Rus News Journal

Clever antidumping

the Companies were exposed and will be exposed to price attacks - in the conditions of a free competition it almost inevitably. How to behave in a similar situation and whether there is more effective means from a dumping of competitors, than reciprocal reduction of prices? In the Russian business there are the examples allowing in the affirmative to answer this question.

the Ural transport company based 10 years ago and occupying 15 % of the local market of long-distance autotransportations of cargoes, has unexpectedly faced a problem of outflow of clients. And on the most profitable direction where till now was considered as the leader, - Chelyabinsk-St.-Petersburg - Petersburg. The reason was that in, apparently, once and for all divided market there was a young and aggressive participant. The firm - the beginner has enticed clients, having offered them the prices for delivery of cargoes in northern capital on 10 - 15 % more low, than at old residents of business.

After two months of such dumping of sale of transport company have fallen to 25 %, and the further succession of events did not foretell anything good. The management emergency meeting has been devoted problem discussion. According to eyewitnesses, it passed extremely emotionally.

the counter-measures Offered during discussion did not differ a variety. For a problem route tariffs suggested to lower to level of zero profitability the majority of participants of meeting and thus to beat the enemy its weapon. However it was not clear, how clients (including from other directions where to reconsider quotations nobody gathered) will react to it. And the main thing how then to restore the status - kvo: hardly customers will like leapfrog with tariffs.

There was one more variant - to mobilise large operators of the market, having convinced competitors that the aggressor has plans and for their account. Association of circulating assets would allow to starve the beginner out while that will not settle the financial resource (that would happen quickly enough as in this case it should work to itself at a loss). But to agree with competitors it was impossible - in the market of a carrier did not love from - for preferences which rendered it local authorities. As a result the company management has not thought up anything better, than to occupy a waiting attitude. So proceeded until any attempts to squeeze out an aggressor from the market have not lost meaning. Some time the beginner kept the dumping prices, and then has raised them on the won direction. By that moment it has already provided itself(himself) with orders for two months forward and even has considerably expanded a motor pool.

Decisions behind a front line
Similar stories occur in many other markets. “ in the bulk the Russian consumer is very sensitive to the price. Therefore dumping wars - the natural phenomenon for domestic business “ - the chairman of board of directors of marketing agency A2Z marketing Andrey Stas speaks. the Defensive doctrine of businessmen which have appeared are involved in price opposition, it is usually reduced to a counter dumping (in this sense inactivity of the Ural carrier not quite typically). The companies do not see the best way to react to aggression of competitors. Subsequently much of them should be sorry about it.

the Adviser - an expert Konstantin Terekhin: Managers of the companies, podvergshiesja to price attacks, speak to themselves: “ If we differ nothing from competitors why then us not to reduce the price? “ however seldom who tries to challenge the first part of a phrase. Sometimes it testifies to incompetence of management, but where more often - about simple misunderstanding of the possibilities. The close point of view and at Andrey Stasja: “ For increase of the competitiveness always it is possible to find additional resources besides the price. I do not have doubts that any business can be improved “.

how to avoid price collisions or truly to choose behaviour strategy in already untied war, it is written in books of some western authors, since Peter Drukera and Filipa Kotler. But further the others have in this respect promoted Jack Traut and Steve Rivkin, offered an accurate technique of asymmetric actions in reply to a dumping.

As behind the stone price
It is possible to reject pressure of an aggressor, having convinced clients that they, buying your goods at higher price, do not overpay, and even save. This model is more characteristic for the mature western market with high consumer culture, marketing abundance and aspiration of businessmen though in something to differ from each other. But examples of such strategy already meet and in Russia. Firm on manufacture and sale of cases - compartment Mr. Doors, without changing the prices, could keep the share in the market where cross dumping attacks became the ordinary phenomenon. How it was possible to it?

In the beginning of 2000 company Mr. Doors has undertaken a step which did not have precedent in the market. She declared granting of a termless guarantee on the built in furniture of the mark. Andrey Mudryj, the assistant to general director Mr. Doors on regional sales:“ In our business a sharp price competition. Naturally, it is reflected and on a margin - it constantly falls. The strategic problem of our company consisted in keeping positive dynamics of sales in all possible ways except for one - price. We have analysed the market and have seen that our competitors year from a year increase a warranty period. At first it made half a year, then - year. By the end of 1999 the most advanced companies declared an order of 30 months of a guarantee. The tendency was well traced, and we have decided to stake out behind ourselves “ edge “. Later we have conducted research and were definitively convinced that consumers are ready to pay generously for durability of furniture, including this quality in one of the most important ”. (By the way, unlimited on time service term meets and in other markets - we will tell, import conditioners.)

For realisation of project Mr. Doors the statistics of repair of the products was required. The analysis has shown that 45 % of breakages result from misuse, that is because of the consumer. 7 more - 8 % of cases - compartments become unfit for use for the objective reasons independent of the manufacturer - for example, from - for deformations of walls indoors. Thus, warranty service Mr. Doors carries out less than in half of cases - only when the breakage reason is poor quality of manufacture of a product, its installation or accessories. But occurrence of technical problems in this case is improbable. The company furniture gathers for 100 % from import accessories (at competitors Mr. Doors the share of details from foreign suppliers on the average does not exceed 40 %).

However from set of the Russian manufacturers of cases - a compartment to example Mr. Doors so anybody also has not followed. Besides the technical reasons, Andrey Mudryj explains it a poor development of regional communications at the competitors who do not have uniform standards of work in all territory of the country. “ to declare a termless guarantee it is theoretically possible and in the local market, but the federal resonance gives incomparably bolshy effect. We always carried out active regional to the policy and closely worked with partners on places, today their sales make about 40 % of the gross revenue of the company “. In the first year only seven firms from approximately 150 regional partners Mr. Doors have agreed to give to clients a termless guarantee, now it is given already by 50 % of suppliers, and by the end of this year their number is planned to finish to 80 %.

In spite of the fact that built in furniture Mr. Doors on - former the most expensive in the market (in some regions it is almost twice more expensive than similar production), in the company any more are not afraid to lose clients as a result of a dumping of competitors.

Under cover
Price war is not terrible also to the one who has exclusive competitive advantage, which hardly or too expensive skopirovatostalnym to participants of the market. It can be an innovation in manufacture, original design of a product or an unsurpassed degree of service. To ekskljuzivnosti as the potential source of superprofits can consider aspiration as natural motive of any normal company - a question only in that, advantage was how much able will be used in competitive struggle and whether it is reliable is protected from duplicating.

rather elegant though and not quite market, it is possible to consider actions of company Sisco Systems conducting the world manufacturer of the equipment for the Internet - providers which couple of years has faced a dumping in the Russian market back. Our country was chosen by foreign manufacturers of cheap analogues of the technics delivered Ρisco Systems.

the Price at unexpected competitors was almost twice more low. In these conditions Ρisco Systems could lower the price even more low - with its turns it was simple to make it. However, according to Council of Federation, the company has not allowed to involve itself in price war. Having got of support of the State customs committee of the Russian Federation (for which, by the way, it together with the Russian partner just at that time built a multiservice network), Ρisco Systems has dispatched on all control posts the catalogues with instructions of the minimum cost of the similar equipment. The customs duties are in most cases raised from goods contract price, and the State Customs Committee has obliged the inspectors to be guided at its definition by firm catalogue Ρisco Systems. If earlier substitute manufacturers underestimated contract cost of the goods, and customs officers could not understand it the firm price threshold of penetration on the market has been henceforth established. Thus the company has successfully blocked the channel of cheap plagiarism and has prevented a price collapse in the market. However, in the Moscow representation Sisco Systems this fact do not confirm.

Masking
the price competition accepts Sharp forms only under a condition when both the consumer, and the supplier well is guided in the prices. But if “ to obscure “ in the a price - sheets, it is possible to remove excessive stress in relations with competitors. Also it is one more model of a solution of a problem.

the Mammal among dinosaurs
to Press competitors in the mature market it is possible not only and not so much the price. Sometimes to make it it is possible to the beginner, observers estimated chances of which success as close to zero.

the Company “ Sonik Duo “ has entered the capital market of cellular communication in 2001. Network occurrence “ the Megaphone “ Under forecasts of analysts, should provoke the next coil of price war which with variable success conducted “ Vympelcom “ and MTS. But the operator, contrary to expectations, has established tariffs for the services at a price level of competitors. Business “ Sonik Duo “ in the Moscow region began with 250 base stations, meanwhile for a qualitative covering of capital and the nearest Moscow suburbs 700 stations (for example, at " are necessary at least; Vympelcom “ them nearby 1800). In such conditions it was extremely inconvenient to involve clients, besides leaders of the market had technical and financial advantages before the beginner. But “ Sonik Duo “ has coped with a problem.

Instead of cheap mobile communication the company has decided to advance a complex of not vocal services, in it the main strategy of its occurrence on the competitive market consisted. For a monthly fee “ the Megaphone “ Has offered users a wide service set - from a determinant of number and SΜS - a directory to a game content and services MMS (this technology allows to send and receive a drawing, video - and the audioinformation). For last year of expenses of 12 % of capital subscribers of a network it was necessary on not vocal services (that not much less, than at leading international operators - 18 %).

the Commercial director “ Sonik Duo “ Eldar Razroev: “ that we have entered the market the last, has appeared not a minus, and even advantage. The cellular industry just endured innovative boom, and we as the young company which has been not burdened by cargo of the out-of-date equipment, have appeared on a first line of technologies “. “ I then have heard successful comparison: a mammal in the world of dinosaurs, - the adviser of the president ` remembers Sonik Duo ` the Novel of Punctures. - Really, by means of more perfect technologies we mastered vital space which was filled with huge pangolins “.

Today, by data “ Sonik Duo “ its share in a gain of subscribers in the Moscow region makes 15 - 20 %, by the end of 2003 in the company expect to leave on 30 % (last summer this indicator did not exceed 5 %).

the Expert on PR the companies “ Vympelcom “ Artem Minaev: “ Conversations on war of tariffs in the cellular market are irrelevant for a long time. ` the Vympelcom ` was and remains the company with a strongly pronounced innovative and service orientation, as though it was challenged by our competitors. We the first have offered in market MMS, only did not raise for it a payment, not so long ago have started WLAN (wireless access to network resources with high speed and protection degree. - Council of Federation). So a question on technological leadership in our business - at least disputable “. “ to Judge overall performance of the operator it is possible only on its financial indicators, - considers a press - the secretary of the company of MTS Eve Prokofiev. - however unlike us ` ` not the public company and the similar information does not open Sonik Duo “.

do not let to the client of possibility know that your price more low or above, than at the competitor - and is high probability that your profitability will not suffer. According to Konstantin Terekhin, in Russia an embodiment of such approach is the tariff policy of two leading cellular operators - “ Mobile Telesystems “ and “ Vympelcom “: “ Many difficult tariff plans of these companies are easy to get confused. As a result the potential subscriber cannot tell that tariff A of the company In unequivocal is more favourable than the offer of its competitor With where there are additional functions D and E, but access to service F manages hardly more expensively. It is made absolutely meaningly, the qualified experts in marketing to avoid a front competition of the companies with each other and sorientirovat the client not so much on a price choice, how many on a communication quality, service and image of the operator “.

However, according to the commercial director of the company “ Sonik Duo “ (“ the Megaphone “) Eldara Razroeva, such scheme cannot long work:“ Really, Russian market suffers from low consumer culture, but the mobile communication sector here is not indicative. The subscriber in the majority understands, how many and for what he would like to pay, and navorachivaniem difficult multirunning tariffs you can frighten off only it ”. In “ Vympelcom “ however, assert that now when price wars in the cellular communication market have departed in the past, the company tries to simplify the grid, resulting tariffs “ to the general denominator “.

there is no place to Recede
Probably, someone will have an impression that any of described above ways does not approach it: say, all strengths which could justify higher price, are and at competitors, be differentiated on their background very hard. To such managers Konstantin Terekhin recommends not to lower at all a hand and to struggle for the client, patiently improving business - processes. When there is no more original way, it is a reliable way to hold the fort. Otherwise the company waits either ruin, or a serious damage, a placentastvija which can unsettle it for a long time. It has occurred to two largest distributors of elite alcohol in Kemerovo which have some years ago launched price war with each other and hardly have not lost business.

“ the Market in region has been limited - in the sense that among consumers of elite alcohol persons of a sports exterior and a doubtful origin of incomes prevailed. And the companies aspired to expand the business and to involve less the population well-to-do “ - Andrey Stas remembers; at that time it worked in one of the Moscow companies, were the supplier for both Kemerovo distributors.

All occurred under the standard scenario: at first one firm has reduced the price, then - another. During opposition shops have appeared are overstocked with goods by the drinks of prestigious marks which were becoming cheaper with each month. The initial purpose - to increase volume of deliveries - has been reached: The goods well dispersed. However the Kemerovo dealers have so lowered the profitableness that have faced deficiency of circulating assets for new purchases. As a result within a year consumers could not buy elite alcohol even at the old price - approximately so much time from the businessmen exhausted with price war, has left on correcting the financial position.

“ the Error was to lower the price for alcoholic brands which basically should not cost not much. But it was even less reasonable to try to outdo in it the competitor “ - mister Stas is assured. In its opinion, with that situation could help kartelnoe the agreement (the Council of Federation #7 for 2002 see ) . And in case attempts it to conclude in what have not resulted, there was a prosy plan “ “: to resist to a dumping at the expense of servicing improvement of quality - deliveries, services in maintenance of a commodity stock, rendering of advertising support, payment concessionary terms, first of all payment delays. Andrey Stas: “I Assure you if the client has a choice between the low price and possibility not to pay at once, he will choose the last is always allows the company with bolshej efficiency to operate own finance. Besides, services of such order, as a rule, are important for the qualitative, target consumer. Whereas the low price involves weight of casual clients which, probably, and give short-term splash in sales, but further do not provide stable development of the company”.

Oleg Berezhnoj, the director for newspaper distribution “ Sports - the express train “ And the owner of wholesale company on periodical press sale “ Kardos “ considers that in long price wars in its market the most far-sighted was to keep a price neutrality and to work over the reputation. Those who has selected similar tactics, in today`s rather stable market are in advantageous position.

Still recently many large publishers of periodicals pursued a policy of exclusive sales and gave to separate wholesalers special conditions - discounts, remission, delays of payment and etc. “ in what good it did not result, - the mister Careful tells. - the companies possessing such advantage, frequently used it to win to themselves an occasional seat under the sun “. As a result of price aggression the market started to be in a fever, retail sellers ran from one supplier to another, the sizes of circulations is unpredictable changed.

Oleg Berezhnoj believes that in such conditions at the company which did not have privileges from editions, was two ways: or to leave business, or to keep clients (retail dealers) by all available means - excellent job on packaging and ekspedirovaniju the goods, services in the analysis of sales. “ especially in our business efficiency is appreciated, - the mister Careful speaks. - to take, for example, the leader of sales, magazine ` Seven days `. The prize in delivery of fresh circulation of this edition in any half an hour gives an essential gain of turns. Ask any lotochnika, and he will tell that many buyers at first are interested in future issue ` Seven days `, and only then, in addition, - all other press “.

the Minimum of victims
the Experts who have given to Council of Federation the comments, are uniform in opinion: - the last that it is possible to make reduction of price in the war which participants have settled all resources of struggle for the client. But if anything else does not remain to operate better so that nobody could suspect the company of weakness. With that end in view it is possible:
- to reduce the prices first of all for those categories of the goods which it is a lot of in a warehouse or at them expires working life (on it, by the way, willingly go many companies and in “ peace “ time);
- to make so that discounts were perceived as for a long time the planned action which has temporary restrictions and concrete motivation (we will tell, seasonal sale or promo - the action). Reduction of price should look as a step towards to the client, and it is important, that he has felt it.

“ At first signs of stabilisation of the market do not hesitate and under any pretext return the prices to former level, - Konstantin Terekhin advises. - And if price attacks repeat, hundred times think before again to copy prices. Someone from classics has told: ` each difficult situation has a simple and obvious decision, in most cases incorrect `. The dumping is a primitive, cave way of a gain of the market and even if any savage persistently provokes you to price actions, try to remain the civilised company “.