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Every business operates within a competitive environment. Understanding competition is essential for making strategic decisions about pricing, product development, and marketing. This lesson explores how businesses compete, the different types of competition, and the impact of competition on businesses and consumers.
Competition occurs when two or more businesses sell similar products or services to the same group of customers. Competition forces businesses to improve their offerings and provide value to customers.
| Term | Definition |
|---|---|
| Competition | Rivalry between businesses selling similar products to the same customers |
| Competitive advantage | A feature or strategy that makes a business more attractive to customers than its rivals |
| Market share | The percentage of total sales in a market held by one business |
| Unique selling point (USP) | A feature that makes a product different from and better than competitors' products |
| Price war | When competing businesses repeatedly lower prices to attract customers |
Competition benefits both consumers and the economy:
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