Competition can be divided into two types: price and non-price.

Price competition

Price competition is a competition between sellers when everyone strives to win due to a price that is more acceptable to the buyer. Simply put, the seller tries to offer a product at a price lower than the competitive one.

Through price competition, sellers influence demand primarily through changes in price. How unique offer products from the consumers' point of view, the more freedom marketers have to set prices higher than those of competing products.

In price competition, sellers move along the demand curve, raising or lowering their prices. It is a flexible marketing tool because prices can be quickly and easily changed based on demand, cost or competition factors. However, of all the controlled marketing variables This is the one that is easiest for competitors to duplicate, which can lead to a copying strategy or even a price war. Moreover, the government is monitoring pricing strategies.

The main condition for successful competition with the help of prices is the constant improvement of production and reduction of production costs. The winner is the manufacturer who has a real chance of reducing production costs.

The mechanism of price competition is as follows. The manufacturing company sets prices for its products below market prices. Competitors cannot follow it, they cannot stay in the market and leave it or go bankrupt. In cases where the economic power of competitors is the same, price maneuvering is used. It consists of providing customers with various discounts, reducing product prices, setting the same price for goods of different quality or bringing them closer together. competition price elasticity non-price

Non-price competition

Non-price competition is a method of competition based not on price superiority over competitors, but on achieving higher quality, technical level, technological excellence, with greater reliability, longer service life and other more advanced consumer properties. A significant role in non-price competition is played by: design, packaging, subsequent maintenance, advertising.

Non-price competition minimizes price as a factor consumer demand, highlighting products or services through promotion, packaging, delivery, service, availability and other marketing factors.

For example, a company tries to attract potential buyers with more beautiful packaging or offer the consumer more favorable conditions compared to a competitor. The most important element of non-price competition is advertising. Advertising can help a company increase its market share and attract consumers.

With non-price competition, 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 main goal of non-price competition is the constant improvement of products, the search for ways to improve their quality, technical reliability, improvement appearance, packaging. Thus, non-price competition, unlike price competition, is not destructive, but creative. In nonprice competition, sellers shift consumer demand curves by emphasizing the distinctive features of their products. This allows the firm to increase sales at a given price or sell the original quantity at a higher price. The risk here is that consumers may not view the seller's offerings as better than those of competitors. In this case, they will purchase cheaper goods that, in their opinion, are similar to more expensive ones. A firm based on price competition must reduce prices to increase sales.

The relationship between price and non-price competition.

• 1) Price and non-price competition are interchangeable. Example: A and B. The price of A’s product is lower than that of B, but B offers free shipping and provides a guarantee not for a year, like A, but for two. Thus, the price situation is balanced by non-price factors.
• 2) Non-price competition, upon deeper and more complete consideration, is price competition. The easiest way to come to this conclusion is to study the financing options. non-price factors(advertising, after-sales service, etc.). Example: company A offers a certain product at a certain price, company B offers the same product at the same price, but offers to deliver it within the city for free. All other indicators do not differ between firms. Therefore, B's "net price" is less.

Distinctive feature non-price competition- variety of methods. But all of them are applied in relation to two objects of competition: a set of consumer properties and their level of quality. When the object of competition is a set of consumer properties, the focus of the struggle is the form of the product, its design and packaging, the form and method of sale, advertising, and pre- and post-sale services provided to the buyer. Action vector non-price methods is aimed at attracting new customers by expanding the set of consumer properties of the product (Fig. 2.2a). Its scope is to establish control over demand, and the result is a redistribution of the market among competitors. When the quality of a product becomes the object of competition, methods are used that lead to a decrease in the elasticity of demand (Fig. 2.26) by strengthening the buyer’s commitment to the brand due to quality: technological excellence, reliability, extension of service life, prestige, etc. In this case, the vector of competition, which is also the criterion for success, is ensuring the best price-quality ratio. When the owner of a flower shop expands the range, this is a factor in attracting new customers. When he also provides additional service, for example, arranges a bouquet, this strengthens the buyer’s loyalty, resulting in a decrease in the elasticity of his demand.

The company resorts to the use of non-price competition methods in two cases. When the type of market requires it and when the firm seeks to protect itself from the pressures of price competition. The “protective function” of non-price competition is associated not only with the ability to prevent a “price war”, but also with the relative sustainability of the competitive advantage gained through the use of non-price methods of competition. Price fighting methods provide short-term gains due to the ease of copying them. In the case of product differentiation, it is not so easy to replicate the achievements of the first mover, which gives it superiority over a longer period of time.

Rice. 2.2.

The main danger that arises during the transition to non-price competition is the unpredictability of the reaction of market demand to the seller's innovations. At the same time, despite the variety of methods, the scope of non-price competition is narrower than that of price competition, in the sense that the latter, although with different intensity, operates in all markets, while non-price competition operates only in markets where they have place of differences in consumer preferences.

The role of non-price competition associated with its impact on industry market, competition and welfare. Non-price competition is a way of segmenting the market and strengthening the market power of firms at the same time. In this sense, it can contribute to both a decrease and an increase in market concentration. Causing qualitative changes, it is an instrument of “creative destruction” and a transformer of the microsystem of competition. Its merit lies in the fact that it generates these changes endogenously, due to the internal forces of competition. Income growth activates innovative activity innovators, and the growth of their competitiveness is the innovative efforts of rivals. By imitating (copying and imitating) the innovator and striving to surpass him, competitors expand the space of “creative destruction”, creating conditions for the emergence of new markets. I. Schumpeter was right when he argued that “contrary to textbooks, in capitalist reality, other (non-price - Yu. T.) competition, based on the discovery of a new product, is of predominant importance. new technology, a new source of raw materials, a new type of organization (for example, the largest firms). This competition ensures a decisive reduction in costs or an increase in quality; it threatens existing firms not with an insignificant reduction in profits and output, but with complete bankruptcy."

Non-price competition is a factor in increasing social welfare, since by expanding product range, ensures better satisfaction of diverse consumer preferences. The intensity of non-price competition is a very reliable indicator of the level of well-being of the population and is always more intense in countries with high income levels. Although the desire of firms to differentiate their product may lead to excessive product variety, causing waste. But product differentiation can also cause harm to consumers, increasing their costs, on the one hand, due to the difficulties of compatibility of products from different sellers, and on the other, due to the increase in the market power of sellers. Standardization, such as the introduction of a pan-European standard for mobile phone chargers, can reduce the severity of these problems. But standardization can become an obstacle to reasonable product differentiation, and therefore a brake on the development of competition. A particularly high risk of its use arises in conditions of rapid technological change, where the standard can become a means of imposing an ineffective technological solution. A dominant firm always strives to impose its standard, while a small firm has more incentive to create a compatible product.

Currently, the object of non-price competition is becoming a symbolic value (sign-value), which means the additional cost that the buyer is willing to pay for possessing a strictly defined product. trademark or brand. The source of its formation is not the consumer parameters of the product, but the buyer’s subjective perception of the product as “branded”. Products compete with each other as symbols." The defining characteristics of a product are its image, created not in production, but in the information and communication sphere. Conquest competitive advantages carried out through the active use of information differentiation, which serves as a source of symbolic value formation. A distinctive feature of competition based on symbolic value is its high intensity and uncompromising nature. The high intensity of the struggle is due to the specifics of the symbolic value market, which operates on the principle: “the winner takes all.” Given the unpredictability of the results of information differentiation, it is not profitable for competitors to limit the volume of product supply, which will also increase the intensity of competition. The uncompromising nature of the struggle is associated with the specifics of the demand for “symbol goods.” The status of symbolic value gives the product unlimited power over the consumer. However, changing a symbol automatically leads to its complete depreciation and to an avalanche-like drop in demand for it.

An instrument for creating symbolic value is advertising, which has become the most active method information differentiation and non-price competition. For a company, it is a method of promoting a product by maintaining interest in it. Its task, by influencing demand and its elasticity, is to ensure control over price, avoiding price competition. For competition, the importance of advertising lies in its ability to 1) smooth out the degree of differences between products with real product differentiation and 2) enhance such differences with phantom (imaginary) differentiation. The impact of advertising on competition is assessed in different ways. Some, for example G. Bakker and J. Stiglitz, see her as an informant. Others, like N. Kaldor and J.K. Galbraith is a tool for manipulating consumer preferences. The point, however, is that competition turns even the informational component of advertising into a way of influencing the buyer.

What is important is not the fact of the impact of advertising, but its consequences for competition. Typically, the influence of advertising is studied in terms of its impact on market structure (concentration, freedom of entry, degree of product differentiation) and signaling about product quality. Empirical research show that the impact of advertising depends on the specifics of the market (volume), the type of buyer (intermediate, final) and the type of product (sought or tested). In large markets where advertising expenses promote economies of scale, aggressive advertising enhances the advantages of large firms and can create barriers to entry for new firms that will not be observed in small markets. Intermediate buyers are weakly exposed to advertising and here its influence on competition is small. For a test good, the quality of which is determined during consumption, advertising can serve as a signal of quality. In this case, while ensuring repeat sales, it can cause a narrowing of product diversity, increasing barriers to entry into the market and reducing the intensity of competition. It is impossible to unequivocally assess the impact of advertising on competition. Even steady growth advertising expenditures cannot change this conclusion, since their growth, on the one hand, indicates that rivals view advertising as a way to protect themselves from competition, and on the other hand, it also indicates an increase in the intensity of the struggle for competitive advantages.

The situation is different in markets where symbolic value is the main source of advantage. Satisfaction of physiological needs leads to an increase in the proportion of needs that are psychological in nature and therefore highly amenable to control through influence on the psyche. Advertising is becoming the most important way to manage demand. When price is not a determining factor for the buyer, the product acquires the properties of the “sought good.” But not because of the value of the product for the buyer, but because of the insignificant consequences for his budget of an erroneous choice. The buyer becomes prone to spontaneous, thoughtless purchases. With this type consumer behavior advertising ceases to be a signal of product quality, and ensuring repeat purchases is its main task. If the criterion for success in the struggle is not the use value, but its perception by the consumer, then the advantage is embodied not in price or quality, but in the image of the product, and the struggle unfolds around its “images”. Symbols are unstable. Therefore, the focus will be not on retention, but on attracting customers: the main thing is to ensure large volumes of initial sales without relying on repeat purchases.

Although symbolic value and advertising increase the intensity of rivalry among sellers, competition based on them brings negative consequences for society. Firstly, it leads to the irrational use of the company's resources, focusing efforts on the creation of not genuine, but symbolic values ​​that do not bring real benefits to consumers. Secondly, by increasing information asymmetry, it leads to a decrease in market efficiency as information system. Third, it reduces the effectiveness of competition as a mechanism for transferring knowledge, since it creates false focal points for both buyers and rivals, thereby distorting the transfer of knowledge. Finally, it leads to a decrease in social welfare due to a reduction in the total volume of utility due to the replacement of genuine values ​​with imaginary ones in the consumer set. This allows us to assert that competition based on symbolic value, deliberately distorting information about the value of the product, is the most cynical method of realizing selfish interests.

It is generally accepted that the stability of non-price competition is due to the presence of product differentiation, which deprives rivals of the opportunity to transition to a price form of competition. However, as practice has shown, the sustainability of non-price competition is determined not by the presence of product differentiation, but by its type. The probability of changing the form of competition is high with horizontal and low with vertical differentiation of the product. With horizontal differentiation, the form of competition is unstable due to the fact that price remains an active tool for redistributing the market, since a rival can entice customers by offering a lower price. In the case of vertical differentiation, where the differences relate to the level of product quality, the segmentation of demand is more pronounced, which means the form of competition is more stable. In this case low price when the quality of the product is low, it does not ensure that consumers switch to a higher quality product. But sellers of a high-quality product can use price as a tool to drive a low-quality product out of the market if this is not prevented by the level of difference in the costs of their production. At the same time, a market with horizontal differentiation is characterized by greater intensity of both price and non-price competition.

Competitive practice indicates a constantly repeating transition from price competition to non-price competition and back. This is the dialectic of the competitive process. Acting as incompatible and opposing parts of it, its price and non-price forms complement each other, thereby ensuring the flexibility of the competition mechanism and the continuity of the competitive process. But the competitive process is not a circular movement. Any non-price form that arises on the basis of price competition, transforming again into a price form, represents not a return to its previous state, but a transition to a qualitatively new state, which, embodying the previous principles, will differ in the conditions of its existence and methods of implementation. Remaining essentially unchanged, each form is reproduced on a new material basis with each new transition, marking a change in the conditions of supply and demand. At the same time, transitions to a non-price form of competition are leaps that reflect qualitative shifts in the competitive process. Price competition unfolds on the basis of a jump that has occurred and should be considered as a period of preparation for a new jump. Such periods are becoming shorter and shorter and the importance of price competition methods is gradually decreasing. But the situation can change radically if the ideology of consumerism1 is replaced by the ideology of “responsible” consumption, arising from an awareness of true consumer values ​​and the need to limit consumption.

• Schumpeter J. Capitalism, socialism and democracy. - M.: Economics, 1995. - P. 128.
• The concept of symbolic or sign-value was proposed by J. Baudrillard to reflect changes in consumer behavioral guidelines, the role of which began to be played not by the real consumer properties of products, but by their imaginary ones, but which are perceived by the consumer as value. Therefore, the term perceptive value is often used as an analogue.
• "Today's consumption - if the term has a different meaning from that which the vulgar economists give it - is precisely defined as the stage where commodities are produced as symbols, as symbolic values, and where (cultural) symbols are produced as commodities." (Baudrillard J. System of things. - M.: RUDOMINO, 2001).
• "Institutes modern advertising and trade... cannot be reconciled with the concept of independently formed desires, since their main function- the creation of desires, that is, the formation of needs that did not previously exist... needs can be provoked by advertising, reinforced by trade and shaped by the careful actions of the mechanism of persuasion.” (Galbraith J.K. The Affluent Society. 2nd.ed. London: Hamilton, 1969. -PP. 150-152); Galbraith J.K. New industrial society. - M.: Progress, 1969. Chapter XVIII).
• Shmalenzi R. Advertising and market structure. // Milestones of economic thought. T. 5. - St. Petersburg: Economic School, 2003. - P. 179-211.
• 4 J Milgrom P., Roberts J. Price and advertising signals of product quality. // Milestones of Economic Thought. T. 5. - St. Petersburg: Economic School, 2003. - P. 212-246.

Non-price methods involve changing the properties of a product, giving it qualitatively new characteristics, creating new products to meet the same needs, offering products that did not exist on the market, improving the range of services accompanying the product (demonstration of the product, increasing the period of warranty repair, etc.) . An important factor non-price competition is efficiency and minimization of delivery times, which can be observed in the conditions of delivery of the required products of a given quality to the place and time specified by the contractual terms, taking into account the minimum total costs of transporting the products. It is impossible not to highlight such a factor of non-price competition as the creation of a powerful sales network and service department.

TO non-price include the following groups methods of competitive action.

The first group is methods of ensuring the competitive advantages of an organization by changing for the better various consumer characteristics of goods and services, in order to increase consumer value:

Introduction of new products (product differentiation);

Introduction of goods with new consumer properties, improved quality, more advanced design, more beautiful packaging (differentiation of consumer properties of goods).

The second type of differentiation will apply when:

The organization strives to expand the list of consumer properties of goods;

The organization is trying to expand the list market segments manufactured goods;

The organization intends to achieve recognition in a relatively small market sector through the diversity of its product offerings;

Introduction of new forms of sales and after-sales service to attract new categories of consumers, encourage more frequent use of goods and one-time purchase of more goods.

The second group is sales promotion methods. These are short-term measures of a monetary or material nature that encourage the purchase of a product.

Sales promotion has a multi-purpose focus. The choice of target depends on the object of the upcoming impact - the consumer or reseller.

The consumer has the greatest significance, and the entire marketing policy comes down to influencing the consumer. The goals of incentives in this case come down to increasing the number of buyers or increasing the number of goods purchased by the same buyer. Sales promotion tools for buyers include: samples for testing, bonuses, lotteries, price discounts, trade discounts, coupons, sales, games and competitions, consumer clubs, “label events.” The trade intermediary, being a natural link between the manufacturer and the consumer, is a specific incentive object that in this case performs regulatory functions. In this case, incentive goals can be aimed at: - increasing the amount of goods entering the distribution network;

Increase the intermediary’s interest in active sales of a particular brand, etc.

Sales promotion tools for resellers are: bonuses and gifts, trade bonuses, compensation for advertising costs, prizes, sales exhibitions, souvenirs, trade brochures.

An organization should constantly compare and analyze alternative options for selling its product, revise prices and discounts depending on changes occurring in the market.

Advertising- this is information disseminated in any form by any means about individuals or legal entities, goods, ideas and undertakings, which is intended for a certain circle of persons and is intended to create or maintain interest in these individuals or legal entities, goods, ideas and initiatives and facilitate the sale of goods, ideas and initiatives.

Radio advertising is an indispensable part of our everyday life. However, its main difficulty is that it is quite difficult to identify potential buyers from this audience and force them to listen to exactly the program within which the advertisement is running. You can influence the senses with the help of appropriate melodies, noises and voices that paint exciting mental images. Radio uses 3 main tools to convey a message:

Music that promotes better memory;

Sound effects used to convey the environment in which the action takes place.

The success of advertising in newspapers and magazines is determined by the right choice publications, good text, catchy text design, good accommodation text on the publication page, the correct choice of publication time and repeatability. In order to choose the most suitable publication, it is necessary to make a list of all newspapers and other periodicals, capable of reaching the desired group of potential buyers.

IN outdoor advertising The main role is played by the factor of repetition, so the budget should be drawn up based on the need to purchase specially selected places that regularly come into view of a large number of people.

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