If people expect income level to increase, demand will also increase and vice versa. In price competition, the marketers develop different price strategies to beat the competition. However, there are some major non-price determinants of demand which include the following: 1. Nonprice competition entails two phases: one that implements new aspects of production or services and another that markets these changes to the public. In general, nonprice competition means marketing a company's brand and quality of products as opposed to lower prices.
For this reason, firms should not expect a single product to appeal to every consumer in a market. 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. Thus, the marketers focus on these factors to increase the sale of products. Thus, if there is an economic boom, someone is more likely to buy, irrespective of price. If there is a price change in a complementary item, it can impact the demand for a product. For instance, Coca-Cola and Pepsi are close competitors, thus, they often engage in price wars.
There is nothing stopping a non-pricing strategy from being used in any market. Changes in the determinants of demand will cause the shift of the demand curve. Prices of related goods Prices of related goods also affect demand. Quality If consumers must choose between two products of the same price but they can see that one is of a higher quality, they generally pick the product of higher quality. Consumer expectations of future prices and income Consumer expectation is important to determine changes in demand. Generally, the prices are changed to cover the costs or increase the demand.
For instance, in the United States, blue jeans have little actual quality variability from one producer to another. These factors are important, because they can change the number of units sold of products and services, irrespective of their prices. 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. 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. When companies offer the same basic product, with few changes, separately for men and for women, potential sales increase.
A company may seek an advantage over another by marketing a product's longevity, convenience and workmanship over comparable products. Buyers income If income of the buyers increases, there will be an increase in the demand for goods and services. 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 example, if there is an increase in the natural rubber then there will then be a lower demand for synthetic rubber, its substitute. 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. For substitute goods, price and demand are directly related to one another.
Product Design In some cases, firms may compete by changing the design of their products to make them more appealing without significantly changing production costs or quality levels. Price normally demands the demand of goods and services. The need for goods varies by time of year; thus, there is a strong demand for lawn mowers in the Spring, but not in the Fall. This normally comes down to advertising, and most companies employing this tactic will boldly say their product or service costs more because it offers better service or quality. 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.
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. Thus, in case of non-price competition, the marketers try to promote the product by exhibiting its distinguishing features. However, a marketer who is competing on non-price basis cannot ignore the prices set by the competitors as price remains a significant marketing element. The demand for these products does not shift even if their prices increase. A company normally does not have to worry about its product costing more if its advertising and product are effective enough.
This allows some companies to charge higher prices for seemingly identical products because consumers see value in the brand itself. However, in the cases of inferior products an increase in income will lead to a decrease in demand and vice versa. 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. Thus, an expected constriction in the supply of rubber might increase the demand for tires now. Multilevel marketing is one way in which firms rapidly build their consumer base.
They generally set a same or low price of a product than that of the competitors to gain the market share. Other methods can prove even more effective for firms, though they can sometimes have downsides as well. However, by turning buyers into sellers as well, such schemes may require significantly higher prices. Price changes occur right away and improve a consumer's bottom line. At the same time, it most commonly is used when there are few competitors.
Markets consist of men and women from diverse age, ethnic and economic groups. If the amount of available buyer income changes, it alters their propensity to purchase. However, such product differentiation can result in significantly higher overhead costs for production. 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. Sellers can use advertising, product differentiation, product quality, customer service, and so forth to create such strong brand images that buyers have a strong preference for their goods.