How do companies and consumers benefit from the competition

Topic : How companies and consumers benefit from the competition OUTLINE Benefits of competitive markets • What are the potential gains from increased market competition? Lower prices A greater discipline on producers/suppliers to keep their costs down Improvements in technology Variety of products A faster pace of invention and innovation Improvements to the quality of service Better information for consumers Better competitors in global markets • Price and Non Price Competition Price competition can involve discounting the price of a product to increase demand Non-price competition focuses on other strategies for increasing market share Example • Opening Up Markets - Liberalisation How consumers benefit from competition? • • • Low prices for all Better quality More choice How companies benefit from competition? • • • • Competitors can help their rivals to save their firms and expand their markets The existence of markets, selling the same products/services, represents a great challenge in front of their competing markets/companies The latter have to be always on the move Nevertheless, the existence of competitors can have an outstanding positive impact on the second party Sometimes customers are informed about the existence of given products through the existence of latter's competitors, rather Example How companies and consumers benefit from the competition? Competition brings many benefits, especially for consumers The producers must find ways to make quality products, more beautiful, with cheaper production costs, rates of scientific knowledge and technology to meet higher demand, market customers' tastes Competition makes producers more dynamic, more responsive, better grasp of customer needs, frequent technical innovations and application advancements, the latest research on production to improve organization of production, production management to improve productivity, quality and economic efficiency So, how companies and consumers benefit from the competition? Benefits of competitive markets What are the potential gains from increased market competition? Lower prices for consumers A greater discipline on producers/suppliers to keep their costs down Improvements in technology – with positive effects on production methods and costs A greater variety of products (giving more choice) A faster pace of invention and innovation : To deliver this choice, and produce better products, businesses need to be innovative – in their product concepts, design, production techniques, services etc Improvements to the quality of service for consumers Better information for consumers allowing people to make more informed choices Better competitors in global markets : Competition within the EU helps make European companies stronger outside the EU too – and able to hold their own against global competitors The overall impact of increased competition should be an improvement in economic welfare Price and Non Price Competition Firms compete for market share and the demand from consumers in lots of ways We make an important distinction between price competition and non-price competition Price competition can involve discounting the price of a product to increase demand Non-price competition focuses on other strategies for increasing market share Consider the example of the UK supermarket sector where non-price competition has become important in the battle for sales • • • • • • • • Traditional advertising / marketing Store Loyalty cards Banking and other Services (including travel insurance) In-store chemists and post offices Home delivery systems Discounted petrol at hypermarkets Extension of opening hours (24 hour shopping) Innovative use of technology for shoppers including self-scanning and internet shopping services Opening Up Markets - Liberalisation Creating more competition in markets involves breaking down the barriers to competition that invariably exist in each industry Perfectly contestable markets are rare One of the key strategies of governments over the last twenty years has been to liberalise markets by cutting the statutory monopoly power of businesses Two good examples of this have been in gas and electricity supply, and also telecommunications Liberalisation of energy markets has led to lower costs through increased efficiency and lower prices for consumers The UK gas and electricity markets are already fully liberalised, with all types of customer able to choose their own supplier For example: More than 30% of domestic gas customers and 25% of electricity customers have switched suppliers and domestic electricity prices have fallen as markets have opened up UK consumers have benefited from rapid price falls as a result of the opening up of the UK market in telecoms: Mobile phone prices have fallen by 20% in 18 months from the beginning of 1999 And, the cost of international calls has fallen dramatically over the past decade Consumers benefit from the competition Low prices for all: the simplest way for a company to gain a high market share is to offer a better price In a competitive market, prices are pushed down Not only is this good for consumers - when more people can afford to buy products, it encourages businesses to produce and boosts the economy in general Better quality: Competition also encourages businesses to improve the quality of goods and services they sell – to attract more customers and expand market share Quality can mean various things: products that last longer or work better, better after-sales or technical support or friendlier and better service More choice: In a competitive market, businesses will try to make their products different from the rest This results in greater choice – so consumers can select the product that offers the right balance between price and quality How can you benefit from Your Competitors Many people believe that competition serves only the benefits of customers, which is true because companies, marketing the same product- type, are obliged to competitively struggle to provide the customers with better product at lower price and faster distributing channels Even entrepreneurs tend to desire that they would have less, if not no, competitors so as to keep manipulating a given market, with low costs and steadyincreasing benefits However, competition in marketing has far more positive effect not only on the consumers but also on the competing companies Competitors can help their rivals to save their firms and expand their markets True enough, the existence of markets, selling the same products/services, represents a great challenge in front of their competing markets/companies The latter have to be always on the move: ready to react to their rivals competing strategy, which requires strategic thinking and perhaps additional budget And after taking these measures, it still not sure which company might win the game as long as there are many other external factors controlling the business environment – customers – that must be considered and anticipated Nevertheless, the existence of competitors can have an outstanding positive impact on the second party First, thanks to competitors that other companies perpetually update their core strategies in terms of the quality of their products/services, communication channels and customer services This ongoing movement of companies helps in well-repositioning and leveling the sale of their products/services within markets Second, companies can benefit from their competitors research results and use the latter as secondary data to either update the strategy or develop innovative product/service line; thus, the market research costs less funds thanks to the information provided by other companies Also, sometimes the success of certain market serves competing companies to design competitive industry on the basic of the characteristics of the existing products In this case, the presence of a company's competitors is rather beneficial Third, and finally, second to the advertising channels of a given company are indeed competitors Most of the time, while promoting the image of their products/services, companies are implicitly admitting the existence of similar products, but perhaps not with the same effectiveness or the same price The point I am trying to make here is that sometimes customers are informed about the existence of given products through the existence of latter's competitors, rather Example The cola war is a relevant illustrating example Both Pepsi-cola and Coca-coal are two brands that fall under the same product type The two companies have been competing for decades Ironically, although Pepsi has always been the leader in terms of innovative marketing programs, Coca has consistently been the leader in terms of sale The success of Coca has most of the time been induced by the existence of Pepsi For instance, right after Pepsi's development of the idea of supermarket sales, lunching a larger bottle size to capture family consumption, and expanding its product lines by including Diet Pepsi, Coca-cola responded back by matching Pepsi's use of larger bottle size, using cans, and introducing new product line such as Sprite Coca's innovation turned out to be a success Yet, that success would not have seen light, if it had not been motivated by Pepsi's precedent campaign To rap it up, competition does not only serve the customer, but the counterparties as well Many companies, that are leading the world market, started as small businesses I believe that among the incentives that contributed to their success are their actual and rival competitors Can you remember how many ‘As’ did you get, when you were a student, because of the challenging decision you took after getting a ‘C’ while one of your classmate had gotten an ‘A’ in the previous assignment After getting an ‘A’, you said: “yes I did it” But you missed the fact that it was your classmate who actually helped you in that Politically speaking, the out-measured popularity that helped G.W.Bush win the second election was mainly because of his propaganda of the war against terrorism and the chasing of Ben-Ladden Ironically, it is Ben Ladden who has granted Bush the widespread popularity in the middle-east area; in return, Ben-Ladden's popularity in the western world was indeed made true by G.W Bush Selfsame, the long-lasting life-circle of both Pepsi and Coca is partially the result of the old-dated competition between the two companies This is just to say that sometimes our efforts can be a success due to our existing competitors So, we can say that: companies and consumers have benefited greatly from the competition Cộng hòa xã hội chủ nghĩa Việt Nam Độc lập – Tự – Hạnh phúc -*** - BIÊN BẢN HỌP NHÓM THẢO LUẬN Học phần:…………………………………………………………………… Lớp học phần:……………………………Nhóm:…………………………… Giáo viên giảng dạy:………………………………………………………… Thời gian họp:……………………………………………………………… Địa điểm họp:………………………………………………………………… Thành phần: Nội dung họp: Hà Nội, ngày… tháng… năm…… Trưởng nhóm ... existence of latter's competitors, rather Example How companies and consumers benefit from the competition? Competition brings many benefits, especially for consumers The producers must find ways to... benefit from competition? • • • Low prices for all Better quality More choice How companies benefit from competition? • • • • Competitors can help their rivals to save their firms and expand their markets... only on the consumers but also on the competing companies Competitors can help their rivals to save their firms and expand their markets True enough, the existence of markets, selling the same