponding increase in the amount of profit.

When equilibrium has been established, a new attempt to reduce the price leads to competitors reacting in the same way: the positions of firms in the market do not undergo changes, but the rate of profit falls, the financial condition of firms in most cases worsens, and this leads to a decrease in investment in renewal and expansion fixed assets, as a result, the decline in production intensifies, instead of the expected victories and ousting of competitors, unexpected ruins and bankruptcies occur.

That is why nowadays there is often not a decrease in prices as scientific and technical progress develops, but an increase in them: the increase in prices is often not adequate to the improvement in the consumer properties of goods, which cannot be denied. 2

Price competition is used mainly by outsider firms in the fight against monopolies, to compete with which outsiders do not have the strength and ability to compete in the field of non-price competition. In addition, pricing methods are used to penetrate markets with new products (monopolies do not neglect this, 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 reductions for manufactured and marketed goods: for example, in 1982, Data General reduced the price of one of its storage devices by 68%, Perkin-Elmers - by 61%, Hewlett - Packard” by 37.5%, as a result of which the average price level fell from 20 dollars (early 1981) to 5 dollars (mid-1982).

With hidden price competition, firms introduce a new product with significantly improved consumer properties, and raise the price disproportionately little: for example, Crate Research released a computer in 1976 with a productivity of 1 million operations/sec. and a price of 8.5 million dollars, and in 1982 - a computer whose performance was three times higher, and the price increased only by High price strategy, or the “cream skimming” strategy, involves selling goods initially at high prices, significantly higher than the price production, and then their gradual decline. It is typical for the sale of new products protected by patents at the introduction stage, when the company first releases an expensive version of the product, and then begins to attract more and more new market segments, offering buyers of various segment groups simpler and cheaper models.

The high price strategy provides the seller with a quick return on investment in the development and promotion of the product. As a rule, such a policy is possible if the product is new, high-quality, has a number of attractive, distinctive features for a consumer willing to pay a high price for its acquisition, and is designed mainly for innovative consumers.

The most acceptable conditions for a high price strategy:

High level of current demand from a large number of consumers;

The initial group of consumers purchasing a product is less price sensitive than subsequent ones;

Unattractiveness of a high initial price for competing firms and limited competition;

The perception of a high price on the part of buyers as evidence of the high quality of the product;

Relatively high level of costs of small-scale production, providing financial benefits for the company.

This type of strategy is becoming increasingly widespread in the market and practically prevails. It is especially actively used when there is a slight excess of demand over supply in the market and the company occupies a monopoly position in the production of a new product. This strategy is acceptable under conditions of low elasticity of demand, when the market reacts passively or does not react at all to lower prices or to their low level, as well as when the efficiency of large-scale production is low.

Subsequently, when a market segment turns out to be saturated and analogous and competing products appear, the company reduces the price of this product, meaning the development of new market segments and the release of new, improved products.

Firms may proactively reduce prices when production capacity is underutilized or market share is declining under the pressure of aggressive price competition from competing firms. However, when pursuing a policy of proactive price reduction, one should take into account the reaction of consumers, who may perceive a price reduction as evidence of the imminent replacement of a given product with a newer model, poor quality of the product or its decline, low demand for the product, the poor financial position of the company, the possibility of the company's imminent exit from the market of this product and the danger of insecurity in the future with spare parts, the possibility of further even greater price reductions, etc.

Thus, the consumer may react inadequately to price cuts and not only not expand their purchases, but, on the contrary, even reduce them.
The low-price strategy, or market penetration strategy, involves the initial sale of goods that do not have patent protection at low prices in order to stimulate demand, win the competition, push competing products out of the market and conquer the mass market and significant market share.

The firm achieves success in the market, displaces competitors, achieves a certain monopoly position during the growth stage, and then raises prices for its goods. However, it is currently very difficult to use such a policy as a pricing strategy. It is practically extremely difficult for a company to secure a monopoly position in the market. A low price strategy is not appropriate for markets with low elasticity of demand. It is effective in markets with large production volumes and high elasticity of demand, when the buyer is sensitive to low prices and sharply increases the volume of purchases. In this case, it is actually very difficult to increase prices, since this circumstance causes a negative reaction in the buyer, he is extremely reluctant to increase the price and, most often, may refuse to conclude a deal.

Therefore, marketers recommend using a modified form of this type of strategy: low prices allow the company to “break through” into the market, stimulating sales growth, but in the future they do not increase, but remain at the same low level and even decline. The massive supply of a product to the market and the growth of its sales ensure profit, that is, the company is ready to reduce income per unit of product in order to obtain a larger total profit due to a large sales volume. In addition, when goods are produced in large quantities, their cost and sales costs are reduced and the price initially set at a low level turns out to be economically justified and corresponding to the low level of costs.

A low price level when a product enters the market may be due to the following circumstances:

Market sensitivity to prices and high elasticity of demand;

Unattractiveness of low prices for active and potential competitors;

Reducing production and distribution costs as production and sales volumes of a given product increase.

A proactive increase in prices is possible, which may be caused by inflationary processes, rising costs that are not covered by a corresponding increase in labor productivity, and the emergence of excessive, increased demand.

Prices can be increased quite unnoticed by consumers by canceling discounts or introducing expensive goods into the product range.

You can raise prices if you have a large, established market, whose buyers are interested in purchasing the goods of a particular company and have high “loyalty” to its brand, as well as in the event of corresponding changes in the economic and marketing environment, for example, when there is a general increase in wholesale prices and retail prices, inflation processes, the introduction of export duties, etc.

Although buyers have an extremely negative attitude towards the policy of increasing prices, they can also perceive it positively, for example, considering rising prices as evidence of great demand for goods and an increase in their quality.
The differentiated pricing strategy is actively used in the trading practice of companies that establish a certain scale of possible discounts and surcharges to the average price level for various markets, their segments and customers: taking into account the types of buyers, the location of the market and its characteristics, the time of purchase, product options and their modifications .
The differentiated pricing strategy provides for seasonal discounts, quantity discounts, discounts for regular partners, etc.; establishing different price levels and their ratios for various goods in the general range of manufactured products, as well as for each modification, representing a very complex and painstaking work to harmonize the general product, market and pricing policy.

preferable if a number of conditions are met:

Easily segmented market;

The presence of clear boundaries of market segments and high intensity of demand;

Inability to resell goods from low-price segments to high-price segments;

The inability of competitors to sell goods at low prices in segments in which the company sells goods at high prices;

Taking into account the perception of buyers of differentiated prices to prevent reactions of resentment and hostility;

Consistency of the selected differentiated form of pricing with the relevant legislation;

Covering additional costs of implementing a differentiated pricing strategy with the amount of additional revenues as a result of its implementation. 3

Differential pricing strategy allows you to “encourage” or “punish” various buyers, stimulate or somewhat restrain the sales of various goods in different markets. Its specific varieties are the preferential price strategy and the discriminatory price strategy.

Preferential pricing strategy. Preferential prices are established for goods and for buyers in which the selling company has a certain interest. In addition, the policy of preferential prices can be carried out as a temporary measure to stimulate sales, for example, to attract buyers to sales.

Preferential prices are the lowest prices at which a company sells its goods. As a rule, they are set below production costs and in this sense may constitute dumping prices. They are used to stimulate sales for regular customers, to undermine weak competitors through price competition, and also, if necessary, to clear warehouse space of stale goods, etc.

Discriminatory pricing strategy. Discriminatory prices are part of a firm's overall pricing strategy for certain market segments and are set at the highest level used to sell a given product. They are used in relation to incompetent buyers who are not oriented in the market situation, to buyers who show extreme interest in purchasing this product, to buyers who are undesirable for the selling company, as well as when pursuing a policy of price cartelization, i.e. concluding various types of price agreements between firms.

Such a strategy is possible when the government pursues a general discriminatory policy towards the country in which the buying company operates: establishing high import or export duties, establishing mandatory rule using the services of a local intermediary, etc.

Single price strategy, or setting a single price for all consumers. This strategy strengthens consumer confidence, is easy to apply, convenient, does not require bargaining, and makes catalog sales and mail order possible. However, the single price strategy is not used so often in pricing practice and, as a rule, is limited by time, geographic and product boundaries.

Flexible, elastic pricing strategy provides for changes in the level of sales prices depending on the buyer’s ability to bargain and his purchasing power. Flexible prices, as a rule, are used when concluding individual transactions for each batch of heterogeneous goods, for example, for industrial goods, durable goods, etc. 4

Strategy of stable, standard, unchanged prices involves the sale of goods at constant prices over a long period. It is typical for mass sales of, as a rule, homogeneous goods for which a large number of competing firms are on the market, for example prices for transport, candy, magazines, etc. In this case, regardless of the place of sale, for quite a long time the goods are sold to any buyer at the same price.

Strategy of unstable, changing prices provides for the dependence of prices on the market situation, consumer demand or production and sales costs of the company itself. The firm sets different price levels for different markets and their segments.

Price leader strategy involves either the company correlating its price level with the movement and nature of prices of the leading company in a given market for a specific product (depending on the firm’s place in the market and the size of its market share, this may be leader No. 1, leader No. 2, leader No. 3), or concluding an agreement (usually unspoken) with the leader in a given market or its segment, i.e. If the leader changes the price, the firm also makes a corresponding change in the prices of its goods.
This pricing strategy is outwardly very attractive and convenient for companies that do not want or do not have the opportunity to carry out their own developments

pricing strategy, however, it is also dangerous: by excessively constraining the company’s pricing initiative, it can lead to serious errors and miscalculations (for example, the leader used an erroneous strategy or took a deceptive move, etc.).

The competitive pricing strategy is associated with the implementation of an aggressive pricing policy by competing firms - with their lowering prices and implies for a given firm the possibility of implementing two types of pricing strategy in order to strengthen its monopoly position in the market and expand its market share, as well as in order to maintain the rate of profit from sales.
In the first case, the seller also carries out a price attack on its competitors and reduces the price to the same or even lower level, trying not to lose, but, on the contrary, to increase its market share.

Reducing prices has an effect on markets and its segments that are characterized by high elasticity of demand. The basis for reducing prices is to reduce production and distribution costs. This strategy is also used effectively for those markets in which it is extremely dangerous to lose share.

In the second case, the selling company does not change prices, despite the fact that competing firms have reduced prices, as a result of which the rate of profit from sales is maintained for it, but there is a gradual loss of market share.
This pricing strategy is used in markets with low elasticity of demand, where there is no sharply negative reaction from buyers regarding maintaining a high price level and some infringement of their financial interests when purchasing, where competing firms are small and it is difficult for them to allocate capital investments to expand production, when prices decline can lead to a significant loss of profits and when this selling company has confidence that it is able to restore lost positions in the market due to its high prestige among buyers.

Prestige pricing strategy involves the sale of goods at high prices and is designed for market segments that sell Special attention on the quality of the product and brand and having low elasticity of demand, as well as being sensitive to the prestige factor, i.e. consumers do not purchase goods or services at prices they consider too low.
The prestige pricing strategy is possible in the case of high prestige of the company and its products, as well as minimal competition, with constant or increasing relative costs of production and sales as sales proceed.
The prestigious price strategy, like standard prices and unrounded prices, belongs to the group of pricing strategies based on psychological pricing.

The unrounded pricing strategy involves setting prices below round numbers. Buyers perceive such prices as evidence of a firm's careful analysis of its prices and a desire to set them at a minimum level. In addition, buyers, when receiving change, perceive such prices as lower or reduced. If a consumer intends to buy a product at a price of no more than 20 rubles, then he will buy it for 19 rubles. 95 kopecks the same as for 19 rubles, since the price is in the digital interval specified by him.
Marketers also recommend setting the price as an odd number, for example, not $300, but $299, not $500, but $499.99.

The bulk purchasing pricing strategy involves selling a product at a discount if it is purchased in large quantities. This strategy is effective if one can expect an immediate significant increase in purchases, an increase in the consumption of goods, attracting the attention of buyers of competing companies to the product, and solving the problem of clearing warehouses of outdated, poorly selling goods.

The strategy of closely linking the price level with the quality of the product involves setting prices at a high level, corresponding to the high level of product quality and the image formed by the company among buyers in relation to its products.

In trading practice pricing strategies They are not used separately according to their types, but in combination, when one type is superimposed on another. Thus, the strategy of differentiated prices is used together with the strategy of “cream skimming” and unrounded prices, and so on. For example, the Japanese company Sony has a differentiated price schedule for various buyers: domestic or foreign, permanent or new, using purchased goods in Japan or exporting them abroad, etc., and at the same time changes the price level depending on from stage life cycle goods: at the stage of introduction, the product is sold at the highest prices, and at the stage of exit from the market - at the lowest. All these prices are usually expressed in non-round numbers: 198 thousand yen, 1.98 thousand yen, etc.

Many circumstances could push a company to lower prices, if not for the danger of initiating a price war, which could have devastating consequences for the company itself. There are various reasons that prompt a company to reduce prices for its products. The main ones are the following:

Excess production capacity. To occupy them, the company needs to expand the sales volume of its products. This can be achieved by influencing demand through advertising, product improvement, etc. But if these methods do not give a sustainable result, the company may resort to lowering prices. In this case, one may be wary of a price war if the market is highly competitive and the industry as a whole is characterized by high fixed costs, big sizes coverage and excess capacity. At the same time, strong competitors will try to maintain their market share.

Reduction of the market share occupied by the company due to intense price competition.

The firm achieves market dominance by reducing production costs.

The need to reduce prices under the influence of the crisis.

With the exception of the last point, the above tactical steps of the company are associated with a huge risk of losing the price war. The most dangerous are three moments that arise in the market when the price of one of the companies decreases:

Buyers may think that a low price reflects the product's low quality and will buy competitors' products that have a higher price.

If a competing form offers lower prices, there will be a contraction rather than an expansion of the existing market for the firm initiating the price reduction.

Possessing large financial reserves, a competing firm will be able to maintain a low price on the market longer, driving the firm that initiated the price reduction to ruin.

A normal condition for a price increase is a disruption of the market equilibrium in the direction of demand. The company assesses the situation and increases the price and, accordingly, receives more profit.

But such cases are rare in the development of a market economy. Most often, a company has to increase the price of its products due to rising costs if they do not cause a corresponding increase in labor productivity. Often, firms raise prices due to expected inflation or changes in government regulation and government policy.

Depending on the external and internal conditions of the company’s development, as well as on the nature of the product produced, the company may have additional profit from the price increase or, conversely, suffer financial losses.

Example. With a product price of 1096 rubles. demand will be 100 units per month. Revenue amounted to 100,000 rubles, with gross costs - 95,000 rubles, gross profit - 5,000 rubles.

The price was increased by 1% and became 1010 rubles, while consumers did not notice such an increase and demand remained at the same level. Accordingly, the gross revenue amounted to 101,000 rubles, and the gross profit - 6,000 rubles. Thus, profits increased by 20%.

Most often, a price increase is reflected in the sales of the company's products and can lead not to an increase, but to a reduction in profits. However, in developed countries, methods of “price adjustment in favor of the consumer” are widely used, although in fact the company, anticipating an increase in the price of its products, guarantees demand and ultimately, as it were, insures itself.

Price adjustment measures in favor of consumers:

Agreement to set exact prices at a later date. Such an agreement may contain the condition that the final price is set only when the product is fully manufactured and even delivered to the consumer. This approach to pricing is common in industries with long production cycles, such as industrial construction and heavy engineering.

Application of moving price. The company requires the buyer to pay for the goods at current prices. However, following the sliding conditions stipulated in the contract, it gradually increases prices according to a price index established in advance, for example, an index of changes in the cost of the consumer basket or, most often, the dollar exchange rate. The use of sliding prices is advisable for long-term contracts.

Removal of parts of a product or additional services. The company may leave the price of the product unchanged, but remove some elements that were previously part of the product offer (free shipping or warranty service, etc.). 5

Reduced discounts. The company is reducing traditionally applied discounts, but this should be done gradually or for separate sets of goods at different times.

Along with direct methods of changing the price of a product, we can note veiled ones, that is, those that are practically invisible to the buyer:

reduce the contents of one package without changing the price;

use cheaper materials and parts in production;

use cheaper packaging materials:

reduce the number of product models offered, etc.

Pricing tactics in a production crisis

In conditions of an economic crisis, there is a general decrease in demand, and consumer criteria for evaluating goods change. Consumer assessments of the usefulness of products per saros monetary unit are reduced, and demand itself is directed to products with a lower price.

It is possible to identify at least seven alternatives for the behavior of a company in a crisis (Fig. 10).

Rice. 1. Alternative options for changing the price and utility of the product

Table 1

Analysis of alternative options for changing the price and utility of a product

Strategic Alternatives	Possible justifications	Consequences
]. Maintain price and consumer ratings, but lose some consumers	High consumer confidence. The form agrees to give some of its customers to competitors	Declining market share, decreasing profits
2. Raise price and consumer ratings by improving the product and its advertising	A high price is needed to cover costs. The price increase is justified by the improvement in quality	Market share declines, profits remain
3. Maintain price and improve consumer attitude towards the product	It will be cheaper to raise the level of consumer appreciation than to lower the price	Declining market share, short-term decline in profits, then recovery
4. Reduce the price slightly and increase consumer ratings	The financial condition of the enterprise allows both processes to be carried out simultaneously	The market share is maintained, but there is a short-term decline in profits and further growth due to increased output
	Suppress a competitor with a price attack	Market share maintained even as profits decline
6. Reduce the price and consumer rating to the level of a competitor		Market share and profit margins remain stable for a short time, then fall
7. Maintain price and reduce consumer ratings by reducing quality	Cost savings, including marketing costs	Declining market share and profits"

The application of these tactical decisions should be made by the company very carefully, assessing the ratio of market shares as accurately as possible. product profitability, the impact of price response on sales, costs, profits and long-term investment. 6

2.2. Non-price competition

Currently, many companies prefer to improve the consumer properties of their products while maintaining or even slightly increasing selling prices. With appropriate advertising such<< скрытая >> a discount on the price of a product usually causes a positive reaction among the modern consumer, who so often associates a low price with the unsatisfactory quality of the product.

Capturing a market by penetrating it through the development of a new branded product or displacing competitors offering similar products also occurs with non-price competition. But it is still small on the domestic Russian market, so it is used mainly when organizing exports. In the world, the success of non-price competition is determined (especially in Europe, North America, and Southeast Asia) by the technical level, quality and reliability of the product, confirmed by certification in generally accepted centers, by the level of service and after-sales service, and not by low prices.

One of the difficult problems modern theory and the practice of organizing competitive activity of participants in the market process is to establish the causes of the emergence and diagnose the qualitative and quantitative conditions for the transition of price competition to non-price competition. Pioneering works in this direction include the works of J. Bulow, J. Ginakoplos and P. Klemperer, as well as J. Tirol and D. Fudenberg.

Non-price competition gives rise to a whole range of major market problems. Among them is the inter-industry profit mechanism in the form of the input-output problem, excess capacity, the influence of non-price factors on sales volume, preference and choice, competitiveness, and consumption costs.

One of the weaknesses of the prevailing theories of competition is the exclusion of the consumer from them. Indicative in this regard are the conclusions of J. Tirole (1988) on methods of competition. Thus, he believes that in order to compete in the market, a company can use many tools. He categorizes these tools according to how quickly they can be reconfigured.

In the short term, the main instrument is often price. It is complemented by advertising and sales promotion measures. At the same time, the cost structure and product characteristics remain unchanged. Under monopolistic competition, a firm can make economic profits if prices are higher than average costs; or face losses if prices are below average costs. Over a longer period, cost structure and product characteristics can be changed both together and separately. Production methods can be revised and improved, and production capacity can be increased or decreased depending on the competitive challenge. Product characteristics include quality, design, delivery times, location of outlets, etc. In the long run, product characteristics and cost structures can be changed not only by simple improvements in product mix and possible costs, but also by changes in that mix.

The likelihood that easy entry into industries with monopolistic competition will promote product variety and product improvement is perhaps the redeeming feature of monopolistic competition, which can offset all or part of the “costs” associated with this market structure. There are indeed two fairly clear circumstances here:

1) product differentiation at any given point in time;

2) improving the product over time.

Product differentiation means that at any given time the consumer will be offered a wide range of types, styles, brands and degrees of quality of any given product. Compared to the situation with pure competition, this definitely means tangible benefits for the consumer. The range of free choice is expanding, and the variety and shades of consumer tastes are being more fully satisfied by manufacturers. But skeptics warn that product differentiation is not a net good. The rapid increase in the variety of certain types of products can reach a point where the consumer becomes confused, making smart choices difficult and making purchases time-consuming. Diversity of choice can add spice to a consumer's life, but only up to a point. A woman who goes shopping to buy lipstick may be confused by the huge array of similar products from which she can choose what she needs. Only Revlon offers 157 lipstick tones, of which 41 are “pink”! Some observers also fear that consumers, faced with a myriad of similar products, may begin to judge their quality based on price alone—that is, consumers may irrationally assume that price is necessarily an indicator of a product's quality. 7

Product competition is an important means of achieving technical innovation and product improvement over time. This product improvement can be incremental in two different senses. First, a successful improvement in one firm's product obliges competitors to imitate or, if they can do so, to surpass that firm's temporary market advantage, otherwise they will suffer losses. Secondly, profits from successful product improvements can be used to finance further improvements. However, again there are significant criticisms of the product changes that can occur under monopolistic competition. Critics point out that many product changes are more apparent than actual. They are minor, temporary changes to the product that do not increase its durability, effectiveness or usefulness. More exotic packaging, brighter packaging or “sparkling” are often the main directions of product changes. It is also argued that, especially in the case of durable and limited-life consumer goods, change can occur through the principle of “planned obsolescence”, where firms improve their product just enough to make the average buyer feel dissatisfied with last year. models. 8

In oligopoly and monopolistic competition, sellers in the same market often provide a variety of similar products. The question arises whether these markets provide adequate variety of products or whether the desire of firms to somehow differentiate their products from those of competitors is excessive, leading to waste.

Since diversity tends to be expensive, society must choose to produce only a few of the vast number of conceivable goods and services. It would be better to limit the number of types of goods produced in most markets, compensating for this by using economies of scale to produce more of each type of good at lower unit costs. If more output was produced by fewer firms and they charged a price equal to average cost, then prices and unit costs would be lower. But this would be less variety than in a monopolistic competitive equilibrium, and consumers want both variety and low prices.

Looking around the store shelves, we often feel that the variety generated by industrialists wasting resources to produce many almost identical brands of products is too great.

The larger the aggregate market, the less expensive it is to provide any given level of diversity within it. As economies develop and people become more wealthy, increasing diversity becomes more effective as the demand for all goods increases. In a very poor country, only one firm's products may be sufficient to satisfy demand in many markets. As the economy grows and consumer demand expands, more firms can enter and market structures evolve toward monopolistic competition, providing consumers with the benefits of diversity.

The same kind of benefit can be obtained from taking advantage of international trade between countries. Most trade between industrialized countries occurs within the same industry. For example, Germany and France sell cars to each other. This trade in differentiated products provides the people of both countries with access to a wider range of products, all of which are produced for the world market and therefore can be produced on a reasonably large scale.

Non-price competition with a wide range of products is the most promising type of competition. The company competes with unique quality, and not low price of products. This means that only this enterprise can produce certain products and, without reducing prices, competes with quality. An example would be global shipbuilding. Thus, Japan is the only country that builds large-capacity tankers with a displacement of more than 100 thousand tons with a unique degree of automation. This type of competition is only suitable for large firms with great scientific and technical potential.

According to foreign scientists, products travel from manufacturer to consumer along a path that can be represented in the form of the following formula:

Product + distribution + scientific research work +

Advertising of any product plays a leading role in the formation of consumer demand.

Advertising in various forms, especially on product packaging, helps achieve the main goal by persuading consumers to continue using the product and trying the product in new applications, as well as encouraging those who do not use the product to buy it. 9

When a company has produced a new product, an additional or modified old one, advertising helps the company in finding and attracting new consumers. At the same time, she tries to influence existing customers so that they continue to buy the company's products. Advertising should also be aimed at attracting buyers in order to replace those whom the company has lost as a result of competition.

Advertising causes customer activity in three ways: it can motivate them to take direct action (the buyer is asked to immediately come and buy, send an order, etc.); indirect action (by constantly reminding the brand and encouraging you to buy only this product); a combination of the two, asking the buyer to take a step towards a purchase, but not requiring it to be done immediately.

Several main media are used in advertising: television, radio, newspapers, magazines, as well as outdoor advertising media: signs, stands, shop windows, neon advertising. Advertising in the form of packaging plays a special role, so the main advertising burden is, of course, carried by the packaging.

The purpose of advertising for a firm operating under conditions of monopolistic competition is that the firm hopes to increase its market share and strengthen consumer loyalty towards its differentiated product. Translated into special terms this means that the firm hopes that advertising will shift its demand curve to the right and at the same time reduce its price elasticity. 10

2.3. Package

Many experts believe that packaging can and should say a lot about a product.

Good packaging makes it easier to sell. Product packaging is a “silent seller”. Self-service retailing and open display of merchandise require that the packaging itself contribute to the sale more than the salesperson and salesperson convince the retailer of the truth of the proposition. Packaging must attract attention, stimulate interest, create desire and encourage customers to buy. It must “sell” not only to the consumer, but also to the merchant, so that the goods are attractive, can be beautifully placed on shelves, have a place to indicate the price, and stand up well to transportation, storage and long-term use.

Good packaging informs. It is the main means of conveying information to satisfy the consumer and cause repeat purchases on his part. It should give the client at least the information he needs to properly use the product. For example, if product - clothing, then it must have a label containing washing, cleaning and ironing instructions, and also include a description of the fiber or materials, tell you whether the material fades, and give general suggestions for caring for the garment. eleven

The packaging should be easily recognizable, creating such a strong impression of the brand that customers almost automatically choose the product.

In some highly competitive industries, packaging is designed specifically to attract customers' attention more than the product itself. In the food industry, for example, manufacturers often use dual-use packaging. They place their goods in vessels, which are consumed for a long time after the contents have been used. For example, a housewife buys a certain type of honey not only because of the contents, but because of the attractive glass in which it is sold.

If a new product appears on the market, then for its effective marketing the packaging must stand out, reflect the novelty, in other words, emphasize the peculiarity of this product.

Thus, packaging drives the sale of goods and is an advertisement that attracts buyers.

Chapter 3 Realization of effective competitiveness of Russia in the global economy

3.1. Russia's competitiveness in the world market.

A fundamental solution to the problem of competitiveness is inextricably linked with the fate of the Russian economy, incredible achievements on the path to a market type of economic management and deeper integration into the world economic system. Despite the government's best efforts Russian Federation, undertaken in recent years to reform the economy, the mechanisms of healthy competition have not yet worked.

Monopolism, a long-standing disease of our national economy, still stands in their way. For economic reform to be successful, it must be given a clear anti-monopoly focus.

In support of the above, we can cite (albeit outdated) data contained in the state report of the Antimonopoly Committee of the Government of the Russian Federation:

Now it is becoming obvious that without undermining the dictates of the manufacturer, the monopolist enterprise in a particular industry, without creating the preconditions for the development of competition, the reform cannot move forward.

At the same time, one more very important circumstance cannot fail to be noted: in recent years, Russia has been losing its international competitiveness, primarily due to the economic crisis it is experiencing, but also for other reasons that are clearly political in nature. It is the state that cannot change the situation in the Russian national economy.

As a result, not only export opportunities were significantly reduced, but also the competitiveness of Russian commodity producers in the domestic market decreased.(4)

Product competitiveness is determined by a number of factors, among which production costs, productivity and labor intensity, which influence the price and quality of products, are of primary importance.

A comparison of the costs of industrial production in Russia and advanced foreign countries shows that in Russia they are higher than in Japan - 2.8 times; USA - 2.7; France, Germany and Italy - 2.3 times and Great Britain - 2 times.(5) 12

(table 2)

table 2

Comparative manufacturing cost data (for $100 output)

	All costs		Raw materials, semi-	Salary	Depreciation
Great Britain
Germany

Available data clearly demonstrate that, compared with industrialized countries, industrial production in Russia is more material, labor and energy intensive. In such a situation, it is difficult to count on the price competitiveness of industrial products on the foreign market.

Product competitiveness on the world market is determined, first of all, by the level of labor productivity.

In Russia in the mid-200s it was on average 4 times lower than in industrialized countries

In agriculture, in terms of the level of added value created per employee - 1,476 US dollars, Russia ranked 37th in the world. This figure is almost 35 times lower.(5)

Unit wage costs in Russia are also significant. This is not due to the level of pay - it is significantly lower than in industrialized countries (in 2004, when calculated at the exchange rate, hourly wages in the Russian manufacturing industry were 15 times less than in the United States), but to the inefficient use of labor.

The decline in industry in Russia is accompanied by a decrease in the production intensity index. Since 2000 to 2005

The average daily industrial output at Russian enterprises decreased by an average of 60%.

At the same time, the largest decrease was noted in light industry - 90%, mechanical engineering - 75, industry

construction materials - 73, forestry, woodworking and pulp and paper - 63, food - 62, chemical and petrochemical - 59, ferrous metallurgy - 53, oil refining - 46, coal - 44%. The production intensity index decreased to the least extent in the fuel and energy complex (except for coal) and other export-oriented industries.(9)

Table 3.

Structure of industrial production by industry (as a percentage of total production)

Industries
Whole industry: including
electric power industry
fuel
ferrous metallurgy
non-ferrous metallurgy
chemical and petrochemical
mechanical engineering and metalworking
forestry, woodworking and pulp and paper
production of building materials

Currently, global competitiveness is coming to the fore non-price factors, of which the most important is the quality of goods and their novelty (which is reflected, in particular, in the knowledge intensity of products). However, the quality of most Russian industrial goods is inferior to Western, newly industrialized and

some developing countries.

The unresponsiveness of the Russian economy to innovation was one of the reasons for the emergence of technological and economic stagnation. The reforms that have begun have aggravated the degradation of scientific and technical potential. In recent years, there has been a steady trend in Russia towards a reduction in real allocations for science (over the last decade they have decreased by 5 times). If total spending on science in the Soviet Union amounted to 4% of GDP (which was the highest figure in the world), then during the period of economic transformation in Russia the share of allocations for science and scientific research in GDP decreased from 0.96% in 1995. up to 0.2% in 2004 (9)

Among Russian companies, only those engaged in the export-oriented raw materials sector, the production of military equipment and weapons, the production of modern unique equipment, and the development of new goods and materials have real international competitiveness. However, their positions in the global market are not as strong as those of leading TNCs.

In Russia, the process of forming large national companies in the form of financial-industrial groups (FIGs), although in the initial stage, is proceeding very dynamically,

Russian financial and industrial groups are created for the purpose of more efficient reproduction of financial, industrial and commercial capital, its accumulation, concentration and investment in priority sectors of the domestic economy. They are designed to help improve the competitiveness of its main industries, restore economic ties and develop the country’s export potential. (Diagram 1)

D

Diagram 1

The most important factor in corporate competitiveness is the level of management. Therefore, Russia is far behind many countries in the world. In particular, research conducted by specialists from the World Economic Forum in the late 90s showed that out of 53 countries surveyed, Russia ranked 51st in terms of quality of management, 50th in financial management, and 50th in financial management. marketing - 52nd place, in training specialists in the field of management - 50th place.

Officially, not a single Russian company is included in the lists of global TNCs. However, based on indicators such as sales volume and number of employees, about two dozen companies can be conditionally (since, as a rule, they do not conduct production activities abroad) classified as transnational.

These could include the largest companies in the fuel and energy complex - RAO UES of Russia, RAO Gazprom, LUKoil, Slavneft, Yukos, Rosneft, Surgutneft, etc. And yet, despite Due to the scale of operations in the domestic market, these companies are significantly inferior to Western transnational corporations in terms of competitiveness.

Among industrial companies, producers of ferrous and non-ferrous metals are often singled out - RAO Norilsk Nickel. Novolipetsk Metallurgical Plant. Magnitogorsk Iron and Steel Works. Nizhny Tagil Metallurgical Plant. However, although their products are quite competitive on the world market, these enterprises themselves are inferior to Western competitors.

In the field of high technology, the most competitive Russian companies are those involved in the aerospace business and conversion industries. These include RSC Energia, State Research and Production Center named after. M.V. Khrunicheva, NPO “Almaz”, “Vympel”, “Kometa” and “Rubin”, KB “Arsenal”, JSC “Zvezda” and “Svetlana”, holding company “Leninets”, “Energomashcorporation”, etc. 13

In the Russian economy, the most competitive in the world market are export-oriented industries and industries that are based on relatively advanced technologies and highly professional personnel. This is confirmed by research conducted by the Russian Center for Industrial Restructuring on one of the TACIS projects. The competitiveness of a number of industries in the domestic (regional) and world markets was assessed. In particular, the main sectors of the Russian economy, according to the degree of competitiveness in the world market, were divided into four categories:

very strong competitive position - ferrous metallurgy;

strong competitive position - non-ferrous metallurgy, electric power, petrochemical, forestry, defense, communications and telecommunications;

mediocre competitive position - chemical, automotive, shipbuilding (civil), mechanical engineering, instrument making;

weak competitive position - aviation (civil), electronic, textile.

World experience shows that the development of market relations in itself is not a sufficient condition for rapid scientific and technological development. Moreover, the decline in industrial production, the disorder in the credit, financial and monetary spheres, the high level of inflation, and the crisis of non-payments gave rise to an unprecedented drop in investment activity in Russia and, accordingly, a decrease in incentives for innovation activity in most industries.

It is impossible to revive the economic power of Russia without integration into the world economy, but this process should not be limited to the sectors of the fuel and energy complex, primary processing of mineral and agricultural raw materials. One of the main priorities of the state economic policy Russia must preserve and develop its scientific and technical potential. The basis for this process is the still surviving high intellectual potential of the Russian people.

In Russia, a concept has been developed for building a comprehensive international environmental monitoring system using spacecraft operating in various orbits, as well as air, ground and sea platforms equipped with measuring equipment, with a wide network of data receiving and processing points that provide information about environmental objects in the interests of individual countries and all humanity.

In the field of transport, competitive ones include the development of vehicles with magnetic suspension based on the principles of ekranoplanes and amphibians; with horizontal and vertical take-off; with high and ultra-high environmental purity; with combined electric, solar, wind and inertial motors; pneumatic ducts, gliders, balloons.

According to independent experts, the cost is not in demand by Russian industry intellectual property exceeds 400 billion dollars.

It is necessary to stimulate the development of high-tech industries based on domestic scientific and technical developments, which would be able to provide competitive advantages to Russian companies in the short and long term. Priority development of these industries will help Russia take its rightful place in the international division of labor and significantly increase its competitiveness in the global economy.(5)

It is impossible to achieve increased competitiveness without a radical change in the entire economic management system at the level of an individual enterprise, industry, region, and the entire national economy. This requires political will to revive the state and consistently carry out socio-economic reforms, which will ultimately lead to the formation of a modern highly efficient socially-oriented market economy and will ensure the comprehensive growth of the spiritual and material wealth of the Russian people. 14

3.2. Price competition in Russia in world markets: positions of domestic firms

Competition is one of the most important features of a modern market economy. As the process of globalization and internationalization intensifies, the problems of international competition come to the fore.

Competitiveness is a multifaceted economic category that can be considered at several levels. This is the competitiveness of goods, producers, industries, and countries. We will be interested in aspects of the competitiveness of Russian firms - producers of goods and services - on the world market.

Competitiveness can only be identified in comparison with similar products. Among the diverse factors that determine it, production costs, productivity and labor intensity, which affect the price and quality of products, are of primary importance.

According to specialists’ calculations, in most sectors of Russian industry in the mid-90s, specific (per unit of production) production costs were 2.9 times higher than in Japan, the USA - 2.7, France, Germany and Italy - 2.3, Great Britain - 2 times.

Available data clearly demonstrates that, compared with industrialized countries, industrial production in Russia is more material, labor and energy intensive. In such a situation, it is difficult to count on the price competitiveness of industrial products on the foreign market.

The unit costs of wages and salaries in Russia are also significant. This is not due to the level of payment - it is significantly lower than in industrialized countries (in 2004, when calculated at the exchange rate, hourly wages in the Russian manufacturing industry were 15 times less than in the United States), but to ineffective significant use of labor.

At the same time, in certain sectors of the Russian economy, mainly oriented towards the foreign market, a relatively low level of material costs. In particular, in 2004, the production costs of 1 ton of nickel for RAO Norilsk Nickel were $3,250, and for its main Western competitors - INCO and Western Mining - $3,850, and Falconbridge - $4,450. For a long time, this cost ratio gave our manufacturers and exporters a certain reserve for price competition on the foreign market.

Labor productivity remains one of the main indicators that determine commodity competitiveness in the world market. In the Russian manufacturing industry, this indicator in the mid-200s was on average 5-6 times lower than in industrialized countries, and about 3-4 times lower than in newly industrialized countries.

Since the end of the 80s, a certain equalization of national production conditions in the manufacturing industry of developed and newly industrialized countries began in the world economy due to the convergence of productivity and wage levels. Currently, non-price factors are coming to the fore in global competitiveness, of which the most important are the quality of goods and their novelty (which is reflected, in particular, in the knowledge intensity of products). It is no secret that the quality of most Russian manufactured goods is inferior to those from Western and some developing countries.

In this regard, the main competitive advantage of Russian exporters on the world market may be price. However, in order to maintain and increase price competitiveness in the foreign market, Russian producers must maintain domestic prices for energy resources and raw materials at the level of 40% of world prices. In Russia, formally free pricing, but actually dictated by domestic natural monopolies, has led to the fact that during the years of reforms, domestic prices for many types of fuel, raw materials and semi-finished products, as well as tariffs for cargo transportation, turned out to be higher than the world level.

At the beginning of 2004, the ratio of domestic and world prices for certain types of fuel, raw materials and finished products was as follows: automobile gasoline - 1.92, pig iron - 1.87, long structural steel - 1.83, diesel fuel - 1.77, medium-grade steel - 1.49, coking coal - 1.38, platinum - 1.22, nickel - 1.21, silver - 1.19, gold - 1.14, primary aluminum and fuel oil - 1.10.

Most countries in the world ensure increased competitiveness of their goods by introducing innovations and developing high-tech products, the production of which is impossible without the use of scientific and technical potential. Unfortunately, the scientific and technical potential of Russia, created over many decades by the selfless labor of millions of people and embodying the achievements of the best minds of many generations, is on the verge of collapse. This situation arose in the former Soviet Union, where the economic system itself turned out to be inadequate to global trends in the development of science and technology and could not provide an organic combination of the processes of scientific, technical and socio-economic development.

A comparative analysis of the economies of the world's fifteen largest trading powers showed that innovation and innovation are one of the main sources of their competitive power on the world stage. In world practice, a complex indicator - the cost of innovation - is increasingly being used. It reflects the country’s ability to innovate and, in addition to the amount of R&D expenses, takes into account the costs of design and marketing, the number of people employed in the scientific field, the number of patents received within the country and abroad, the degree of intellectual property protection, and the development of the field education (unfortunately, the culture of entrepreneurship, private initiative, and the desire to take risks cannot be quantified). 15

The insusceptibility of the Russian economy to innovation was one of the reasons for the emergence of technological and economic stagnation. The reforms that began aggravated the degradation of scientific and technical potential. In recent years, Russia has seen a steady trend towards a reduction in real allocations for science (in 2003-2004 they decreased by almost 5 times).

Current world practice shows that costs for science and scientific research are distributed between the state and the private sector. Moreover, the more attention the state pays to the creation of scientific and technical potential, the greater the R&D costs on the part of large companies. For example, in the early 90s, of the total allocations for R&D, the private sector accounted for: in South Korea - 82%, Switzerland - 75, Belgium and Luxembourg - 73, Japan - 69, USA, Germany and Sweden - 68, Great Britain - 63, Ireland - 62. in France -61%. 16 In Russia, 95% of science funding comes from the state budget. There are virtually no allocations for these purposes from commercial structures, which deprives the country of an important source of preserving and developing scientific and technical potential.

Like the entire economy, science and the scientific and technical sphere of Russia were characterized by excessive militarization. If in most countries of the world, on average, defense research takes up only 20% of all R&D allocations, then in Russia it is about 70%.

From the moment of its creation and in the process of operation, every industrial and commercial company is faced with the problem of ensuring competitiveness, including international one. The international competitiveness of any economic entity consists of a number of advantages that are identified on the world market by comparison with the corresponding indicators of foreign competing firms.

Important competitive advantages include the profitability of production, the nature of innovation, the level of labor productivity, the effectiveness of strategic planning and management of the company, its ability to quickly respond to changing requirements and market conditions, etc. Obviously, the wider the a company has a set of competitive advantages; the more favorable the preconditions for its successful activities in the global market, the more stable positions it can occupy in certain segments of this market.

In 2003, the American investment bank Morgan Stanley conducted a special study of the level of competitiveness of large national corporations. At the same time, one of the main criteria was the share of a certain product or service on the world market. The study showed that of the 238 largest and most competitive transnational companies on the world market, more than half (125) were American. They were followed by a significant margin by companies from the UK (21). Japanese firms were in third place (19), and German firms were in fourth place (10).

Among Russian companies, only those engaged in the export-oriented raw materials sector, the production of military equipment and weapons, the production of unique modern technological equipment, and the development of new goods and materials have real international competitiveness. However, their position in the global market is not as strong as that of leading transnational corporations.

In the fight at the world commodity markets Russian companies can only use price factors. Often, in order to gain a foothold in the foreign market, they resort to selling goods at dumping prices. However, in the long term, such a policy may have the opposite effect, that is, it may not lead to the expansion of the sales market and the preservation of competitiveness, but, on the contrary, to a narrowing of market share or complete exclusion from it. Therefore, it is not enough to use only the price factor in the modern struggle for world markets. It is necessary to actively realize the advantages of the scientific and technological revolution and the international division of labor, which in fact are only available to large transnational companies.

In Russia, the process of forming large national companies in the form of financial-industrial groups (FIGs), although it is in the initial stage, is proceeding very dynamically. Russian financial and industrial groups are created with the aim of more efficient reproduction of financial, industrial and commercial capital, its accumulation, concentration and investment in priority sectors of the domestic economy. They are designed to help improve the competitiveness of its main industries, restore economic ties and develop the country’s export potential.

Officially, not a single Russian company is included in the lists of global TNCs. However, based on indicators such as sales volume and number of employees, about two dozen companies can be conditionally classified as transnational.

These could include the largest companies in the fuel and energy complex - RAO UES of Russia, RAO Gazprom, LUKoil, Slavneft, Yukos, Rosneft, Surgut-Neft, etc. And yet , despite the scale of operations in the domestic and foreign markets, these companies are significantly inferior to Western transnational corporations in terms of competitiveness.

In the field of high technologies, the most competitive Russian companies are those involved in the aerospace business and conversion industries. These include RSC Energia. State Research and Production Center named after. M.V. Khrunichev, NPO "Almaz", "Vympel", "Kometa" and "Rubin", KB "Arsenal", etc.

From the point of view of sustainable development, environmental work is associated not only with an increase in production costs, but also, to a significant extent, with gaining competitive advantages. Individual companies who have adopted this concept effectively use more advanced technological processes, increase labor productivity, reduce the costs of meeting environmental requirements and the best way use market opportunities.

Such commodity producers will always have an advantage over their competitors who do not use new approaches in their activities. Corporations and firms that fail to adapt to the principles of sustainability will not be able to compete on an equal footing on the world stage.

In Russia, the level of environmental mentality in large companies and in the business environment is very low. This is primarily due to the fact that Russia is experiencing a period of initial capital accumulation, when the bulk of businessmen give priority to maximizing profits at any cost, and environmental problems remain in the background.

The most important factor in a company's competitiveness is the level of management. According to this indicator, Russia lags far behind many countries in the world. In particular, research conducted by specialists from the World Economic Forum in the late 90s showed that out of 53 countries surveyed, Russia ranked 51st in terms of management quality, 50th in financial management, management in the field of marketing - 52nd place, in training of specialists and management - 50th place.

Producing competitive products or increasing the competitiveness of a company are very difficult, but completely solvable problems in a market economy. However, increasing the competitiveness of an individual industry or an entire country on the world stage requires solving a whole range of long-term problems. Russia can count on a breakthrough to the world markets for finished and high-tech products only by sharply reducing production costs, increasing labor productivity and the efficiency of material production. 17

3.3.Competition of Russian financial and industrial groups in world markets

The development of market relations in Russia led to the emergence of financial and industrial groups (FIGs) in the country. Below we will consider the features of the functioning and prospects for the development of Russian financial industrial groups in world markets.

Today there are about 90 officially registered groups and even more informal ones in the country. The actions of FIGs indicate their significant influence on government policy: they acquire important media that can be used to shape public opinion; they are the main sources of financing for reformist and pro-government parties, etc. Since 1993, 3 state laws have been adopted regarding the creation and activities of financial industrial groups.

The creation of financial industrial groups is an attempt to correct the inefficient size of firms inherited from the Soviet planned economy. The creation of financial industrial groups is necessary for firms to solve problems associated with the underdevelopment of legislative, financial and government institutions.

It is important to note that the majority of financial industrial groups in Russia are banking groups and, according to statistics, the most attractive areas of the economy for banking investments are export-oriented raw materials industries: chemical, metallurgical and food industries. It is the first three industries from this list that account for the lion's share of Russian exports.

During perestroika, the production, financial and trade ties between firms that had been created over decades were destroyed, which forced them to look for new partners and means of survival. Left without a planning center and government financial support, many Russian enterprises did not have working capital. The old financial system was destroyed, and a new one was just beginning to be created. At the same time, the economy was in need of structural adjustment, which required large-scale investment.

At the first stages of the formation of financial industrial groups in Russia, the initiative to create them belonged to enterprises. Groups were formed informally, on the basis of loan agreements and the purchase of shares of enterprises by banks. But after the adoption of the first law on financial industrial groups in 1993, large banks increasingly began to create new groups. Today, Russia, as well as many other CIS member countries, are striving to restore business contacts through the creation of international financial and industrial associations.

Currently there are 9 groups of this type: “Interros” (Russia, Kazakhstan), “Nizhny Novgorod Automobiles” (Russia, Belarus, Ukraine, Kyrgyzstan, Tajikistan, Moldova, Latvia), “Accuracy” (Russia, Belarus, Ukraine) , Trans-National Aluminum Company (Russia, Ukraine), Siberian Aluminum (Russia, Kazakhstan), Aerofin, etc.

An example here, of course, is the Nizhny Novgorod Automobiles financial and industrial group, the selection of participants of which is focused on cooperative ties with enterprises in Ukraine, Belarus, Kyrgyzstan, and Latvia. Thus, JSC "RAF" (Elagva, Latvia) from JSC "GAZ" (city. Nizhny Novgorod, Russian Federation) receives 77 positions of finished parts and assemblies. Ukrainian participants (PO Belotserkovshchina and Chernigov Plant) supply tires and driveshafts to GAZ JSC. JSC "Kyrgyz Automobile Assembly Plant" (Bishkek, Kyrgyzstan), receiving chassis from JSC "GAZ", supplies cooling radiators for the needs of financial industrial groups.

If we approach the consideration of financial industrial groups from the perspective of assessing their scale: the volume of industrial output, the number of employees, etc., then the groups can be conditionally divided into large, medium and small.

Today, at least 10 of the largest groups have the opportunity to become the “locomotives” of the national economy. These are “Nizhny Novgorod Automobiles”, “Metal Industry”, “Magnitogorsk Steel”, “Volzhsko-Kamskaya”, etc.

Within the framework of the Magnitogorsk Steel FIG, which has a clear technological cooperation and a clear leader in the person of JSC Magnitogorsk Iron and Steel Works, it was possible to unite 18 enterprises with a workforce of more than 260 thousand people, fixed assets of 5072 billion rubles and an output volume marketable products amount to more than 3.3 trillion rubles. The leading investment project within the financial industrial group is the commissioning of a complex at JSC MMK for the production of 5 million tons of hot-rolled and 2 million tons of cold-rolled steel sheets per year. These products will be supplied to both the domestic and foreign markets (1,400 thousand tons and 600 thousand tons annually, respectively).

Among the largest registered financial industrial groups, one cannot fail to note Volzhsko-Kamskaya, which includes the automobile manufacturing associations AvtoVAZ JSC and KamAZ JSC. The total number of employees reaches 231 thousand people. A number of promising investment projects are being implemented within the framework of the financial industrial group. AvtoVAZ JSC is producing fuel-efficient VAZ 2110, 2114, 2123 cars. A program for the production of diesel passenger cars has been outlined. KamAZ JSC has a program for modernizing power units for three-axle tractors with a load capacity of 8-12 tons and road trains with a load capacity of 16-20 tons. The production of Oka cars is expanding, including for disabled people.

The results of the activities of Russian financial industrial groups allow us to speak about the positive impact of the integration of financial and industrial capital not only at the macro, but also at the micro level. More than half of the groups currently operating can be called “islands of stability” in the sea of ​​chaos that has overwhelmed all sectors of the economy. Only according to data from 15 financial industrial groups, in 2004 their production volumes increased by five percent, the volume of products sold - by 40%, exports - by 28%, investments - by 250%. The FIG portfolio includes over 200 investment projects with total funding of 65 trillion rubles.

About 4 million people were employed in formal financial industrial groups by mid-2004 (out of 18 million in Russian industry), the industrial sector of financial industrial groups produced about 10% of GDP. The number of workers in the group ranged from 5 thousand to 300 thousand, the number of firms - from 8 to 60. The share of state ownership in the groups never exceeded 10%. Of the 200 largest Russian enterprises in 2004 (according to the rating of Expert magazine), 143 enterprises participated in official groups, and of the 100 largest banks, 48 ​​banks participated in the same groups. Most groups in Russia are single-industry, and the production of most of them is export-oriented.

IN modern world Based on the dual power of national states and transnational capital, the Russian state, following the example of advanced countries, is obliged to enter into a close strategic alliance with domestic financial groups. But in contrast to the current system of personal unions of officials and financial magnates, which are often corrupt and illegal in nature, the conditions of this union must be absolutely clearly formulated and secured by relevant documents, which would define the goals of the state in this alliance, methods their achievements and control rules.

During the transition period, the state must cultivate financial and industrial groups in the field of high technologies that have at least distant prospects of conquering certain sectors of the world market. It is necessary to literally “educate” our leading groups into real transnational corporations with advanced technologies and modern management. 18

3.4. Competitive advantages and disadvantages of Russia

The prospects for the development of Russia's foreign trade largely depend on the implementation of the competitive advantages of its industrial complex. In addition to raw materials, these include: a fairly high level of skilled labor with its comparative cheapness, as well as a significant scale of accumulated fixed assets production assets and universal funds

3. Foreign trade of Russia: trends and prospects for the development of processing equipment, which allows reducing the capital intensity of technological modernization of production; the presence of unique advanced developments and technologies in a number of sectors of the economy, mainly related to the military-industrial complex.

However, the use of these advantages is hampered by a number of reasons. This is the underdevelopment of the financial and organizational infrastructure of foreign trade cooperation; lack of a developed system state support export; difficulties in adapting to the conditions of mass production based on competitive technologies concentrated in the defense complex and intended for small-scale or single production; low production efficiency and extremely high share of material costs even in advanced industrial sectors.

Taking into account competitive advantages and weaknesses Russia can try to determine the medium-term prospects for the development of its foreign trade. It is obvious that fuel and raw materials will remain the main position in Russian exports for a long time. However, for Russia it is quite possible to deepen the degree of processing of raw materials and, on this basis, further increase their share in exports (chemical goods, lumber, petroleum products, fertilizers, etc.).

There are opportunities to stabilize and expand traditional mechanical engineering exports, which include cars and trucks, energy and road equipment, equipment for geological exploration, etc. Taking into account the availability of fairly cheap labor, it is very promising to create assembly plants from imported goods. to Russia of components oriented to the domestic and foreign markets.

As Russia’s own agriculture and light industry are restored, obviously, the share of consumer goods in Russian imports will decrease and the share of investment goods—machinery and equipment—will increase.

Russia's foreign trade, neither in its volume nor in the structure of exports and imports, corresponds to the economic potential of the country. More complete use of its competitive advantages and overcoming its inherent disadvantages is only possible in the process of reviving the country’s economy and creating a full-fledged system of state support for its export potential.

Conclusion

It is impossible to revive the economic power of Russia without integration into the world economy, but this process should not be limited to the sectors of the fuel and energy complex, primary processing of mineral and agricultural raw materials. One of the main priorities of Russian state economic policy should be the preservation and development of scientific and technical potential. The basis for this process is the still surviving high intellectual potential of the Russian people.

It is quite obvious that there is an urgent need to stimulate the development of high-tech industries based on domestic scientific and technical developments that can provide competitive advantages to Russian companies in the short and long term. The priority development of these industries will help Russia take its rightful place in the international division of labor and significantly increase its competitiveness both in general on the world market and on individual commodity markets.

Research institutes of the Russian Academy of Sciences and individual industries have technical developments and technologies that in the future will determine not only the competitiveness of our individual commodity producers and industries, but also the main directions of development of world civilization. In the field of informatization, competitive technologies developed by Russian scientists include, first of all, a fundamentally new information carrier - three-dimensional optical-electronic memory, which, if successfully implemented, can turn the most modern Western developments into yesterday's technologies. According to independent experts, the value of intellectual property not in demand by Russian industry exceeds $400 billion.

It is necessary to stimulate the development of high-tech industries based on domestic scientific and technical developments, which would be able to provide competitive advantages to Russian companies in the short and long term. Priority development of these industries will help Russia take its rightful place in the international division of labor and significantly increase its competitiveness in the global economy.

It is impossible to achieve increased competitiveness without a radical change in the entire economic management system at the level of an individual enterprise, industry, region, and the entire national economy. This requires political will to revive the state and the consistent implementation of socio-economic transformations, which will ultimately lead to the formation of a modern highly efficient socially-oriented market economy and will ensure the comprehensive growth of the spiritual and material wealth of the Russian people.

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Price price competition V competition non-price. Non-price competition generates a whole range of important..., M.: YURAYT, 1999 2. Zhigun L. Concept of synthesis price And non-price competition// Marketing - 2001 - No. 2 3. Larionov...

Price And non-price competition (2)

Test >> Economic Theory

Low prices. In this regard, there are price And non-price competition. Price competition occurs, as a rule, through artificial...

From this article you will learn:

• What are the differences between price and non-price competition?
• What are the advantages and disadvantages of using non-price competition?
• In what forms can non-price competition take place?
• What methods of non-price competition are used in a modern market economy

From an early age, each of us finds ourselves in harsh circumstances of competition in various areas of life. Competition in the economy can definitely be called one of the toughest types of struggle. Both wealth and luck are at stake here. In entrepreneurship, there are two types of competition – price and non-price. More often than not, low cost actually wins. And yet, non-price product competition helps achieve greater success.

What is non-price competition

Competition is the struggle of individuals in various areas of the life process. First of all, this refers to the economic sphere. Figuratively speaking, competitors are the owners of nearby shops who are trying to get as many visitors as possible. But it's not just the number of buyers that matters. It is also important to sell your goods and services on the most profitable terms. Scientists believe that it is competition that spurs the modern world to develop at such a rapid speed. And at the same time, it is the basis of the instability of the world economy.

Exist two ways of economic rivalry: price and non-price. The difference between price and non-price methods of competition is quite serious:

1. Price competition- This is a type of fight against rivals by reducing the cost of goods. Most often, this method is used where demand is greater than supply. Another option is when customer competition is strong enough. This option is also used when there are prerequisites for pure competition (many manufacturers offer the same type of product). This way of competing with competitors cannot be called the most effective. After all, competitors can suddenly set prices at the same level, or even lower. In this case, both the subject himself and his competitors lose their earnings. Despite all the disadvantages, this option is nevertheless widely used, especially in cases where it is necessary to introduce products to a new market. Such measures should be taken very carefully. You need to know for sure that a decrease in cost will actually result in an increase in profits, and not losses.
2. Non-price competition involves more progressive and modern techniques. Among them are the differentiation of their products from similar products from competitors, the introduction of special characteristics, expanding the range, improving quality, increasing advertising costs and warranty service. The use of non-price competition methods generates conditional monetary stability. Another significant benefit is that competitors often fail to retaliate immediately, giving their rival an advantage. If innovations turn out to be successful, all expenses on non-price competition options not only pay off, but also serve as a source of income.

In order to successfully apply methods of non-price competition, companies and organizations must be aware of the latest developments in their market and continuously develop, which leads the country’s economy along the path of progress.

Non-price competition is a type of competitive rivalry tactic. Various methods are used here, with the exception of reducing the cost of goods and services. Non-price competition involves the use of more advanced methods of competing for buyers, such as creative advertising or improving the quality characteristics of a product. Improving quality comes in two ways: by working on the technical characteristics of the product or by increasing its flexibility according to the wishes of customers.

Non-price competition allows you to focus on the path of progress and increase sales without price fluctuations. Non-price competition indicates a higher quality level of interaction in the market.

There are a number situations where non-price competition is used:

• The value cannot be reduced due to the limits set by the market controller.
• A punitive agreement has been signed that does not allow for a reduction in value. The purpose of such a document is to stabilize a specific level of profitability.
• The company has invested so much money in producing goods for a new market that reducing the cost makes no sense from an economic point of view.
• The costs of distributing goods are high.
• In the market, demand exceeds supply, which means: the client will buy products at any price.
• The company relies on improving the quality characteristics of manufactured goods - by improving the technical properties of products (so-called product competition).

Non-price competition is typical for those industries where the quality of the product, its uniqueness, packaging, appearance, brand style, additional services, and non-market ways of influencing the buyer are of key importance. All these points are not directly related to cost, or even have nothing to do with it at all. During the 80-90s, the first positions in the list of non-price criteria included:

• reduced energy consumption and low metal consumption;
• minimal harm to the environment (or its absence);
• the ability to hand over the product as a starting fee for a new one;
• advertising;
• high level of warranty service (as well as post-warranty service);
• indicators of related offers.

Example non-price competition . At the start of global sales of its products in Russia, Sony encountered difficulties with regard to non-price competition. The problem was that, according to the company's current regulations, customers were only allowed to return broken products after five attempts to fix them. The law in our country, in turn, gives the client the right to return goods immediately after problems are identified. This condition is observed by all companies in the Russian Federation. To increase sales, Sony not only changed the warranty standards according to the local model, but also significantly reduced the warranty period, similar to the most popular models. As a result, the company strengthened its position in the non-price sphere of competitive rivalry.

What are the disadvantages and advantages of non-price competition?

Key Benefits non-price competition are as follows:

• Price fights have a negative impact on all market participants. Bonuses go only to the buyer. Price competition can lead to monopoly and economic decline. The more powerful the company, the longer the period of time it can sell goods at a reduced cost. Medium and small companies will lose out in competition with leading brands.
• Competent differentiation is a more productive way of competition than dumping. For the desired product, the client will pay the price set by the company.
• If done correctly, non-price competition is less costly than price competition. A good advertising clip can be made for little money, the main thing is to find a creative and tempting idea. The same applies to product properties: even a minimal improvement in design can attract the attention of buyers.
• With non-price competition, the company has a huge field for activity: it can gain superiority with the help of any successful find.

At the same time, there is also a number of disadvantages non-price competition:

• The company is losing that group of buyers for whom cost comes first.
• Dependence on the professionalism of managers and ordinary workers, because they must develop competent competition tactics and systematically monitor the compliance of the real state of affairs with plans.
• Many firms use illegal methods of non-price competition (poaching personnel, manufacturing counterfeit products, industrial espionage).
• We need cash injections, often permanent.
• Large expenses for trade marketing, advertising and PR.
• Specificity in positioning, thoughtfulness of actions, and correct tactical moves are required.

What types of non-price competition can be used and which ones should not be used?

There are different types of non-price competition:

• legal;
• semi-legal;
• deterring competitors using government regulation and support.

Legal methods of competition suggest:

• product rivalry. In the course of working on the existing assortment, a new product appears that has a new price;
• competition to provide services. It is especially relevant for the machinery and equipment market. The service package includes the supply of advertising materials, the transfer of technical papers (which simplify the use of products), training of employees of the client company, maintenance during the warranty period (and after it).

Semi-legal forms competitive rivalry means:

• economic espionage;
• bribes to officials in the government apparatus and in rival companies;
• conducting illegal transactions;
• activities to restrict competition. Here the company has at hand an extensive arsenal of methods, the use of which can lead to the dictatorship of a monopolist company in the market. These include, for example, activities to impose intra-brand standards, promoting convenient conditions for selling rights to trademarks or patents.

The most common forms of non-price competition

The most common forms and methods of non-price competition are:

1. Product differentiation

The purpose of product differentiation is to offer the buyer products of different types, styles, brands. This, of course, gives the buyer serious bonuses, expanding the possibilities of choice. However, pessimists caution that product differentiation is not an absolute good. The rapid growth in the number of product items often leads to the buyer being unable to make an informed choice, and the purchasing process takes a lot of time.

Product differentiation is a kind of reward for those negative phenomena that are characteristic of monopolistic competition.

Types of differentiation:

• Product differentiation– production of goods of higher quality and attractive appearance than those of competitors. Regarding standardized products (petroleum products, metal), there is almost no possibility of product differentiation. In relation to fairly differentiated goods (electronics, motor vehicles), such tactics are a matter of course.
• Service differentiation– is to provide a higher class service compared to competitors. This may include installation and after-sales service, speed and safety of deliveries, training and consultations for customers.
• Personnel differentiation– the desire to ensure that the company’s employees do their job more productively than the employees of a competing company. Team members must have qualities such as friendliness, professionalism, and commitment.
• Image differentiation consists of working on the appearance, style of the company and (or) its products in order to highlight them best sides compared to competitors and/or their offerings.

2. Improvement of manufactured products and offered services

Another method of non-price competition is for competitors to improve the goods and services they offer. Improving the quality characteristics or user parameters of products leads to increased sales. Competitors who don't care about improving their product step aside. This path of competition leads to favorable consequences, the main one of which is customer satisfaction. In addition, other firms also begin to take steps to offset the temporary success of their rival, and this contributes to scientific and technological progress.

Competing companies are looking for funds to improve their product or create a new position. All these measures make it possible to strengthen production and increase profits.

Some companies, instead of conducting fair competition, engage in imitation (imitative) activities. Most often, they stop at minor modernization of the product. We are talking about an external effect. Such companies pass off apparent changes in the product as real, and also introduce obsolescence into the improved product. This approach can lead to massive customer disappointment.

3. Advertising

According to foreign researchers, goods go from manufacturer to buyer along a path that can be illustrated by the formula:

product + distribution + scientific activity + resellers + transport + advertising = sale

• provides the client with information about products;
• increases demand for products and forces them to increase the pace of their production. There are often cases when a manufacturer, having a small income, through advertising in non-price competition increases the level of sales several times, which leads to receiving a large income;
• increases competition;
• enables the media to be independent, bringing them a certain profit.

Advertising reduces sales costs. Firstly, advertising promotes faster turnover of goods. Secondly, it ensures that goods are different from similar ones. This allows buyers to track the cost of products in different stores and thereby restrain the arbitrariness of sellers in setting markups. Products that are prominently advertised will pass through distribution channels with minimal markup.

4. Other methods of non-price competition

The group of non-price methods includes: providing a wide range of services (including employee training), free service, handing over a used product as an entry fee for a new one, supplying equipment on the terms of “finished products in hand.” Reduced metal consumption, absence of negative impact on the environment, reduced energy consumption and other similar parameters have become the main advantages of goods or services today.

Currently, many companies are conducting marketing research. They make it possible to find out the buyer’s desires and his opinion about various products. Possession of such information helps the manufacturer to design the market situation and reduce the likelihood of mistakes.

Methods of non-price competition: 3 main groups

Methods of non-price competition are divided into several groups.

First group– these are techniques aimed at achieving competitive advantage by improving various product parameters.

These include:

• launch of new product items;
• introduction of products that have new consumer characteristics, for example, higher quality, improved appearance, more attractive packaging (this process is called differentiation of consumer properties of goods).

Such techniques are used in cases where:

• the company wants to improve the consumer characteristics of its products;
• the company wants to increase market segment manufactured goods;
• the company wants to become known through a wide range of manufactured products in a limited market sector;
• the company is working on the timely introduction of new service conditions (sales and after-sales) in order to interest new groups of customers, force them to purchase products more often and pay at a time for a larger number of items (most often with the help of large discounts and promotions).

Second group- these are methods of stimulating the buyer to buy. Most often these are short-term promotions, sales, etc. Incentive goals in this case, there is an increase in the number of clients or an increase in the number of goods purchased by the same client.

Sales promotion tools for consumers are:

• sweepstakes and lotteries, discounts, coupons, promotions;
• trial samples (samples, testers, as well as tasting);
• competitions and games;
• sales;
• various “label events”;
• consumer clubs.

A sales agent is a link between the manufacturer and the buyer. It is necessary to stimulate the sales agent in order to create a bright image of the product, make it easily recognizable and widely known, and increase the number of positions in trading network. It is equally important to “stir up” the agent’s own interest in large sales volumes of a particular brand.

Sales promotion means For sales agents there are various bonuses and gifts, all kinds of compensation for advertising expenses, exhibitions and sales, prizes, trade booklets, souvenirs, etc.

For the company to be successful, it is necessary to constantly look for alternative ways to sell products, as well as index the amount of discounts in accordance with the current situation on the market.

However, non-price competition works primarily through improving the quality characteristics of goods and production technology, modernization, patenting and branding, as well as competent “servicing” of sales. This type of competition is based on the desire to gain part of an industry market (or a significant segment of it) by producing new products or improving existing products.

The development of competition today is becoming a very urgent task for manufacturers. The problem of studying various types of competition raises the need to study the factors influencing the formation of competitive advantages of goods or services. Considering that the income level of potential consumers is quite low, but at the same time the principles of the Western lifestyle are actively being formed in society, at this stage of economic development one of the most important issues is the price of various types of products of similar quality.

In conditions of development modern economy Competition issues are becoming particularly relevant. This is due to a number of different factors, among which we should especially highlight the rapid growth of information and communication technologies, which allow the consumer to have information about a large number of possible sellers; globalization of the world economy, making it possible to supply relatively inexpensive goods from remote regions, liberalization of international trade. These factors determine the increase in the number and density of contacts between competing types of products in the same markets, and also, quite often, the weakening of the positions of local manufacturers who are unable to compete with products in their markets transnational corporations and the largest manufacturers. The intensification of competition, the development of which can be predicted for the future, makes relevant the question of what forces an individual manufacturer can oppose to this, and how it should act in the current situation.

The answers to this and similar questions actualize the problem of studying various types of competition, as well as how one or another chosen strategy can affect the well-being and future development of the enterprise. A feature of most Russian markets is that the income level of potential consumers is often quite low, while the principles of the Western lifestyle, corresponding standards of consumption and product evaluation are actively being formed in society. Therefore, at this stage of economic development, one of the most important issues is the price of various types of products of similar quality.

As is known, non-price competition involves offering a product of higher quality that fully meets the standard or even exceeds it. Various non-price methods include all marketing methods of enterprise management. In accordance with the stages of consumer decision-making to purchase a particular product, the following types of non-price competition can be distinguished:

1. Competing desires. Exists a large number of alternative ways for a potential buyer to invest their money;

2. Functional competition. There are a large number of alternative ways to satisfy the same need;

3. Intercompany competition. Is a competition of the most effective ways to satisfy existing needs;

4. Interproduct competition. It is competition within the product line of the same company, usually with the aim of creating an imitation of significant consumer choice.

5. Illegal methods of non-price competition. These include: industrial espionage, poaching of specialists, production of counterfeit goods.

In a more condensed form, we can conclude that non-price competition is “a market approach in which the cost of production is minimized and other market factors are maximized.”

Price competition develops in the market in close connection with the conditions and practice of non-price competition, and acts in relation to the latter depending on the circumstances, the market situation and the policies pursued, both subordinate and dominant. This is a price based method. Price competition “goes back to the days of free market competition, when even similar goods were offered on the market at a wide variety of prices. Reducing the price was the basis with which the seller distinguished his product and won the desired market share.” In the modern market, a “price war” is one of the types of competitive struggle with a rival, and such price confrontation often becomes hidden. An open “price war” is possible only until the company exhausts its product cost reserves. In general, open price competition leads to a decrease in profit margins and a deterioration in the financial condition of companies. Therefore, companies avoid conducting price competition in an open form. It is currently usually used in the following cases: by outsider firms in their fight against monopolies, with which outsiders have neither the strength nor the capabilities to compete with them in the field of non-price competition; to penetrate markets with new products; to strengthen positions in the event of a sudden aggravation of the sales problem. With hidden price competition, firms introduce a new product with significantly improved consumer properties, and raise prices disproportionately little. It should be noted that in the operating conditions of different markets, the degree of significance of price competition can vary significantly. As a general definition of price competition, the following can be cited: “Competition based on attracting buyers by selling at lower prices goods of similar quality to competitors’ products.”

The framework limiting the possibilities of price competition is, on the one hand, the cost of production, and on the other hand, the institutional features of the market that determine the specific structure of sellers and buyers and, accordingly, supply and demand.

The selling price consists of the cost of production, indirect taxes included in the price, and the profit that the seller expects to receive. At the same time, the price level is set in the market by the ratio of supply and demand, which determines a particular level of profitability of assets and profitability of products produced by the enterprise. Factors limiting price maneuvering for the purpose of price competition can be presented schematically (Fig. 1).

In the global market, intense competition among product manufacturers constantly exists, but in order for performance in foreign markets to be as successful as possible, it is necessary to constantly improve the competitiveness of domestic products. Using competition from foreign sellers when importing allows you to achieve the most favorable purchasing conditions.

Competition concept

Competition (from the Latin “to collide”) is the struggle of economic entities that are absolutely independent from each other for limited economic resources. It is 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 is impossible to fit it under one universal definition that clearly expresses its essence. This is both a method of management and the special existence of capital when one of them competes with another.

There are 5 components of business competition:

• when potential market participants compete;
• existing players or participants in the market;
• market pressure from buyers to reduce prices;
• competition between surrogates of services or goods (for example, sellers of leather and leatherette);
• market pressure from suppliers to increase prices.

Competition as a catalyst for economic development

In competition, there is a main distinguishing feature - the property of commodity production, as well as the method of development. In addition, competition plays the role of a spontaneous regulator of all public production of goods and services, and as its ultimate goals, competition leads, on the one hand, to the aggravation of market relations, and on the other, 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 reliability of the product than its competitors, more modern and attractive design, and many others as methods to achieve such goals. For example, many buyers prefer to overpay for a well-reputed foreign product than to buy an analog product of local production inexpensively and on favorable terms. Non-price methods of competition also include providing consumers with large packages of services, such as personnel training, payment of a down payment for the purchase of goods and others, for example, reduced metal consumption or the prevention of environmental pollution. One of the methods to realize this is advertising, the role of which in the 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 lure specialists from other companies, promising higher wages, in order to take possession of some production secrets in the field of technology.

Illegal methods of competition also include the release of counterfeit goods, which are similar in appearance to genuine ones, but are 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 artificially reducing 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, occurs 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 abilities.
3. The original buyer does not have the opportunity to resell the product or service received.

In most cases, price discrimination is used in the service sector (cleaning, legal services, hotel business, etc.), when providing services for the transportation of finished products; marketing of goods that cannot be redistributed from one market to another (this usually applies to perishable products).

Price competition strategies

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

This does not mean that price competition does not apply in the market today. It certainly exists, but it always takes different forms. Open competition can exist only if the moment has not come when the company has not exhausted its reserves for reducing production and, accordingly, increasing profits.

But when a certain price equilibrium is established, any attempts by manufacturing firms to reduce prices entail a reduction in the cost of their products on the part of 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 to the market for other companies.

Monopolies as an example of competition

In most cases, price competition as a method of competition itself is used by so-called outsider firms in their fight against monopolies, which they have neither the strength nor the ability 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, which 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 communicate price reductions for new, as well as for services and goods already on the market. It is important to understand that the modern consumer has a lot of choice.