However, a marketer who is competing on non-price basis cannot ignore the prices set by the competitors as price remains a significant marketing element. The demand for these products does not shift even if their prices increase. Thus, a change in the price of popcorn in a movie theatre could impact the demand for movies, as could the price of nearby parking. Such a strategy can prove effective at stealing business from competitors, but it can also backfire, because it can cause the company to alienate its existing consumers, who may be knowingly choosing the existing design over other products with different designs specifically because it appeals to their tastes. One disadvantage to nonprice competition is that consumers may not notice changes right away. They often do so by cutting costs whenever they can, which allows them to pass the savings on to customers in the form of lower prices.
When there are many competitors, it may be harder to win just on quality, especially if there are similar products selling for much less. By offering a range of similar products geared toward different market sectors, firms can expand their market base. With a non-pricing strategy, price goes untouched, forcing companies to use other methods to attract consumers. A company may seek an advantage over another by marketing a product's longevity, convenience and workmanship over comparable products. If the company can distinguish itself from the many competitors with superior quality and advertising, then this makes the strategy even more viable in a large market. For this reason, a number of producers compete by manufacturing a perception of high quality with their brands. However, trying to offer a lower price than a competitor is not the only way of competing.
A decrease in petrol price will lead to more frequent use of cars that will increase the demand for petrol and engine oil, its complements. . With price not being used, advertising usually is considered the pinnacle sales maker with a non-pricing strategy. Buyers income If income of the buyers increases, there will be an increase in the demand for goods and services. Thus, in case of non-price competition, the marketers try to promote the product by exhibiting its distinguishing features.
Product Differentiation Not all consumers are the same. In general, nonprice competition means marketing a company's brand and quality of products as opposed to lower prices. If the product is inferior, then this strategy may be ineffective, because consumers generally expect a better product or service when they pay more money. Examples of nonprice competition include touting a supermarket's loyalty discount cards, banking services, extended hours, self-checkouts and online shopping. In a competitive market, various firms vie for the business of the same potential buyers. For example, if non-price determinants are driving increased demand, but prices are very high, it is likely that buyers will be driven to look at substitute products.
Generally, the prices are changed to cover the costs or increase the demand. Instead of focusing so much on price via advertising — though it may be brought up every now and then — the company will focus more on how its product is superior and why spending more on it will be a better investment. Thus, if there is an economic boom, someone is more likely to buy, irrespective of price. Price Competition: Exists when marketers complete on the basis of price. For instance, in the United States, blue jeans have little actual quality variability from one producer to another. Perception and Branding In some cases, little possibility of quality differentiation exists between two products.
Several advantages to nonprice competition include higher quality products, better perception of the brand, newer product design, different products for varied demographics and improved sales tactics. These determinants will alter the demand for goods and services, but only within certain acceptable price ranges. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars. Product Design In some cases, firms may compete by changing the design of their products to make them more appealing without significantly changing production costs or quality levels. Nonprice competition entails two phases: one that implements new aspects of production or services and another that markets these changes to the public. If people expect the price of product X to increase, there will be more demand for that product now. At the same time, it most commonly is used when there are few competitors.
If people expect income level to increase, demand will also increase and vice versa. There is nothing stopping a non-pricing strategy from being used in any market. For this reason, firms should not expect a single product to appeal to every consumer in a market. However, such product differentiation can result in significantly higher overhead costs for production. Such groups tend to gravitate toward particular products as a bloc.
For complementary goods, the price of one good and the demand for the other are inversely related. Multilevel marketing is one way in which firms rapidly build their consumer base. In price competition, the marketers develop different price strategies to beat the competition. Price normally demands the demand of goods and services. For substitute goods, price and demand are directly related to one another. However, by turning buyers into sellers as well, such schemes may require significantly higher prices.