Competition outside of prices can be an important element of a marketing strategy in a demanding market. Many companies today are competing for the attention of the same potential customers. They often do this by offering lower prices. However, doing so can harm all competing parties in the long run. But are there other options? Read on.
It is natural that all companies want to earn more and more and sell more. Ultimately, to achieve this, they need to have a larger share of the market. To this end, companies try to use two types of strategies. The first is pricing strategy, consisting in regularly offering products at the lowest possible prices. The second, non-price competition, focuses on the extensive promotion of products. To emphasize their characteristic advantages or features, companies use, inter alia, tools public relations, inbound marketing if positioning of pages.
Competition outside the price - definition
Non-price competition means a certain way of competition between firms. This strategy focuses on all those aspects of the product/service that do not require price changes. These could be, for example, additional benefits or additional services, solid workmanship and quality, etc. This tactic is in contrast to price competition, where rivals try to gain market share by lowering prices. Non-price competition is often used by industry competitors to prevent a price war that can lead to a damaging spiral of price reductions. yeah marketing strategy usually includes expenses for online marketing and those related to the promotion of offline sales, such as free gifts, coupons or paid advertising. Simply put - non-price competition means promoting the brand, company and product qualitynot lowering prices. Most companies around the world compete in the market, thus taking part in non-price competition, price competition, or both.
Is non-price competition profitable?
While non-price competition typically involves promotional expenses, it is still an attractive form of competition. Why? Because despite the additional costs it is usually still more profitable than selling at a lower price. Ultimately, it also avoids the risk of a price war. Non-price competition can also promote innovation and act as a growth factor for those brands trying to differentiate their product.
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While any firm can adopt a non-price competition strategy, it is the most common among oligopolies and monopolistic competition. There, companies can be much more competitive than in purely competitive markets. An important moment for the non-price strategy was the emergence of the e-commerce market. Enabling customers to search and compare multiple products at the same time has significantly changed the dynamics of the business.
Competition outside the price - examples
Non-price competition means building a concrete advantage other than simply offering cheaper goods or services. One of the non-price strategies for building a position on the market is to bet on quality. Imagine that as a consumer, you have the choice of two products for the same price. Which one will you choose? If one of them is of better quality, this is usually the one you choose. So it all comes down not only to finding a way to make the cost of the produced item or service offered comparable to that of a competitor.
In order to "steal" the market of the competition, apart from a similar price, the product must also be of higher quality. It has been known for a long time that customers are able to pay even more for goods with similar external features, but perceived by them as of higher quality. This phenomenon is used by, among others Apple, iPhone producers or organic food producers. The problem may be that consumers usually take time to perceive this quality and then get used to it enough not to want to give up on it. This is an area where marketing specialists can especially prove themselves.
Non-price competition is also closely related to brand perception. After all, in some cases there is really little scope for quality variation between two products. Take jeans, for example. Individual producers have a limited influence on their quality. For this reason, some manufacturers launch several brands on the market, giving the impression that some of them offer high-quality jeans, while others are slightly weaker. In the long run, such an approach may not guarantee success because the brand advantage in this model results from consumer trends.
While they currently work in their favor, the same consumer trends may also lead to their downfall. If consumers no longer perceive a given clothing brand as fashionable, the manufacturer may not be able to continue to charge high prices for its products. In this tactic brand image is essential. Adopting a non-price competition strategy allows some firms to charge higher prices for seemingly identical products. How is this possible? Because consumers see value in the brand itself. This is perfectly visible on the example of basic food products, such as flour or butter. Branded products are more popular than store brands, although they cost more.
Non-price competition and marketing activities
Price is one of the most important factors that any company takes into account when deciding how to place a product on the market, but also in the eyes and minds of its consumers. This is an important move as it sets the arena of competition in which the brand will fight for its position. Lowering the price means price competition. Not disrupting the pricing mechanism means there is non-price competition at stake, and the company will want to increase market share and sales volume through promotion, distribution and other marketing tools. In a word, it will compete with everything except price.
Even if the price is the only P of 4P marketing mixwhich generates income directly, while all others initially only generate costs. It is impossible to say unequivocally which strategy will bring better results. There are many factors to consider. First of all, each one target group She's differrent. Moreover, not every customer is the same. Some potential consumers are primarily interested in low prices. For one segment, other factors such as service, quality of goods, value offered and brand image will be more important. Each company must therefore decide for itself what strategy will be the best for it.