What is the danger of price dumping for the market and methods to combat it

Prohibited price reduction

Dumping is a concept familiar to every entrepreneur, and it means selling goods at a deliberately low cost. It is done most often to attract new customers, win a larger market share, and eliminate competitors. In Ukraine and in the world dumping is considered an unfair competition which has a number of negative consequences for the market.

How dangerous is price dumping for the market?

There will be different consequences of artificial price dumping. It mainly depends on the chosen strategy of the company, which was seen as a violation, the reaction of state authorities and competing companies, as well as the extent to which this marketing campaign was conducted.

  • Obstruction of the economic growth of the company. A general decline in value in the marketplace leads to a drop in the profitability of the business and a maximum decrease in its profitability.
  • A decrease in the price tag, and therefore in the margins of merchandise items. This directly leads to a decrease in individual store profits.
  • Complete collapse of an entire industry. Constant dumping of market leaders (dealers who control 60 % and more of turnover) can lead to it.

Do you want to keep a constantly high level of income and turnover? Control of dumping in the market is a must in this matter!
Methods to combat artificially low prices

Have you identified a player who is systematically violating the rules of the RMC? Solutions, in this case, can be the following:

  1. Complaint to the supplier. Dumping is an act that no manufacturer can condone! And if there is a systematic violation, the dealer may simply be denied service and supplies.
  2. Expecting a collapse. Sooner or later your competitor is sure to fold by constantly dumping. But stick to this strategy only when you are sure of your customers and your position in the market.
  3. Move into a higher price segment. Carry out a marketing campaign, refine the product offered externally, add functionality - create a unique product.
  4. Conclude a partnership agreement with a competitor. A "non-aggression" agreement is also a good option, but the relevance of this method is noted only in low-competitive markets.

Most often the situation with prices below the MRTs can be resolved by contacting the supplier's representative.

Helecos is a fully automated system that searches for dumping companies and provides you with a comprehensive report on prices, promotions, and offered discounts. To get a trial version of the service or to learn more about it please call +38(073) 072 1221 or email [email protected].

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