MEANING AND FORMS OF NON-PRICE COMPETITION

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Non-price competition is a form of competition in which two or more firms use non-price factors to boost demand and sales for their products.

It is a market strategy in which a firm seeks to set its product apart from competing products based on features other than price, such as design, size, quality, superior service etc.

Non-price competition is common in imperfectly competitive markets where firms sell goods at the same price but compete to grow their market share using non-price measures such as creating high-quality goods etc.

Non-price competition entails a company differentiating items based on high quality, better service delivery etc., as opposed to price competition, where a company attempts to distinguish its product based on low price.

Non-Price Competition in Oligopoly

An oligopoly is a market structure where many few sellers in the market dominate the market supply.

An oligopoly is a market structure in which a small number of dominant sellers control the market supply.

If an oligopolist cuts the price, other oligopolists will follow suit to avoid losing market share, thereby reducing the gain of cutting the market price. The result is a kinked demand.

Therefore, rather than cut price, oligopolies engage in a non-price competition where each oligopoly try to improve the quality of their goods to increase market demand for their goods.

Non-price competition in Monopolistic Competition.

A monopolistic competitive market is one where there are many buyers and sellers of slightly differentiated goods.

By differentiating their products from one another, monopolistic competitive firms engage in non-price competition.

Monopolistic competitor engage in non-price competition because their less elastic demand prevents them from raising prices excessively.

Non-price competition in monopolistic competition may entail the launch new products, innovation, creating imaginary product differentiation through advertising etc.

Forms of Non-price Competition

1. Product differentiation: This is a form of non-price competition where a firm sells goods which are slightly or significantly different from those of competitors.

Companies differentiate their goods or services from those of competitors to make them stand out from the competition and appealing to the target market.

A company can differentiate its product from the competition by adding product features that are lacking in the products of its competitors.

Furthermore, through advertising, a business can also induce imaginary product differentiation in consumers' minds, which brings us to the following forms of non-price competition 

2. Advertising and Promotion: This is another common type of non-price competition.

Rather than lowering the price of its goods to increases demand for its goods, a company could increase its spending on advertising to increase demand for its goods.

The entire purpose of advertising is to inform consumers about the qualities and benefits of a company's offering..

Advertising is also used to create imaginary product differentiation. For most people, the uniqueness of a product is more or less determined by what advertisers would like them to believe about the product.

3. After-sale service: Producers of goods such as electronics rely on after-sales services as a means of distinguishing their products.

For example, most Pay TVs offer after-sale services to customers who purchase their decoders.

A company's after-sale service acts as a perk to entice customers to purchase more of its goods, hence boosting demand for those goods.

4. Distribution method: Customers love comfort, just like anybody else. 

They love it when goods are delivered to their place of convenience.

A business can increase demand for its products by making them accessible to customers wherever they are most comfortable to the customers

Place strategies are just as crucial as promotional or pricing strategies because if a product is not offered where the customer needs it, it is no different from one that has not been promoted at all.

Companies are increasingly starting to offer home delivery of items to clients after realizing the value of providing goods to consumers at their place of convenience.

RELATED POST: MONOPOLY VS OLIGOPOLY

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