What is competition in business - the concept, essence, types, rules and levels of competition. Types of economic competition

There are five levels of competition. To determine the level of competition in your city or region, you need to:

study the territory in which you plan to do business;
make a list of competitors;
find out the strategy of attracting customers by competitors.

What levels of competition are there?

High level of competition characteristic of a mature market in which developed enterprises operate. The standard of living of the population in such a market is high, so the quality of the goods offered is the best. The level of service is of great importance. Markets with a high level of competition offer a wide range of products - from economy class to luxury. Competition in such a market is high. Marketing and advertising campaigns are very diverse, companies take an integrated approach. The market with level of competition above average.

Intermediate level competition is typical for emerging markets. Buyers prefer high quality goods and services; a fairly wide assortment, the ability to choose prices and quality are important to them. In a market with an average level of competition, there are mainly price arguments. Unfair competition occurs quite often. As soon as a strong player appears in such a market in the form of a powerful federal network, the situation can change for the better.

The level of competition is “below average” also typical for emerging markets. The standard of living of the population in such markets is below average. The population cannot afford any excesses. For such buyers, the best price-quality ratio is very important. To stand out among competitors, companies dump and offer all kinds of discounts that incur losses for partners. Unfair practices are also possible.

Low competition market completely undeveloped in terms of progress. As a rule, the zone of such economic relations is inhabited by a poor population that cannot make any demands on the quality of the product and its range. Everything on the shelf sells out in a short time, as there is no alternative. In such a situation, the consumer does not pay attention not only to quality, but also to price. There is unfair competition and high criminalization of the market.

How does the size of a locality affect the level of competition?

The locality in which you are going to work will tell you a lot about competition and the possible struggle for a leading position in the market.

High level of competition and above average, usually typical for large cities and regions. For example, these are Moscow and the Moscow region, St. Petersburg and the Leningrad region, Krasnoyarsk, Novosibirsk, Yekaterinburg, etc. More than a million people live in such settlements, the infrastructure is highly developed. All new products reach these cities first. Salaries and incomes of the population are quite high.

Average level of competition typical for medium-sized cities. The number of inhabitants in such settlements ranges from 150 thousand to 1 million people. The main condition for such a city is the presence of a city-forming enterprise where most of the population works and has decent salaries. The income of the population in such cities is lower than in large cities, but the income is enough to create high demand. The active actions of businessmen allow them to conduct civilized competition, improving the methods and methods of PR and promotion.

Below average competition typical for small cities that do not have a city-forming enterprise. A small town, a medium-sized city, an urban settlement or a suburban area - these territories are not always interesting for business representatives, since trading here is very problematic. The number of people living in this area is less than 100 thousand people, but more than 20–25 thousand. Not everyone can make large purchases here; the solvency of the population is quite low. But in such settlements there is often a high activity of entrepreneurs from among local residents.

Territory with low level of competition- rural area. The incomes of residents here are low; less than 5–6 percent of the total population receives average and high incomes. Farmers and owners of large farms receive very low incomes, since investments are constantly required for the future harvest or livestock raising season. It is impossible to sell expensive, high-quality goods here due to low consumer incomes and also because historically it has happened that the population of villages goes to central cities to make large purchases.

How to choose competitors for analysis

Once you have decided on the territory where you will do business, identify organizations that offer goods and services similar to yours (in terms of characteristics, quality, satisfied needs) in the same market segments. Quite often, entrepreneurs make two mistakes. In the first case, the list of competitors is too small or the company is generally confident that there are no competitors. Such a decision can lead to a loss of vigilance, and before you know it, your competitors will take leading positions. In the second case, the list of competitors is too large, and it is simply impossible to study all the companies included in it. Therefore, you should strive to ensure that the list includes 5–10 main competitors, depending on the specifics of the activity.

For example, when choosing competitors, you can focus on companies that set trends in the development of the segment. Such organizations often anticipate the wishes and interests of potential clients, and also attract the best talent due to their reputation and image.

How to figure out your competitors' customer acquisition strategies

Who are the competitors' buyers? It is necessary to determine the target audience of the competitor - in what price segment it operates. So, if you are planning to enter the b2b market, then you can find out this information using the sections where the activities of a competitor are described and a list of large and significant customers is given.

What are the sales conditions (prices, discounts). Find out what conditions your competitor is offering to new and existing customers. Assess the risk of losing customers if a competitor's offer is more profitable. Analyze whether the company can offer more attractive terms. Find out whether the competitor promotes its products through agents (independent or within product distribution networks), and on what terms it cooperates with them. You can assess this by surveying your competitor’s employees – contact them as a potential client.

Does the competitor have its own trademark? Find out whether the competitor has its own trademark (an important competitive advantage, since it contributes to product recognition). Study the range of products manufactured under the competitor's trademark. You can find out about a trademark through the registers of Rospatent and.

Does the competitor have a license? A company that has a license appears reliable in the eyes of customers (i.e., it is a competitive advantage).

What kind of advertising does the competitor give? Analyze what types of advertising the competitor uses, how actively, and what advantages of products (services) he emphasizes. Find out whether the awareness of products (services) among specialists and clients has increased after advertising campaigns.

Porter's five-factor model for analyzing the level of competition

To assess the level of competition, you can use Porter's Five Forces Analysis model, a technique developed by Michael Porter at Harvard Business School. The five forces include:

analysis of the threat of the emergence of substitute products;
analysis of the threat of new players;
analysis of market power of suppliers;
analysis of consumer market power;
analysis of the level of competition.

When opening a company, you can evaluate one factor - the level of competition.

Example of analysis of the level of competition

To assess the level of competition, the head of the Alpha company assessed four parameters. The results are presented in the table.

Table. Analysis of the level of competition

Parameter	Evaluation score
Parameter	1	2	3
Number of competitors	Low level – from 1 to 3 participants	Medium level – from 3 to 10 participants	High level – more than 10 participants
Number of competitors		2
Degree of product differentiation on the market	The products of enterprises differ significantly from each other	A standard product on the market has additional advantages	Companies sell a standard product
Degree of product differentiation on the market		2
Market Volume Growth Rate	High	Average	Market stagnation
Market Volume Growth Rate		2
Limitation on price increases	Loyal price competition, there is an opportunity to increase prices to cover costs and increase profits	Possibility of raising prices to cover rising costs	Fierce price competition, price increases are impossible
Limitation on price increases	1
Total	7 points

Interpretation of results:

4 points – low level of competition;
5–8 points – average level of competition;
9–12 points – high level of competition.

The Alpha company has an overall result of 7 points. Thus, the level of competition can be characterized as average.

The most important component of the plan is an assessment of markets for products (services) in conjunction with a characteristic of the state of the industry, on the basis of which conclusions about the market needs that are satisfied by the company’s products are substantiated. It is advisable to provide statistics on the sale of goods on the market, classification of users and distributors, assessment of annually consumed products; in the second part of this section, the world market can be considered, if the company’s products claim a certain niche in it, in this part it is necessary to reflect the volume of product sales, produced by the company, has been on the world market over the past five years, what factors influence this (legislation, politics, demographic situation), what measures need to be taken to increase the competitiveness of the organization’s products on the world market. Analysis of external influencing factors is also necessary for analyzing the internal market.

Many Russian entrepreneurs underestimate the dangers of competition, so it is advisable to carry out an analysis on this problem in a business plan, since even if a company is the only manufacturer and seller of a particular product in the industry, it still faces competitive forces; they may be new (potential) competitors entering the industry; competition from substitute goods, suppliers (sellers), clients (buyers) is possible. We must not forget that one of the most serious competitive forces currently on the domestic market are foreign companies that attract buyers, if not with quality, then with affordable prices and more eye-catching packaging and product design. These firms act rigidly, guided by their own strategic goals. In competition with similar organizations, the head of the company must

wives to resort to approaches tested in international practice, the basis of which is not only the development of strategies, but also specific management decisions. However, before you start planning their elements, you need to think about how best to implement this strategy, whether a reorganization of the organizational structure of the enterprise is necessary (restructuring of business, production, attracting new specialists, etc.), what should be the financial structure necessary for implementation strategies on whether to leave the traditional market; if it is supplemented by a new one, then which of them is appropriate to focus on; is it possible to increase profits without changing the current competitive position of the company. At the same time, one cannot help but evaluate the possible retaliatory actions of competitors, as well as their likelihood.

Based on the above, three paragraphs are included in this section: the first discusses the areas of market and competition analysis, sources of obtaining the necessary information, the second, third and fourth contain a description of practical techniques that are advisable to use when conducting the analysis.

Market Research

The results of the market research provide answers to a number of questions:

How large is the market size for the company’s products or services;

Whether this market is growing, static or declining;

What is the company's market share;

What potential market share can be achieved;

What needs to be done to increase market share;

Are there any barriers to entering the market or expanding activities within it;

What resources and at what time are required to implement expansion plans;

What problems may arise in this case and how they can be prevented;

What alternative courses of action can lead to achieving the desired result;

Who are the company's main competitors in the market and what do they offer;

What is the competitive position of the company in the market;

What basic customer needs are satisfied by the company’s products?

What prices are offered by the main competitors and how do they influence the company's pricing policy?

It is not surprising that, faced with such an abundance of tasks, many directors and company owners come to the simplest solution - to respond to demand, rather than making forecasts and plans for the future in order to then follow them, and in some cases there has been a decrease in interest in intra-company planning in in general and, in particular, to business planning.

However, common sense dictates that the more a firm knows about customers and markets, the better chance it has of maximizing opportunities and minimizing risks, which in turn increases the chances of survival and growth of any business.

To summarize the main aspects covered by the issues listed above, it is necessary to highlight four main areas: the size and nature of the market itself, the share that the company can acquire in it, competitors and their offerings, and the prospects for the company's own products or services in this market. These areas require more detailed research, and first of all it is necessary to consider the main sources of information from which the company can obtain answers to its questions.

Typically, there is a wealth of data and research available about specific markets, both internationally and nationally, provided by trade magazines and manufacturers' and dealers' associations, economic reports and analyses, national and regional statistics, and the like. From these data, it is usually possible to determine not only the overall size and growth rate of a potential market, but also to realistically assess the relative share of its main participants.

For analysis, it is advisable to use only reliable and reliable information from officially published sources. However, at the local level it is much more difficult to obtain the specific data needed, and even at the regional level the information may be combined with data from other markets published in economic development reports that are too generalized to be useful for new small businesses. Therefore, if published sources are not adequate or relevant, this should be noted in the business plan and the alternative sources used and the reasons why they may be considered acceptable to the target market should be detailed.

As part of conducting market research, it is very important to determine the share of the target market occupied by the company. If the level of supply in a particular market does not reach its full saturation, then the share of the target market can be quite accurately determined by the volume of production and the supply of products on the market. But if there is already strong competition in it, then the share of the target market segment may be significantly smaller, and at the same time there may be high barriers to entry into the market, which will require significant investment, as well as high costs for the subsequent maintenance and expansion of market share.

Undoubtedly, competitors will take a certain position in relation to the new market participant and may enter into fierce competition with him in order to prevent him from entering the market. In fact, determining the target market share usually requires specialized knowledge of the market sector to ensure that the choice of a particular market niche is reasonable and realistic. To penetrate the market and obtain the required share, certain knowledge of the sales model and distribution channels is also required.

The nature of competition is influenced by the level of the target market. Thus, at the international and national levels, all the main market participants in the industrial or service sectors are usually well known to each other and often interact with each other on common issues of interest (for example, monitoring the provision of loans, lobbying for new bills, etc.) .p.). In those cases where there is no formal connection between rival organizations at the company level, there almost always remains an informal connection at the interpersonal level. This could be a relationship between former colleagues who have changed jobs, those who studied together in the past, or between those who met at sales exhibitions or conferences. Indeed, it is difficult to overestimate the importance for business of informal communication and the knowledge about the market that can be collected and accumulated bit by bit using modern channels for organizing business interactions.

When it comes to goods and services in the local market, those who are completely new to it usually already have an idea about competitors and the products or services they offer.

More detailed technical information or a price list can be obtained through telephone inquiries or by presenting yourself as a potential consumer, which should not be considered an unethical act: this situation is repeated all the time, and sooner or later someone will turn to you for such information . Another source of information is local directories about companies, in particular the Yellow Pages, DublGIS information retrieval systems, etc. You should not neglect the information that can be obtained from local authorities, for example, from the small business support committee. However, it is important to note that while identifying competitors is important, it is equally important to find out what product they offer, at what price, and what its distinctive or unique features are.

Analysis of competitors' products and services involves answering a number of questions:

Which organizations are direct competitors in the target market segment, i.e. who offers the same or very similar products or services;

Which companies offer substitute products, i.e. who offers other goods or services that, without being direct competition, can nevertheless lure consumers away;

What price level do competitors set? what is the reason for the identified price differences;

What quality of goods and services do competitors offer and how does this affect their prices;

What geographic areas does the competitor's service cover?

Are competitors focused on the same market sector as the company in question, and what market share do they occupy? is there a niche for new business in this market sector?

Obtaining information is part of the market research process, and to create a sound and realistic business plan, you need to find answers to all the questions posed.

When analyzing competitors and the products they offer, it is necessary to turn to your own goods and services to determine how well they correspond to competitive products and the nature of demand in the market as a whole, i.e. The question of assessing the competitiveness of both products and enterprises is important. Has the company set the price correctly, is it too high or too low? If a company charges lower prices than competitors, does it achieve higher sales volume? Are the quality standards acceptable? Should a product be positioned based on quality rather than price? What is more acceptable for this market: a simple, but cheap and reliable product, or more sophisticated and expensive products available for sale in a wide range? It is possible that both options are acceptable for some consumers.

The process of identifying market segments allows you to select those that are most worthy of investment in labor and material resources based on the potential profitability of these sectors. The factors on which market segmentation may be based are different. These are consumer needs, geographic location, income level, age, gender or social status of the client, purchasing habits, commitment to a particular brand, or simply a commonality of interests, and priorities can be determined differently, for example, depending on the number of consumers in each segment, its relative profitability, geographic location or accessibility of a segment, or the amount of time and investment required to establish the activity. When all factors are ranked according to priorities, you can begin to develop a marketing mix for each target segment, taking into account these priorities.

External influencing factors

Factors influencing an organization can have different origins. It is relatively easy to identify those that can influence the viability of an enterprise within the business itself (personnel, management skills, available finances, etc.) and from the market environment (market size, demand for goods and services, competition, etc. .p.). However, most business leaders, especially if they are unfamiliar with economics or have little interest in politics or current affairs and issues, find it much more difficult to focus on broader influences.

One of the most widely used methods for analyzing these factors is the so-called PESTLE analysis, during which all influencing factors are divided into six main categories: political, economic, social, technology, legal ) and ecological (ecology). Their specific significance, of course, is different for each organization? depending, in particular, on its specific geographical location and on the market segment in which it operates. Let's illustrate this with a few examples.

Political factors in the external environment include aspects such as government policies on transport, unemployment, regional development, education and training, etc. Thus, there may be financial incentives to locate businesses in rural developing areas or perhaps in a sparsely populated area where a new highway is to be built. Predictable policy changes may also reveal a threat: for example, high taxation of petrol and diesel will force people to use public transport, which will obviously lead to ever-increasing overhead costs in any business involving the production or transport of bulky goods over long distances. It is also important to identify government policies that may affect your business in the near future.

Economic factors can be viewed from many aspects and may be difficult to predict in the long term as the international economic situation is influenced by a large number of national policies, changes in demand, recession, inflation, etc. For example, a consequence of a high interest rate and a relatively low level of inflation may be the stability of the national currency, which makes imports cheap and exported goods expensive and encourages companies working for export to reduce sales volumes.

The interest rate is often used as an inflation control mechanism, but invariably also affects foreign exchange rates, so the combination of higher interest payments on loans taken out, coupled with falling export sales, can seriously harm a small firm's cash flow. Higher interest rates may also reduce the amount of disposable income for buyers, who will then direct their spending towards everyday needs rather than luxury goods, which is quite unfavorable for the firm intending to produce or import them. The question is which of these economic impacts may be significant to specific business plans, if not right now, then over the next few years.

Social factors and trends manifest themselves more slowly and are therefore somewhat easier to predict than economic changes. Since the late 1970s. There is a growing understanding in society of the importance of problems related to environmental protection, movements for reducing emissions and recycling waste, etc. are emerging. Products that are not considered environmentally friendly are met with strong opposition, so manufacturers and suppliers must respond to this and make changes to their products or services.

A similar trend is also manifested in changing attitudes towards a healthy lifestyle: the number of smokers has decreased, an increasing number of people regularly play sports, and preference is given to organic food and healthy products. All this is accompanied by a change in expectations associated with goods and services, with consumers paying attention to brand reputation and quality.

That is why it is important to determine what impact recent trends have on the company’s products or services, and whether it is possible to identify other changes that now or perhaps in the future will become significant for the company.

When analyzing the technological component, it is important to determine what impact state technology policy has on the organization’s field of activity, and at what speed new technologies and products emerge. To do this, it is useful to analyze information about new patents and developments published in specialized journals and to use other sources of information.

Of great importance for an enterprise is the analysis of legal factors, which are expressed in the presence of a legislative framework regulating the operating conditions of the organization.

Some of the environmental issues have already been mentioned in social trends, often resulting from increased education and public awareness, but there are other equally relevant examples. Thus, it is important to consider the impact that air and environmental pollution control laws have on a company's operations.

Assessing a company's competitiveness

Assessing the competitiveness of goods and services, as well as the company itself, is an important element in the analysis of competition in a particular market due to the fact that it allows a realistic approach to assessing both the strengths and weaknesses of the organization and determining directions for increasing the competitiveness of the enterprise and its products. This analysis is especially relevant when a business plan is developed for “internal use,” i.e. represents a development program for the company as a whole. The scientific literature identifies the following methods for assessing the competitiveness of an enterprise:

1) score;

2) assessment from the position of comparative advantage;

3) assessment based on the theory of effective competition;

4) assessment based on quality theory;

5) matrix methods;

6) methodology of the American Management Association;

7) indicator method;

8) methodology for assessing competitiveness used in marketing research.

When scoring the competitiveness of enterprises, the performance indicators of competing enterprises are numerically compared. Then the average score of these indicators is found. By its level one can judge the position of the enterprise. The scoring of individual indicators is presented in table.

Scoring of individual indicators

As can be seen from the table, the highest level of competitiveness is for enterprise A, and the lowest for enterprise B.

However, for a more accurate objective analysis of the competitiveness of enterprises, it is necessary to take into account the different influence on it (the different significance) of each of the properties under consideration. In this case, the maximum score for each competitiveness indicator is taken equal to 5 points, and the sum of the weighting coefficients of the competitiveness indicators is equal to 1 point. The second condition is met quite simply by using the appropriate expert ranking technique. The results obtained are shown in table.

Assessment of competitiveness indicators taking into account weighting coefficients


Financial condition
Resource Usage
Work with personnel
Long-term capex
Ability to innovate
Responsibility to society

Legend:

K in - weighting coefficients of competitiveness indicators, characterizing their significance in the overall assessment of the competitiveness of these commodity producers;

R a - assessment of the competitiveness indicators of enterprise A;

R b - assessments of the competitiveness indicators of enterprise B;

R in - assessment of the competitiveness indicators of enterprise V.

The competitiveness of enterprises is determined by the formula

K = ∑ K in Р i

Thus, the competitiveness of enterprise A:

K a = 0.68 + 0.45 + 0.56 + 0.16 + 0.3 + 0.14 + 0.68 + 0.12 = 3.09 points.

For enterprise B:

K b = 0.51 + 0.6 + 0.28 + 0.32 + 0.3 + 0.07 + 0.51 + 0.48 = 3.07 points.

For enterprise B:

K in = 0.34 + 0.45 + 0.42 + 0.32 + 0.2 + 0.35 + 0.17 + 0.6 = 2.85 points.

Advantages of enterprise A: quality of management, stable financial condition, ability to innovate.

Advantage of enterprise B: quality of goods.

Advantages of enterprise B: long-term capital investments, increased responsibility to society.

Thus, enterprises A and B have better chances in the market. At the same time, the relative equality of competitiveness portends an intensification of competition between them.

Identification of an enterprise's comparative advantage is based on the assumption that firms specialize in the production and export of those goods that cost them relatively little. To determine the degree of competitiveness of a manufacturer, the performance of competing enterprises is compared according to an accepted criterion, for example, profit volume, sales level, market share, etc. However, it must be borne in mind that it is impossible to measure the comparative advantages of an enterprise in a complex of many indicators. Thus, if you focus only on production costs, then the quality of products and many other factors that determine the level of competitiveness and potential of the organization will not be taken into account.

In the theory of effective competition, methods for determining competitiveness are based on the assumption that an industry is considered more competitive if its member firms have strong market positions. The main method of analyzing the competitiveness of an industry is to compare the indicators of its member companies with the indicators of competing firms.

To develop a criterion for the level of competitiveness, two main approaches are used: structural and functional.

The assessment of competitiveness based on the structural approach is carried out based on an analysis of the level of monopolization of the industry in the market (concentration of production and capital, barriers to entry of new companies into the market).

In the functional approach, as a rule, the following main groups of company activity factors are compared:

1) indicators reflecting the efficiency of production and sales activities (the ratio of net profit to the net value of tangible assets, the ratio of net profit to net working capital);

2) indicators reflecting the production sphere of activity (the ratio of net sales, respectively, to the net value of tangible assets, to net working capital, to the value of inventories, to the value of tangible assets, to net working capital);

3) indicators characterizing the financial activities of enterprises: the period for paying current bills, the ratio of current debt during the year to the value of tangible assets, etc.

Indicators of labor productivity, return on investment, and profit margins are also compared. Methods for determining competitiveness based on the theory of effective competition are widely used in Western Europe and the USA.

Based on the theory of product quality, methods have been developed for assessing the competitiveness of a manufacturer based on a comparison of quality indicators. In a subjective assessment, product quality parameters are compared based on one’s own requirements for the product or the requirements imposed by an individual consumer; with an objective assessment - with a similar product from a competing company. If an enterprise produces heterogeneous products, then it is not possible to judge its competitiveness in a generalized form only on the basis of the qualitative characteristics of the product and a comparison of a system of indicators characterizing the economic potential of the enterprise is required.

Matrix methods are based on the idea of considering competition processes in dynamics. The theoretical basis of these methods is the concept of the life cycle of a product and technology, which distinguishes the following stages of this cycle from the moment the product appears until its disappearance on the market: introduction, growth, saturation and decline. Matrix methods are a convenient practical tool and are widely used by American firms.

Developed in the mid-70s. XX century The marketing firm Boston Consulting Group uses a matrix method for assessing the competitiveness of various goods both to analyze the characteristics of goods and to study the competitiveness of “strategic business units”: goods, individual companies, and the sales activities of industries. The matrix is built on the basis of two indicators. The vertical axis indicates the growth rate of market capacity on a linear scale, and the horizontal axis indicates the relative share of the entrepreneur or company in the market. All strategic business units are located on this matrix depending on their parameters and market conditions. The most competitive are those that occupy a significant share of it. To develop a market behavior strategy, using the matrix method, they evaluate the level of competitiveness of the potential of both their enterprise and competing enterprises.

The competitiveness of an enterprise can also be determined using the methods of the American Management Association (table).

Checklist for analyzing the strengths and weaknesses of an enterprise in competition

Each column in the table is assigned a value:

1 - better than anyone. Clear leader;

2 - above average. Business performance indicators are quite good and stable;

3 - average level. Stable position in the market;

4 - you should take care of improving your position in the market;

5 - the situation is truly alarming. The company found itself in a crisis situation.

This methodology offers a wide range of groups of indicators that allow, using a scoring system, to determine the weak point of an enterprise in comparison with competing enterprises.

The level of competitiveness of an enterprise's economic potential can be determined using the indicator method, which allows one to identify ways to increase competitiveness and develop a new strategy and management tactics. This method is based on a system of indicators, with the help of which a quantitative assessment of the competitiveness of the potential of an enterprise, company, corporation is determined. Each indicator - a set of characteristics that formally describe the state of the parameters of the object under study - includes a number of indicators that reflect the state of individual elements of this object.

The selected indicators are compared with similar standard or actual indicators from competitors. Each level of competitiveness of an enterprise corresponds to a certain set of indicators in the form of specific indicators. They form a matrix of the competitiveness of the enterprise's potential, which reflects the relative values of the selected indicators and their percentage-point expression.

To fill out the matrix at an enterprise, the creation of a data bank and the ability to receive and process external information are required. Without knowledge, study and comparison of information about the work of similar enterprises, none of the prestigious companies can count on long-term business success.

In the competitiveness matrix, the highest level of the indicator today is taken as 100% and, accordingly, 100 points. The scoring of the level of competitiveness is determined both for individual indicators and for the entire complex as a whole.

The methodology for assessing competitiveness used in marketing research is intended to:

To assess the competitiveness of an enterprise and its products during marketing research;

To evaluate and select optimal options for product production plans (current and future) resulting from marketing programs;

To evaluate and select optimal programs for the reconstruction of production and enterprises, developed on the basis of marketing research;

To assess the performance of the structural divisions of the enterprise, as well as assess the results of the labor of employees to ensure the competitiveness of the enterprise;

To assess the technical and economic level and select optimal technological processes, equipment and structural materials used for the manufacture of products, in order to ensure the same - the competitiveness of the enterprise.

The methodology can be used as an independent method, when it is impossible to economically evaluate the compared decision options based on the totality of costs and results or other cost indicators, and also as a complementary one, when the compared options are economically approximately equivalent, but certain non-economic characteristics (social, economic) are important. , technical), based on the totality of which the assessment and selection of optimal solutions is carried out.

To compare and evaluate various solution options and select the optimal one, a table is compiled, where each row corresponds to a specific solution option, and each column corresponds to an evaluation indicator, the totality of which is compared and the optimal option is determined. The number of compared options, as well as the number of evaluation indicators in each of them, can be any.

If the estimated indicators have the same units of measurement and are values of the same order, then you can evaluate and select the optimal solution based on their totality by simply summing up the indicators and comparing the results obtained. In this case, for each option (i.e. for each line), the sum of the estimated indicators taken with their own signs (“+” or “-”) is calculated. The line with the maximum (minimum) value of the amount will correspond to the optimal solution; the remaining amounts will correspond to less efficient options.

Since estimated indicators, as a rule, have unequal units of measurement and are quantities of different orders (they differ from each other by 10-100 times, and therefore the summation will be incorrect), it is impossible to evaluate and select the optimal option based on their totality without additional transformation or difficult. As such a transformation, it is advisable to reduce heterogeneous indicators to a dimensionless (relative) form as follows.

1. In each column of the table, the best of the compared evaluation indicators is found (the maximum value is selected for indicators, the growth of which increases the efficiency of decisions; the minimum - for indicators, the decrease of which increases the efficiency of decisions); the best values are underlined, and indicators requiring minimization are indicated with an asterisk.

2. The best estimated indicators found in each column are equal to one, and all other indicator values are expressed in fractions of one in relation to the best indicator of the corresponding column: if the maximum value of any indicator is selected as the best, then all other indicator values of this column divided by it, and if the minimum value of any indicator is chosen as the best, then it is divided by all other indicators of this column.

3. A new table is compiled from the obtained dimensionless (relative) values of the estimated indicators with an additional, not yet filled in column C.

4. For each of the rows of the table, consisting of dimensionless (relative) quantities, i.e. for each compared solution option, the sum of the indicators is determined, which is then divided by their number, so that the resulting result (arithmetic mean) is also expressed in fractions of unity and shows the difference between the real optimal solution option and a certain ideal one (which incorporates all the best estimated indicators) , which the unit must correspond to. The results obtained are entered in an additional column (C) of the table.

5. The line with the maximum value of the calculated arithmetic mean dimensionless (relative) indicator will correspond to the optimal solution; the remaining arithmetic average values will correspond to less effective options.

In the described method for assessing competitiveness, we proceed from the assumption of the same importance and equivalence of all evaluation indicators, on the basis of which decision options are compared. It can be used in cases where all estimated indicators are either truly equally important (equal), or when it is impossible for some reason to rank them by importance.

To take into account the unequal importance, unequal value of estimated indicators, due to various factors of a social, economic, scientific and technical nature, these indicators can be ranked and each of them can be given a numerical characteristic or coefficient, expressed in fractions of a unit and showing how many times (or by what percentage) some indicators are more important (priority) than others. In this case, it is necessary to comply with the following condition: the sum of the specified significance coefficients (importance) for all evaluation indicators must be equal to one.

The ranking of estimated indicators and assignment of significance coefficients to them should be carried out by an expert or a group of experts, who can be economists, managers, scientific and technical specialists. To increase the reliability of their estimates, you should use well-known methods for processing results using mathematical statistics or probability theory.

After ranking and assigning significance coefficients, the dimensionless (relative) values of the estimated indicators of each column are multiplied by their corresponding significance coefficients and recorded in a new table. The optimal solution will correspond to the line with the maximum sum of dimensionless values of the evaluation indicators multiplied by their corresponding significance coefficients; the remaining amounts will correspond to less efficient options.

Most modern markets are characterized as competitive. This implies an urgent need to study competition, its level and intensity, and to know the forces and market factors that have the greatest impact on competition and its prospects.

A preliminary but obligatory stage of market competition research is the collection and analysis of information necessary, ultimately, for choosing competitive strategies. The completeness and quality of the collected information largely determine the effectiveness of further analysis.

The main stage of analyzing competition in the market is assessing the degree of exposure of the market to competition processes based on an analysis of the main factors determining the intensity of competition.

Since the competitive environment is formed not only under the influence of the struggle of intra-industry competitors, to analyze competition in the market in accordance with M. Porter’s model, the following groups of factors are taken into account:

rivalry among sellers competing in a given market (“central ring”) - the situation in the industry;
competition from substitute goods - the influence of substitute goods;
the threat of new competitors - the influence of potential competitors;
positions of suppliers, their economic capabilities - influence of suppliers;
consumer positions, their economic opportunities - the influence of buyers.

Each of the competitive forces under consideration can have a different impact on the situation in the industry, both in direction and in significance, and their total impact ultimately determines the characteristics of competition in the industry, the profitability of the industry, the company’s place in the market and its success.

The main factors determining the level of competition in the industry, combined into groups, as well as signs of their manifestation are presented in Table 1.

Table 1. Competition factors in the industry market.

	Competition factors	Signs of manifestation of factors in the market

1. Industry situation
		There is a group of firms equal in power or there is one or more firms that are clearly superior in power to the one under study.
		Effective demand for goods is falling, the forecast is unfavorable.
		Competing firms are not specialized in types of goods. The company's product and competing products are practically interchangeable.

		The costs of switching a client from one manufacturer to another are minimal, i.e. the likelihood of the company's clients leaving for competitors and vice versa is high.
		The range of services provided by competing firms in the firm's industry for the product is generally identical.
		The costs of a company leaving the market for a given product are high (retraining of personnel, loss of a sales network, liquidation of fixed assets, etc.).
		The initial costs for launching work on the market for this product are low. The product on the market is standardized.
		The level of competition in related product markets is high (for example, for the furniture market, adjacent markets are the markets for building materials, house construction, etc.).
		Individual firms are implementing or are ready to implement an aggressive policy of strengthening their positions at the expense of other competitors.
		There is clearly expanding demand, great potential opportunities, favorable forecast

		The amount of capital required to enter the industry market is not high. Efficient production scale can be achieved quite quickly. Firms in the industry are not inclined to use aggressive strategies against "newcomers" and do not coordinate their activities within the industry to reflect expansion into the industry
		There are a large number of resellers in the industry market with weak connections to manufacturers. Creating your own distribution network or attracting existing intermediaries to cooperate does not require significant costs on the part of “newbies”
	Industry benefits	Enterprises in the industry do not have significant advantages over new competitors related to access to sources of raw materials, patents and know-how, fixed capital, convenient locations of the enterprise, etc.
3. Supplier influence
	Uniqueness of the supply channel	The degree of product differentiation among suppliers is so high that it is difficult or expensive to switch from one supplier to another.
	Buyer importance	Enterprises in the industry are not important (main) clients for supplier firms.
	Individual supplier share	The share of one supplier mainly determines the supply costs of producing a product (mono supplier).
4. Buyer influence
	Buyers status	There are few buyers in the industry. Basically, these are large buyers who buy goods in large quantities. Their consumption constitutes a significant percentage of all industry sales.
		Our product and similar products of our competitors are not an important component in the buyer’s purchase mix.
	Product standardization	The product is standardized (low degree of differentiation). The cost of switching buyers to a new seller is negligible.

		Lower prices and the availability of substitute products create a price ceiling for our industry's products.
	Switching cost	The cost of “switching” to a substitute product (costs of retraining personnel, correcting technological processes, etc. for the client when switching from our product to a substitute product) is low.
	Quality of the main product	Maintaining the required quality of our product requires higher costs than for a substitute product

Thus, it becomes possible to assess the significance of factors according to the degree of manifestation of their signs in the market of the product under study and draw a conclusion about the general level of competition in this market.

Let us analyze the nature of the influencing factors included in the “situation in the industry” group.

The number and power of firms competing in the market largely determine the level of competition. In principle, the intensity of competition is considered to be greatest when there are a significant number of competitors of approximately equal strength in the market, and it is not at all necessary that the competing firms be particularly large. However, this rule is not universal and is always true from the position of a company conducting market research. Thus, for a large company with powerful resources and numerous advantages, competition is, as a rule, only from companies of a similar size with similar capabilities. On the contrary, for a medium-sized and, especially, a small company, the presence of even one large competitor can be a significant obstacle to successful sales. It should be noted that the number of firms operating in the market, indicating a high degree of competition, can vary significantly depending on the industry, and even the field of activity.

The uniformity of product services in the industry reflects the ability of firms to expand the range of work and services in this field of activity. The presence on the market of a large number of competing firms with a high degree of diversification of services indicates the impossibility of moving into a “niche,” that is, avoiding competition through specialization in some work or services. Thus, a high degree of unification of product services in the industry tends to reduce competition in the market under study.

Changes in effective demand in the market strengthen or weaken the effect of the first two factors. Indeed, an increase in volume softens, and a decrease, on the contrary, intensifies competition in the market.

The degree of standardization of a product offered on the market tends to increase competition. Indeed, when each manufacturer offers its own product model or its own set of services intended for one market segment, competition is reduced to a minimum. And, on the contrary, when all manufacturers produce homogeneous products intended equally for all consumers, competition between them is high. Of course, these are extreme cases. In practice, products in any market are differentiated to one degree or another, which does not eliminate competition, but only somewhat reduces the degree of competition.

The costs of switching a customer from one manufacturer to another, especially with significant volumes of after-sales service, can to some extent reduce the level of competition threatening the supplier company. Indeed, pre-determined features of the supplied product may make it unprofitable or simply impossible to invite a third party to provide after-sales service.

Market exit barriers work towards increasing competition in the market. If switching to another industry market or leaving a given area of business is associated with significant costs (liquidation of fixed assets, loss of a sales network, etc.), then it is natural to expect greater persistence of firms being forced out of the market in the struggle for their positions.

Barriers to market penetration are closely related to the previous factor and act in exactly the opposite direction, that is, increasing barriers helps reduce competition and vice versa. This is due to the need for significant investments, the need to acquire special knowledge and qualifications, etc. The barriers to penetration are higher, the greater the differentiation by type of technology, operational characteristics and other factors. In this case, existing firms have advantages over newly emerging competitors due to their focus on a specific customer, prestige and experience.

The situation in adjacent product markets has a significant impact on competition in this market. A high level of competition in related product markets, as a rule, leads to an intensification of the struggle in this market.

The strategies of competing firms operating in the market are examined in order to identify differences and commonalities in the strategic attitudes of competitors. Thus, if most firms adhere to the same strategy, then the level of competition increases. On the contrary, if most firms pursue different strategies, the level of competition is relatively reduced.

The attractiveness of the market for a given product significantly determines the level of competition. For example, a sharp increase in demand causes a rapid influx of competitors.

Now let's look at how the influence of potential competitors affects the level of competition in the industry.

The seriousness of this threat depends on the magnitude of the barriers, that is, the difficulties and costs that a “newcomer” has to overcome in comparison with the “old-timers” of the industry.

Factors that reduce pressure from new competitors are: the need for initial capital to penetrate the industry; efficient scale of production, temporarily unattainable for a beginner; difficult access to distribution channels, etc.

The influence of suppliers is manifested as follows. Suppliers interact with firms, exerting a direct influence on them, which increases in the following cases:

Suppliers' products are highly differentiated or unique, making it difficult for the buyer to switch suppliers;
firms in the industry are not important clients for the supplier;
costs of switching to another supplier.

Supplier pressure can be reduced by creating alternative supply channels.

Buyers can greatly influence the strength of competition in an industry. This power increases in the following cases:

products are standardized and not differentiated;
the purchased goods do not occupy an important place in the buyer’s priorities;
the buyer has good information about all possible suppliers.

The influence of buyers weakens with the expansion of the boundaries of the industry market, differentiation and specialization of the product, coordination of the efforts of industry producers, and the absence of substitute products.

Scientific and technological progress predetermines the emergence of substitute goods - new goods and services that can successfully perform the functions of traditional goods. The pressure from firms producing substitute goods is that the prices and availability of substitutes create a price ceiling for basic goods when the prices of basic goods are above that ceiling.

Competition from substitutes depends on whether it is easy or difficult for consumers to switch to it, and what the cost of switching is. The lower the price of the substitute, the lower the cost of reorientation to the substitute, and the higher the quality of the product, the greater the pressure of competitive forces from substitutes.

Each of the factors characterizing competition in the market (see Table 1) is assessed by experts on a point scale. Managers and leading specialists of the enterprise can be involved as experts. For example, if a factor, in the expert’s opinion, does not appear on the market or there are no signs of its manifestation, then the strength of manifestation of this factor is assessed as 1 point; if the factor is weakly manifested - 2 points; if the factor is clearly manifested - 3 points.

In addition, the factors considered have different effects on competition in the market. To take into account the relative importance of various factors, the specific “weight” of each of them is determined directly during the analysis.

The assessment of the degree of influence of each of the five forces of competition in the market obtained in this way is a weighted average score:

where bij is the j-th expert’s score of the degree of manifestation of the i-th factor;

n - number of experts;

Based on the obtained weighted average score, the following conclusions are drawn (Fig. 1):

a moderate level of competitive strength if the resulting weighted average score falls within the interval .

In addition, at the stage of analysis of competition factors, a forecast of the development of competition in the market is carried out based on forecast estimates of changes in the effect of each factor. The forecast assessment of changes in the effect of a factor corresponds, for example, to the following point estimates: “+1” - if the effect of the factor will increase, “0” - will remain stable, “-1” - will weaken.

Based on the obtained expert assessments of the forecast for the development of each of the factors, a weighted average assessment of the forecast for the development of competitive forces in the market is determined:

where сij is the score of the j-th expert forecasting the development of the i-th factor;

n - number of experts;

ki - coefficient of importance of the i-th factor,

m is the number of factors considered.

In the case when the weighted average estimate of the forecast falls within the interval (0.25; 1), a conclusion is drawn about an increase in the level of competition in the market, (-0.25; 0.25) - the level of competition will remain stable, (-1; - 0.25) - will decrease (Fig. 2).

Competition factors

Expert assessment

Factor change forecast

1. Industry situation

Number and power of firms competing in the market

weakly manifested

will remain stable

Change in effective demand

does not appear

will remain stable

The degree of standardization of the product offered on the market

weakly manifested

will remain stable

Costs of switching a client from one manufacturer to another

clearly manifested

will remain stable

Unification of product services in the industry

weakly manifested

will remain stable

Barriers to exiting the market (company costs for re-profiling)

clearly manifested

will remain stable

Barriers to market entry

weakly manifested

will remain stable

The situation in related product markets (markets for goods with similar technologies and areas of application)

clearly manifested

will definitely increase

Strategies of competing firms (behavior)

weakly manifested

will remain stable

Market attractiveness of this product

clearly manifested

will definitely increase

2. Influence of potential competitors

Difficulties in entering the industry market

weakly manifested

will remain stable

Access to distribution channels

weakly manifested

will remain stable

Industry benefits

weakly manifested

will remain stable

3. Supplier influence

Uniqueness of the supply channel

weakly manifested

will remain stable

Buyer importance

weakly manifested

will remain stable

Individual supplier share

weakly manifested

will remain stable

4. Buyer influence

Buyers status

weakly manifested

will remain stable

The importance of the product to the buyer

weakly manifested

will remain stable

Product standardization

clearly manifested

will remain stable

5. The influence of substitute products

clearly manifested

will remain stable

Switching cost

clearly manifested

will remain stable

Quality of the main product

clearly manifested

will remain stable

Most modern markets are characterized as competitive, hence the urgent need to study competition, its level and intensity, to know the forces and market factors that have the greatest impact on competition and its prospects (V.D. Shkadrun, T.M. Akhtyamav. 2000) 1 .

A preliminary but mandatory stage of researching competition in the market is the collection and analysis of information necessary to select competitive strategies. The completeness and quality of the collected information largely determine the effectiveness of further analysis.

The main stage of analyzing competition in the market is an assessment based on an analysis of the main factors determining the intensity of competition and the degree of exposure of the market to competitive processes.

Since the competitive environment is formed not only under the influence of the struggle of intra-industry competitors, when analyzing competition in the market in accordance with M. Porter’s model, the following groups of factors are taken into account:

rivalry among sellers competing in a given market; “central ring” – the situation in the industry;

competition from substitute goods, the influence of substitute goods;

the threat of new competitors – the influence of potential competitors;

positions of suppliers, their economic capabilities - influence of suppliers;

consumer positions, their economic opportunities - the influence of buyers.

The main factors determining the level of competition in the industry, combined into groups, as well as signs of their manifestation are presented in Table 1.1.

Table 1.1 – Competition factors in the industry

Competition factors	Signs of manifestation of factors in the market

1 Industry situation
Number and power of firms competing in the market	There is a group of firms equal in power or one or more firms that are clearly superior in power to the one under study
Change in effective demand	Effective demand for goods is falling, the forecast is unfavorable
The degree of standardization of the product offered on the market	Competing firms do not specialize by type of product. The company's product and competitors' products are practically interchangeable
Costs of switching a client from one manufacturer to another	The costs of switching a client from one manufacturer to another are minimal, that is, the likelihood of the company’s clients leaving for competitors and vice versa is high
Unification of product services in the industry	The range of services offered by competing companies in the industry is generally identical
Barriers to exiting the market (company costs for re-profiling)	The costs of a company leaving the market for a given product are high (retraining of personnel, loss of a distribution network, liquidation of fixed assets, etc.)
Continuation of Table 1.1

Barriers to market entry	The initial costs for launching work on the market for this product are low. The product on the market is standardized
The situation in related product markets (markets for goods with similar technologies and areas of application)	The level of competition in related product markets is high (for example, for the furniture market, adjacent markets are the markets for building materials, house construction, etc.)
Strategies of competing firms (behavior)	Some firms are implementing or are ready to implement an aggressive policy of strengthening their positions at the expense of competitors
Market attractiveness of this product	There is clearly expanding demand, great potential opportunities, favorable forecast
2 Influence of potential competitors
Difficulties in entering the industry market	The amount of capital required to enter the industry market is low. Efficient production scale can be achieved quite quickly. Firms in the industry are not inclined to use aggressive strategies against newcomers and do not coordinate their activities within the industry to reflect expansion into the industry
Access to distribution channels	There are a large number of resellers in the industry market with weak connections to manufacturers. Creating your own distribution network or attracting existing intermediaries to cooperate does not require significant costs on the part of “newbies”
Industry benefits	Enterprises in the industry do not have significant advantages over new competitors related to access to sources of raw materials, patents and know-how, fixed capital, convenient locations of the enterprise, etc.
3 Supplier influence
Uniqueness of the supply channel	The degree of differentiation of suppliers' products is so high that it is difficult or expensive to switch from one supplier to another
Buyer importance	Enterprises in the industry are not important (main) clients for supplier firms
End of table 1.1

Individual supplier share		The share of one supplier mainly determines the supply costs for the production of the product (mono supplier)
4 Buyer influence
Buyers status		There are few buyers in the industry. Basically, these are large buyers who buy goods in large quantities. Their consumption volume makes up a significant percentage of all sales in the industry
The importance of the product to the buyer		Our product and similar products of our competitors are not an important component in the buyer’s purchase mix
Product standardization		The product is standardized (low degree of differentiation). The cost of switching customers to a new seller is negligible
5. The influence of substitute products
			Lower prices and the availability of substitute goods create a price ceiling for the products of enterprises in our industry
Switching cost			The cost of “switching” to a substitute product (costs of retraining personnel, correcting technological processes, etc. for the client when switching from our product to a substitute product) is low
Quality of the main product			Maintaining the required quality of our product requires higher costs than for a substitute product

Thus, it is possible to assess the significance of factors according to the degree to which their symptoms manifest themselves in the market of the product under study and draw a conclusion about the general level of competition in this market.

Let us analyze the nature of the influencing factors included in the “situation in the industry” group.

The number and power of enterprises competing in the market largely determine the level of competition. In principle, the intensity of competition is considered to be greatest when there are a significant number of competitors of approximately equal strength in the market, and it is not at all necessary that the competing enterprises be particularly large. However, this rule is not universal and is always true from the position of an enterprise conducting market research.

Thus, for a large enterprise with powerful resources and numerous advantages, competition, as a rule, is presented only by enterprises of almost the same size with similar capabilities. On the contrary, for a medium-sized and, especially, a small enterprise, the presence of even one large competitor can be a significant obstacle to successful sales. It should be noted that the number of enterprises operating in the market, indicating a high degree of competition, can vary significantly depending on the industry and even the field of activity.

The uniformity of product services in the industry reflects the ability of firms to expand the range of work and services in this field of activity. The presence on the market of a large number of competing enterprises with a high degree of diversification of services indicates the impossibility of moving into a “niche”, that is, avoiding competition through specialization in some work or services. Thus, the high degree of unification of product services in the industry favors a decrease in competition in the market under study.

The degree of standardization of a product offered on the market contributes to increased competition. Indeed, when each manufacturer offers its own product model or its own set of services intended for one market segment, competition is reduced to a minimum. And, on the contrary, when all manufacturers produce homogeneous products intended equally for all consumers, competition between them is high. Of course, these are extreme cases. In practice, products in any market are differentiated to one degree or another, which does not eliminate competition, but only somewhat reduces the degree of competition.

The costs of switching a customer from one manufacturer to another, especially with significant volumes of after-sales service, can to some extent reduce the level of competition that threatens the supplier enterprise. Indeed, pre-determined features of the supplied product may make it unprofitable or simply impossible to invite a third party to provide after-sales service.

Market exit barriers work towards increasing competition in the market. If switching to another industry market or exiting a given area of business is associated with significant costs (liquidation of fixed assets, loss of a sales network, etc.), then it is natural to expect greater persistence of firms being forced out of the market in the struggle for their positions.

Barriers to market penetration are closely related to the previous factor and act in exactly the opposite direction, that is, increasing barriers helps reduce competition and vice versa. This is due to the need for significant investments, the need to acquire special knowledge and qualifications, etc. The barriers to penetration are higher, the greater the differentiation by type of technology, operational characteristics and other factors. In this case, existing enterprises have advantages over newly emerging competitors due to their focus on a specific customer, prestige and experience.

The strategies of competing enterprises operating in the market are examined in order to identify differences and commonalities in the strategic objectives of competitors. Thus, if most businesses follow the same strategy, the level of competition increases. On the contrary, if most enterprises follow different strategies, the level of competition is relatively reduced.

Market attractiveness of this product largely determines the level of competition. For example, a sharp increase in demand causes a rapid influx of competitors.

Now let's look at how the influence of potential competitors is reflected in the level of competition in the industry.

Factors that help reduce pressure from new competitors are: the need for initial capital to penetrate the industry; efficient scale of production, temporarily unattainable for a beginner; difficult access to distribution channels, etc.

The influence of suppliers is manifested as follows. Suppliers interact with enterprises, exerting a direct influence on them, which increases in the following cases:

Suppliers' products are highly differentiated or unique, making it difficult for the buyer to switch suppliers;

firms in the industry are not important clients for the supplier;

costs of switching to another supplier;

supplier pressure can be reduced by creating alternative supply channels;

Buyers can greatly influence the strength of competition in an industry. This power increases in the following cases:

products are standardized and not differentiated;

the purchased goods do not occupy an important place in the buyer’s priorities;

the buyer has good information about all possible suppliers.

Scientific and technological progress predetermines the emergence of substitute goods - new goods and services that can successfully perform the functions of traditional goods. The pressure from firms producing substitute goods is that the prices and availability of substitutes create a price ceiling for essential goods when the prices of essential goods are above the ceiling.

Each of the factors characterizing competition in the market (Table 1.1) is assessed by experts on a point scale. Managers and leading specialists of the enterprise can be involved as experts. For example, if a factor, in the expert’s opinion, does not appear on the market or there are no signs of its manifestation, then the strength of manifestation of this factor is assessed as 1 point; if the factor is weakly manifested - 2 points; if the factor is clearly manifested, 3 points.

In addition, the factors considered have different effects on competition in the market. To take into account, the relative importance of various factors is determined directly during the analysis.

The resulting assessment of the degree of influence of each of the five forces of competition in the market is a weighted average score (b):

where b ij is the j-th expert’s score of the degree of occurrence of the i-th factor;

n – number of experts;

Based on the obtained weighted average score, the following conclusions are drawn (Figure 1.3).

Figure 1.3 – Assessment of the degree of influence of the force of competition in the market

The level of competition is very high
,

where b cf is the weighted average score obtained when competition factors in the market are weak;

b max – weighted average score corresponding to the case of clear manifestation of competitive factors in the market.

Level of competitive strength is high
.

Moderate level of competitive strength, if the resulting weighted average score falls within the interval
,

where b min is the weighted average score, if competition factors do not appear in the market.

Reduced level of competitive strength, if the resulting weighted average score falls within the interval
.

In addition, at the stage of analysis of competition factors, a forecast of the development of competition in the market is carried out based on forecast estimates of changes in the effect of each factor. The predictive assessment of changes in the effect of a factor corresponds, for example, to the following point estimates: “+1” – if the effect of the factor will increase, “0” – if it remains stable, “-1” – if it weakens.

Based on the obtained expert assessments of the development forecast for each of the factors, a weighted average assessment of the forecast for the development of competitive forces in the market is determined (c):

(1.2)

where c ij is the j-th expert’s score of the degree of occurrence of the i-th factor;

n – number of experts;

k i – coefficient of importance of the i-th factor;

m – number of factors considered.

In the case when the weighted average estimate of the forecast falls into the interval (0.25; 1), a conclusion is drawn about an increase in the level of competition in the market, (-0.25; 0.25) – the level of competition will remain stable, (-1; -0.25) – will decrease (Figure 1.4).

Figure 1.4 – Intervals for assessing the level of competitive forces in the market

Competition can either help a company in its growth and development, or cause a loss of profit and a real threat. There is an opinion that for start-up businesses it is best to choose a low-competition niche. This is actually a double-edged sword. Where there is no competition, there is most likely no great demand. And growing it from scratch is a task that requires significant effort and time. There are, of course, exceptions that only confirm the rule.

Types of competition

Let's understand the theory a little. Competition is a process associated with rivalry between groups of goods, services or organizations that compete with each other for consumer attention. Competition is the engine of progress and the basis for the emergence of new technologies, services and products.

In addition to the classification of competitive structures known to everyone from their student days, which includes: monopoly, oligopoly, monopolistic competition and pure competition, there is also a division of competition by type into:

species;
functional;
intercompany.

Compete with organizations that occupy similar niches in the market for goods or services, that is, those who fight to satisfy the same type of needs.

To compete successfully, you need to stand out based on the following basic parameters:

Value for money. That is, having chosen a market segment, set a pricing policy that is adequate to the expectations of potential customers, as well as depending on the actual quality of the product or service.
Unique service. Be attentive to your clients and do not trade easily, but solve their real problems.
Best offers. Even the most ordinary services and goods can be sold with a twist. Figure out how you can attract additional customers to your business. An example is the ice cream machine at the entrance of the first supermarket from the legendary Sam Walton.

Important! In direct sales, you can find the client’s real problem using the technique of working with objections, and in retail trade and in the provision of services, you can establish the truth using the following means of collecting information: questionnaires, short surveys, promotions, etc.

"Life cycle" of competition

The choice of strategy for interaction with a competitive market environment also closely correlates with the stages that competition goes through. In classical theory, the following stages are distinguished:

Implementation. A stage associated with a high level of costs, the beginning of promotion to the market and winning the attention of customers.
Height. Costs are still at a high level. Marginal income is at a minimum level. There is a rapid increase in demand and reaching the “break-even point”.
Maturity. Demand is saturating. Maximum income level. The rate of increase in production and sales levels is slowing down.
Aging. Demand is oversupplied. Net income begins to decline. The level of competition is starting to decline. A new product or service needs to be released.

Benefits of Market Competition

In addition to intense competition and price regulation, competition gives the company many undervalued advantages.

The disadvantages of a highly competitive market environment include:

Possible price dumping by competitors. Here the advantages go to the “old-timers” of the business, since they have already accumulated experience and funds in order to benefit from economies of scale, and not from a huge markup
Possibility of unfair competition.
Oversaturation of the region with similar goods and/or services.

How to maximize benefits and reduce negative impacts?

To take full advantage of having a large number of competitors, you need to carefully approach your strategy. It will depend on it whether competitors will be able to break the “fighting spirit” of the market newcomer.

Think through every decision and use original technologies in service, production or sales. This state of affairs will not go unnoticed.

If you have to reduce your price, support your business with new ideas to optimize costs. Of course, you shouldn’t immediately cut the salaries of your subordinates, as this will cause a series of dismissals and grievances in the company.

Important! Treat any move by your opponents like rearranging pieces on a chessboard. There is always the possibility of both winning and losing a game in one move, so be on your guard.

In today's consumer world, the number of similar and substitute products designed to satisfy the same needs in new ways has made it difficult to achieve significant growth or profitability without a unique service. The huge number of offers makes demand selective.

As you can see, competition can act not only as an enemy, but actively help you on the path of formation and growth.

Be bolder. Get started today!

This article is also available in the following languages: Thai

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THANK YOU so much for the very useful information in the article. Everything is presented very clearly. It feels like a lot of work has been done to analyze the operation of the eBay store
- rootsshell
  
  Thank you and other regular readers of my blog. Without you, I would not have been motivated enough to dedicate much time to maintaining this site. My brain is structured this way: I like to dig deep, systematize scattered data, try things that no one has done before or looked at from this angle. It’s a pity that our compatriots have no time for shopping on eBay because of the crisis in Russia. They buy from Aliexpress from China, since goods there are much cheaper (often at the expense of quality). But online auctions eBay, Amazon, ETSY will easily give the Chinese a head start in the range of branded items, vintage items, handmade items and various ethnic goods.
  - Next
    
    What is valuable in your articles is your personal attitude and analysis of the topic. Don't give up this blog, I come here often. There should be a lot of us like that. Email me I recently received an email with an offer that they would teach me how to trade on Amazon and eBay. And I remembered your detailed articles about these trades. area I re-read everything again and concluded that the courses are a scam. I haven't bought anything on eBay yet. I am not from Russia, but from Kazakhstan (Almaty). But we also don’t need any extra expenses yet. I wish you good luck and stay safe in Asia.
rootsshell

It’s also nice that eBay’s attempts to Russify the interface for users from Russia and the CIS countries have begun to bear fruit. After all, the overwhelming majority of citizens of the countries of the former USSR do not have strong knowledge of foreign languages. No more than 5% of the population speak English. There are more among young people. Therefore, at least the interface is in Russian - this is a big help for online shopping on this trading platform. eBay did not follow the path of its Chinese counterpart Aliexpress, where a machine (very clumsy and incomprehensible, sometimes causing laughter) translation of product descriptions is performed. I hope that at a more advanced stage of development of artificial intelligence, high-quality machine translation from any language to any in a matter of seconds will become a reality. So far we have this (the profile of one of the sellers on eBay with a Russian interface, but an English description):
https://uploads.disquscdn.com/images/7a52c9a89108b922159a4fad35de0ab0bee0c8804b9731f56d8a1dc659655d60.png

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