Competitiveness is the most important criterion for increasing market share and forming an enterprise’s leadership in the industry. It represents the company’s ability to resist other players in the market, attract and retain customers with fewer resources. The high level of competitiveness allows the company to create a strong and viable brand, achieve significant success in its field and continue to develop in the chosen direction.
It is known from the course of economic theory that it is competition that is the cause of economic progress in a market economy. The price mechanism for this process is well known. Thus, a manufacturer that reduces production costs can lower the price while maintaining profit per unit of goods. As a result, it increases sales and profits until other manufacturers also lower the price.
As a result, the market achieves a simultaneous gain for the producer (seller) and the buyer (consumer) who buys goods at lower prices. Here there is a natural redistribution of public resources to the most efficient working subjects.
However, the modern approach to the concept of “competition” presupposes a deeper understanding of this phenomenon. Here the concept of “competition” is filled with a new meaning and acts as a synonym for the terms “self-organization” and “adaptation”.
Factors affecting competitiveness
The conditions, nature and level of competition are the determining factors in analyzing the market and developing an effective strategy for spending resources. The assessment of competitive behavior is facilitated by the identification of the following factors:
– key economic indicators of the market;
– the main competitive forces and factors affecting them;
– competitors, their position and position in the industry;
– the main criteria that determine the success in the competitive struggle;
– players setting the vector of competition;
– the degree of attractiveness of the industry in terms of possible profitability.
The analysis of these indicators lays the foundation for a competitive strategy in a changing consumer market. In marketing practice, there are two possible scenarios for the development of competition:
– Horizontal – the market space is literally “redesigned” in the course of a constant struggle for positions in the industry, for which advertising, pricing policy, etc. are used.
– Vertical – by focusing on the needs of the target audience and improving the quality of goods / services, new technologies and markets are being mastered.
Typically, businesses do not rely on one option, preferring to combine both. But the use of vertical and horizontal scenarios of competition is not enough to guarantee the company’s success in the industry. To determine a profitable competitive advantage, it is necessary to take into account a number of factors, including:
– aggressive behavior of other players, accompanied by constant advertising and price wars and stable / declining sales. A possible reaction in this case is the production of new goods;
– ease of entering the market, characterized by a constantly changing composition of participants and consistently low profitability. The solution may be to reorient the business;
– the existence of substitute goods that pose a threat to the company. The recommendation is to maximize the benefits of the product;
– dependence on consumers due to their small number or high level of organization, sensitivity to prices and the availability of similar goods / services from competitors. As an option of possible behavior, maximum attention to existing consumers and favorable conditions for new customers are considered;
– dependence on suppliers, the signs of which are the absence of substitute goods, a limited number or a high degree of organization of suppliers. The recommendation is close interaction with existing suppliers and the search for alternative partners and options for cooperation.
