Competition in the TSB industry.

Question for discussion
Objective patterns of formation of the competitive environment of the b2b market and Russian realities of the TSB industry.

Irina TUMANOVA:
Competition is always good, if the competition is healthy. To speak indiscriminately about competition in the security industry is about the same as to speak about the average temperature in a hospital. TSB in the Russian Federation are Russian manufacturers of various systems, these are trading companies that sell systems of Russian and foreign production, these are installation organizations. And each group has its own conditions of work and competitive struggle.
Of course, an important positive factor of competition is the reduction of prices, but sometimes this leads to the fact that someone simply thoughtlessly drops the market of a particular product or service, living one day at a time, without thinking about where to get money for the development of a company or product. Flexible pricing policy is good for competition, but it is time to come to civilized rules of behavior in the market and respect the competitor, who is sometimes also a partner.

Oleg ZHESTKOV:
I would like to make it clear right away that our company is engaged exclusively in the distribution of equipment and solutions for IP video systems, therefore everything that will be said below applies only to the distributor-dealer relationship in the video surveillance segment and in no way claims to analyze the entire B2B market. I have an ambivalent attitude to the B2B market. On the one hand, it exists and meets certain formal criteria. And at the same time, it kind of doesn’t exist. Western researchers believe that suppliers should be subject to fairly strict requirements, full compliance with which provides them with the priority right to supply goods and services (priority from max to min): availability of a technical support service; efficiency of deliveries; speed of response to requests; quality of goods (services); reputation of the supplier; price of goods; completeness of product range; qualifications of personnel; possibilities of providing credit; personal relationships between buyers and suppliers. Basically, in our market, when choosing a supplier, most of the same criteria are used, only the priorities are set differently. All other things being equal, personal relationships often come first, and the influence of some factors is reduced to almost zero. And the better these relationships are, the lower the likelihood of competition.
The term B2B also refers to e-commerce systems that should reduce the overhead costs of supplier companies for order processing. I'm afraid I'm wrong, but there is not a single company on the market that uses a serious e-commerce system that allows for all types of trading procedures (from simple requests for quotations, complex tenders to issuing payment documents, informing the client about the order status and preparing the shipment of goods) with minimal intervention from the supplier company's personnel. Everyone already knows how this usually happens — correspondence, phone calls, etc. The entire business process comes down to communication between two people: the one who buys and the one who sells. That is why I would not risk calling this model a full-fledged B2B.

Vasily GOLOVANOV:
The patterns of formation of a competitive environment generally do not depend on the sphere of human activity. I can highlight the following patterns:
The first ones always eat up the larger part of the «pie» while the competition is small.
The winners in the market are those companies that provide high-quality and timely services and constantly maintain feedback with clients, monitor industry development trends and demand.
Partnership, cooperation and unification bring greater benefits than competition.
The competitive environment is formed by a set of USP characteristics — the uniqueness of trade offers (price, functionality, reliability, market loyalty, range of services provided, etc.).

Sergey STASENKO:
The security systems market in Russia is quite young, and competition in it is not as strong as in many other markets. In addition, it is heterogeneous depending on the segment. The market is quite closed, conservative, and difficult to study. Until recently, competition in the market was mainly limited to price competition. Now we can already observe other forms of competition (improving the quality of products and services, advertising, terms of trade, differentiation of goods), which is certainly encouraging, since ultimately this develops our market as a whole.

Question for discussion
Advertising as the most important component of the formation of a competitive environment: gains and losses of the TSB industry.

Irina TUMANOVA:
The crisis last year forced many companies to cut their advertising budgets and look for cheaper and more effective ways to remind the client about themselves. We must not forget that in the b2b territory, personal sales play the main role, but it is really impossible to do without advertising. From my own experience, I know that the bulk of advertising has migrated to Internet resources, this is especially interesting for the TSB industry, since the main clients are people who actively use the Internet in their work and search for the necessary solutions. It is no coincidence that the websites of many magazines, which were originally only printed publications, have become more active. The crisis has become a catalyst for the inevitable process.

Oleg ZHESTKOV:
In my opinion, advertising is still “one of…” The role of PR, publications of independent sources, user reviews, etc. is increasingly increasing for the promotion of goods and services. They are the ones that largely shape the attitude towards the supplier and give it certain preferences in relation to competitors. In addition, information posted and circulating on the Internet plays a huge role. Nevertheless, advertising in specialized printed publications, exhibitions, and other methods of traditional influence on clients remain relevant for branding in terms of informing consumers about the state of the company. If a company is present in the media space, it means that, despite everything, it is alive and actively promoting itself and the goods and services it represents on the market.

Vasily GOLOVANOV:
Advertising is an important tool for producing and disseminating information and shaping public opinion. Therefore, the question of the objectivity and truthfulness of the information being disseminated is quite slippery. However, advertising has a greater impact on non-professional consumers, while experienced consumers primarily look into the root of the equipment and services provided and trust word of mouth and their experience more.

Sergey STASENKO:
Due to the specifics of the market, participants in our market rarely resort to serious and large-scale advertising campaigns (advertising on television, radio, etc.), and some do not need it at all! As a rule, advertising is limited to participation in exhibitions, advertising in specialized publications, publishing booklets, prospectuses, and, of course, Internet advertising. Unfortunately, I would like to note that, with the exception of isolated cases, the level and quality of information delivery to potential consumers leaves much to be desired. In terms of advertising, our market is still very far behind other markets, where competition is much stronger and forces participants in this market to approach marketing and advertising issues much more seriously.

Question for discussion
Unfair/fair competition in the industry: an example you know.

Irina TUMANOVA:
Unfair competition, including deliberate lies about a competitor, is still encountered today, but the availability of information is increasing with the development of the Internet. The main tool of unfair competition is dumping, as well as the ability to financially interest the client's representatives who influence the decision to purchase.

Oleg ZHESTKOV:
If we leave out dumping and the use of administrative resources/nepotism, which all market participants face almost daily (especially the first one), then we had to deal with unfair competition only a couple of times. Here is one example: company A supplies a fairly wide range of equipment to company B, including equipment for which A has an exclusive right. Company C begins to supply company B with some of the same equipment that A supplies, offering more convenient working conditions. Upon learning of this, company A gives B an ultimatum: if you do not start buying from us the equipment that you buy from C again, we will not sell you other equipment, including exclusive equipment.
In most cases, this is normal competition, which forces you to constantly be on your toes, to look for and offer solutions that will best meet the needs of customers.

Sergey STASENKO:
When it comes to money, there is always a temptation to get it, even if it involves ugly and sometimes even illegal methods. Our market is no exception, and such moments happen there too. Partly reassuring is that these are cases, not a system, and usually they do not reach the general public. In general, I would still call the competition in our market quite conscientious and civilized.

A question for discussion
Are competition and/or morality antagonisms? Is a choice always required?

Irina TUMANOVA:
There is a saying: «Nothing personal — it's business.» But we must not forget that competition in translation from Latin means contest, rivalry, rivalry. As in sports, so in business everything depends on the people who run the business, on their upbringing and worldview.

Oleg ZHESTKOV:
This is a philosophical question. For some, making money by deceiving old people is quite moral. What scale should morality be set by? By God's or can we make concessions depending on the size of one's conscience? If we proceed from the covenants, then definitely yes. But if we take as a starting point, let's call it «the morality of a businessman», then no — certain actions that lead to profit do not cause negative emotions in healthy competition.

Vasily GOLOVANOV:
Competition ensures development, and this is what makes it moral, there is little that can replace it. The concept of morality should be more related to advertising and its methods.

Sergey STASENKO:
This question is very similar to the previous one. Healthy, fair competition in the market can only exist when market participants are not alien to morality and conscience and play fair. Any serious company implementing a competent strategy in the market and having a good reputation simply does not need to make such a choice.

Question for discussion
Administrative resource and its impact on competition in the industry. If possible, give examples.

Irina TUMANOVA:
The lobbying of the interests of certain companies by the administration has a rather negative effect on competition. It is good if there are at least two companies in the same segment selected by the administration. But if only one company is certified, this, on the one hand, leads to the unification of the built systems, which is generally convenient in itself, but on the other hand, it slows down more active development of products, reduces the choice, which sometimes affects quality. There is no need to talk about pricing policy at all.

Oleg ZHESTKOV:
Where there is an administrative resource, competition disappears. Giving specific examples is a thankless task, but in most auctions in which our dealers took part, the list of winning equipment and the winner of the tender who would supply it were known in advance.

Vasily GOLOVANOV:
The influence is great. For a number of companies, the administrative resource replaces the concepts of «marketing», «strategy» and «building a sales department».

Sergey STASENKO:
In my opinion, in most cases, the presence of administrative resources excludes competition as such. It is encouraging that today in our market protectionism often no longer plays a key role. In my opinion, it is much more important for a company to have serious financial and technological resources to win tenders and work with large government agencies or commercial organizations.

Question for discussion
The Russian TSB market is almost fully formed, so entering it is not an easy task. What advice would you give to a beginner?

Irina TUMANOVA:
Starting your own business is always difficult. Market knowledge, competence, communication skills and technical literacy are important here. The ability to declare yourself is also important, and for this purpose there are professional publications such as TZ. I would also like to wish you perseverance and good luck.

Oleg ZHESTKOV:
To successfully enter the market, you need to either have a killer new idea/technology that will turn the market in your direction, or a huge desire plus a lot of patience, connections and start-up capital.

Vasily GOLOVANOV:
The market can never be fully formed. Life is movement. Activity, USP, live contact with potential clients, new offers, quality products and services, customer feedback are the key to successful entry into the market and development of any new company.

Sergey STASENKO:
In any bookstore you can find a lot of smart books on strategic management, where this issue is discussed in detail. I would like to focus on the following points:
At the very beginning, a new company needs to answer several key classic questions: who is its consumer, how is it better than other companies for this consumer and why should the consumer go to it.
Having chosen a development strategy, you should not deviate from it. If a company has decided, for example, to engage in production, then you should not try to develop both the trade and assembly directions. Chasing two hares … Well, you know the rest.
It doesn't matter what the company does (produces, sells goods or services), the product must be of high quality. It is oh so difficult to win consumer loyalty in our market, and it is very easy to lose it.