Price Competition: Exists when marketers complete on the basis of price. 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. 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. One disadvantage to nonprice competition is that consumers may not notice changes right away. Thus, in case of non-price competition, the marketers try to promote the product by exhibiting its distinguishing features. Multilevel marketing is one way in which firms rapidly build their consumer base.
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. The following list enumerates the non-price determinants of demand. By offering a range of similar products geared toward different market sectors, firms can expand their market base. If buyers believe that the market will change in the future, such as may happen with an anticipated constriction of supplies, this may alter their purchasing behavior now. For complementary goods, the price of one good and the demand for the other are inversely related. Advertising usually is quite clever in this field, because the company typically cannot win on the price battlefield and, thus, needs strong advertising to get sales. The demand for these products does not shift even if their prices increase.
As an example, reducing a product's packaging saves materials, weight and space on the shelf. A company normally does not have to worry about its product costing more if its advertising and product are effective enough. If the amount of available buyer income changes, it alters their propensity to purchase. Buyers income If income of the buyers increases, there will be an increase in the demand for goods and services. There is nothing stopping a non-pricing strategy from being used in any market.
This allows some companies to charge higher prices for seemingly identical products because consumers see value in the brand itself. Price changes occur right away and improve a consumer's bottom line. Sales Structure When two firms are competing with similar products, one may be able to enjoy more market share and a deeper level of penetration due to a more effective and aggressive sales structure. If people expect the price of product X to increase, there will be more demand for that product now. 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. 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. Other methods can prove even more effective for firms, though they can sometimes have downsides as well.
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. Thus, if there is an economic boom, someone is more likely to buy, irrespective of price. Thus, the marketers focus on these factors to increase the sale of products. Thus, an aging population will increase the demand for arthritis drugs, while a younger population will increase the demand for sporting goods. During a particular season say a rainy season there tend to have higher demand for umbrellas, raincoats as compared to other times during the year. Perception and Branding In some cases, little possibility of quality differentiation exists between two products.
Newer sales tactics include social media posts, direct sales through manufacturers rather than stores and efficient forms of advertising online. Examples of nonprice competition include touting a supermarket's loyalty discount cards, banking services, extended hours, self-checkouts and online shopping. Product Differentiation Not all consumers are the same. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars. In this way, if a firm can figure out how to produce an item at a cost comparable to what its competitor charges but make it of higher quality, that firm may be able to steal the market from its competitor. Most companies compete with a pricing strategy, which involves adjusting and changing the price to get more sales.
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. The non-pricing strategy occurs in many markets but tends to be most common in an oligopolistic market, or one with few competitors. 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. If the market is expanding rapidly, customers may be compelled to purchase based on other factors than price, simply because the supply of goods is not keeping up with demand. Such groups tend to gravitate toward particular products as a bloc. At the same time, it most commonly is used when there are few competitors. For example, if there is an increase in the natural rubber then there will then be a lower demand for synthetic rubber, its substitute.
When companies offer the same basic product, with few changes, separately for men and for women, potential sales increase. Markets consist of men and women from diverse age, ethnic and economic groups. However, a problem with this approach is that it may take some time for consumers to realize any difference in quality. Number of buyers in the market If the number of buyers in the market increases as a result of population growth, there will be an increase in the demand for the goods and services. These factors are important, because they can change the number of units sold of products and services, irrespective of their prices.