NON-PRICE AND PRICE COMPETITION

Аннотация

Exists when marketers complete on the basis of price. In price competition, the marketers develop different price strategies to beat the competition.They generally set a same or low price of a product than that of the competitors to gain the market share. Generally, the prices are changed to cover the costs or increase the demand. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars. The major disadvantage of price competition is that the competitors have flexibility to change the prices of products. KEYWORDS: Price, marketing, advertisement, economy. INTRODUCTION Thus, in case of non-price competition, the marketers try to promote the product by Focuses on the factors other than the price of exhibiting its distinguishing features. the product. In non-price competition, However, a marketer who is competing on customers cannot be easily lured by lower non-price basis cannot ignore the prices set by prices as their preferences are focused on the competitors as price remains a significant various factors, such as features, quality, marketing element. service, and promotion. Non-price competition is a marketing strategy Thus, the marketers focus on these factors to "in which one firm tries to distinguish its increase the sale of products. For instance, product or service from competing products customers prefer buying expensive luxury on the basis of attributes like design and products for gaining status in the society. The workmanship".[1] It often occurs in demand for these products does not shift even imperfectly competitive markets because it if their prices increase. exists between two or more producers that sell goods and services at the same prices but “NON-PRICE AND PRICE COMPETITION” P age 301 | 5 compete to increase their respective market Businesses can also decide to compete against shares through non-price measures such as each other in the form of non-price marketing schemes and greater quality.[2] It is competition such as advertising and product a form of competition that requires firms to development. Oligopolistic business normally focus on product differentiation instead of do not engage in price competition as this pricing strategies among competitors. Such usually leads to a decrease in the profit differentiation measures allowing for firms to businesses can make in that specific market. distinguish themselves, and their products Non-price competition is a key strategy in a from competitors, may include, offering growing number of marketplaces (oDesk, superb quality of service, extensive TaskRabbit, Fiverr, AirBnB, mechanical turk, distribution, customer focus, or any etc) whose sellers offer their Service as a sustainable competitive advantage other than product, and where the price differences are price. When price controls are not present, the virtually negligible when compared to other set of competitive equilibria naturally sellers of similar productized services on the correspond to the state of natural outcomes in same market places. They tend to distinguish Hatfield and Milgrom's two-sided matching themselves in terms of quality, delivery time with contracts model.[3][4] (speed), and customer satisfaction, among It can be contrasted with price competition, other things. which is where a company tries to distinguish Although any company can use a non-price its product or service from competing competition strategy, it is most common products on the basis of low price. Non-price among oligopolies and monopolistic competition typically involves promotional competition, because firms can be extremely expenditures (such as advertising, selling staff, competitive. Firms will engage in non-price the locations convenience, sales promotions, competition, in spite of the additional costs coupons, special orders, or free gifts), involved, because it is usually more profitable marketing research, new product than selling for a lower price, and avoids the development, and brand management costs. risk of a price war. Kinked demand curve model Oligopolistic competition market. Due to the little or few firms in the market, these firms tend to compete in non- Non-price competition often occurs in price measures to distinguish themselves. oligopoly, where few firms dominate the Such competition would be otherwise known “NON-PRICE AND PRICE COMPETITION” P age 302 | 5 as quality competition where oligopolistic demand curve model, the firm will maximize firms depend on their quality improvement its profits at Q,P where the marginal revenue intensities to survive.[5] In order to distinguish (MR) is equal to the marginal cost (MC) of the themselves well, These firms can compete in firm. Hence, a change in MC would not price, but more often, oligopolistic firms necessarily change the market price, implying engage in non-price competition because of rather stable and sticky market prices. their kinked demand curve. In the kinked Long-run equilibrium of the firm unde