This pricing method is used more often by businesses selling similar products, since services can vary from , while the attributes of a product remain similar. Above the competition pricing requires the business to create an environment that the premium, such as generous payment terms or extra features. Thus, in case of non-price competition, the marketers try to promote the product by exhibiting its distinguishing features. Generally, the prices are changed to cover the costs or increase the demand. They generally set a same or low price of a product than that of the competitors to gain the market share.
Firms will engage in non-price competition, in spite of the additional costs involved, because it is usually more profitable than selling for a lower price, and avoids the risk of a price war. Companies face strong pricing competition from businesses that manufacture generic equivalents of their brand-name medications. However, trying to offer a lower price than a competitor is not the only way of competing. Non-price competition typically involves promotional expenditures, marketing research, new product development, and brand management costs. Alter your prices as prudent to speak to the various customers defined by the above comparisons. . For example, in November 2014, Amazon projected price changes to approximately 80 million items in preparation for the holiday season.
Consider the relative price of the two or more competing products. Browse the definition and meaning of more terms similar to Non Price Competition. Quality If consumers must choose between two products of the same price but they can see that one is of a higher quality, they generally pick the product of higher quality. For this reason, firms should not expect a single product to appeal to every consumer in a market. Price Competition: Exists when marketers complete on the basis of price. The firm can also distinguish its product offering through quality of service, extensive distribution, customer focus, or any other other than price.
However, the long-term sustainability of such an approach may be difficult because, as such brand advantages arise through consumer trends, consumer trends may also lead to their demise. Product Differentiation Not all consumers are the same. In order for a business to charge an amount above that of the competition, the business must differentiate the product from those created by competitors. 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. For instance, if consumers no longer see a clothing brand as fashionable, the manufacturer may not be able to continue charging high prices for its products.
Competitive pricing is the process of selecting strategic price points to best take advantage of a product or service based market relative to competition. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars. Non-price competition — oligopolies Non-price competition is more common in , such as those with very few competitors — oligopolies — maybe because it can give an impression of a very competitive market, when in fact the rivals are colluding to keep their prices high. Multilevel marketing is one way in which firms rapidly build their consumer base. A is a good or service being offered at a notable discount, at times resulting in a loss if the products are sold below cost. Non-price competition is a marketing strategy that typically includes promotional expenditures such as sales staff, sales promotions, special orders, free gifts, coupons, and advertising.
Non-price competition is often adopted by the competing players in a sector in order to prevent a price war, which can lead to a damaging spiral of price cuts. It contrasts with price competition, in which rivals try to gain market share by reducing their prices. The major disadvantage of price competition is that the competitors have flexibility to change the prices of products. Compare the price of the products in absolute terms; in this case, do not consider the relative value of the product. Other retailers, including Walmart and Best Buy, announced a price-matching program. Determine which products are substantively similar to your product in the eyes of the customer. For this reason, a number of producers compete by manufacturing a perception of high quality with their brands.
Most companies across the world are involved in either non-price competition, price competition, or both. The technique looks to increase traffic to the business based on the low price of the aforementioned product. Perception and Branding In some cases, little possibility of quality differentiation exists between two products. Methods include advertising, slightly differentiating your product, improving its quality, or offering free gifts or discounts on subsequent purchases. It can be contrasted with price competition, which is where a company tries to distinguish its product or service from competing products on the basis of low price.
In non-price competition, customers cannot be easily lured by lower prices as their preferences are focused on various factors, such as features, quality, service, and promotion. Price competition is one of many ways that a product or service can compete in the marketplace. In these marketplaces, suppliers tend to distinguish themselves in terms of customer satisfaction, speed of delivery, quality, etc. Non-price competition is particularly common , perhaps because it can give an impression of fierce rivalry while the firms are actually colluding to keep prices high. Brands provide guidance and clarity for choices made by firms, consumers, investors and other stakeholders. This is done with the purpose of building up a sustainable competitive advantage over the competitors. However, in virtually every case, the brand-name owner avoids reacting with pricing strategies, and instead uses a non-price competition marketing approach.
When a company is unable to anticipate competitor price changes or is not equipped to make corresponding changes in a timely fashion, a retailer may offer to match advertised competitor prices. About the Author Ellis Davidson has been a self-employed Internet and technology consultant, entrepreneur and author since 1993. By offering a range of similar products geared toward different market sectors, firms can expand their market base. In price competition, the marketers develop different price strategies to beat the competition. Other forms of competition are always in play, however, and will affect the price comparison.
Businesses have three options when setting the price for a good or service: set it below the competition, at the competition or above the competition. 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. You can complete the list of synonyms of non price competition given by the English Thesaurus dictionary with other English dictionaries: Wikipedia, Lexilogos, Oxford, Cambridge, Chambers Harrap, Wordreference, Collins Lexibase dictionaries, Merriam Webster. Non-price competition is an important strategy in marketplaces where sellers are offering their service as a product, such as AirBnB, Fiverr, oDesk, TaskRabbit, Mechanical Turk, etc. Businesses can also decide to compete against each other in the form of non-price competition such as advertising and product development. 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.