- Non-price competition
- Non-price competition is rivalry between firms for customers through advertising, branding, quality or loyalty schemes, rather than through the price they charge.
- Price competition
- Price competition is rivalry between firms for customers through the price itself, by cutting it to win sales or to keep rivals out.
Forms of non-price competition
Can you name the four forms of non-price competition?
Each leaves the price alone and changes the product or the reasons to buy it.
Advertising tells or persuades buyers that a firm's product differs from its rivals', to raise demand for it or make that demand less price elastic.
Can you think of an example?
Two cola makers each spend heavily on television adverts. Much of one campaign cancels out the other.
Branding builds a name that buyers recognise and trust, so they keep choosing the product even when rivals sell something similar for less.
Can you think of an example?
Many people cannot tell common ketchups apart blindfolded, yet keep buying the same brand out of habit and pay more for it.
Competing on quality means offering a better product or service than rivals: better features, reliability, free delivery or a guarantee.
Can you think of an example?
Broadband providers compete on speed, reliability and how quickly faults are fixed, not only on the monthly price.
Loyalty schemes reward repeat custom with points, vouchers or perks, which raises the cost to a buyer of switching to a rival.
Can you think of an example?
A supermarket card turns spending into points that come back as vouchers, so shoppers keep returning to the same chain.