You paid attention to the fact that in differentstores prices for the same goods, albeit slightly, but still different? This is price competition. This move is used by virtually all sellers: from single traders to large stores and companies.
Of course, price competition today is significantlyis limited, since its dimensions are minimal and sometimes constitute fractions of a percent. But its failure to take into account would still be erroneous. In world practice, there are a lot of examples of cheapening of goods, fast and even large-scale (electronic household appliances, semiconductors, ceramics, products, etc.).
Usually a quick and cascading "dump" of prices -the event is rare, forced and economically flawed (unprofitable). More preferably, of course, price fixing, i. E. keeping them unchanged. Reduction in prices in significant amounts is possible only in two cases: either the seller immediately "winds up" the cost (exposes the goods at a price much higher than the manufacturer's price) and therefore can afford discounts on purchases (especially wholesale), or the laws of STR (the scientific and technological revolution). As for the second option, this is also understandable:obsolete products (especially electronic home appliances), not being sold cheaper today, tomorrow will not be sold at all, as the demand for it will fall.
The emergence of new, more complex in the technicalthe plan of products leads to the transformation of the very concept of price, as such. Here we are talking about the multi-element price of the consumer, reflecting the possible amount of expenses of the main buyer, which sellers are targeting and which is an indicator of the demand and full consumption of the goods.
Prices with the base, lying outside the cost, become the object of competition, which can be directly attributed to the price.
As a result, understanding prices as the basis (or howcenter), around which customer preferences should fluctuate, in some way is transformed, giving way to seemingly non-price concepts like quality, novelty, progressiveness, standards compliance, clearance, promptness in maintenance, etc. Today it is these parameters that form a new system of values for the consumer, and it is precisely on these that price competition is based primarily on them. This applies to individual exporting firms, and entire countries acting as exporters.
Expanding the range of consumer requirementsdictates more stringent requirements to the exporter, to its competitiveness. This is a regularity: a competitive product can only be produced by a competitive firm, for which, in turn, certain conditions are required that are characterized by the country's competitiveness. As you can see, an inseparable chain, a vicious circle.
This pattern is seen long ago and long agois being studied. The European Forum on Governance (International Organization) regularly conducts studies on assessing the competitiveness of Western countries, and the concept of "competitiveness" includes the ability to design, manufacture and, of course, the sale of goods that are most attractive in terms of characteristics (both price and non-price) for 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 legitimate strugglesellers, based on the reduction of prices to a level lower than that of competitors. The result, by the way, is not always predictable (reduction in profitability, or "pulling" of consumers to their product and increasing profits) and depends on the actions of competitors who either respond with their price cuts or leave prices unchanged.
Competitors do not always meet with a reduction in their prices.Often non-price competition wins based on higher quality, higher reliability, more attractive design (agree, if there is enough money, you prefer a good Japanese car without even looking at domestic).
Price competition is built on the fulfillment of two conditions:
1) if the price for the buyer is a decisive factor;
2) if the company has become a leader, "has earned a name" and can afford to reduce prices, sometimes even to the detriment of itself.
Only then is it possible to make a profit, even though other companies at the same prices suffer losses.
