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Differences Between Price and Non-Price Competition Markets

An arrangement created by where buyers and sellers coming close contact with each other for the intended purpose of buying and selling of goods and services straight or indirectly is referred to as market.

  • Perfect
  • Competition
  • Monopolistic
  • Competition
  • Monopoly
  • Competition

MARKETS

  • Oligopoly
  • Competition
  • Duopoly
  • Competition

MONOPOLY MARKET

  • Single firm
  • No substitute
  • Price maker
  • Downward sloping supply curve
  • Entry barriers
  • No competition

PERFECT MARKET

  • Price
  • Homogenous products
  • Large quantity of potential buyers and sellers
  • Free entry and free exit
  • Perfect knowledge
  • Perfect flexibility of factors of production
  • Absence of carry cost

DUOPLOY MARKET

  • 2 sellers
  • Restricted entry
  • Sellers have some market power
  • Close substitute might be differentiated
  • Demand curve downward sloping
  • Equilibrium point is MR =MC

OLIGOPOLY MARKET

  • Few sellers
  • Homogenous and differentiated products
  • Restricted entry
  • Imperfect information
  • Interdependence and regular struggle
  • Very high price elasticity
  • High offering cost
  • Lack of uncertainty

MONOPOLISTIC MARKET

  • Large variety of clients an sellers
  • Product differentiation
  • Free entry
  • High advertising cost
  • Two sizes of competition
  • Price
  • Non price

DIFFERENCE BETWEEN PRICE AND NON PRICE COMPETITION

  • BASIS
  • NON PRICE
  • PRICE

MEANING

  • Marketing strategy in which one firm tries to tell apart its product or service from rivalling products on the basis of characteristics like design and workmanship"
  • Marketing strategy where a company tries to tell apart its service or product from rivalling products based on good deal.

FOCUS

  • The concentrate is on quality, deign, delivery methods, locations, special services
  • The focus is on only price of the product.

PROFIT

  • It is usually more profitable than retailing for less price, and avoids the risk of a price war.
  • The company can lead to sub normal earnings or normal income.

SELLING COST

  • Selling cost is high as the company spend a lot on promotional activities
  • Selling cost is low as company focuses on price factor more than promotional activities.

MARKETS

  • Most common among oligopolies and monopolistic competition, because companies can be hugely competitive.
  • Due to extreme completion, a situation of price wars occurs in oligopolistic and monopolistic markets

EXAMPLES

  • Shampoo Market
  • Mobile service providers

NON PRICE COMPETITION

  • Applicable to all markets except perfect & monopoly market.
  • Single buyer in monopoly so no competition.

PRICE COMPETITION

  • Applicable in all types of marketplaces except monopoly market
  • All are price takers & monopoly is price machine.

NON PRICE COMPETITION

  • Product differentiation is the process of distinguishing something from other products in the market by adding unique features like style, quality, offers etc rendering it more attractive and superior to the mark market.
  • The success of the product differentiation is more predicated on non price factors not price factors and successful differentiation offers origin to monopolistic competition and sometimes to perfect competition also.

There are three types of product differentiation:

  1. Simple: predicated on a number of characteristics
  2. Horizontal: predicated on a single feature but individuals are not clear on quality
  3. Vertical: based on a single characteristic and consumers are clear on its quality

3 Components of price differentiation

  1. Convenience- as the changing situation customer wants the merchandise as soon as possible. So the firm should make an effort to deliver the merchandise on time.
  2. Customization- according to the needs of the customers the merchandise must change in terms of sizes, color, design, technology etc
  3. Cost restoration- this is actually the cost that is worth charging. It doesnt signify very high or suprisingly low but should be affordable based on the product.

Non price determinants of demand

Income of the consumer

  • There is direct relation between the income of the buyer and demand for it. Generally, higher the income, higher the quantity demanded and lower the income lower the quantity demanded.

Price of the related good

  • In circumstance of alternative goods, demand for a product comes with the semester in the price of other commodities
  • In circumstance of complementary goods, price demand of a commodity goes up with the show up in the price of other goods.

Taste and preference

  • If the client is rolling out a style for a item, the demand will increase
  • If he does not have any taste and preference for the merchandise, the demand will decrease.

Seasonal factors

  • The demand will keep on changing in line with the weather conditions. Summers will improve the demand of soft drinks whereas winter will raise the demand og woolens.

Number of buyers

  • The demand of any product depends upon the number of buyers of the merchandise. More the potential buyers demand will be high, less the number of buyer demand will be less. ,

Future expectations

  • If the price tag on any item is expected to go up in future, customers starts off buying prior compared to that in case the pries are expected to drop in future the customer postpone his buying to get the power.

NON PRICE DETERMINANTS OF SUPPLY

Input prices

  • As the type prices enhances, the resource will be afflicted and will collapse.

Technology

  • Quantity of the material required depends after the technology. Cost saving technology leads to fall in suggestions prices and thus upsurge in the source.

Number of sellers

  • With the increase in the amount of sellers, the resource also improves with the curve moving to its right area.

Expectations

  • If the costs are expected to rise in future, owner will make man-made shortage and thus the supply diminishes.

ADVANTAGES OF NON PRICE COMPETITION

  • The consumers get low prices as the emphasis is not on price its basically on the other factors of the product besides price.
  • To bring variants firms continue bringing new systems which lead to more smoothing of the functions and add deviation in the merchandise.
  • The emphasis is not on price and hence the main focus is on enhancing the product quality and the services of the merchandise.
  • Large volume of variants brings about many choices and options for the customers on the market.
  • There is not any price war on the market hence it maintains and creates an effective discipline on the market which causes gentle situation.
  • Consumers get increasingly more perks in terms of offers and discounts which entice people and thus lead to competition in the market.
  • A typical feature of non-price tools is the fact they may modify the degree of substitutability among goods.

PRICE CONPETITION

PRICE EALSTICITY OF DEMAND

  • This measure the responsiveness of number demanded of a product to changes in its price.
  • It allows contrast of volume demanded with monetary changes
  • It actions the change

MARKET

PRICE ELASTICITY

Perfect market

Monopoly market

Monopolistic market

Oligopoly market

Duopoly market

In the forex market the demand is elastic as the products are identical in dynamics and are perfect replacement of every other.

This market is highly inelastic as there is 1 seller who are able to make changes in the purchase price and amount demanded accordingly.

Demand is relatively flexible, with small change in price brings about large change in volume demanded as all the merchandise are close alternative of every other.

Demand is relatively stretchy as the merchandise are close substitute of each other.

Demand is relatively stretchy as there are only 2 sellers on the market and the merchandise are close substitute.

For example-

If the price of steel and flat iron increases what happens to its quantity demanded.

CROSS ELASTICITY OF DEMAND

The responsiveness of demand for just one good to a big change in the price tag on another; the proportionate change popular for just one good divided by the proportionate change in the price tag on the other.

MARKET

CROSS ELASTICITY

Perfect market

Monopolistic market

Duopoly market

Oligopoly market

Monopoly market

As the merchandise are homogenous there is a high price combination elasticity demand.

Cross piece elasticity is relatively high credited to competition and the amount of producers in the forex market is high

Fewer producers on the market so the cross price elasticity is low.

Products are close alternative, so change in cost will boost the demand of another product. It includes high combination elasticity.

Only 1 seller on the market and therefore no substitute is obtainable so cross price elasticity is not applicable

ADVANTAGES OF PRICE COMPETITION

  • Pricing plan has a direct impact on the customers as costs of any product is the first observation of customers.
  • Setting prices is relatively a simple task as it does not require financial and accounting information to ascertain prices
  • No market research is required that involves a higher cost. So that it saves cost on promotional activities as compared to non price competition.
  • Pricing directly signifies the product quality and standard of the product and thus the worthiness of the merchandise can be estimated.
  • Price competition divides the segments properly as it evidently points the prime and economy school.
  • Pricing strategy helps a lot to new players coming into on the market to get market show.

CONCLUSION

Price and non price, both have different effect on the marketplaces. As observed in the above task it sometimes appears that monopolistic market is the marketplace situation which is most inspired by both strategies i. e. price and non price.

This project is all my own work and is not copied partly or entirely from any other source, except for any clearly proclaimed up quotation. It complies with the Institutes regulations on Plagiarism that i have read and understood.

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