What are the conditions for enterprises to compete in price? What are the characteristics of price competition?

The condition for enterprises to participate in price competition is to reduce production and operation costs. The characteristic of price competition is easy to attract customers.

What is price competition?

Price competition means that enterprises use price means to flexibly respond to competitors' pricing or price changes and compete for market share with competitors by raising prices, protecting prices or lowering prices. For a long time, price competition has been highly valued by commodity producers and operators. Even if competition is involved, you will think of reducing the price. Under certain conditions, price competition is necessary. However, taking price as the only factor that determines the success or failure of a transaction will inevitably lead to the proliferation of price competition.

Advantages and disadvantages of price competition:

1. Price competition is a way that is easily imitated by competitors, which easily leads to retaliation from competitors, causing losses to both sides and ultimately failing to improve economic benefits;

2. Although we can temporarily attract customers by reducing the price, once the normal price is restored, the sales volume will be greatly reduced;

3. Low pricing often forces the quality of products or services to decline, leading to the loss of buyers and damage to corporate image;

4. Price competition can often make large enterprises with abundant funds continue to survive, while small enterprises with insufficient funds and weak competitiveness suffer more. Therefore, under the condition of modern market economy, non-price competition has gradually become the mainstream of marketing.

What is non-price competition?

Non-price competition, that is, value competition, is a competition to provide customers with better, more distinctive products and services that are more suitable for their respective needs. Through product differences, that is, by improving product quality and efficiency and changing product style and packaging, manufacturers try to distinguish their products from competitors' products to meet the needs of consumers. Through advertising and promotion activities, manufacturers can attract more customers and increase their market share in product sales. Non-price competition is particularly prominent in oligopoly industries, because in these areas, manufacturers are unlikely to try to increase market share through price competition, and non-price competition is often more effective.