The essence of competition and the influencing factors of the market The so-called competition is to compete with others for the sake of one's own interests. Enterprise competition is an activity in which enterprises compete with other enterprises in the market in order to obtain their own ultimate interests and development. There are various ways and means of competition, but the most important one is market-centered. Therefore, the essence of competition should be understood from the following aspects: 1. Competition is basically an activity centered around consumers. The so-called competition for the market means competition for consumers. The size of the market share is the number of consumers it has. Every seller has a very conscious intention, and its purpose is to provide products to consumers and be regarded as the products they provide. Products that are more attractive or advantageous than those of its competitors, thereby improving itself and its position in the market. 2. Competitiveness is revealed through the pursuit of customer purchases, and various measures are taken based on this to defeat competitors' wits and courage, and to gain more profits or a larger market share. Strategies and counter-strategies. 3. The competitive means and strategies used by enterprises to compete, as well as the competitive opportunities they can seek and the scope of competition they can participate in, are subject to their own imagination, consumers (buyers) and social norms (including special restrictions and government restrictions). Relevant laws). 4. When one or more competing companies are tempted to take proactive strategic actions to increase sales, market share and profits, or take defensive actions to protect their existing positions, new competitive pressures will arise. Get active. 5. As the competition process continues, becomes long-term and develops, active competition will enable enterprises to create and respond to new market forces, market trends, customer interests and preferences. In this sense, production also determines consumption. 6. Competitive behavior not only enjoys strategic success, but also bears strategic failure. If a certain kind of competitive behavior guides, affects or "controls" the direction of market change, such a competitive strategy is considered successful. 7. The failure of competitive strategy means that the strategy is not enough to defeat rival companies, or it is due to poor design or poor execution that fails to achieve the expected results in market share or profitability. Or lack the power to influence, and passively follow competitors to imitate them or struggle. There are many factors that affect the market, but the most important ones are the characteristics of competing products, the entry of new companies and consumers: 1. The competitive power of substitute products. Broadly speaking, any new product launched by any company on the market will be in competition with related products. For example, engineering plastics and traditional furniture companies will inevitably be in competition in terms of the use of their products. . Closely related substitute products affect competitors in the following aspects: First, they may completely replace the original product. For example, televisions have almost completely replaced radios, and color televisions have replaced black and white televisions. Secondly, unless the product faces competition by improving quality or lowering price, or adding new features. Otherwise, it may be severely affected in terms of sales and profitability due to the entry of substitutes into the market. This is the case between fully automatic washing machines and ordinary washing machines. Finally, the intensity of competition caused by substitute products is expressed by the cross-demand elasticity between the unit sales volume of the original product and the sales price of the substitute product. In other words, the lower the price and the higher the quality and performance of a substitute product, the stronger the competitive pressure it creates. This is the case between electronic watches and mechanical watches. 2. The potential for new companies to enter. New enterprises enter the market and form new production capabilities. At the same time, they have the requirement to occupy a certain share of the market and must compete with the original enterprises. Especially those powerful large enterprises that enter new markets in order to implement their diversification strategies and implement diversified operations will inevitably cause market oscillations. For example, this is the case with Haier's entry into the air conditioner and color TV markets. The possibility of potential competitors entering the market is affected by the following factors: (1) Economies of scale are inversely proportional to the possibility of potential competitors entering. Because it forces potential entrants to make large-scale investments, this may lead to new entries and bear risks such as excessive investment scale, excessive costs, and market saturation. (2) Product brand trust and customer preference. General customers have varying degrees of preference and trust in existing product brands. This means that a new entrant must be prepared to pay higher costs in advertising and promotion in order to win the trust of customers and establish its own credibility.

These efforts cost a lot of time and money. (3) The amount of capital invested. The greater the investment required to successfully enter the market, the greater the restrictions on potential entrants, and vice versa. (4) Economic and technical requirements of the product. Such as the possession of proprietary technology, the acquisition of a certain patent, the exclusive monopoly of unique and difficult-to-share raw materials, market advantages, etc., are all factors that affect new companies' entry into the market. 3. Analysis of consumer factors. In the following situations, consumers also have greater influence on enterprises: (1) The number of consumers is small, but the scale of purchases is large. In this case, the supplier of the goods is highly dependent on the buyer, and large customers will often use the quantity of their purchases as leverage to obtain important price concessions or other favorable conditions. In either case, It will affect the profits of companies that provide goods, and even affect the competitiveness of production companies under certain conditions. (2) Consumer purchases account for a large proportion of all sales in the sales industry, and the products purchased are standardized. Buyers can not only choose producers, but also change product providers at no cost. This situation will often be temporarily alleviated by increasing the cost of sales. (3) The supplying industrial sector includes a large number of smaller producers, and it is more economically cost-effective for buyers to purchase goods from several or several suppliers at the same time, which will induce price wars among producers. . Analysis of factors affecting competition intensity From the above, it can be seen that the main influencing factors of the market are products, competing companies and consumers. Then, the factors that affect the intensity of market competition revolve around these three aspects. It is specifically broken down into the following factors: 1. The intensity of competition increases with the increase in the number of competing companies, and also increases with the proximity of these companies in scale, production and competitiveness. The more companies participating in competition, the less likely it is that one company will attempt to manipulate the market alone and seek special interests; when competing companies are closer in size and capabilities, it is possible and necessary for each company to do so. Compete on a fair and equal footing. A competitive "equilibrium" is thus formed. A typical example is China's motorcycle market: in the years around the early 1990s, Chongqing's motorcycles accounted for half of the market, and high market profits attracted a large number of competitors. In the beginning, these motorcycles New participants pose no threat to the original companies, but with the influx of new companies and the expansion of the scale of entrants, when the average market profit drops significantly, the original companies begin to feel a sense of crisis. 2. Competition generally becomes more intense when product demand is low or demand growth is slow. In an environment of excessive demand or rapid market expansion, competition will be affected or even weakened. This is because each manufacturer has enough buyers and enough business to do. However, when demand is not strong or demand growth is slow, whether it is those companies that expand production scale or those companies that want to maintain sufficient sales volume to maintain their necessary profit levels, they always find ways to compete fiercely for market share. compete. This often results in the elimination of weak, inefficient, and poorly managed companies. Since the 1990s, a large number of television manufacturers, washing machine manufacturers, and air conditioner and VCD manufacturers have been eliminated, all appearing as victims of a market with sluggish demand. 3. If competing companies attempt to use price reductions or other sales strategies to increase the number of sales units, competition will become more intense. When constant costs are high and marginal costs are low, companies are under strong economic pressure. For a time, domestic manufacturers of color TVs and microwave ovens dragged themselves into a sea of ??price wars. And if market demand becomes weak and production capacity utilization begins to decline, competing companies may resort to price cuts, special discounts, rebates, and other strategies to increase sales such as prize sales. This similar situation will be more intense if the economic life cycle of the product is short, or the product is highly seasonal, or the cost of storage is high. In the annual calendar war and mooncake war in China, almost all efforts are made to offer price discounts. 4. If the difference between the products or services of competing companies is not very prominent and it does not cost much for buyers to switch from one brand to another, competition will become fierce. Product brand and service itself are important means for enterprises to compete.

But if the quality of services is comparable and the brand becomes irrelevant, the only way for companies to compete is to find other ways, and competition will become more intense. 5. The retreat of competing enterprises. If a company withdraws from the business, it will pay a greater price than staying and competing, then the market competition will become even more intense. The higher the barriers to exit, the greater the cost of giving up a market, and the greater the pressure and motivation for companies to stay and compete, because this is the best and only thing companies can do. Even though the profits they can earn are low, they sometimes even suffer losses. Those industries with highly specialized production, machinery, equipment, and technical personnel, once dragged into fierce market competition, will have no other way out except a last-ditch fight. 6. The more complex and elusive the competitive landscape becomes, the more diverse and eclectic competing companies become in terms of their strategies, behavioral characteristics, business priorities, resources, and marketing tools. More companies will "go their own way" in the competition and adopt strategies that may cause greater market volatility and uncertainty. In such a competitive state, it is extremely difficult for any company to accurately predict the behavior of its opponents. At the same time, firms will always adapt their competitive strategies and counterstrategies to some extent to their own internal priorities, strengths, weaknesses, and economic capabilities. The more these factors differ among competitors, the greater the likelihood that it will be the "right" strategy for some firms and the "wrong" strategy for another firm. Develop flexible and diverse competitive strategies Based on the above analysis, it can be seen that whether an enterprise can succeed in competition involves the interaction between users, competing enterprises and the competitive strategy of its own enterprise. The company's competitive strategy must also be based on these three. 1. User policy. The first and most important step in competitive strategy is the judgment and analysis of users. Analyze the impact of your products on the competition in the entire industry, what proportion of the products you provide account for the total investment of users, and whether the product's technology dependence is large. If the products you supply account for a large proportion of the user's total investment, have a vital impact on the user's production and reproduction activities, or have a significant impact on the quality of the user's product, then the weight of your bargaining with the user will be heavier. The greater its impact. At the same time, due to the special requirements of technology, it is more difficult or very costly for users to switch suppliers when they change their plans. If an enterprise possesses both of these two advantages, then in the competition, it should use its main force to optimize product performance, improve product quality, reduce product production costs, and provide it to buyers at a price they think is more suitable; in addition , but also need to work hard on stabilizing delivery times, stabilizing and improving after-sales service, and connecting with users' emotions. Of course, the most important thing is to improve the performance of our products and upgrade our products, so that users' needs can increase and our products can be upgraded. This inductive strategy not only strengthens users' dependence on themselves, but also prevents more competitors from joining the market to compete. A company with excellent management always continuously develops its own unique capabilities so that its product identification methods are not easily exploited by others. “Others” here include both competitors and users. 2. Competitor strategies. At any time, two or more producers are competitors in the market. They also have to face the problem of how to enter the market and what kind of competition strategy to formulate. These competitive strategies each have different characteristics, and the differences are quite large. Some companies may adopt a low-price strategy, some will focus on quality, some choose vertical integration, some strive to become a "comprehensive production line" production, and some will prudently limit themselves to a narrower production lines; some may focus their research and development expenditures on cost-saving production process innovations, while others will research and develop new and better-performing products. If a company's strategy is to adopt a low price with the aim of quickly penetrating the market, this strategy itself is very risky: either its costs will be difficult to be compensated, or its profits will be affected, thereby seriously affecting potential for its development. It can be concluded that this company's competitive strategy will be difficult to sustain. If encountering this kind of strategy, as a competitor, the company may respond or not respond at all. For example, "Gao Luhua", which "creates a famous brand that ordinary people can buy", it is difficult to say how far its low-price strategy can go.

"Knowing the enemy and knowing the enemy will ensure you are invincible in a hundred battles." In the competition, enterprises must not only understand the competitive strategies of competing enterprises, but also know other factors of rival enterprises. These factors include: production capacity, equipment technical status, overall quality of employees, corporate culture and other factors. Only by fully understanding a competitor's background can we know whether the strategy adopted by the opponent is a long-term strategy or a short-term behavior. Those "speculative" companies that have neither product advantages nor long-term plans try to attract public attention by seizing the "brand king" in one fell swoop, obtain unexpected gains by maliciously "squatting" the trademark of a famous brand, and rely on overwhelming advertising to deceive consumers. Those who rely on some kind of fanciful so-called "planning" to seek "pie" in the sky. The lifespan of this type of enterprise is about 3 years at most. Therefore, companies do not need to respond or reason with this so-called "competitive strategy". 3. The company’s market positioning and related strategies. Enterprise positioning is first based on the company's market share. According to my country's actual situation and capital concentration, the following divisions can be made: Market dominance - 20% to 30% market share. If the company is in the market leader position, it should mainly focus on optimizing after-sales service and win more users through high-quality after-sales service to achieve steady development of the company; market challenger status - 11% to 19% Market share. Enterprises in the challenger position must put more effort into advertising and marketing channels if the products they produce are standardized and of relatively stable quality; market follower position - 5% to 10% market share. If this type of enterprise is not a new entrant, it may be that it should work more on improving product quality and establishing the social image of the enterprise; the market's supplementary status - a market share of less than 5%. Enterprises in this position should be based on the local area and implement localization strategies. They should not blindly expand the market, but should start from the local market and expand steadily. Secondly, closely related to the market share, the profit level and profitability of the enterprise at that level of market share must also be considered: this is not only a sign of the enterprise's management level and comprehensive quality, but also a potential factor affecting the competitiveness of the enterprise. In short, for an enterprise, no matter what competitive strategy or method it adopts, its purpose is to put itself in such a position: (1) defend and isolate itself from competitive forces as much as possible; (2) choose to adapt to current conditions and Strategies adapted to local conditions influence the direction of competition in one's own favor.