Federal State Educational Institution of Higher Professional Education "Financial Academy"

under the Government of the Russian Federation"

correspondence courses (distance technologies)]

Department ""

Course work

in the discipline "Microeconomics"

on the topic: “Price and non-price competition in economic strategies Russian business»

Completed by: Evgeniy Vladimirovich Cheburov

Checked: ______________________

Moscow 2010

Introduction……………………………………………………………………………………….....4

1 Competition as an element of the market mechanism……………………………7

1.1 The concept of competition……………………………………………………….….7

1.2 Criteria and approaches to competition classification………………………10

1.3 Price and non-price competition……………………………………………………….…..10

1.4 Types of competition and their application in world practice…………………16

2 Development of price and non-price competition at the present stage………………………………………………………………………………………..…21

2.1 Features of price competition on modern commodity markets………………………………………………………………………...……21

2.2 Competitiveness of Russian industry: price and non-price factors………………………………………………………………..24

2.3 Methods of competition in the automotive services market of the city of Moscow……………………………………………………………………………………………….…28

3 Ways to increase the competitiveness of goods and services in the sphere of production and services……………………………………………………………......31

Conclusion…………………………………………………………………………………...33

List of references……………………………………………………….……34

Appendix……………………………………………………………………………………….….35

Introduction

The marketing environment of a company consists of a microenvironment and a macroenvironment. The microenvironment is represented by forces that are directly related to the company itself and its ability to serve clients, i.e. suppliers, marketing intermediaries, clients, competitors and contact audiences. The macroenvironment is represented by forces of a broader social plan that influence the microenvironment (factors of a demographic, economic, natural, technical, political and cultural nature).

Thus, competitors are an important component of the company’s marketing microenvironment, without taking into account and studying which it is impossible to develop an acceptable strategy and tactics for the company’s functioning in the market.

There are many definitions of competitors; here are the most commonly used ones. As noted above, competitors? These are subjects of the marketing system who, through their actions, influence the company’s choice of markets, suppliers, intermediaries, the formation of a product range and the entire range of marketing activities (which entails the need to study them). Considering competitors as subjects of the marketing system in more detail, we can give the following definition. Competing firms are firms that have a completely or partially identical fundamental niche.

The fundamental market niche here refers to the set of market segments for which the product and/or service produced by a given company is suitable.

The presence of competing firms gives rise to such a phenomenon in the economy as competition. From an economic point of view, competition? the economic process of interaction, the relationship between the struggle of producers and suppliers when selling products, competition between individual producers or suppliers of goods and/or services for the most favorable production conditions. Thus, competition in in a general sense can be defined as competition between individuals and business units interested in achieving the same goal. If this goal is specified from the point of view of the marketing concept, then market competition is the struggle of firms for a limited volume of effective consumer demand, conducted by firms in the market segments available to them.
From a marketing point of view, the following aspects are important in this definition:

Firstly, we are talking about market competition, that is, about the direct interaction of firms in the market. It concerns only the struggle that firms wage when promoting their goods and/or services to the market.

Secondly, competition is conducted for a limited volume of effective demand. It is the limited demand that forces firms to compete with each other. After all, if demand is satisfied by the product and/or service of one company, then all others are automatically deprived of the opportunity to sell their products. And in those rare cases when demand is practically unlimited, the relationship between firms offering similar products is often more like cooperation than competition. This situation, for example, was observed at the very beginning of reforms in Russia, when a large number of As goods began to arrive from the West, they were faced with an almost insatiable domestic demand.
Thirdly, market competition develops only in accessible market segments. Therefore, one of the common techniques that firms resort to in order to ease the pressure of competitive pressure on themselves is to enter market segments that are inaccessible to others.

In economic literature, it is customary to divide competition according to its methods into:

Price (competition based on price);

Non-price (competition based on the quality of use value).

Price competition dates back to the 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) distinguished his product, attracted attention and ultimately won the desired market share.

The relevance of the topic of the course work is that in the modern world price competition has lost such importance in favor of non-price methods of competition. This does not mean, of course, that “price war” is not used in the modern market; it exists, but not always in an explicit form. The fact is that “an open price war is possible only until the company exhausts its reserves for reducing the cost of goods. In general, open competition leads to a decrease in the rate of profit, deterioration financial condition firms and, as a result, to ruin. Therefore, firms avoid conducting price competition in an open form.

The object of the course work is price and non-price competition in the Russian goods market.

The subject of the course research is that, having the results of an analysis of methods and forms of non-price competition, it is possible to establish the degree of their importance for the commercial success of a particular company.

So, the purpose of the course research is to analyze the methods and forms of price and non-price competition, which represent the most effective and significant methods of marketing management. From the stated goal of the course research, it is necessary to solve the following problems:

Study the theoretical foundations of competition - concept, theories, types;
- consider the role of competition in a market economy;

Analyze the features of competition in Russia;

Highlight the features of price and non-price competition in the Russian market.

1 Competition as an element of the market mechanism

1.1 Concept of competition

Competition - (from the Latin concurrere - to collide) - the struggle of independent economic entities for limited economic resources. This is competition between commodity producers for better, more economically advantageous conditions for the production and sale of goods, for obtaining the highest profits.

There are other definitions of competition. In the literature devoted to this problem, there are three approaches to defining competition.

The first defines competition as competition in the market. This approach is typical for Russian literature.

The second approach considers competition as an element of the market mechanism that allows balancing supply and demand. This approach is characteristic of classical economic theory.

The third approach defines competition as the criterion by which the type of industry market is determined. This approach is based on the modern theory of market morphology.

The first approach is based on the everyday understanding of competition as competition to achieve the best results in any field. Competition, although in different interpretations, is still defined as the rivalry of economic entities. Here are the most typical definitions:

Competitiveness of economic entities, entrepreneurs, when their independent actions effectively limit the ability of each of them to influence General terms circulation of goods in a given market and stimulate the production of those goods that are required by the consumer;

Competition in the market in the absence of a monopoly;

Competitive, competitive relations between two or more economic entities of economic activity, manifested in the form of the desire of each of them to beat the others in achieving a common goal, to obtain a higher result, to push aside an opponent;

This is a special type of fair economic struggle, in which, given basically equal chances for each of the contending parties, the more skillful, enterprising, and capable side wins;

Rivalry between participants in the market economy for the best conditions for the production, purchase and sale of goods;

Competition in the market between producers of goods and services for market share, maximizing profits or achieving other specific goals .

Within the framework of classical economic theory, competition is considered as an integral element of the market mechanism. A. Smith interpreted competition as a behavioral category when individual sellers and buyers compete in the market for more profitable sales and purchases, respectively. Competition is the “invisible hand” of the market that coordinates the activities of its participants .

Competition acts as a force that ensures the interaction of supply and demand, balancing market prices. As a result of competition between sellers and buyers, a common price for homogeneous goods and a specific type of supply and demand curves are established. Competition ensures the functioning of the market pricing mechanism.

Competition is a mechanism for regulating the proportions of social production. Through the mechanism of inter-industry competition, capital flows from industry to industry.

In modern microeconomic theory, competition is understood as a certain property of the market. This understanding arose in connection with the development of the theory of market morphology. Depending on the degree of perfection of competition in the market, various types of markets are distinguished, each of which is characterized by a certain behavior of economic entities. Competition here does not mean rivalry, but rather the degree to which general market conditions depend on the behavior of individual market participants.

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 consequence of competition is, on the one hand, the aggravation of production and market relations, and on the other, an increase in the efficiency of economic activity and the acceleration of scientific and technical progress.

Competition refers to uncontrollable factors that affect the activities of an organization that cannot be controlled by the organization.

Having examined the essence of competition, let us move on to characterizing its role in the market.

Firstly, competition helps to establish an equilibrium price and equalize supply and demand. In a purely competitive market, individual firms exercise little control over the price of their products and have such a small share of total production that increasing or decreasing their output will not have a noticeable effect on the price of the product. The manufacturer, as well as the buyer, should always focus on the market price. Thus, competition promotes compromise between sellers and buyers. It can also be noted here that competition creates the identity of private and public interests. “Firms and resource suppliers that seek to increase their own benefits and act within the framework of intense competition, at the same time, as if guided by an “invisible hand,” contribute to ensuring state or public interests.” .

Secondly, competition maintains socially normal conditions for the production and sale of goods and services. It kind of tells commodity producers how much capital they should invest in the production of a particular product. Suppose that one seller spent more money on the production of a product than another. In such a situation, when an equilibrium price for a given type of product is established on the market, the last seller, that is, the one who produced the product at a lower cost, will have more profit. And if there is an excess of this type of product, as already noted, a sharp drop in prices will occur, and the seller, who has spent a lot of money on production, will suffer losses. Thus, competition maintains production conditions that are normal for the entire society and, under competitive conditions, resources are distributed efficiently.

Thirdly, competition stimulates scientific and technological progress and increased production efficiency. Since competition serves as a price equalizer, we can conclude that in market competition the one who has the goods will win High Quality with the lowest possible cost. And for this it is necessary to constantly update production conditions and spend large investments on improving technology. Nowadays, there are many resourceful entrepreneurs who are willing to take risks in producing goods using new technology. Consequently, with the development of competition, production efficiency increases every year.

Fourthly, when market subjects confront each other, their socio-economic stratification increases. The competition involves many small owners who are just starting to conduct their business activities. Many of them, lacking sufficient capital, modern means of production and other resources, cannot withstand this competition and after some time suffer losses and go bankrupt. And only a few of them increase their economic power, expand their enterprises and become full-fledged and quite significant and respected market entities.

1.2 Criteria and approaches to classification of competition

There are many criteria and approaches to classifying competition.

Based on the degree of product differentiation, competition is divided into homogeneous , homogeneous (without differentiation), and heterogeneous , heterogeneous (with differentiation).

Competition is divided into open, closed and semi-closed, taking into account the degree of free penetration into the industry.

Since competitors can greatly influence a firm’s choice of a particular market in which it will try to operate, competition can be divided into three types:

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

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

Subject competition is the result of the fact that firms produce essentially identical goods, differing only in the quality of workmanship or even the same in quality. Such competition is sometimes called inter-firm competition, which is true in some cases, however, it should be borne in mind that two other types of competition are usually inter-firm.

Depending on the degree of antagonism, competition without extremes and in violation of the norms of current legislation is distinguished

And finally, the most popular classification: according to market conditions and methods of competition.

Thus, we have defined competition, revealed some of its functions and identified several criteria and approaches to classifying competition. Last scheme, showing the classification of competition according to methods of rivalry and the state of the market, will be taken as a basis when considering the types of competition in subsequent chapters.

1.3 Price and non-price competition

In economics, it is customary to divide competition according to its methods into price and non-price. (see Appendix 1)

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, manufacturers strive to keep prices constant for as long as possible in order to, by purposefully reducing production costs and marketing expenses, 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 exactly the same way: the positions of firms in the market do not change, 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 we often observe 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.

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 (this is not neglected by monopolies where they do not have an absolute advantage), as well as to strengthen positions in the event of a sudden aggravation of the sales problem. With direct price competition, firms widely announce price 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 (beginning of 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 priced at 8.5 million dollars, and in 1982 - a computer whose performance was three times higher, and the price increased only by 15% .

The main condition for successful competition through prices is constant improvement of production and cost reduction. Only the entrepreneur who has a real chance of reducing production costs wins.

The price competition mechanism operates as follows. The manufacturing company sets prices for its products below market prices. Competitors who do not have the opportunity to follow this initiative cannot stay in the market and leave it or go bankrupt. However, there is always a competitor who will lead the company out of a difficult situation, survive the “price war” and wait for a new increase in product prices. So, only a company that has a truly strong position in the market compared to its competitors can count on winning. If competing firms are in approximately equal conditions, then the “price war” is not only wasteful, but also meaningless.

With non-price competition, the role of price does not decrease at all, but the unique properties of the product, its technical reliability, and high quality come to the fore. It is this, and not a reduction in price, that allows you to attract new customers and increase the competitiveness of the product.

The analysis of the market behavior of business entities in conditions of monopolistic competition allows us to talk about the possibilities of developing price competition, despite the existing variety of different goods and services that can satisfy the same need. At the same time, this market structure is also characterized by non-price competition. The main forms of non-price competition in conditions of monopolistic competition are product differentiation, improvement of its quality and consumer properties, and advertising. Product differentiation allows you to offer customers a wide variety of products and services in terms of type, style, brand, and quality. When this process is successful, it allows the company to create its own constant circle of customers who prefer its products to analogues from competitors.

However, with such a diverse range of products and services offered, there is always the possibility of a new offer that will differ from the variety of products already available. A thorough study of the diversity of consumer tastes and their individual shades allows new commodity producers to find their niche in the market.

Product differentiation acts as a kind of compensation for those disadvantages that are inherent in monopolistic competition and are associated primarily with the costs associated with the functioning of such a market structure. At the same time, product differentiation, taken to the extreme of its manifestation, on the one hand confuses the consumer, complicating the selection process, on the other hand, can give rise to false guidelines in choice. Quite often, preference for some products over others is given not on the basis of the actual quality and consumer properties of the product, but on the price, considering that the latter serves as the best indicator of the quality of the goods and services offered.

Another form of non-price competition is the improvement of competitors' products and services offered. Improving the quality characteristics or consumer properties of a product ensures the expansion of the product sales market and the displacement of competitors who do not care about improving their products. This form of competition has two positive consequences, in addition to better satisfaction of customer needs. The first is that the successful improvement of one firm's product encourages other firms to take necessary action to overcome that firm's temporary advantage. In general, this contributes to the development of scientific and technological progress not only in the field of consumer goods, but also directly in the field of resource and logistical support for the production of non-production goods.

The second point is associated with the emergence of new sources of financing the process of further improvement of the manufactured product or the creation of a qualitatively new product. Success in product expansion allows you to expand production, achieve its optimal scale and receive significant amounts of economic profit, which precisely serves as this new financial source.

While noting the positive aspects of competition in the form of product improvement, one cannot ignore the imitation activities of firms in this area. The imitation company's activity to improve the product, as a rule, is limited to minor superficial changes in the product, achieving an external effect that passes off apparent changes in the product as real, and also a priori builds obsolescence into the improved product, which causes quick disappointment in the buyer's possession of the product. which was replaced by its new model. It is clear that this type of activity by firms objectively leads to the theft of limited resources and causes an increase in consumer spending by the population.

Non-price methods also include the provision of a large range of services (including personnel training), free after-sales service, crediting old delivered goods as a down payment for a new one, supply of equipment on the terms " finished products into your hands." Lower energy consumption, reduced metal consumption, prevention of environmental pollution and other similar improved consumer properties have come to the fore last decade on leading place in the list of non-price arguments in favor of the product.

Currently received very great development various types of marketing research, the purpose of which is to study consumer needs, his attitude towards certain products, because The manufacturer's knowledge of this kind of information allows him to more accurately represent future buyers of his products, more accurately imagine and predict the situation on the market as a result of his actions, reduce the risk of failure, etc.

Due to the great influence of the media and the press on the public, advertising is the most important method of competition, because with the help of advertising, companies not only convey to buyers information about the consumer properties of their products, but also build confidence in their product, price , sales policy, trying to create an image of the company as a “good citizen” of the country in whose market the entrepreneur acts in foreign trade.

A manufacturer in conditions of monopolistic competition can, by manipulating the product, achieve at least a temporary advantage over competitors. The same result can be achieved by the manufacturer through advertising and other sales promotion techniques. While product differentiation tailors the product to consumer demand, advertising tailors consumer demand to the product.

During the existence of the Federal Republic of Germany, French beer was in great demand among West German consumers. West German producers did everything to prevent French beer from entering the German domestic market. Neither advertising of German beer, nor patriotic calls “Germans, drink German beer,” nor price manipulation led to anything. Then the German press began to emphasize that French beer contained various health hazards. chemical substances, while the German one is supposedly an exceptionally pure product. Various actions in the press, arbitration courts, medical examinations began. As a result of all this, the demand for French beer nevertheless fell - just in case, the Germans stopped buying French beer .

The purpose of advertising for a company operating in conditions of monopolistic competition is simple. The company hopes to increase its market share and strengthen consumer loyalty towards its differentiated product. Translated into technical 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.

On the one hand, it is argued that this kind of activity is wasteful and weakens competition. Indeed, for example, in the United States, advertising costs exceed the amounts spent by state and municipal governments. On the other hand, advertising is credited with many positive aspects that are associated both with the interests of consumers and the efficiency of the national economy, as well as with the strengthening of market forces, which leads to increased competition. So, let’s briefly look at both the positive and negative aspects of advertising.

In connection with such a dual assessment of advertising activities, it is obvious that the legislative and executive bodies of the country need to constantly monitor the processes of advertising activities in order to take certain effective measures, promptly limit or prevent negative consequences from advertising. This applies primarily to today's Russia, which is overwhelmed by a real harmful advertising bacchanalia, which damages not only the national economy, but also the health and psyche of the population. The disadvantages of advertising include:

The media is dependent on advertisers, which limits their freedom.

However, we must not forget the undeniable advantages of advertising activities:

Advertising often leads to lower prices. By creating mass markets, advertising makes it possible to reduce production costs, which allows manufacturers to reduce costs. The consumer benefits from this saving.

The main research interest of economists has focused on the effect of advertising on the degree of competition. Two completely different schools developed. The anticompetitive view argues that advertising is essentially a form of persuasion that enhances product differentiation in the minds of consumers and thus allows each firm to gain a greater degree of monopoly power in the market, and to do so at the expense of consumers. Advertising convinces consumers that there are few substitutes for the intended product. In graphical form, advertising makes a firm's demand curve less elastic, allowing it to charge higher prices and earn higher profits. Advertising reduces competition among existing firms in the industry and, acting as a barrier for them, protects established firms from new potential competitors. In contrast, the pro-competitive view views advertising as information, that is, as a relatively inexpensive means of increasing the number of product substitutes known to consumers. Consequently, advertising makes the demand curve of any seller, especially one operating in conditions of monopolistic competition, more elastic, and prices and profits tend to decrease. Greater knowledge about the suitability of products through advertising successfully increases the number of substitutes and makes the industry more competitive.

Evidence of the economic effects of advertising is mixed, as researchers generally have difficulty identifying the true causes and effects. Suppose it is discovered that firms that advertise many of their products have significant monopoly power and large profits. Does this mean that advertising creates barriers to entry, which in turn reinforce this monopoly power and profits? Or are these same barriers to entry not related to advertising, but are a source of monopoly profits and allow firms to spend lavishly on advertising their products? One thing that is clear is that there is simply no consensus at present regarding the economic consequences of advertising.

Thus, we have established that the main methods of non-price competition are product differentiation, improving its quality and consumer properties, and advertising. We also found out that the main condition for successful competition using prices is constant improvement of production and cost reduction. Only the entrepreneur who has a real chance of reducing production costs wins.

1.4 Types of competition and their application in world practice

The role of competition, especially price competition, has increased significantly in the last two decades, both in national commodity markets and in global commodity markets. Large companies have the opportunity to use different pricing options based on the nature of the product and market, as well as the actions of other leading manufacturers.

Participants in transnational oligopolies, who have approximately the same potential and are equally unwilling to introduce newcomers, abandon destructive price competition as the main weapon of rivalry. Given the approximate equality of financial and technological resources of competing companies, the use of price methods of struggle is too expensive, and most importantly, it practically cannot lead its initiators to victory.

A frontal attack based on price reductions within transnational oligopolies is usually used only when radical shifts in the balance of forces occur, when the sharply increased competitiveness of individual TNCs gives them the opportunity to redraw their spheres of influence (for example, Japanese automobile and electrical firms in the US market).

Forms and methods of competition. Depending on the methods used, there are three main forms of competition: price, non-price and free competition.

Price competition is used mainly in competition between monopoly firms and outsiders. Its main types are open and hidden.

Open price competition involves lowering prices as a method of competition and is used:

Outsiders in competition with monopoly firms when they do not have the means of non-price competition;

Large firms in response to the actions of outsider competitors. A price war ensues. This is typical for the markets of many new products (for example, in the storage device market, American firms have reduced prices: Data General by 68%, Perkin Elmer by 61%, Hewlett Packard by 37%);

Monopoly firms as establishing a barrier against the entry of new potential competitors into the market, as well as with the aim of ousting competitors from the market. Here a temporary decrease in prices occurs, after which prices sometimes rise again to a level higher than before;

Internal cartels of importing countries by harmonizing the level of import prices;

Large companies entering markets that are new to them in order to seize monopoly positions that make it possible to dictate sales terms. This is most typical for product markets with an unsettled corporate structure, in the production of which a large number of firms operate. There are sudden, sharp price cuts, especially for new products (companies usually announce price cuts of 20, 40 or 60%). The main reason for this price reduction is an attempt to expand the company's market share.

Methods of open price reduction when entering new markets are widely used by firms in Japan, South Korea, and Taiwan, in particular, when exporting ships, televisions, and cars to the United States and Western European countries.

Competition is especially intensifying in global commodity markets, where the competitive positions of even the largest monopolies are not stable (an example of the global automobile market, where General Motors lost the first place in car sales in the United States, which it had held for almost 50 years, to the Japanese company Nissan ).

The main efforts of competing companies are aimed at maintaining global market shares and maintaining the existing balance of power between them. This is manifested in the pursuit of innovation, the creation of foreign manufacturing enterprises, concluding intercompany agreements in the scientific and production sphere. Therefore, these relationships, first of all, manifest themselves in industries most closely related to scientific and technological progress.

Patent protection of inventions for international level to some extent restrains open price competition in the market (for example, in the automobile, pharmaceutical, electronics and chemical industries).

Hidden price competition is carried out in various ways. In particular, by providing discounts on prices and better sales conditions. The following price discounts are provided: secret simple discounts from the officially announced price (list price, reference price, etc.) to certain groups of buyers or individual buyers in order to establish long-term, more sustainable relationships to ensure sustainable profits (secret rivalry);

Open discounts from price to quantity, to the wholesale nature of sales, under certain contract conditions (progressive, bonus, export, seasonal);

Secret discounts for the special nature of the relationship with a partner when granting a simple right to sell in a certain territory, when selling goods to employees of a partner company, etc.;

Discounts for “loyalty” provided by companies for customers’ refusal of competitors’ offers;

Discounts for regular customers.

Providing the best sales conditions is a hidden, transformed form of price competition, carried out by:

Improving the quality of a product at a constant price (technical parameters: beneficial effect, etc.), which actually indicates a decrease in the price of the product;

reducing the price of goods;

Extending the warranty period (for example, if two companies offer passenger cars on the market with the same technical characteristics and price level, but one of them offers a longer warranty period, then since the cost of warranty service is included in the price, we are talking about offering the product at a higher price). low price);

Providing a cash loan on better terms (lower interest rates for most of the supply);

Providing a loan in the form of a deferred payment for a longer period (sometimes for the entire period of the trial period of operation of the equipment).

Providing shorter delivery times. Such delivery gives the buyer the opportunity to quickly use capital in commodity form, spend less money on borrowing capital from the bank and thereby receive additional profit. Therefore, the supplier of goods with shorter delivery times fixes a higher price;

Using a mixed form of lending, providing for the provision of low-interest government loans, which are in the nature of state assistance along with commercial loans. This allows firms in individual countries to reduce interest rates and extend loan repayment periods.

Non-price competition. The use of non-price competition methods allows the largest firms to pursue a more flexible policy in the market. The following types of non-price competition can be distinguished:

Legal means of competition;

Semi-legal methods of fighting rivals;

Methods of limiting the actions of other competitors using government regulation and assistance.

Legal means of competition include:

Product competition, when in the process of differentiating an existing product a new product is created, i.e. having a new use value;

Competition in the provision of services, which is of particular importance in the machinery and equipment market. The range of services includes the provision of advertising materials, the transfer of technical documentation that facilitates the operation of the equipment, the provision of training services for specialists at the buyer’s enterprise, technical maintenance during the warranty and post-warranty periods.

Semi-legal forms of competition include:

Economic espionage;

Bribery of officials in the government apparatus and in competing companies;

The practice of concluding illegal transactions;

The practice of limiting competition, which contains a rich arsenal of means designed to ensure the dictates of a monopoly firm on the market in order to establish the most favorable operating conditions on it. This includes, in particular, the practice of pushing internal company standards as national and international ones, and imposing favorable clauses when selling rights to use trademarks or patents.

2 Development of price and non-price competition at the present stage

2.1 Features of price competition in modern commodity markets

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 competitive advantages 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 food. different kinds products of similar quality.

In conditions of development modern economy Competition issues are becoming particularly relevant. This is related to a number various factors, among which we should especially highlight rapid growth information and communication technologies that 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 largest producers. 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. There are 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 the competition the most effective ways meeting 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 by 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 ability to compete 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 given: “Competition based on attracting buyers by selling at more low prices goods similar in 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.
Today, the most common pricing strategy, chosen by about 80% of companies, is “following the market.” Enterprises that use it set prices for their products based on a certain average price list. However, it is difficult to call this a conscious choice. Most often, it is simply impossible to act differently. As a rule, those who work in mass markets, where competition is very high, have to “be like everyone else.” This provision fully applies to the meat market. In the current situation, buyers react very painfully to any noticeable increase in the price of goods, which does not allow them to inflate prices, and competitors harshly respond to any attempt to change the existing proportions of sales, which makes another pricing strategy – “market penetration” – dangerous.

Speaking about the implementation of pricing measures within the framework of competition, it must be said that, basically, pricing at Russian enterprises is carried out by completely different bodies and persons: director, accountant, economist, sales manager, supply manager, marketing department specialist, etc.

Unfortunately, there are still few precedents, at least in regional practice, of the use of professional analysts-consultants who have special skills and experience in competent pricing, capable of taking into account the entire range of factors affecting the price. Therefore, it is not uncommon for enterprises to go to extremes when building their pricing policy.
Here is a list of such extremes that you may encounter in practice:

– almost all enterprises use only a price competitive strategy taking into account their cost - competition based on prices, but not quality. Accordingly, prices are set either at the level of the leading competitor in the market, or at the level of average prices among competitors, or at a level below all competitors;

There are enterprises that thoughtlessly use the price dumping strategy. In certain areas (for example, the provision of telecommunications data services), the latter method may be of predominant importance. Naturally, such “pricing” in a short period of time can lead an enterprise not only to fundamental changes in pricing policy, but also to fatal consequences.
– Some enterprises use only the “Cost +” method. Their prices have little correlation with the existing market level. The cost and margin that the entrepreneur would like to receive are taken into account.

Professional pricing consultants are approached by those entrepreneurs who want to optimize the efficiency of their investments and increase the likelihood of their payback in the shortest possible time. Large enterprises can add a special position to their staff and employ a specialist on a permanent basis. This is justified when the company has a large range of products and services, when their sales volume and prices depend on seasonal factors and other external factors. For example, when the purchase of materials, services and the sale of finished products are made in different currencies. And we have to build a separate strategy for tracking rates and responding to their changes. Small and medium-sized enterprises, as a rule, need one-time services and resort to them from time to time.
Lastly, when choosing a specialist to build a pricing policy, you must comply with the following conditions:

1. The consultant must have proven technology for solving problems and the necessary professional skills.

2. The consultant must be independent from the enterprise: from the traditions existing in the organization, from the policies of the management apparatus.
Thus, it is advisable to solve issues of pricing management within the framework of price competition using professional staff. If it is impossible to maintain such employees, it is recommended to resort to outsourcing of this function.

2.2 Competitiveness of Russian industry: price and non-price factors

Predictions regarding a slowdown in economic growth and industrial production in 2009 came true. In general, in 2009, the growth rate of GDP decreased to 6.4%, and industry growth - to 4% against 7.2 and 8.3% in 2007, respectively. At the same time, the dynamics of growth in physical volumes of exports generally corresponded to the dynamics of industrial production, and no significant changes were observed in the growth rate of imports.

Formally, in 2009, the economic growth model “improved”: the contribution of extractive industries to industrial growth decreased to 9% (versus 23-25% in the previous two years), while the contribution of “processing” grew to an impressive value - more than 80%. Nevertheless, it is premature to talk about improving the structure of economic growth in Russia, since the increase in the contribution of manufacturing industries is accompanied by high instability and volatility of their growth rates. (1. Measured by the standard deviation of the growth rate as a measure of the instability of this indicator.) (due to the low level of competitiveness) does not improve the quality of growth of the economy as a whole.

With export prices rising by a third, the balance sheet profitability of sales of industrial sectors, according to Rosstat, in 2009 increased by less than 2 percentage points (up to 15%). Among the three most important cost-generating factors are the prices of natural monopolies (primarily transport and electricity), wages, prices for petroleum products - only the latter increased at a rate faster than the wholesale price index (WPI), while the first two markets in their price dynamics lagged behind the WPI, which had already slowed down its growth in 2009 - to 16% (versus 28. 3% in 2008). But this did not result in a significant increase in profitability (apparently due to insufficient internal production efficiency), and therefore disincentivized the investment process. The propensity to invest decreased mainly in the oil and gas industries, which is fully explained by last year’s restructuring of this industry complex and the related revision of current investment programs.

At the same time, in the medium term, the pressure of costs on business profitability will only increase, since prices for the products of natural monopolies may begin to grow at an accelerated pace (taking into account both the aggravation of real investment restrictions in the electric power industry and transport, and the strengthening of lobbying of natural monopolies during their nationalization). In the medium term, rising costs will limit not so much wage growth as investment in fixed capital, the growth rate of which in real terms has been consistently declining for the third year (from 12.5% ​​in 2007 to 10.8% in 2008 and 10 , 4% in 2009) At the same time, the propensity to invest in fixed capital from profit also decreases: if in 2008 the scale of investment was about 83% of the economy’s profit, then in 2009 it was about 76%.

The prospects for economic growth in Russia are largely related to the possibility of restoring high growth rates in physical export volumes (primarily raw materials) and the dynamics of the competitiveness of the manufacturing sector of the economy.

The slowdown in the growth of merchandise exports in 2009 is associated with three product groups - “fuels” (from 11% growth in 2008 to 3% in 2009), “metals” (from 17 to 7%) and “machinery and equipment "(from 8 to 3%). Such a sharp and serious slowdown in the growth of Russian exports against the background of an increase in the price attractiveness of export markets by a third may indicate both the temporary nature of the decline (if it is caused by a sharp change in the tactical guidelines of the largest companies) and the emergence of serious restrictions in the export infrastructure or in the raw material base .

In the fuel industry, according to available estimates, there are no catastrophic restrictions in the pipeline export infrastructure yet, and the slowdown in export growth was associated, on the one hand, with the restructuring organizational structure a number of the largest enterprises in the industry, and on the other hand, with uncertainty against the backdrop of an increase in the marginal tax burden. Export growth that outstripped production in previous years was achieved largely due to alternative types transport, at the same time its marginal profit (taking into account the high tax burden of the oil industry and the increased risks of a change of owner) was quite low.

As for metallurgy, the slowdown in export growth is mainly due to a decrease in copper exports by 8% (by 2008), as well as moderate growth rates (if not stagnation) in the export of ferrous metals, in particular due to increased production in China. These factors appear to be a more serious limitation on export growth in the short term than in the fuel industry.

Exports of engineering products could decline not only due to the cyclical situation in the global arms market, but also due to the discussed reorganization of the Russian defense industry.

At the same time, theoretically, export growth rates higher than in 2009 are possible, but unlikely due to the high level of uncertainty and constant organizational changes. In addition, external export restrictions may emerge over the next few years, including in connection with the upcoming commissioning of new capacities in countries competing with Russia in the raw materials market, in particular in the global non-ferrous metallurgy.

The situation in the manufacturing industries in 2009 did not improve radically, as evidenced by the dynamics of such industry indicators of current competitiveness as the real industry ruble-dollar exchange rate and unit labor costs, that is, indicators determined primarily by the relative dynamics of prices and wages. Qualitative assessments of changes in the competitiveness of Russian enterprises, recorded by surveys of professional forecasters. Surveys were conducted by the Development Center on October 31 - November 6, 2009 and January 31 - February 8, 2009) showed that the situation in this area continues to deteriorate. The number of negative assessments exceeded the number of positive ones by 27.6%, although three months ago the balance of assessments was even less favorable and amounted to 36.7%.

So, if the process of reorganization of the raw materials sector drags on, which is most likely, then its growth rate will remain at the current low level - 1-2% per year. Taking into account the predicted average for the year in 2006-2008. A 7% increase in mechanical engineering and a 6% increase in the food industry, the growth rate of industrial production as a whole will not exceed 5%, averaging about 4.5% per year. Against the backdrop of higher GDP growth rates, this will mean that, given the inertial development of the situation in the field of economic policy, the deindustrialization of the economy will continue. Moreover, it will not occur due to the accelerated growth of new non-industrial sectors while maintaining traditional industrial potential, which could be regarded as an improvement in the structure of growth, but due to the slowdown in growth in the raw materials sector and in manufacturing industries related to it technologically. This shows the importance of the problem of competitiveness primarily in industries that directly compete with imports, that is, in the manufacturing sector of industry.

Price indicators of competitiveness at the macro level: lack of focus on the dynamics of the real effective exchange rate (3. This section of the article was written in collaboration with V. A. Dorogov.)

As one of the main indicators of competitiveness, it is customary to use the real effective exchange rate, which is calculated taking into account the structure of foreign trade and is usually adjusted to the consumer price index. An increase in this indicator means a decrease in the country’s price competitiveness compared to its main trading partners.

In world practice (but so far, unfortunately, not in Russia), when calculating price competitiveness, not only consumer price indices are used, but also the so-called unit labor costs.

While estimating the real effective exchange rate based on the consumer price index provides information about the price competitiveness of a country's economy, calculating it based on unit labor costs allows us to assess cost competitiveness. This approach is even more consistent with the concept of comparative advantage, since labor costs were a key variable in the Ricardian model of international trade. At the same time, the growth of the real effective exchange rate of the ruble signals a potential strengthening of the position of imported goods in the domestic market and a weakening of the position of non-commodity exported goods in foreign markets. In turn, an increase in unit labor costs, calculated relative to the dynamics of similar indicators in countries - trading partners (relative unit labor costs), ceteris paribus, means a decrease in the profitability of enterprises in the economy, which negatively affects the volume of funds available for investment, and therefore , on competitiveness in the medium term(

Russia's price competitiveness has been steadily declining since its peak in 1999, and until 2009, at approximately the same rate both in terms of prices and costs. By the end of 2009, the growth rate of the real effective exchange rate for labor costs was almost twice as high as for the consumer price index. In 2010, this trend continues, and Russia's competitiveness in terms of labor costs has decreased even more. One gets the feeling that, having quickly consumed the reserve of competitiveness created by the devaluation of the ruble in 2008-2009, the Russian economy is seeking to use up the resource of competitiveness in terms of labor costs in the coming years,

Thus, obtaining a holistic picture of changes in the competitiveness of the real sector of the economy and assessing the impact of the real exchange rate on it at the empirical level is not easy, since, in addition to the real exchange rate of the ruble and the growth of labor productivity, other elusive microeconomic and industry factors influence competitiveness (10. Competitiveness of or another product is characterized by a price/quality ratio, that is, the less a unit of product utility costs for the consumer (a unit of quality), the more competitive the product is. Since the limiter for downward price movement is production costs, competitiveness can be increased both by reducing costs (a. consequently, prices), and by increasing the quality of products. Thus, the level of competitiveness of products is characterized by the relative level of prices and the level of production efficiency (labor productivity), as well as the quality characteristics of products.).

2.3 Methods of competition in the automotive services market in Moscow

Automotive markets services, both sales and service, and rental, in Moscow, is very saturated and very susceptible to price fluctuations that are insignificant for the company, but significant for clients, so if information is received about a slight change in the price of any services from competitors in the direction of decrease, then the heads of the departments themselves make decisions about changing the company’s prices for the same services. However, if significant jumps occur or the new kind services, then the decision to change the company’s policy is made only at a general meeting of directors, which requires a significant waste of time.

The company's pricing policy is designed to keep prices for its services in the middle of the price range established in each specific market. However, it is known that print publications specializing in advertising publications, which the company, like many of its competitors, use, accept advertisement texts at least two weeks before the release of the publication, and during this time prices on the market may change several times. Therefore, despite the small, by company standards, expenses for this kind of advertising - only about 300 thousand rubles . per year - quite often, it loses greatly to its competitors, due to inaccuracies in the “prediction” of price changes carried out by the board of directors. For example, Table 1 presents information on prices for car service and maintenance services published in one of the printed advertising publications.

Table 1

Prices for car repairs and servicing in Moscow

Company	Standard hour price, USD
GENSER-SERVICE
AUTOLEGION
AUTO CENTER on Bashilovka
RECOVERY
GRAND MOTORS
KUNTSEVO EUROCAR TRADING
MOSREMONTSERVIS
NIVUS-SERVICE
OLMI TRADING
RENAULT CENTER KUNTSEVO
SOVINTERAUTOSERVICE
YUSHAS SERVICE
* – depending on the model

However, at the time of publication of this publication, prices at Mosremonservice CJSC were already in line: 19-29 USD per standard hour for Skoda cars and 25-40 USD per standard hour for Renault cars. There is a clear ineffectiveness of the board of directors, which directly affects the decision of the company's competitive advantages. A similar picture has emerged in other areas of the company’s activities – sales and rental of vehicles.

But nevertheless, such advertising works - many call to clarify prices, and are pleasantly surprised when they turn out to be lower than stated, so this shortcoming in the company’s work can still be considered a successful method of competition, although it entails small losses, but parts of clients.

The company attracts new clients with a number of additional free services. So, for example, when selling a car, they install a car alarm of their choice from those available, completely free of charge for the client, and also provide assistance in insuring the purchased car. In addition, the company provides warranty service and warranty repairs for the sold vehicle.

The company is fighting hard for the quality of its services. Suffice it to say that, for example, the company provides a one-year guarantee on the quality of repair work, despite the fact that the law of the Russian Federation considers a six-month guarantee sufficient. There is not a single car in the rental car fleet that is older than three years - such cars are sold by the company at their residual value. All cars must undergo pre-sale training, preparing them for Russian operating conditions.

To ensure the quality of services provided, the company spends a lot of money. For example, in 2009, 15 million rubles were spent on:

Updating and replenishment of equipment intended for vehicle repair and maintenance;

Repair tool update;

Purchase of consumables from world leaders;

Purchasing the latest technological developments from leading world leaders;

Retraining of personnel.

The company’s very high, one might say inflated, but fully justified requirements for personnel directly involved in repair work require special attention. The company's policy in this direction does not allow hiring people without a higher technical education, necessarily related to auto-mechanical work.

In the entire history of the company, there have only been two cases when clients were dissatisfied with the work performed. And in both cases, the money was returned to the clients and repeated repairs were carried out at the company’s expense - this was followed by the mandatory dismissal of those responsible, while, in the last case, which occurred in 2009, the employee had to be fired with the wording “staff reduction” and the company gave him everything payments provided for by the current legislation of the Russian Federation.

3 Ways to increase the competitiveness of goods and services in the sphere of production and services

In the sphere of production, the most important ways to increase the competitiveness of manufactured goods are

ensuring a given level of their quality or designing and developing new types of products, packaging in packaging that is attractive in appearance and size, reducing production costs.

Unlike production, where significant changes are possible in the formation of the fundamental characteristics of the use value of goods, in the service sector the efforts of performers are aimed at maintaining the achieved level of quality and preventing quantitative and qualitative losses. However, this cannot increase the competitiveness of the goods sold or services provided.

At the same time, there are certain ways to increase their competitiveness related to economic criteria: reducing trade markups on goods and reducing tariffs for services through the use of internal reserves, saving costs on service processes without reducing the level of its quality, which will allow setting lower prices at sale of goods and provision of services.

Limiting the active influence on increasing the competitiveness of goods and services in the service sector requires a reasonable selection and application of methods to ensure competitiveness, which must be considered as the most effective ways to increase competitiveness.

One of the ways to increase the competitiveness of goods and services in the service sector is to ensure their organizational and information support in the form of providing additional services, as well as bringing necessary and reliable information to consumers. In addition, it is possible to increase the competitiveness of goods and services in the sphere of production and services by developing and implementing systems to ensure competitiveness.

Competitiveness Ensuring System (CSS) is a set of management systems of organizations aimed at creating consumer preferences.

This term was proposed by R.A. Fakhrutdinov. in his opinion, SOC consists of an external environment (input, output, connection with the external environment, feedback) and an internal structure (scientific support subsystems, target, supporting, controlled and controlling).

The components of the “input” of the SOC of goods and services are tangible and intangible resources (raw materials, supplies, semi-finished products, components, equipment, information) that are necessary for the production and receipt of finished products or service results. To ensure the competitiveness of such goods or services, it is necessary that the “input” has competitive resources (in terms of quality and price). The higher the competition among suppliers, the greater the likelihood of obtaining such resources.

Communication with the external environment allows the organization to take into account its uncontrollable factors that affect the competitiveness of goods and services. These include socio-economic, legal, environmental, natural, scientific, technical and other factors.

Feedback components include consumer preferences (their formation and maintenance), consumer complaints, information from consumers about the acceptability of quality and price.

At the same time, the listed components of the external environment are not enough to ensure the competitiveness of goods and services. In addition to them, internal structure components play an important role. When creating, implementing and maintaining subsystems of the internal structure (scientific support, target, support, etc.), personnel are of decisive importance.

Personnel management as one of the components of the internal structure subsystem is distinguished by the following characteristic features:

The focus of personnel work is to ensure and maintain the competitiveness of goods and services throughout the entire technological cycle.

Quick adaptation to a constantly changing competitive environment;

Constant improvement of your qualifications;

Systematic analysis of the competitive environment, as well as the advantages of your organization, the goods it sells, the services it provides, and the competitor organization, its goods and services;

Taking into account factors influencing the formation and maintenance of consumer preferences;

Knowledge of methods for ensuring competitiveness and the ability to apply them in the service sector.

Due to the fact that these methods of ensuring competitiveness are important.

Conclusion

In the Russian economy, it is important to solve the problem of increasing competitiveness through improving the quality of products. Currently, the products of domestic producers, in addition to high prices, are characterized by low quality indicators compared to similar industrial products developed countries. This causes low competitiveness of industrial goods.

There are often cases when the company’s products are not in demand and remain in the company’s warehouse for a long time, often losing their quality properties. In this regard, the problem of increasing competitiveness is currently quite relevant.

Thus, the competitiveness of a product is determined by its unit price, which is understood as the ratio of the price of a product to the beneficial effect, reflecting the justified return of its sought-after consumer properties in specific conditions.

The price must justify the supply when selling the product, and the supply of new products must be stimulated by the price. Thus, if “price” acts and is just a tool for selling products, then “competitive quality” remains the only factor in the development of the market - the core by which we should understand not the specific indicators of the product, but the entire complex of measures aimed at obtaining it and delivery to the end user.

In addition, taking into account the fact that competitiveness is determined by the qualitative and cost features of the product, which are taken into account by the buyer according to their immediate importance for meeting needs, as part of assessing the competitiveness of products, the pricing policy of the enterprise should be considered and its impact on the competitiveness of the products produced should be assessed.

Pricing policy is a set of measures to manage prices and pricing and consists of setting prices for goods (services) that compensate for production costs, correspond to market conditions, satisfy buyer demand and bring planned profits. Pricing policy is considered only in the context of the general policy of the company.

The basis for setting prices for products are the costs of their production and the quality characteristics of the product. In addition, marketing department specialists constantly monitor the level and dynamics of prices for products produced by competing companies and, if necessary, make proposals to change the price level.

List of used literature

1. Zaloznaya G.M. Increasing competition in the Russian economy // Modern competition. – 2008. – No. 5. – P.12-16.

2. Ivashkovsky S.N. Microeconomics: textbook. – M.: Delo, 2002. – 416 p.

3. Kopylov M. Competition policy and competitive environment in the Russian Federation // Modern competition. – 2009. – No. 5. – P.14-18.

4. Course of economic theory: Textbook / M.I. Plotnitsky, E.I. Lobkovich, M.G. Mutalimov. – Mn.: Interpressservice, 2003. – 496 p.

5. Course of economic theory / Edited by Chepurin M.N., Kiseleva E.A. – Kirov: “ASA”, 2007. – 848 p.

6. Lukyanov S. Entry barriers: the most important tool for the policy of limiting competition in Russian markets // Modern competition. – 2009. – No. 1.

7. Lymar E.N. Features of monopolistic competition markets in the regional aspect // Bulletin of Chelyabinsk University. – 2009. – No. 2. – P.71-76.

8. Maksimov S.V. Guarding fair competition // Modern competition. – 2009. – No. 5. – P.70-81.

9. Merkulova Yu. Features of Russian industry monopoly // Society and Economics. – 2009. – No. 4/5.

10. Nikolaeva L.A., Chernaya I.P. Economic theory: textbook. – M.: KNORUS, 2006.

11. Stankovskaya I.K., Strelets I.A. Economic theory: textbook. – M.: Eksmo, 2008. – 448 p.

12. Economic theory: Textbook / Under the general editorship. acad. V.I. Vidyapin, A.I. Dobrynin, G.P. Zhuravleva, L.S. Tarasevich. – M.: INFRA-M, 2003. – 714 p.

13. Economic theory: textbook / Ed. A.G. Gryaznova, T.V. Checheleva. – M.: Publishing house “Exam”, 2005. – 592 p.

Annex 1

Types of competition

Magazine "AutoPanorama". M., March 2009. p.120.

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

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

Usually, a quick and cascading “reset” of prices is a rare, forced and economically damaging (unprofitable) event. It is more preferable, of course, to fix prices, i.e. keeping them unchanged. Significant price reductions are only possible in two cases: either the seller immediately “increases” the price (involves the product at a price significantly higher than the manufacturer’s price) and therefore can afford discounts on purchases (especially wholesale), or laws come into force. As for the second option, then this is understandable: obsolete products (especially electronic household equipment), not being sold cheaper today, will not be sold at all tomorrow, since demand for them will fall.

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

Prices with a basis that lie outside of value become the object of competition, which can be directly attributed to price.

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

The expansion of the range of consumer requirements dictates more stringent requirements for the exporter and its competitiveness. This is a regularity: only a competitive company can produce, which, in turn, requires certain conditions characterized by the country’s competitiveness. As you can see, it’s an unbroken chain, a vicious circle.

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

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

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

Competitors do not always respond by lowering their prices. Often it is non-price competition that wins, based on higher quality, higher reliability, more attractive design (you must admit that if you have enough money, you will give preference to a good Japanese car without even looking at the domestic one).

Price competition is based on the fulfillment of two conditions:

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

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

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 competition: 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 shortcomings, 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. A significant positive is also that competitors often fail to retaliate immediately, giving the rival an advantage. If innovations turn out to be successful, all expenses for 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 samples. 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 – more productive way competition rather 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 companies use illegal ways 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 items of goods often leads to the fact that the buyer cannot 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– consists of providing service more high class 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 their best aspects in comparison with competitors and (or) their offers.

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, no negative impact on environment, reduced energy consumption and other similar parameters have today become the main ones in the list of advantages of goods or services.

On this moment many companies conduct 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:

• drawings 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 interest in large volumes sales of a certain 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.

Federal Agency for Education of the Russian Federation

Kazan State Technological University

Coursework in the discipline "Marketing"

“Price and non-price competition”

Kazan 2007

Introduction

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

Basics of Competition

Concept and types of competition

Competition methods

Application of marketing in competition

Use of marketing in various competitive conditions

Three strategies without which you cannot win the competition

Ways to win customers

Pricing Strategies

Non-price promotion methods

Chapter II. A research program to determine the influence of price and non-price competition methods on consumer choice.

Determining the influence of price on consumer choice using the example of the dairy market

Determining the influence of non-price competition methods on customer choice using the example of the men's clothing market

Conclusion

Bibliography

Introduction

The relevance of research.

Currently, competition, mainly price, is being used more and more often, since more and more new products are appearing in the markets, and mainly price competition is used to penetrate the market with a new product. Competition is also used to strengthen positions in the event of a sudden aggravation of the sales problem.

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

It can be concluded that competition provides consumers with choice and great amount goods currently. Competition is currently the most pressing issue in any market for goods and services.

Coverage of the problem.

The topic of competition has become widespread in both economic and marketing literature. Almost any book covers all the basic concepts and types of competition, as well as its methods and ways to win customers. Also, the practical application of competition is very often used nowadays. Almost all markets for goods and services involve one or another type of competition. Competition is well discussed in the books by F. Kotler, E.P. Golubkov, and Tim Ambler provides practical research on competition. Except scientific literature competition has become widespread in periodical literature, where marketing research in various markets is provided and the degree of competition of a particular product is assessed.

Goals and objectives.

Purpose my course work is a more accurate consideration of price and non-price competition, both in its theoretical use and in practical application in the market of goods and services.

Tasks my coursework are:

1. Give a more precise definition of competition;

2. Consider the types and methods of competition;

3. Consider the use of marketing in competition;

4. Consider pricing methods of competition;

5. Non-price methods of competition;

6. Methods of winning customers;

7. Conduct marketing research on competition in the market for goods and services and draw conclusions.

Work structure.

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

·Concept, types, methods of competition;

·Use of marketing in competition;

·Methods of winning over consumers;

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

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

Concept and types of competition

Competition is understood as rivalry between individuals, economic units in any field, interested in achieving the same goal.

Soviet foreign trade organizations and enterprises are forced by force of circumstances to compete in foreign markets with companies selling the same (and not only the same!) goods. This competition inevitably arises from the fact that both our company and its competitors strive to capture the attention of customers and induce them to purchase the product. As K. Marx noted, people purchase goods not because it (the product) “has value, but because it is” “use value” [No. 2 p. 144] and is used for certain purposes, then it goes without saying :

1. that use values ​​are “assessed,” that is, their quality is examined (in the same way as their quantity is measured and weighed);

2. that when different varieties of goods can replace each other for the same purposes of consumption, one or another variety is preferred......;

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

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

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

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

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

Subject competition – the result of the fact that firms produce essentially identical goods, differing only in the quality of workmanship or even the same in quality. This kind of competition is sometimes called intercompany competition, which is true in some cases, but it should be kept in mind that two other types of competition are usually intercompany.

Competition methods

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

Price competition goes 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.

In the modern world, when markets are monopolized, divided between a small number of large firms that have captured key positions (the IBM company, for example, in the USA owns 70% of the computer market), manufacturers strive, perhaps longer, to keep prices constant in order to purposefully reduce costs and expenses on marketing, to ensure an increase in profits (maximization). In monopolized markets, prices, as economists say, become less elastic.

This does not mean, of course, that “price war” is not used in the modern market [No. 2 p. 145] - it exists, but not always in an explicit form. A “price war” in open form is possible only until the moment the company exhausts its reserves for reducing mass production and a corresponding increase in the mass of profits. When equilibrium has been established, any 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 renovation and expansion of 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 we often observe not a decrease in prices as scientific and technological 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, of course, cannot be denied.

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

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 the context of the development of the modern economy, issues of competition become especially 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 of competing types of products in the same markets, as well as, quite often, the weakening of the positions of local producers who are unable to compete in their markets with the products of transnational corporations and major 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. There are 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. A “price war” in open form 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 ability to compete 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).