Non-price competition
Non-price competition is a marketing strategy "in which one firm tries to distinguish its product or service from competing products on the basis of attributes like design and workmanship" (McConnell-Brue, 2002, p. 437-438). The firm can also distinguish its product offering through quality of service, extensive distribution, customer focus, or any other sustainable competitive advantage other than price. 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. Non-price competition typically involves promotional expenditures, (such as advertising, selling staff, sales promotions, coupons, special orders, or free gifts), marketing research, new product development, and brand management costs.
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. In the worst case scenario, competitors will start to lower prices resulting in a price war.
Although any company can use a non-price competition strategy, it is most common amoung oligopolies.
See also
Sources
- Brue, Stanley L., and McConnell, Campbell R. Economics–Principles, Problems and Policies (15th edition). Boston: Irvin/McGraw-Hill, 2002.