Differences between PRICE AND NON PRICE COMPETITION
Market is a place where the sellers sell their products and buyers purchase their products what they needs and wants.
Every one establish the business for the sake profits .Firms sell goods and services through a variety of direct and indirect channels.
In order to increase the profit orto increase the revenue of the firm we can follow the price competition or non-price competition.
In the price competition companies seek to attract customers solely on the basis of product price.In this marketer’s seek to influence customer demand primarily through changing the prices of the products.
In the non pricecompetition cost of thecost of the product is minimized and other making factors are maximized by the creation of a distinctive quality about the product such as its design ,performance ,advertising ,complementary and substitute goods ,availability ,customer services and loyalty programs.
In monopoly market price competition is more beneficial to the firms because only few sellers are available in the market.
In oligopoly market non price competition is more beneficial to the firms because market is controlled by the small group of firms.
In monopolistic market non price competition is more beneficial to the forms because it is imperfect competition in short run and perfect competition in long run analysis.
For the above example it can shows the price competition .when ever the prices are remains same in the $1:40 and the profit of the price remains unchanged .Most of the firms followed by the dominant strategy. In the price competition that depends up on the opponents movement. That’s why firms are mostly used in non price competition. For example pepsi cola and coco cola are always used in the non price competition.
In order to measure this responsiveness of quality to price changes ,and ultimately impact on the total revenue. It is called elasticity. It is defined as the percentage change in one variable relative to a percentage change in another variable.
Where Ep= Coefficient of price elasticity
∆Q=percentage change in quantity
∆P=percentage change in price
The quantity demanded or supplied changes will change when the price changes. This is known as price elasticity of demand and price elasticity of supply respectively. Elasticity is a measure of relatively changes.
If the price of the compulsory goods can be increased and the consumer can choose the complementary goods then it is called elastic and the consumer cannot choose the complementary goods ,they are compulsory goods then it called inelastic.
In general, Oligopolies involve a large amount of non-price competition. Product development is one area of competition, and advertising makes up a large portion of non-price competition as well. Oligopolists are large firms and therefore can afford to advertise
Price is the value placed on what is exchanged. Something of value is exchanged for satisfaction and utility, includes tangible (functional) and intangible (prestige) factors.
Buyers must determine if the utility gained from the exchange is worth the buying power that must be sacrificed. Price represents the value of a good/service among potential purchases and for ensuring competition among sellers in an open market economy.
Marketers need to understand the value consumers derive from a product and use this as a basis for pricing a product--must do this if we are customer oriented.
Percent change in quantity demanded relative to the percent change in price.
% change in Qtty demanded
% change in price
Elastic demand is more sensitive to price than inelastic demand.
Elastic demand, greater than1
Inelastic demand, less than 1
Unitary demand, equal to 1
TR = Price * Qtty
If demand is elastic then change in price causes an opposite change in the total revenue.
If demand is inelastic then change in price causes the same change in the total revenue.
The less elastic the demand, the more beneficial it is for the seller to increase price.
Demand is more supply is less then the of the product price will be increases. It can be possible in only in the monopoly market.because single firm leads the entire market.
In the same way when the demand is more supply is less then the product of the price will not be increases in the oligopoly market because in the oligopoly all the firms having the same price and varies the product in the nonprice competition.
In the store they arranged all shampoos in the similar brands are side by side. In the store the two products of the different brands are arranged side by side then the demand and prices of the different brands are same .
In the monopolistic market two more firms lead the market.in the monopolistic market also follows the nonprice competition.
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Learn why its better to buy professional shampoo and how to find the best one or your budget ,life style and hair type.
In the shampoo industry there are number of brands .Each brand can be manufactured by many products ,and the every product has many types .All the brands are manufactured products like Antidandruff, loss of hair fall ,black and silky, to get vitamins ,long and grow hair.
I visited a local super market spencers ,consult the sales manager(koteswararao).i enquiry about how much space allocated for shampoos. He tells that 2.3% of the total volume of the store.in this store all the shampoos are placed in the left corner of the entrance. That row contains 7racks all of them are FMCG products.The 3 rack is allocated for shampoos.The brands that i ound in the rack are Hindustan unilever limited, procter and gamble ,cavin care, Himalaya drug company ,loreal ,ITC ,Godrej and many more brands.
Sun silk, Dove,
All clear, clinic plus
Pantene, wella, Rejoice
Meera ,chik ,Nyle
Neem,Johnson& Johnson ,kesini
Vivel ultra pro
I find that many customers are willing to buy hul products. I asked one of the customer why all of them are buying shampoos and what are the benefits to you.
He said that on watching advertisements he started buying hul products .and also tells that hul has more variety of products and they are updating the products frequently.By this always gets
a new stock.the ingredients which are using hul products are not harmul to our health.the price of the hul products are reasonable and available to all the classes of the people.thats why he is choosing hul products.
Compared the rural and urban areas, urban areas are more sales in shampoos because it is difficult to get natural products.hul products are more interact with the all kinds of areas. Most of the people living in the urban areas are coming from the rural.they all of them know hulproducts.thats why hul products has more sales comparing to the other brands.
When the demand of the shampoo increases price is automatically decreases, because if any product has more demand then automatically many of them starts the business.
Hul has a greater supply and the other are relatively low compared to hul.thats why the supply of hul increases price also increases.shampoos are inelastic products because there are no complement products.in this quality demanded or supplied changes will change when the price changes.
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