Price competition

Did You notice that in different stores prices on the same goods, albeit slightly, but still different? It — and price competition. This course is used by virtually all sellers: from single markets to reputable shops and companies.

Of Course, price competition today is considerably restricted, because the size of its minimum and at times amount to a fraction of a percent. But failure to take it into account it would still be incorrect. In world practice many examples of cheaper products, fast and even large-scale (household electronic equipment, semiconductors, ceramics, food, etc.).

Usually quick and cascading reset price — a rare event, forced and flawed economically (unprofitable). Preferably, of course, the fixing of prices, i.e. keeping them constant. Lower prices in large sizes is possible only in two cases: either the seller immediately, "wind" value (puts the goods at the price considerably exceeding the price of the manufacturer) and therefore can afford discounts on purchases (especially of wholesale), or in force in the laws of NTR (revolution scientific and technical). As for the second option, and this is understandable: legacy products (especially electronic household equipment) are not being sold cheaper today, tomorrow will not be sold at all, as the demand for it will fall.

The Emergence of new, more complicated products leads to the transformation of the concept of prices as such. Here we are talking about multi-element price of the consumer, reflecting the possible amount of expenditure main buyer, which guided the sellers and which is an indicator of the demand and a full of consumption goods.

Prices based beyond cost, become the object of competition, which can be directly attributed to the price.

In the end, the price understanding as the Foundation (or center) around which should range in consumer preferences in some way transformirovalsya, giving way to a seemingly non-price concepts like quality, novelty, progressiveness, conformity to standards, clearance, speed maintenance, etc. Today, these parameters are creating a new value system for the consumer and that they are based primarily on price competition. This applies to individual exporter companies and countries that act as exporters.

Expanding the range of consumer demands dictates more rigid requirements to the exporter, to its competitiveness. It is a pattern: a competitive product can only be produced by a competitive firm, for which, in turn, requires certain conditions, characterized by the competitiveness of the country. As you can see — an unbroken chain, a vicious circle.

This Pattern is seen for a long time and has long been studied. European forum on issues in management (international organization) regularly conducts studies on the estimation of the competitiveness of the countries of the West, and in the concept of "competitiveness" is the ability to design, manufacture and certainly sales of goods characteristics (both price and non-price) the most attractive to the average consumer.

In the fight for the consumer (and therefore — for profit) are the principal methods of competition - non-price competition and price.

Price competition — it is a natural fight sellers based on price reduction to a level lower than the competition. The result, incidentally, is not always predictable (reduced profitability, or "pulling" to your product consumers and increase profits) and depends on the actions of competitors who will either respond with their price decrease, or leave price unchanged.

Competitors do not always meet the reduction in its prices. It often wins non-price competition based on higher quality, higher reliability, more attractive design (see, in the presence of a sufficient amount, you will prefer a good Japanese car, not even looking at the domestic).

Price competition is based on two conditions:

1) if the price to the buyer is the decisive factor.
2) if the company became the leader, "made a name" and can afford lower prices, sometimes even to its detriment.

Only then the possibility of making a profit, even despite the fact that other companies with the same prices suffer losses.