Learn in detail about market competition and its main characteristics with this article .
market competition
Market competition can be defined as the existence of different companies, organizations, or corporations within the market to exercise supply and demand within a given market.
It is important to understand that this competition in the market is specifically based on covering each of the needs or preferences of our clients or users in order to establish the positioning that we manage to establish within the market.
In many cases, it is important to understand that this competition in the market at certain times can be based on different levels of intensity and levels, which means that different types of markets are established, which can be defined as follows:
Perfect market competition
This type of competition in the market will be defined by prices. In a general way we can define that the market is managed in the following way, the higher the price, the less demand and so on.
These market variations are technically known as the directly proportional economy, these types of competition are characterized by not having any type of entry or exit barriers for the number of companies that can be managed in this economic system.
It is important to understand that the market, supply and demand is what is going to establish each of the prices of the assets that we are establishing. It is necessary to establish in an organizational and business way which is the most efficient option for us.
The best option that can be presented to us as an organization within the competition in the market that is defined as perfect is the production of the last unit of a specific product or service that allows us to establish the market price.
To better understand these concepts we leave you the following video
To establish that competition is perfect within the market, it must meet the following characteristics:
Atomicity
When we refer to the atomicity within the competition in the market we speak of those factors that are characterized by having so many buying and selling actions that neither leaders nor losers can be established within this market.
When there is atomicity within the competition in the market, the perfect equilibrium exists or develops within this economy. This has the consequence that prices will not suffer any radical change in price.
Homogeneity
When a market allows homogeneity, we establish that all goods and services are completely equal, there is no difference and it does not allow common and complete variations to exist within the different markets that are achieved within the economy.
Transparency
This type of competition in the market allows us to freely and freely establish each of the information that determines the effective and complete circulation of the different information that describes us as an organization.
It does not have limits
In these types of competition in the market it is important to understand that there is no relevant entry or exit restriction to the market, the main characteristic in this market is that resale is not known.
Competition in the imperfect market
When we evaluate this type of competition, we find that, unlike the previous one, it allows us to completely manipulate the condition of the product and allows us to directly affect the formation and establishment of the prices that define us.
With reference to the number of companies, companies or organizations that work with what is known as competition in the imperfect market are extremely few, since they are organizations that bet on extremely innovative products creating extremely low production levels at extremely high costs. In this type of market competition it is normal to get three cases in particular
Monopoly
The monopoly of a market is defined as those structures of the economy where there is only one organization, company or company capable of offering that product or service to the entire market segment.
In a monopoly, there is no direct or indirect competition, meaning that no other organization is able to produce a product similar to the one we are offering. If you want to learn more about this topic, we invite you to visit the following link: Competitive Analysis
It is also important that we understand that the commercial monopoly is understood as that organization that may be able to control the market of a geographical area, locality, state or country; fully capable and effective.
It is necessary to understand that when we speak of a monopolized market we are referring to economic structures that are characterized by having a single supplier and a single seller, which allows us to have exclusivity in some areas for the product. On the other hand, we find that the sale of the product is generated entirely by itself and it is not necessary to have large advertising campaigns to stimulate sales.
Oligopoly
Oligopoly can be defined as that competition in the market where the dominant is an extremely large group of sellers or brand images, known as oligopolies. They are the ones that manage to actively and proactively establish the reduction of competition, which is why they establish themselves in the market as unique, standing out in a masterful way to attack our clients or users.
Oligopolies seek to stay in the market with few sellers, who are highly aware of how each of the actions or decisions they make within the market will directly affect the organization, company or brand.
That's why in these types of market competition, it's common to see organizations using tools that allow them to resolve problems quickly and objectively. If you want to learn more about these tools, we invite you to visit the following link: SWOT Analysis of a Company
Competition between monopolies
This is the last competition that we will find in this classification. It is defined as competition in the market where, thanks to the diversity of products that exist in the market, none is really the leader.
A clear example of this definition can be supermarkets where we find the same product under different presentations and brands. Where each of the companies that present their products or services do so in a unique and particular way, giving the customer individual reasons to choose our product.
That is why the important thing within the competition in the monopoly market is to look for those characteristics that make us unique and that differentiate us from the different brands in order to achieve an important position among the organizations that present the same product with other variants. within the market.
For this reason we can understand or define that competition within this type of market is based specifically on the quality of the product or service that we are presenting and not on the price.
It should be noted that it is of the utmost importance to carry out a differentiation analysis to allow our sellers to have the ability to adjust the price if a product or service that closely resembles ours is found on the market.
Another characteristic that defines this competition in the monopoly market is its ability to generate new suppliers and in turn remove them. It is a very high turnover of companies since it is based on the quality opinion of our clients and these standards are highly variable.
It is for this reason that we must establish an extremely high and practical costume service to be able to listen to each of the new and current needs of our clients and thus avoid leaving the market due to lack of quality and service.
An example of this characteristic is the market that encompasses women's beauty products. The amount of make-up and beauty treatments is an extremely wide and completely new market every day, as women look for products that quickly adapt to the beauty standards that each of them has established, respecting the environment and the latest trends in this field. This forces the laboratories of beauty companies to listen and study new methods that offer that quality differentiation factor that makes us position ourselves in the market.
