A market with a small number of participants who have a good understanding of each other. If one of them lowers the price, the others will do the same, and as a result, all producers will lose profit. Most companies are aware of this and adhere to a specific price range. It is possible that organizations come to an agreement vietnam number and determine a minimum price value that cannot be reduced.
There is a worthy competitor on the market that creates its image thanks to a low price. As a rule, this is a serious brand that other companies can surpass only due to non-price factors.
Applications of non-price competition
A shortage of goods caused by increased demand. If there are fewer goods left than all those who want to buy them, the price does not matter - they will buy it anyway.
The company has invested heavily in developing and promoting the product or is spending large sums on its production. If the price is reduced, the costs will not be recouped and the enterprise will become unprofitable.
Luxury goods trade. It is basically impossible to create an attractive image here due to low price. Buyers are not interested in cost, they pay attention to the appearance, quality, prestige, exclusivity of the goods.
In the market, the state exercises control over the price level in one form or another, using various regulatory instruments. This means that companies cannot set low prices by law. At the same time, price competition can exist, but only indirectly (promotions, discounts, release of new models with advanced characteristics, but at an attractive price).
Case: VT-metall
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Characteristic features of non-price competition in the Russian Federation
Competition is one of the most important factors in the economy. It must be acknowledged that non-price methods of competition are used relatively rarely in the Russian market, and most companies understand competition as a reduction in price by minimizing costs, which occurs at the expense of product quality. In turn, consumers are more focused on low price than on quality.
Another feature is that some companies successfully sell their products in Russia, but they are not well-known in foreign countries, therefore, in order to enter the world market, it is necessary to modernize production and determine an effective promotion strategy.
In the current conditions, domestic producers are characterized by various types of competitive behavior:
Traditional behavior characteristic of a developed market economy (for example, price and non-price competition).
Non-standard forms that are relics of the command economy or caused by the weak development of market relations and economic instability:
reliance on support from state and municipal authorities, provision of benefits (on taxes, loans, etc.);
ignoring requirements to pay taxes and mandatory payments in the hope of writing off the debt;
failure to fulfill obligations to creditors;
failure to repay loans;
delay in payment of wages;
making payments in kind;
release of unregistered products (shadow business);
informal employment and other schemes.
Basically, the above types of competitive behavior contradict generally accepted norms. Since the Russian Federation has not had a clear concept of interaction between the state and business for a long time, difficulties have arisen with the implementation of fair competition.