Importance of Competition

Competition leads to lower prices and better quality goods and services which helps improve our daily
lives. In having competition, some businesses will succeed, some will fail. But as long as the market
remains open for the new competition, then prices will stay low and innovation will continue. In
conclusion, either way is a win for consumers.

Benefits of Competition

Competition among businesses plays an essential role in sustaining and nourishing a healthy economy.
When businesses compete with each other, consumers have the ability to choose which one is right for
them. If a certain company sets its prices too high, consumers can simply choose another company that
offers low prices to save money. If a company offers a much better product than the other, then
consumers have the power to choose the better one with the best quality. Competition also benefits
businesses because it pushes them to innovate and run their operations efficiently which results to a
lower expenses and leads to a lower price. Lastly, competition benefits the government. The reason is
because when businesses are competing with each other, it drives economic growth.

Advantages of competition to business

Competition is a one way of strengthening your business because it forces you to innovate continuously
and adopt to your customer’s changing needs. Also, you can learn from your competition’s previous
mistakes through market research since competition provides evidences that there’s market for your
product.

4 Levels of Market Competition

Product Form is a narrow competition; they consider competition with products that are closely the
same just that they come from different brands. This means that it is a competition that includes only
products or services of the same product type.

Product Category is much of a bigger scope than product form. It is a competition with products that
have similar features and provide the same basic function.

Generic Competition includes products and services that fulfills the same customer needs. It is a
competition that incorporates the customer’s notions of substitutability

Budget Competition includes all products and services that compete for the same amount of money. It is
a competition with products and services that are purchased from the same general budget.