Increased Competition in the Marketplace Essay Examples & Outline
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Increased Competition in the Marketplace
A profitable business is bound to attract competition in form of interested investors that seek a share of the profit that the market provides to the customers. In order for the business to survive it has to deal with competition in the expeditious manner and come up with the best solution that will make it the best choice among the market. Increased competition means that there is more in supply while there might not be any change in the demand (Kotler, 2000). Competition is viable for the customer since he or she has a variety of products from which to select (Czinkota & Kotabe, 2001).
He is also guaranteed that there will be an increase in the quality of the product. On the other hand, the competition may decide on unscrupulous business practices in order to capture the attention of the customers. They may lead to the development of policies and advertisements that are misleading and hyped such that the customer is the loser (Winer, 2004). From the management perspective, increased competition is a headache since they have to safeguard their market and work harder to move into the new markets. This paper will present an argument proposing that the increased competition in the market place is a disadvantageous predicament (Budzinski, 2004).
To the stockholder, the increased completion is a threat to their dividend payout since the competition will affect the profitability of the organization. Being able to deal with the issue of competition is therefore and interest for the management and owners of the company. Competition affects the profitability through price wars that hurt the prospects of the stockholders gaining any profits and the management attaining their targets. Any time a new entrant comes in the market, there is a chance that the company will lose out some of the customers to the new player. Strategies have to be put in place to deal with the issue of increased competition (Pride & Ferrell, 2008).
Increased competition is a problem since it affects the cost of the product offering. The new entrants will seek to attain their economic profitability by selling the product at a higher price compared to the standard one. They may increase the cost of the product or the perception of the product by creating misleading adverts that create the perception in the minds of the consumers that the product is better than the others in the market. Eventually, the products, which are essentially the same, end up being sold at a higher price compared to the initial players (Sheehan, 2011). The additional frills end up making the product less affordable for the consumer. In the worst case scenario, it may lead to a substitution effect whereby the high prices for the products will drive the customers to the other products.
Increased competition may lead to the reduction of the quality of the products. Quality is often costly and since the companies are focusing on the sales volume, they may neglect the quality of the products offering such that the consumer ends up paying for a product that is substandard. Quality issues may affect the enjoyment of the service of the product. Quality issues also have an ethical perspective whereby some of the businesses may bend some of the rules in the industry in order for them to break even. Therefore, competition is an undesirable outcome that often hurts the customer more than it adds value to him.
Budzinski, O. (2004). The international competition network: prospects and limits on the road towards international competition governance. Competition & Change, 8(3), 223-242.
Czinkota, M., & Kotabe, M. (2001). Marketing management. Cincinnati: South-Western College Pub.
Kotler, P. (2000). Marketing management. Upper Saddle River, N.J.: Prentice Hall.
Pride, W., & Ferrell, O. (2008). Marketing. Boston: Houghton Mifflin Co.