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Non-price competition and product diversity in healthcare
The manifestation of non-price competition and the desire of manufacturers to
product differentiation occurs in all, without exception, health care sub-sectors.
In the conditions of fierce competition, the medical industry enterprises apply the following methods of non-price competition:
? providing volume discounts for the purchase of a large batch of equipment;
? the provision of deferred payment and commodity loans;
? provision of equipment for trial operation;
? sending doctors to conferences and seminars, organizing on-site seminars;
? warranty and post-warranty service and more.
Consider the product differentiation in the production of medical equipment on the example of anesthesia - respiratory equipment of the Korean company "ROYAL MEDICAL" (table. 10).
Product differentiation deepens when several manufacturers enter the industry. For example, the offer of various options for ultrasound scanners from three companies - Shimadzu (Japan),
Acuson (USA), and Aloka (Japan) expand the range of similar
products up to twelve items in the price range from US $ 15
000 to US $ 250,300.
Table 10 -
models of anesthesia - respiratory equipment, offered in one period of time by one manufacturer
Product differentiation is most pronounced in the pharmaceutical industry, with competition between manufacturers being priced as well as non-priced.
Table 11 shows sample information as of 01.01.2005 for finished medicinal products, the active substance of which is paracetamol. Non-price competition is manifested in the variety of manufactured dosage forms and trade names, which, within the same dosage form, are differentiated by the excipients used, packaging, shelf life, price (element of price competition).
Institutions engaged in medical and preventive activities are forced to limit the formation of competitive advantages only due to product differentiation (the variety of medical services provided). This is due to the existence of state guarantees and strict control of the state (or municipal authorities) over the pricing procedure by:
• coordination of prices for paid services,
• approval of estimates when financing from the relevant budget,
• approval of tariffs for compulsory health insurance.
• In these conditions, attracting consumers is possible only through the use of mechanisms of non-price competition, namely:
• advertising, or the formation of a positive image in the media;
• increase the serviceability of the services provided;
• providing additional medical and preventive services;
• improvement of the treatment and diagnostic base;
• advanced training for nurses and doctors;
• strict observance of deontological standards and more.
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Non-price competition and product diversity in healthcare
- Non-price competition
Non-price competition is based on attracting the buyer not by lowering prices, but on the basis of non-price factors: improving the quality of goods, advertising of brand names, conditions of sales and after-sales service. Non-price competition is associated with certain additional costs, however, in the long run, product differentiation, improvement and non-price competition
- Product differentiation. Non-price competition
Product differentiation. Non-price
- Market structure and product diversity
The diversity of the product on the market is closely related to its structure. From the definition of the two extreme types of market structures — monopoly and perfect competition, it follows that a monopoly firm and firms in perfect competition offer a homogeneous product on the market that does not need advertising. In monopolistic competition, sellers in the same market often provide diversity.
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