Whether to include his other brands in it, or to expand the boundaries of the market to include all interchangeable goods - these are the questions that the antimonopoly services of all countries have to decide.

Of course, in reality one should not approach defining the boundaries of the market for a particular product so frivolously. No approximate (as in our answer) assumptions are acceptable here, because they are fraught with financial losses. When determining the boundaries of the market, any assumption must be followed by an accurate marketing calculation, but more on that later. In the meantime, it is proposed to remember once and for all that if you work in the market (produce or import in order to sell), you need to know the boundaries of your market. And the approach in general should be similar to that described above. But at the same time, we repeat once again, if you started with an assumption about the possible boundaries of the market, then there must be an accurate and balanced calculation. Marketing is an exact science.

Determining the boundaries of the market is identifying the product category within which the TM actually competes. Market division - a product category can be divided into certain sectors (submarkets) that approximately correspond to the true TM market.

The fourth mistake is to incorrectly define the boundaries of the market. A technological breakthrough can dramatically change these boundaries and make a product attractive to many new consumers.

Section 4 should indicate the boundaries of the market. They are determined not only by its geography, but also by the characteristics of the use of products. When determining the market boundary, the significance of the market segment and the intensity of competition are taken into account.

The critical issue in this case was whether ABM had monopoly power in the relevant market or not. The government, while claiming that there was a monopoly, interpreted the market narrowly as including only large computers, thereby defining ABM's share of the market as high. The firm itself, on the contrary, argued that the relevant market also included software and peripheral devices. And since ABM's share of this expanded market was noticeably smaller, it was much more difficult to prove the existence of monopoly power. The problem of defining the boundaries of a market is important in many cases brought over violations of Section 2 of the Sherman Act. (Another example is given in Box 11-1.) Discerning economists may often disagree with the best definition of a market if a significant portion of the products comprising it , can be replaced by others under certain conditions. For example, there is no doubt that people sometimes prefer to do arithmetic with a pencil rather than with a mainframe computer - but do pencils and mainframe computers really belong in the same market? What about mainframe computers and personal computers

In turn, here it is necessary to recall the numerous shortcomings of the register of monopolists, associated primarily with inadequate definition of market boundaries, which allows many firms to be unreasonably included in the register.

Determination of market boundaries, subject of analysis

Correct determination of the geographical boundaries of the market plays a big role in the formation of the enterprise's market strategy, taking into account the possible actions of its main real and potential competitors. From the point of view of antitrust policy, clarifying the geographical boundaries of the market for a particular product or product group is essential for determining the relevant market and the subsequent application of antitrust sanctions.

In fact, this kind of action is only possible if there really are market prices for intermediate products of individual technological stages. In addition, it is not recommended to allow the head of a spinning production, pushed by the established payment scheme, to create his own sales service based on the possibility of more profitable sales of his products externally than to his own weaving production. Or, on the contrary, the weaving industry creates a purchasing service in order to be able to purchase yarn at lower prices than from its own spinning production. In order to counteract such trends, individual technological production facilities must negotiate the settlement prices between them, depending on their market position and capacity utilization situation. Moreover, it is advisable to set certain price limits, as is customary in the system of international exchange rates. Exceeding the established limits will require controller intervention.

Market share is an indicator that characterizes, as a percentage, the place of a given company in the market for a particular product or service. For the purpose of further specification, the geographical boundaries of the market are often clarified. For example, analytics may be of interest

True, the Russian Antimonopoly Committee makes a reservation: in conditions of imbalance of supply and demand in the market, calculations of cross-elasticity coefficients in some cases may lead to distorted results and recommends resorting to more accessible and less labor-intensive methods for assessing the interchangeability of goods - expert assessments, interviews with consumers and specialists or other industry. The choice depends on the specific market situation and the level of awareness of the specialists conducting the analysis. This is recorded in the Methodological Recommendations for determining the boundaries and volumes of commodity markets (Appendix No. 1 to the order of the State Committee of the Russian Federation on Antimonopoly Policy and Support of New Economic Structures dated October 26, 1993 No. 112).

The company may not pay attention to competitors. However, knowledge of competitors, their products and methods of operating in the market can help improve the competitiveness of the enterprise even with small changes in operation. Competition is present in almost all areas of activity; this is the most obvious factor in the external environment of an enterprise. But despite its obviousness, this is the least studied factor. The importance of monitoring the activities of competitors is determined by the fact that this is, in a sense, a mirror image of the enterprise’s own activities. Competitor analysis is necessary to determine the boundaries within which the strategic advancement of competitors is possible, as well as to assess the possible reaction and strategic potential of competitors. Carrying out such an analysis is associated with the processing of extensive information that needs to be obtained, summarized and based on it, appropriate conclusions can be drawn. Naturally, creating a system for studying competitors requires considerable investment.

Another way to plot the "outer boundaries" of the market is to use a moving average envelope. Moving average, as discussed in the previous chapter of the Problem Book, displays the average price over a certain period of time. The moving average envelope is formed by lines drawn above and below the moving average, offset by a certain percentage.

Clashes between employers and trade unions can at times, especially in poor economic conditions, be violent. The strike struggle sometimes reaches such a high intensity that it can even paralyze the entire economic life. It is no coincidence that in many countries the state interferes in relations between businessmen and workers and their trade unions. The result is a kind of triangle. It interacts with unions of entrepreneurs, trade unions and the state, which thereby regulates many aspects of labor relations and wages. This regulation affects the amplitude (scope) of fluctuations to which the amount of wages is subject to, depending on a number of circumstances. The maximum limit of remuneration for labor is determined by the upper limit of the cost of labor, increased demand for workers in a certain profession and a certain monopolization of the market by the trade union of workers. The minimum limit is formed taking into account the lower limit of the cost of labor, as a result of the increased supply of labor and the formation of a monopsony on the part of employers.

After a more than three-fold devaluation of the ruble in the fall of 1998, the Bank of Russia decided to seriously adjust its foreign exchange policy in the context of a deep financial and economic crisis in the country. He began to pursue his policy in a floating exchange rate regime without defining the limits of its deviations. At the same time, using the appropriate instruments of monetary and exchange rate policy, he sought to smooth out the amplitude of sharp exchange rate fluctuations of the ruble against the dollar, depending on the demand and supply of currency in the market. At the same time, the effectiveness of the Bank of Russia’s actions in this direction was determined by the level of its gold and foreign exchange reserves (in 1998 they decreased by 31.3%, or from $17.784 billion as of January 1, 1998 to $12.223 billion as of as of 01/01/99), as well as the state’s ability to negotiate with external creditors on its debts.

Approve the attached methodology for determining the turnover and boundaries of the financial services market of financial organizations.

Three types of coexistence occur. First, coexistence may arise as a result of firms failing to recognize their competitors due to the difficulty of defining market boundaries. For example, a fountain pen manufacturer may not respond to competition from jewelry companies because the definition of competitors may be based on the product rather than the market (in this case, the gift market). Secondly, firms may not recognize as competitors other companies that, from their point of view, operate in a different market segment. For example, Waterman does not seem to pay attention to

It is best to start segmenting by establishing general market boundaries, or adjusting them if they have already been established. Information obtained through a global analysis of the company’s external environment and its SWOT analysis will help in solving this problem. They will allow the company to create an information base for more or less accurately identifying the boundaries of the market within which it can engage in business activities with an acceptable degree of risk and an acceptable level of income. The designation of market boundaries can be precise or approximate. The degree of accuracy here is obviously determined by the consumer properties of the product, some market characteristics, and the specific needs and requirements of buyers. So, in particular, if we are talking about the market for collection services (from the perspective of the collection service and some security structures that are also involved in collection), then the boundaries of this market can be determined quite accurately, since it is not difficult to list the number of potential clients for collection in a given territory and allocate your market share in their structure. It is much more difficult to define the boundaries of the market for consumer goods, for example, toothpaste. What, besides territorial characteristics, should be taken as a criterion for determining the boundaries of the market for such products?

Obviously, any definition of the banking market can be a compromise, provided that banks can simultaneously compete in regional, national and international markets. As a compromise, most economists studying banking markets use the concept of a primary service area. By this, economists mean a geographic area that covers a significant portion of buyers and sellers of banking services. For example, if the majority, say 75%, of bank loans are made within the official boundaries of a city, then that city can be said to be the bank's core service area, and economists view that bank as competing in the capital market with other banks, the bulk of whose customers also is located in the city.

Some traders take advantage of price fluctuations within "

The uncertainty of the concept of industry in the second approach poses the problem of determining the boundaries of the industry. Defining the boundaries of an industry essentially means identifying the enterprises that are part of a given industry. The following types of market boundaries are distinguished:

1. Product market boundaries

From the definition of the industry it follows that the main factor defining the boundaries of the industry is product . In marketing, a product is understood as everything that can satisfy a need /Kotler/. However, products that satisfy the same need can be either completely identical, or similar in basic characteristics, or significantly different. For example, if a person feels thirsty, then he can drink water or milk, or beer - and these are all different goods and different industries, despite the fact that enterprises in these industries will compete with each other (inter-industry competition). At the same time, milk will differ in fat content, packaging appearance, producers and other parameters - that is, all milk producers will compete with each other (intra-industry competition).

Therefore, it is correct to speak not just about a product as a factor that determines the boundaries of an industry, but about a product group. Product group may include either completely identical goods, or differentiated goods, or goods that do not have close substitutes /Andreev/ (see Table 3).

Table 3

The relationship between the composition of the product group, the type of market and the composition of the industry

Products that are close substitutes are usually considered within a separate industry, as a separate product group.

2. Industry price limits

The essence of the action of price boundaries is that at a certain price ratio, substitute goods, considered as different industry markets, can be part of one industry market, which can be explained by the example of the Guterenberg curve (see Fig. 3).

The Guterenberg curve suggests that the demand curve for goods that have substitutes does not have a classic downward slope, but a broken one. At the same time, three sections with different elasticities can be distinguished on the demand curve: sections of the curve SA And ВD, more elastic than the plot AB. What does this mean?

Suppose: there are two substitute goods on the market, in Fig. Figure 3 shows the demand curve for one of them. On a section of the curve AB demand is inelastic, which means some change in price (ranging from P 1 before R 2) will not cause a significant change in sales volume. This is explained by the high commitment of buyers to the product due to giving it distinctive features, unique properties, or for some other reasons. Therefore, the product and the substitute product are considered as different industry markets. But if the price drops below R 2, then many buyers will refuse to purchase a substitute product in favor of a cheaper, but higher quality and more prestigious product. As a result, substitute products will become part of the same industry.

However, the price increase is higher P 1 will cause a significant decrease in sales volume, since the company will lose a significant part of customers who will refuse to purchase a product with unique properties in favor of a simpler and cheaper substitute product. As a result, substitute products can be considered within the same industry.

The only problem is determining the price range at which the composition of the industry may change. As a rule, the price range is determined as a result of marketing research or expert analysis. The criterion for selecting the price level at which the composition of the industry may change is the change in the cross-price elasticity of demand between two goods (Ed overlap):

Where D Q 2,% - change in demand for the second product, %;

DP 1,% - change in the price of the first product, %.

If E d cross has a positive value, then the goods in question are substitutes. If at the same time meaning elasticity of demand for a company's product E d < 1, то товар находится на отрезке АВ и занимает с товаром-заменителем разные рыночные ниши; если значение elasticity of demand for the enterprise's product will increase, then the product will “cross” the borders P 1 And R 2 and will become part of the substitute product industry. If E d cross has a negative value, then the goods in question are not substitutes, most likely they are goods that complement each other.

3. Geographical boundaries of the market

Depending on which geographic markets are taken into account when defining industry boundaries, both the composition and structure of the industry will change. In theory, there are:

1. Local market is a market for goods at a specific place of sale;

2. Local market is a market in a specific locality;

3. Regional market;

4. Domestic market;

5. International market.

4. Market time boundaries

Temporary market boundaries suggest that over time, the composition and structure of an industry may change due to unequal growth rates of various enterprises in industries, the entry of new competitors into the market and the departure of old competitors from the market, the appearance of new products on the market and the departure of old products from the market, and etc.

Under industry refers to a set of sellers offering customers a product intended to satisfy the same need in the same way //. Based on this definition, the following differences from the first definition can be noted.

Firstly, the main thing is not only to produce products, but to sell them, that is, the structure of the industry will be determined not by production volumes, but by sales volumes.

Secondly, this approach does not take into account either the method of production of the product or the materials used; only the product itself, intended to satisfy the need, is important here. So, if a metal chair, a soft chair, a plastic chair, from the point of view of the first approach to the concept of industry, I would distinguish three industries (metalworking, chemical industry and furniture industry), then in the second case all enterprises offering chairs on the market are part of one industries compete with each other for buyers.

Thirdly, if a manufacturing enterprise simultaneously offers goods to customers through a direct sales system and through a system of intermediaries, then in this case they will be competitors in the same market segments, which requires a more strict approach to the development of distribution channels.

In general, it can be noted that this concept of “industry” in Russian anti-monopoly legislation corresponds to the concept of “product market”.

Market is the basic concept of economic analysis of the behavior of business entities. Market- is a system of relations in which the connections between buyers and sellers are so free that prices for the same product tend to quickly equalize. Market- is a collection of buyers and sellers whose interactions ultimately lead to the possibility of exchange. The market simultaneously reflects the conditions of both supply and demand. The classification of markets is presented in Figure 3.1.

Figure 3.1. – Classification of markets

The definition of a specific market is related to the purpose and methodology of the study. First of all, it is necessary to determine the boundaries of the market. Usually in the scientific literature the following are distinguished: border types: product boundaries, reflecting the ability of goods to replace each other in consumption, temporary boundaries, local boundaries. The breadth or narrowness of the boundaries depends, firstly, on the characteristics of the product, and secondly, on the purposes of the analysis. Thus, for durable goods, the time boundaries of the market will be much wider and less defined than for goods of current consumption. For consumer goods, a larger number of product items will belong to one market than for industrial and technical goods. Determining the local boundaries of the market depends on the intensity of competition between sellers on the national or global market, firstly, and on the height of the barriers to entry into the regional market of “external” sellers, secondly.

One of the difficult questions is the question of the relationship between the market and the industry. An industry is a collection of enterprises that produce similar products using similar technologies and resources. The differences between a market and an industry are based on the fact that the market is united by the need it satisfies, and the industry is united by the nature of the technologies used. The identification of the industry and the market is unacceptable, since the goods sold by enterprises in the industry may be more or less close substitutes, but they may also be completely independent goods.

When it comes to industry market, refers to a set of enterprises in a sub-industry, united by the production of replaceable products that compete with each other in the sale of these products.

D. Robinson proposed the following definition of the market, which is used with slight variations by the antimonopoly committees of many countries. Market includes a homogeneous product and its substitutes until a sharp break is found in the chain of product substitutes. The degree of substitution (substitution) is characterized by the cross-price elasticity of demand indicator. As soon as the cross elasticity becomes less than a certain specified value, we can talk about a break in the chain of commodity substitutes, and therefore about the market boundary. By specifying different values ​​of cross price elasticity, it is possible to obtain different market sizes.

Other criteria are also used to determine market boundaries:

· Index changes in revenue when prices change. If the price of product A has increased and revenue has also increased, then the market is limited only by product A. If revenue has decreased (the additional profit of producers is negative, or at least non-positive), then, therefore, there is a close substitute, product B. Therefore, it is incorrect to talk about market for product A.

· Correlation of commodity prices over time. A positive correlation between the movement of prices of goods over a long period of time (5-10 years) indicates that the goods are stable substitutes, that is, they constitute one market. This criterion is based on the concept of cross price elasticity for goods.

· Geographical limitation of the market. As a criterion for different territories to belong to the same geographic market, the same conditions of competition are identified, such as the interconnectedness of demand, the presence of customs barriers, national (local) preferences, differences (significant/insignificant) in prices, transport costs, substitutability of supply.

Types of Market Structures

Each of the market characteristics influences the parameters of its functioning in its own way. The totality of market characteristics determines its structure or market type.

Under market structure understand the totality of elements that determine the functioning of the market; this includes the number of companies operating in the market and competing with each other, the relative size of these companies (concentration), technological and cost indicators, demand conditions, supply conditions, as well as the degree of openness of the market for the entry of new companies into it or the departure of existing participants .

The factors that determine the market structure are presented in Figure 3.2.

Figure 3.2 – Factors determining market structure

The terms used to denote different types of market structure are derived from words of Greek origin, characterizing the belonging of subjects to one of the two sides of the market - sellers or buyers: poleo (sell) and psoneo (buy). The number of both on the market of goods can be different: mono - one, oligos - several and poly - many. By combining them in pairs, you can obtain the most general and simple classification of types of market structure (Table 3.1).

Table 3.1. Types of market structure according to Stackelberg.

Presented in table. 3.1. classification proposed by the German economist Stackelberg, who made a significant contribution to the theory of oligopoly.

When considering sectoral market structures, the emphasis, as a rule, is on product markets, so the main attention should be paid to the market types presented in the first row of Table 3.1 - two-way polypoly in the forms of perfect and monopolistic competition, oligopoly and monopoly. These three types of markets differ in the number of sellers (many, several, one).

Using a classification based on two parameters: the number of sellers and the nature of the product, we obtain the six most important types of sellers' markets, as presented in Table 3.2.

Table 3.2. Basic types of seller's market structures according to F. Scherer, D. Ross

Pure monopolists, oligopolists and monopolistic competitors have common features: each is aware that his “decision to produce a product significantly affects the price, i.e. everyone can increase the quantity of products sold under given demand parameters only by reducing the price of their products. All three types of market structures are characterized by a certain level of influence on prices, so they have monopoly or market power. The disadvantage of this approach is that the differences between product homogeneity and differentiation in this classification are based on a comparison of consumer opinions about the degree of substitutability of products.

Market structure is an external manifestation of deep processes at the level of enterprises and the industry as a whole. Therefore, it is necessary to consider these basic processes, namely, processes of cost formation and dynamics, determining the structure of the market.

Markets and economies of scale

Industry cost curves and industry supply

The nature of the industry's supply in the long term has a particular influence on the structure of the industry. If the supply of an individual firm and the industry as a whole in the short run is determined based on the marginal cost curve, then the long-run supply is determined based on the long-term average cost of the industry. This is due to the fact that in the long run it is possible to change the scale of production. If there is technological non-optimality of production, then, as follows from "method of survival" in the long run, the scale of production increases (decreases), therefore, in the long run, the supply curve of each firm is defined as the set of technological optimum points at which AC = MC, for different scales of production.

We can distinguish seven types of dependence of average costs in the long run on production volume.

"Ricardian" rising costs take place in industries for which there is a strict limitation on the key resource. A theoretical description of costs of this type was given at one time by D. Ricardo in his theory of rent. The specificity of the industry is that the key resource is strictly limited, and its supply does not change in the long term. Extensive growth due to increased use of resources is fundamentally impossible for such an industry. In this situation, production growth will be achieved only through more intensive use of the resource, which is limited.

Suppose there is an increase in demand for industry products, which can be represented as a shift in the demand curve from position D 1 to position D 2, which leads to an increase in price from the level P 1 to level R 2(Fig. 3.3). Since the scale of production does not change, the firm's cost curves remain at the same level. Due to more intensive use of resources, the firm increases its production volume from q 1 before q 2, the volume of production in the industry as a whole increases with Q 1 before Q 2. In this case, the company receives economic profit, since the price exceeds average costs ac 1 . Under conditions of competition, the demand for the use of this resource increases, which ultimately leads to an increase in the cost of the resource (for example, to an increase in rent payments by the landowner in the event of an increase in demand for bread) and a shift in average costs from the position ac 1 to position ac 2. At the industry level, this means an increase in average costs as production volumes increase.

Constant average costs of the first type. The simplest option is constant long-term industry costs. The first variant of this type of cost occurs in the case when any firm in a given industry can increase the scale of production in the long run in such a way that this will not lead to an increase in average costs.

On the graph (Fig. 3.4), an increase in the change in the scale of production represents a shift in the curves ac 1 And mc 1, characterizing short-term production volume, in the provisions ac 2, …, ac n And mc 2, …, mc n respectively. In this case, the optimal production volume increases with q 1 before q 2, …, qn. Theoretically, the company is able to independently satisfy market demand. When there are several firms in the market, the most severe price competition between market participants takes place, which will be discussed later (Bertrand's paradox).

Two limitations of this model can be considered as possible options:

Fixed costs in the long run with limited scale of production ( AC = const For Q ≤ Q 0, AC = ∞ For Q > Q 0);

· each firm is characterized by constant long-term costs, but there is a difference in the level of costs for different firms;

· the presence of differences in the level of costs and limitations on the scale of production at constant costs.

Wherein A.C.– long-term cost curve without restrictions on production volume, and AC'– if there is such a restriction.

Fixed long-term costs of the second type occur when firms cannot increase the scale of production, but the industry is characterized by open entry.

With an increase in demand for industry products, at the first stage there is an increase in production while maintaining the scale of production of each firm, by analogy with the situation in an industry with “Ricardian” increasing costs. However, the absence of strict restrictions on resources and the absence of entry barriers leads to an increase in supply from new firms and a decrease in prices to the original level. In the long run, this is also characterized by constant long-term costs. The specificity of this situation is also that firms do not change their scale of production, that is, the volume of industry supply is equal to the total curve M.C. for n firms in the industry. In this case, there is a discrepancy between long-term demand and long-term supply (defined as the sum of the optimal production volumes of individual firms) in the product market, that is, in the long run, the situation in the industry will fluctuate between overproduction and underproduction, and the number of firms will be inconsistent (Fig. 3.5).

The industry is in optimal condition n firms When demand increases from level D 1 to level D 2 in the short term there is an increase in price from P n before Pn'. At the same time, the production volume of firms and the industry as a whole increases. Since the price established in the industry exceeds the average cost, this serves as an incentive for new firms to enter the industry. However, when one firm enters the industry, the sum of the scale of production of all firms turns out to be less than the increase in demand, and the established price also exceeds the level of average costs. When another firm enters the industry, the industry supply curve again shifts downward, but the price is set below minimum average cost. As a result, the industry will balance between n+1 And n+2 firms

Net internal economics of large scale production occurs in a situation where expansion of production in the long run leads to a net decrease in average costs at an individual enterprise. The word “net” is used to emphasize that an increase in the scale of production leads to both an increase in certain types of costs and a decrease in other types of costs. Pure economy refers to a situation where efficiency exceeds inefficiency. Internal efficiency can be associated either with technological efficiency or with financial and organizational factors (for example, reducing interest rates on loans or transaction costs and reducing the cost of raw materials when purchasing volumes increase).

Let's consider the change in long-term costs when the scale of production changes. Increased production from q 1 before q 2, …, qn leads to new configurations of cost curves ac 1, …, ac n And mc 1, …, mc n. The long-term cost curve is an envelope curve.

Changes in demand and an increase in the scale of production in the industry lead to a further increase in the scale of production and a fall in prices, or an increase in profits.

Pure internal diseconomies of large-scale production represents the opposite situation, when the economy of large-scale production is less than the unprofitability and in the long run there are increasing average long-term costs. This may, as in the previous case, be associated with both technological factors (for example, an increase in capital costs with increased production) and non-technological factors (for example, an increase in transaction costs caused by control costs).

Otherwise, the logic of constructing a long-term cost curve corresponds to the net internal efficiency of large-scale production, as can be seen in the graph in Figure 3.7.

Net external economics of large scale production– a rather rare phenomenon, but it does occur in practice. External efficiency arises at individual enterprises as a result of an increase in production in the industry as a whole and does not depend on the volume of production of the enterprise itself. The source of savings in this case may be a better organization of markets, a reduction in the cost of maintaining infrastructure, and lobbying interests in government bodies. The most obvious example of pure external efficiency is industrial areas, in which a large number of enterprises in a particular industry are concentrated.

Let's consider an example with an industry that is not characterized by changes in the scale of production (an analogue of an industry with constant average costs of the second type). Increasing demand for products in this industry from the level D 1 to level D 2 leads to an increase in the number of firms in the industry, which leads to an increase in production volume from the level Q 1 to level Q 2 at a constant level of production of an individual firm. At the same time, the average costs of each individual enterprise are reduced, which leads to a decrease in the price of these products with growing demand.

Net external diseconomies of large-scale production, unlike the previous option, is much more common. It occurs in a situation where an increase in production in a given industry leads to an increase in average costs at individual enterprises due to an increase in the costs of involving additional resources into circulation. This situation is the opposite of the situation with pure external efficiency and results in a rising long-term average cost curve.

Thus, when determining the nature of long-term costs, three questions must be answered:

· Is extensive production growth in the industry possible or impossible?

· Do factors of internal efficiency or unprofitability prevail for enterprises in the industry?

· Do factors of external efficiency or inefficiency prevail for enterprises in the industry?

The answer to the first question allows us to determine whether the industry is one of the industries with “Ricardian” costs.

The answer to the second allows us to talk about what type of costs are typical for the industry being analyzed without taking into account external factors (fixed costs of the first type, pure internal efficiency or the uneconomicity of large-scale production).

The answer to the second question allows us to determine what influence external factors have on the development of production in the industry (fixed costs of the second type, pure external efficiency or the uneconomicity of large-scale production).

It is necessary to take into account that in the long term for the same industry, with an increase in production volumes, the influence of factors that increase efficiency may gradually decrease as the influence of factors that reduce efficiency increases. This situation is common, and we can say that at a certain level of production there are net internal economies of large-scale production, which, as the size of the enterprise grows, turns into fixed costs, and then into net internal inefficiencies of large-scale production. O. Williamson showed that participants in most oligopolistic markets are in the area of ​​fixed costs, which leads to tough, mainly non-price competition.

Minimum efficient scale of production and number of firms in the industry

These types of costs have a decisive influence on the structure of the industry, namely, on the number of firms operating in it.

Depending on the number of sellers in the market, the market structure also depends significantly. What factor is the main one for the existence of the number of sellers in the market? Let's consider the dependence of the number of sellers on the effective capacity of the enterprise.

If the long-run average total cost curve LATC looks like LATC 1, so that the effective capacity of enterprise q 1 is small, then to satisfy market demand QD required Q D /q 1 enterprises. And the smaller the effective power, the greater the number of enterprises - sellers. If the long-run average total cost curve is LATC 2, and its effective power is q 2, then only a few ( Q D /q 2) similar enterprises. Finally, when market demand equals the effective capacity of one plant q 3 = Q D , then the number of seller enterprises on the market will be equal to one. Thus, economies of scale, or rather the minimum efficient scale of production ( MES) is the main factor determining the number of sellers (many, several, one) in a particular product market.

Thus, industries with the net internal economies of large-scale production and fixed costs of the first type tend to monopolize, while industries with the net internal diseconomies of large-scale production and fixed costs of the second type will most likely be classified as competitive industries. Industries with “Ricardian” increasing costs can be either monopolistic or competitive industries. Net external efficiency and net external diseconomy of large-scale production do not determine the structure of the industry in the literal sense of the word, but they do influence the degree of market power in the industry. Thus, pure external unprofitability can serve as a barrier to entry of new firms into the industry, especially in a situation where old sources of resources are tied to existing producers through long-term contracts.

3.2. Markets and transaction costs

The main characteristics of information that influence market structures are:

· possibility of opportunistic behavior;

· speed of information circulation;

· asymmetry of information.

Risk of contract failure and speed of information dissemination

Let's consider a situation that allows for opportunistic behavior of the company, that is, the possibility of violating the terms of the contract if it is more profitable for the company. Violation of the terms of the contract means a fairly wide range of actions, including non-delivery of goods, violation of delivery deadlines, failure to comply with the quality of goods, etc.

For convenience, we will evaluate the behavior of the company in two time periods. In the first period of time, the firm is faced with a choice: to violate or comply with the terms of the contract. In the second period of time, the company can be sold at the price formed based on the results of activities in the previous period.

Let the company make a profit if the terms of the contract are met. p 0, and in case of violation of contract (opportunistic behavior) - profit p 1, and p 1 > p 0(See Figure 3.11).

In accordance with the assumption that the value of a company is determined by its profitability, which means that the assessment of the value of the company based on the results of the first step of the model under consideration corresponds to the potential for profit. If the terms of the contract are met, the value of the firm is equal to P0, and in case of non-compliance with the terms of the contract - P 1 = 0. The last equality means that a company that has once violated the terms of the contract cannot be sold (since the effect of a negative reputation leads to the fact that there is no profit in future periods).

At every moment in time, the company faces a choice: to violate or not to violate the terms of the contract. Subject to rational behavior, that is, behavior based on the principle of profit maximization, the firm will choose the strategy of violating the terms of the contract only if the following condition is true:

p 1 > p 0 + P 0 ,

which means that the profit from breaking the contract must not only be higher than the profit for the case of fulfillment of the contract, but also cover the losses from non-receipt of profit in the future.

This conclusion is true for the case of instantaneous dissemination of information. Now let’s evaluate how the speed of information dissemination will affect the risk of dishonest (opportunistic) behavior.

Let l- the period of time that passes from the moment the contract is broken until the moment when information about this becomes known to the market, and t- time required to conclude one contract. Let also the company be able to negotiate with only 1 potential client at a time. In this case, the number of contracts concluded by the company since the failure of the first contract will be equal to , where the sign “” denotes the integer part of the resulting number.

Then, subject to rational (profit-maximizing) behavior, the condition for breaking the contract will be as follows:

p 1 (1 + ) > p 0 (1 + ) + P 0 .

It follows from this that the difference between the profit for the case of fulfilling the contact and the minimum profit required to refuse to fulfill the contract is significantly less. That is, the low speed of information dissemination imposes less stringent restrictions on the fulfillment of the terms of the contract.

Based on the expression considered, we can formulate the following relationship between the speed of information circulation and the risk of non-fulfillment of the contract, understanding the latter as the amount of minimal profit from violation of obligations:

· the risk of non-compliance with the terms of the contract is higher, the lower the speed of information circulation in the system, or the longer the period of time between the event and the dissemination of information about the event;

· the risk of non-compliance with the terms of the contract is higher, the less time is needed to conclude and fulfill the contract;

· the risk of non-fulfillment of the terms of the contract is higher, the lower the value of the company, which is equivalent to one of two statements:

o low profitability of the market in which the company operates;

o insignificant value of the company's assets.

From the above it is clear that in markets in which a small number of large firms operate, unscrupulous behavior is less relevant. In addition, increasing the speed of information dissemination significantly reduces the risk of dishonest behavior. The last thesis means that with a high probability of opportunistic behavior in the market, structures should be formed that increase the speed of information exchange. These may be government agencies, and then we are talking about eliminating market distortions through government policy. Another example of this type of structure is information and analytical firms that monitor markets and sell information support services. It is also possible to form information exchange networks (for example, about unscrupulous clients or suppliers), which include firms operating in certain product and geographic markets.

Thus, distortions associated with the speed of information circulation can lead to the following market structures:

· government regulatory bodies;

· intermediaries;

· networks or industry organizations of firms;

· consolidation of companies;

· creation of in-house security services.

The choice of structures that eliminate these distortions occurs in accordance with the principles of institutional theory (minimum costs to achieve the goal).

Asymmetry of information dissemination

Asymmetry in the dissemination of information occurs when one participant in a transaction has information that is not available to its counterparty. This situation can be most adequately analyzed based on the model Akerlova, designed to analyze the used car market in the United States.

Let two groups of goods be available on the market: high-quality goods, or “pear-type” goods (for used cars, these are cars in good condition), and low-quality goods, or “lemons” goods (cars in poor condition).

Table 3.3

The consumer is willing to pay for a pear-type product U G, and for goods like “lemon” – U L, and U G > U L(Table 3.3).

The owner of a quality product is ready to sell it at a price P G, and the owner of a low-quality product is ready to give it up at a price P L, and P G > P L. A transaction on the market is concluded if the buyer’s price is not less than the seller’s price, so let’s assume that U G ≥ P G, A U L ≥ P L.

If the seller is aware of the quality of the product, but the buyer is not, then the buyer, based on the assumption of the rationality of his behavior, is ready to pay for the product the weighted average price for the probability of purchasing a high-quality and low-quality product:

U G a + U L (1 – a),

Where a– the probability with which a quality product is found, and (1 – a)- poor quality.

Low-quality goods will always be sold on the market:

U G a + U L (1 – a) > U L a + U L (1 – a) = U L ≥ P L.

But for a quality product there is no such certainty:

U G a + U L (1 – a)< U Г a + U Г (1 – a) = U Г ≥ P Г.

That is, a situation is possible when the probability-weighted average assessment of the product by the buyer will be lower than the seller’s price. Then the so-called The effect of “washing out” quality goods from the market. Market research shows that when such a situation arises, structures arise whose purpose is to eliminate asymmetries in the dissemination of information. The simplest structures are intermediary institutions that conduct an examination of the quality of goods and, with their reputation, guarantee the reliability of its results (the influence of reputation can be traced in the previous example, since it is related to the fulfillment of the terms of the contract). Such institutions can be either private (appraiser firms) or public (for example, Gosstandart, Sanitary and Epidemiological Station, etc.).

In markets where information asymmetry is high, industry associations that introduce voluntary certification of goods or internal ratings (for example, a star system for hotels and restaurants) are also often found.

It should be noted that this model is applicable not only to the analysis of the market for used goods, but also for the market in which direct manufacturers of goods operate. In this case, the higher price demanded by manufacturers of high-quality products is due to the higher costs of producing high-quality products compared to low-quality products. In this case, structures such as exhibitions and competitions of product quality, advertising, warranty periods, etc. arise on the market, the purpose of which is to inform the consumer about the higher quality of the product of this company compared to the product of competitors.

In the case of symmetrical distribution of information (i.e., in the case when both the seller and the consumer have the same information about the quality of the product), the displacement of quality goods from the market does not occur. If neither sellers nor buyers know the quality of the goods, then the goods are valued by the two parties to the transaction using a weighted average value. If the quality of the product is known to both market participants, we can talk about two interconnected markets, and the consumer makes a choice depending on his own preferences.

An interesting situation is also in which the buyer is familiar with the quality of the product, but the seller is not. This situation is quite rare, but it occurs when the buyer is an expert in this field, and the seller is a random person. Then the seller values ​​the product at the weighted average price:

P G a + P L (1 – a).

The opposite effect occurs: high-quality goods are purchased under any conditions, and low-quality goods can be washed out of the market.

Thus, we can draw the following conclusion. The presence of distortions of information in the market can lead to both the emergence of the company itself (thesis R. Kousa), and to the emergence of auxiliary market structures that are not involved in the production of goods, but minimize the costs of interaction between manufacturing firms. These structures arise, in particular, in the case of low speed of information dissemination and asymmetric information in the market and represent market infrastructure .

Topic control questions:

1. Define the market. What types of market structures do you know?

2. Determine the main types of market boundaries, show their features for different types of goods.

3. Define transaction costs.

Literature:

1. Sherer, F. M. Structure of industry markets: Textbook for universities: Transl. from English / Scherer F.M., Ross D.; Econ. fak. Moscow State University named after M.V. Lomonosova.-M.: INFRA-M, 1997.-698 p.: ill.- (University textbook). – ISBN 5862255850: 69.00 h/z No. 2, textbook.

2. Tyrol, Jean. Markets and market power: theory of industrial organization/Tirol Jean; edited by V. M. Galperina, L. S. Tarasevich.- St. Petersburg: Economic school, 1996.-745 p.-ISB N 5900428281: 100,000 p/z No. 2

3. Avdasheva, Svetlana Borisovna. The theory of organization of industry markets: Textbook / Institute "Open Island". - M.: Master, 1998. - 320 pp.: ill. - 23.00

4. Thompson, Arthur. Economics of the company: Textbook. allowance/Thompson Arthur, Formby John; Per. from English under general ed. Shlenova Yu.V. - M.: BINOM, 1998. - 540 pp.: ill., tab. - ISBN5798900517: 32.00 part number 2, part number 3, scientific. ab. .

5. Hay, Donald. Theory of industrial organization: In 2 volumes. T. 1./ Transl. from English edited by A.G. Slutsky. - St. Petersburg: Economic School, 1999- 590 pp. - (Library of the “Economic School”. Issue 24). - ISBN 5900428397: 154.00

6. K. Heather. Economics of industries and firms: Trans. from English/Text. Manual. - M.: Finance and Statistics, 2004. – 480 p.

The application of competition law is only possible with strict definition of market boundaries.

According to the Law on the Protection of Competition, the product market (product market) is the sphere of circulation of goods or interchangeable goods for which there is supply and demand for a certain time and within a certain territory. The commodity market is part of the reproduction process and covers the sphere of circulation of goods (works, services), as a result of which, at a certain time and within certain territorial boundaries, the latter pass from the manufacturer (seller) to the buyer (recipient).

The key to understanding the boundaries of a particular product market is the concept of “interchangeability”. Moreover, depending on the demand of a particular consumer, the limits of interchangeability can vary significantly. Product boundaries of the market are determined by forming a group of interchangeable goods(product groups), within which a consumer under normal conditions can easily move from the consumption of one product to the consumption of another.

The formation of a group of interchangeable goods (product groups) is carried out from a list of goods that, according to indicators of interchangeability, have for sellers (suppliers, manufacturers), buyers (consumers, users) the characteristics of one (similar, similar) product (product group). They, in particular, have similarities in purpose, consumer properties, conditions of use; similarity of physical, technical, operational properties and characteristics, quality indicators, etc.; the presence of a common group of consumers of the product; no significant difference in prices; interchangeability of goods (product group) from the point of view of production, that is, the ability of manufacturers to offer new goods to replace those that exist.

In the process of determining the product boundaries of the market, a predetermined group of interchangeable goods (product groups) can be divided into several subgroups or attached to a second group.

When conducting research, it is necessary to take into account that interchangeable goods belong to a group of homogeneous goods (product groups), which are considered by the consumer as the same product (product group) and which can be standardized or differentiated.

How standardized goods(product groups) goods can be considered that have a unified system of indicators, parameters characterizing the product, and in the production of which the same or identical technical standards, technical conditions, application standards, etc. are used.

Differentiated Products(product groups) are characterized by certain differences in consumer properties, appearance, quality indicators, terms of use, volumes of additional services (maintenance), which allows consumers to appropriately distinguish the advantages of a specific product (product group), which is produced (sold) by a certain enterprise ( seller), from other similar goods (product groups) when satisfying the corresponding demand.

Substitute goods included in a certain product group are found to be based on the criterion of interchangeability of commercial products. One of the criteria for interchangeability in consumption is the cross price elasticity of demand, calculated as the ratio of changes in the volume of sales of goods LP as a percentage for a certain period:

Demand for goods P with an increase in the price of a product, P can both increase and decrease depending on the buyer’s attitude to the overall use of both goods. So, cross elasticity can be both positive and negative. With a positive cross elasticity coefficient (E> 2) goods P and R are easily replaced from one to another, and the higher the coefficient, the greater the degree of interchangeability of goods.

If 0 ≤ E≤ 2, then there is an insignificant probability of replacing one product with another. Negative elasticity (E<0) is typical for goods that complement each other in the process of consumption, for example, at a certain point in time, the price of white bread increased in the region from 1 UAH. 20 kopecks (R 1) up to 1 UAH 32 kopecks (P 2):

At the same time, the total sales volume (in the region) of bread made from 1st grade flour increased from 700 thousand kg to 910 thousand kg

Therefore, with the value E> 2 white bread can easily be replaced with first grade bread.

If supply and demand are unbalanced in the market, calculations of cross-elasticity coefficients in some cases may lead to distorted results.

To assess the interchangeability of goods in production, it is necessary to take into account the availability of free production capacity that can be used to produce one of the goods included in a given product group, or the technological capabilities of switching production capacity to produce a given product group.

Territorial (geographical) boundaries of the market are the territory with the sphere of relations between the purchase and sale of goods (groups of goods), within which, under normal conditions, the consumer can easily satisfy his demand for a certain product and which can, as a rule, be across the territory of the state, region, district, city, etc. or parts thereof.

The territorial (geographical) boundaries of the market for a certain product (product group) are determined by establishing a minimum territory beyond which, from the consumer’s point of view, the purchase of goods (product group) that belong to the group of interchangeable goods (product group) is impossible or impractical. In this case, in particular, the following criteria must be taken into account: physical and technical characteristics of the product (product group); technological connections between producers and consumers; possibilities of technical, warranty, subscriber service; price ratio, in particular the level of price ratio for certain goods (product groups) within this market, acceptable for producers or consumers; opportunities to move demand for a product (product group) between territories that are part of the same geographic market, in particular the ability to maintain the level of quality and consumer properties of the product (product group) during transportation; the level of transportation costs, including the features of transportation of goods (product group).

In addition, significant factors determining geographical boundaries are: the availability of retail and warehouse premises, ease of loading and unloading operations, and the ability to perform pre-sale preparation; availability of signs for goods and services; the presence in the relevant territory of barriers to the export or import of goods (product groups), namely: administrative barriers; economic and organizational restrictions; impacts of vertical (horizontal) integration; barriers associated with the effect of scale of production; barriers based on the absolute predominance of the level of costs; barriers related to the amount of capital expenditure or investment required to enter a particular product market; demand side constraints; environmental restrictions; barriers preventing free exit from the market, etc.; location of specific consumer groups; the price level for certain goods (product groups) in adjacent territories, the possibility of moving the supply of goods (product groups) between these territories.

When finalizing the territorial (geographical) boundaries of the market, the determining factor is the lesser ability to move either demand or supply.

The correctness of determining the territorial (geographical) boundaries of a product market can be verified by studying the openness of the market regarding interregional and/or international trade.

The degree of market openness (hereinafter - SVR) for international, interregional trade is assessed by an indicator that is calculated as the percentage of the total volume of imports of goods into a certain market from the territories of other regions of the country (other countries) to the total market volume according to the formula:

where Qv is the volume of goods imported into the corresponding market from outside this market (for the national level, the volume of imports into Ukraine).

For example, consider the degree of market openness when part of the goods is imported from outside area B, but imports constitute an insignificant part of the total market volume - about 10%. If SVR<30%, следовательно, границы рынка хлеба и хлебобулочных изделий определены пределами области Б. Если же ввоз муки в область Б из соседних областей составляет более 30%, то территориальные границы этого товарного рынка могут быть определены как межрегиональные.

Commodity and territorial boundaries operate simultaneously with the market schedule and are defined as a period of time (usually a year) during which a given set of commodity-money relations between sellers (suppliers, producers) and consumers forms a product market with a constant structure.

In cases where the period of complete turnover of the advanced capital in the production of the relevant product exceeds one year, the time boundaries of the market are usually defined as a period of time equal to one to three designated periods of capital turnover.

In practice, a situation arises when a period of time of less than one year can be recognized as a market schedule. However, the following conditions must be met: firstly, the period of full turnover of the advanced capital in the production of the corresponding product is significantly less than one year; secondly, during this time, in response to a significant increase in prices on the market, sellers (suppliers, manufacturers) have the opportunity to take appropriate measures and stabilize supply, and a significant number of consumers who have reduced consumption as a result of this increase can restore consumption volumes without significant difficulties; thirdly, the monopoly (dominant) position of a business entity (entities) is determined by the provision of special rights, powers, benefits to it by government bodies, local governments or administrative and economic management and control bodies or other business entities occupying a monopoly (dominant) position .

Question 4. Barriers to entry(English) Barriers to Entry) - economic and technical factors that do not allow or complicate the entry of new companies into the market or industry, in order not to create additional competition for existing companies.

Barriers to entry limit competition and is a source of a company's pricing power—the company's ability to raise prices without losing customers.

Term barriers to entry also applies to individuals who intend to start a certain professional or business activity.

Examples of barriers to entry into the labor market for individuals include education, licensing, or quotas for the number of workers in a particular occupation.

On the one hand, these barriers are to ensure that people who enter this market have the necessary qualifications, on the other hand, it reduces competition in the market. Also because of this, there is an effect of additional cost for professionals in certain fields.

Market concept. Market boundaries (product, territorial, time) and their assessment

Market is a set of economic conditions under which buyers and sellers interact to carry out mutually beneficial trade transactions.

The market is not only a set of existing and potential consumers, but also a complex of interrelated elements - product supply, price and demand .

The most important condition for applying a commercial approach in modern conditions is the existence of a market. If there is no free market of buyers and sellers in a society, then no one is interested in studying market demand. If buyers do not yet have a choice when purchasing goods, if quality and price are dictated exclusively by monopolistic manufacturers, then their desires and needs will not be taken into account by anyone. A market exists when people meet directly or through intermediaries to sell or buy goods and services. In a free market, the process of exchange, buying and selling determines who should produce what goods, as well as what and how to buy.

Approaching the concept of the market in more detail, it is possible to note that the market consists of a number of mandatory elements (each of these elements characterizes one side of the market, together they describe its entire complex):

ь buyer (people, groups, organizations) with their own needs;

b availability of sellers willing and able to sell;

ь purchasing power (money);

ь desires (buy);

ь corresponding opportunities (buy).

The following follows from this:

• 1) The importance of understanding the needs and requirements of the buyer, as this leads directly to the act of purchase;
• 2) Sellers must be able to produce goods needed by buyers and be able to sell them;
• 3) The market can expand and contract depending on purchasing power.
• 4) New markets can be created or existing ones expanded by increasing the opportunity to buy through wider distribution.
• 5) Markets can be increased by stimulating the desire to buy through promotion and advertising.

Classification characteristics of the market:

• a) objects of transactions - commodity, legal factors, real estate, financial;
• b) operating conditions - open closed, spontaneous organized, stable unstable, seller buyer;
• c) the degree of localization of transactions - by time, territory;
• d) types of relationships - vertical horizontal;
• e) the nature of interaction between firms - competitive non-competitive

Understanding the market as a sphere of circulation predetermines the need to set its external parameters. In regulatory legal acts, such parameters are determined through geographical and product boundaries.

Market product boundaries are understood as a group (set) of interchangeable goods. Determining the product boundaries of a market is a procedure for determining a product (its consumer properties), substitute products and forming a product group (a group of products whose markets are regarded as one product market). The basis for determining product boundaries is the opinion of buyers about the interchangeability of products.

Geographical (territorial) boundaries of the market - This is the territory in which buyers can purchase this product and do not have such an opportunity outside it. Geographic boundaries are determined by economic, technological and administrative barriers that limit the ability of some buyers to purchase a given product in the territory in question.

When determining geographical boundaries, many factors are taken into account, in particular:

• 1) the possibility of moving goods between territories;
• 2) availability of vehicles to move the buyer to the seller;
• 3) the absence of administrative restrictions on the import or export of goods in the given territory;
• 4) a comparable level of prices for relevant goods within the boundaries of this market.

According to the criterion of geographical boundaries, the market can be divided: local, regional, interregional, all-Russian.

Market boundaries

I. grocery - substitutability in consumption

II. temporary - duration of consumption period, presence of entry barriers

III. local - intense competition, presence of barriers to entry

The market structure is characterized by quantitative and qualitative indicators. Quantitative indicators are:

• 1) the number of sellers operating in this market;
• 2) shares occupied by sellers in the market;
• 3) indicators of market concentration.

Quality indicators include:

• 1) the presence or absence of barriers to entry into the market for potential competitors, the degree of their surmountability. In this case, potential competitors can be considered business entities that:
  • a) have the material and technical base, personnel and technologies for the production of this product, but for various reasons do not realize these capabilities;
  • b) produce this product, but do not sell it on the territory of this product market;
• 2) openness of the market for interregional and international trade.

Comparison and analysis of quantitative and qualitative indicators characterizing the structure of the market makes it possible to determine its type. Thus, market types are distinguished depending on:

• a) on concentration (highly concentrated, moderately concentrated and low concentrated markets are distinguished);
• b) on the development or underdevelopment of the state of the competitive environment. Determining the boundaries, structure and type of market is necessary for the relevant government agency to develop a system of measures aimed at regulating it in order to maintain a competitive environment, create conditions for satisfying the demand and supply of entities.

Time boundaries are also highlighted. The main time limit is the calendar year. The planning process for the next year takes place from September to December. Planning and reporting, including fiscal, are carried out synchronously - according to the calendar year. Changes in the current plan are reflected in additions to the current plan, control actions are carried out according to deviations. The year is divided into quarters, quarters into months. For large assembly lines and large assembly plants, weekly, daily and hourly schedules are prepared. It is important to remember that the bulk of the work on drawing up schedules for production departments was previously developed manually and, if you imagine that the plan changed significantly during the year (quarter, month), then changing schedules was not an easy job.

In management work, planning occupies one of the main places. The greater the uncertainty in demand, both internal and external, the greater the role of the planning process. Good organization of the planning process may well be considered the key to the success of an enterprise. One of the most important criteria for good planning is the correct determination of time boundaries. By establishing time boundaries, management brings strict order to the planning process for all departments. At the same time, by changing time boundaries, management manages the planning process as required by the market. Learning to manage the planning process and correctly using time boundaries in planning means learning to effectively manage an enterprise and its activities.

Market assessment, determining the volume and share occupied by individual enterprises is the main task of market research.

The practice of marketing research shows that this information is currently of great interest to the company.

In most cases, market assessment is carried out according to the following plan:

• 1. Analysis of supply and demand and its development trends:
  • - assessment of the magnitude and structure of current actual demand / supply (total and by components)
  • - prospective assessment of supply and demand in the market (general trends / segmentation)
• 2. Analysis of market structure, segmentation, analysis of sales forms and methods.
• 3. Study of the level and conditions of competition in the selected market.
• - assessment of the competitive environment (circle of main competitors, strategic plans of competitors, tactics and strategies of activity).
• - SWOT analysis; STEP analysis; business environment profiling.

Knowledge of these indicators is necessary both to expand the market share of a particular company and to penetrate the market of a new company or brand.

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