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Methods of non-price competition. Price and non-price competition

Non-price methods involve changing the properties of a product, giving it qualitatively new characteristics, creating new products to meet the same needs, offering products that did not exist on the market, improving the range of services accompanying the product (demonstration of the product, increasing the period of warranty repair, etc.) . An important factor in non-price competition is cost-effectiveness and minimization of delivery times, which can be observed in the conditions of delivery of the required products of a given quality to the place and time specified by the contractual terms, taking into account the minimum total costs of transporting the products. It is impossible not to highlight such a factor of non-price competition as the creation of a powerful sales network and service department.

TO non-price The following groups of competitive action methods include:

The first group is methods of ensuring the competitive advantages of an organization by changing for the better various consumer characteristics of goods and services, in order to increase consumer value:

Introduction of new products (product differentiation);

Introduction of goods with new consumer properties, improved quality, more advanced design, more beautiful packaging (differentiation of consumer properties of goods).

The second type of differentiation will apply when:

The organization strives to expand the list of consumer properties of goods;

The organization is trying to expand the list of market segments of the goods produced;

The organization intends to achieve recognition in a relatively small market sector through the diversity of its product offerings;

Introduction of new forms of sales and after-sales service to attract new categories of consumers, encourage more frequent use of goods and one-time purchase of more goods.

The second group is sales promotion methods. These are short-term measures of a monetary or material nature that encourage the purchase of goods.

Sales promotion has a multi-purpose focus. The choice of target depends on the object of the upcoming impact - the consumer or reseller.

The consumer has the greatest significance, and the entire marketing policy comes down to influencing the consumer. The goals of incentives in this case come down to increasing the number of buyers or increasing the quantity of goods purchased by the same buyer. Sales promotion tools for buyers include: samples for testing, bonuses, lotteries, price discounts, trade discounts, coupons, sales, games and competitions, consumer clubs, “label events.” The trade intermediary, being a natural link between the manufacturer and the consumer, is a specific incentive object that in this case performs regulatory functions. In this case, incentive goals can be aimed at: - increasing the amount of goods entering the distribution network;

Increase the intermediary’s interest in active sales of a particular brand, etc.

Sales promotion tools for resellers are: bonuses and gifts, trade bonuses, compensation for advertising costs, prizes, sales exhibitions, souvenirs, trade brochures.

An organization should constantly compare and analyze alternative options for selling its product, revise prices and discounts depending on changes occurring in the market.

Advertising- this is information disseminated in any form by any means about individuals or legal entities, goods, ideas and undertakings, which is intended for a certain circle of persons and is intended to generate or maintain interest in these individuals or legal entities, goods, ideas and undertakings and facilitate the implementation goods, ideas and initiatives.

Radio advertising is an indispensable part of our daily life. However, its main difficulty is that it is quite difficult to identify potential buyers from this audience and force them to listen to exactly the program within which the advertisement is running. You can influence the senses with the help of appropriate melodies, noises and voices that paint exciting mental images. Radio uses 3 main tools to convey a message:

Music that promotes better memory;

Sound effects used to convey the environment in which the action takes place.

The success of advertising in newspapers and magazines is determined by the correct choice of publication, good text, catchy text design, good placement of text on the publication page, correct timing of publication and repetition. In order to select the most suitable publication, it is necessary to make a list of all newspapers and other periodicals that can reach the desired group of potential buyers.

In outdoor advertising, the repetition factor plays a major role, so the budget should be based on the need to purchase specially selected places that regularly come into view of a large number of people.

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Economic methods of competition

There are two key approaches: playing with costs, with prices. Influence through prices is an option when a company resorts to a floating pricing policy. The main task is to force the opponent to leave this niche. Often, to achieve a goal, an enterprise sets the price of a product significantly below the norm. The competition method produces the greatest effect if the decline occurs sharply and is unpredictable for rivals. The company adheres to this pricing policy until it succeeds in squeezing the competitor out of the niche. Equally satisfactory are the options when the opponent completely stops activities, and when he chooses a different direction as an attempt to avoid barony.

If the applied methods of competition gave the desired result and the competitor was removed from the market, prices can be restored to their previous level. In some cases, an enterprise can afford to raise the cost above the previous standard. This allows you to compensate for the losses that were associated with the period of competition.

Advantages and disadvantages

The weakest side of the described approach to eliminating rivals is the fact that the opposite side can also resort to a similar line of behavior. Competition in the market is often unpredictable, and an accurate assessment can only be made in advance if there is extensive and correct data on the financial condition of the competitor.

The winner remains with those who have a large supply of money at the start of the “battle.” As soon as the first signs of competition appear in the niche where the enterprise operates, it is necessary to tune in to a fight from which only one can emerge victorious. However, as practice shows, only large monopolies currently seriously compete in this way, while most medium- and small-sized companies simply adjust to the generally accepted price level. For such market participants, other forms and methods of competition are relevant.

Costs as a way to fight an opponent

The main idea of this method of competition is to reduce to a minimum the costs associated with the process of production and sales of products. Enterprises are resorting to all legal tools that allow them to at least slightly reduce the cost component of their business. It is taken into account that manufacturing the same product in different ways can be very expensive or vice versa. The influence is exerted by technological features of production, automation of work lines, and the streamlined workflow. It becomes very important for an entrepreneur to establish an organized working day - this is one of the methods of non-price competition.

In an effort to minimize costs in the production and sales process, many try to use the most inexpensive raw materials. This often leads to low quality of the finished product, which, as practice shows, does not stop companies that are immersed in competitive methods in an attempt to win a place in the market.

At any cost!

A widespread practice of reducing costs associated with the production and sales process is to attract cheap labor. This option often goes against the current legal norms of the country. This is not only about competition law, but also about employment rules. Enterprises hire illegal, semi-legal workers who are willing to work full-time hard work for low wages. However, you should not expect that such employees will work really well, producing high-quality goods.

Both the use of cheap labor and other methods of non-price competition can reduce the costs of an enterprise. This means that by keeping prices equal to competitors in the vast market, the company can count on greater profits. This technique is quite typical for both small and medium-sized businesses.

Conditional-economic: looking in more detail

There are several methods combined in this group to increase the competitiveness of an enterprise. If the ones described earlier made it possible to influence an opponent, then this group was developed on the idea of attracting more buyers.

The simplest way, which is completely subject to the law on protection of competition, is legal, correct and does not lead to a decrease in the quality of services - this is to expand the range. The company thus forms a line of offers so that the client can find anything for himself, regardless of his wishes, no matter how specific they may be. This applies not only to names, but also to packaging. For example, a classic package of milk is one liter in volume, but to meet the needs of a certain category of customers, containers of 100 ml, 330 ml, half a liter or one and a half are produced.

Selection and pricing policy

As they say in the economics course in any specialized educational program, you can apply knowledge of the concept and types of competition to improve the company’s position in the market. How does this happen within the approach described above? As we were able to discover, the sale of goods that are available in different design options is always higher than those that are available in only one form.

This type of competition is beneficial for the enterprise, as well as for the client: small packages can be set at prices that, in terms of the net weight of the product, will be higher. The company makes a profit, the client gets the product he needs. Additional tools for this type of competition (the concept was given above) are changing the design solution. The more modern and brighter a product looks, the more willing they are to buy it. It is worth taking into account fashionable music, popular films - in a word, even aspects of social life that are not directly related.

Distinctive feature of non-price competition- variety of methods. But all of them are applied in relation to two objects of competition: a set of consumer properties and their level of quality. When the object of competition is a set of consumer properties, the focus of the struggle is the form of the product, its design and packaging, the form and method of sale, advertising, and pre- and post-sale services provided to the buyer. The vector of action of non-price methods is aimed at attracting new customers by expanding the set of consumer properties of the product (Fig. 2.2a). Its scope is to establish control over demand, and the result is a redistribution of the market among competitors. When the quality of a product becomes the object of competition, methods are used that lead to a decrease in the elasticity of demand (Fig. 2.26) by strengthening the buyer’s commitment to the brand due to quality: technological excellence, reliability, extending service life, prestige, etc. In this case, the vector of competition, which is also the criterion for success, is ensuring the best price-quality ratio. When the owner of a flower shop expands the range, this is a factor in attracting new customers. When he also provides an additional service, for example, arranging a bouquet, this strengthens the customer’s loyalty, resulting in a decrease in the elasticity of his demand.

The company resorts to the use of non-price competition methods in two cases. When the type of market requires it and when the firm seeks to protect itself from the pressures of price competition. The “protective function” of non-price competition is associated not only with the ability to prevent a “price war”, but also with the relative sustainability of the competitive advantage gained through the use of non-price methods of competition. Price fighting methods provide short-term gains due to the ease of copying them. In the case of product differentiation, it is not so easy to replicate the achievements of the first mover, which gives it superiority over a longer period of time.

Rice. 2.2.

The main danger that arises during the transition to non-price competition is the unpredictability of the reaction of market demand to the seller's innovations. At the same time, despite the variety of methods, the scope of non-price competition is narrower than that of price competition, in the sense that the latter, although with different intensity, operates in all markets, while non-price competition operates only in markets where they have place of differences in consumer preferences.

The role of non-price competition related to its impact on the industry market, competition and welfare. Non-price competition is a way of segmenting the market and strengthening the market power of firms at the same time. In this sense, it can contribute to both a decrease and an increase in market concentration. Causing qualitative changes, it is an instrument of “creative destruction” and a transformer of the microsystem of competition. Its merit lies in the fact that it generates these changes endogenously, due to the internal forces of competition. Income growth activates the innovative activities of innovators, and the growth of their competitiveness stimulates the innovative efforts of rivals. By imitating (copying and imitating) the innovator and striving to surpass him, competitors expand the space of “creative destruction”, creating conditions for the emergence of new markets. I. Schumpeter was right in asserting that “contrary to textbooks, in capitalist reality, other (non-price - Yu. T.) competition, based on the discovery of a new product, a new technology, a new source of raw materials, a new type of organization (for example, the largest firms ). This competition ensures a decisive reduction in costs or an increase in quality; it threatens existing firms not with an insignificant reduction in profits and output, but with complete bankruptcy."

Non-price competition is a factor in increasing social welfare, since, by expanding the product range, it ensures more complete satisfaction of various consumer preferences. The intensity of non-price competition is a very reliable indicator of the level of well-being of the population and is always more intense in countries with high income levels. Although the desire of firms to differentiate their product may lead to excessive product variety, causing waste. But product differentiation can also cause harm to consumers, increasing their costs, on the one hand, due to the difficulties of compatibility of products from different sellers, and on the other, due to the increase in the market power of sellers. Standardization, such as the introduction of a pan-European standard for mobile phone chargers, can reduce the severity of these problems. But standardization can become an obstacle to reasonable product differentiation, and therefore a brake on the development of competition. A particularly high risk of its use arises in conditions of rapid technological change, where the standard can become a means of imposing an ineffective technological solution. A dominant firm always strives to impose its standard, while a small firm has more incentive to create a compatible product.

Currently, the object of non-price competition is becoming a symbolic value (sign-value), which means the additional cost that the buyer is willing to pay for owning a product of a strictly defined trademark or brand. The source of its formation is not the consumer parameters of the product, but the buyer’s subjective perception of the product as “branded”. Products compete with each other as symbols." The defining features of a product are its image, created not in production, but in the information and communication sphere. Competitive advantages are achieved through the active use of information differentiation, which serves as a source of symbolic value formation. A distinctive feature of competition based on symbolic value - high intensity and uncompromisingness. The high intensity of the struggle is due to the specifics of the symbolic value market, which operates on the principle: “the winner takes all.” Considering the unpredictability of the results of information differentiation, it is unprofitable for competitors to limit the volume of product supply, which will also help increase the intensity of competition. with the specificity of demand for “symbol products". The status of symbolic value gives the product unlimited power over the consumer. However, a change of symbol automatically leads to its complete depreciation and to an avalanche-like drop in demand for it.

An instrument for creating symbolic value is advertising, which has become the most active method of information differentiation and non-price competition. For a company, it is a method of promoting a product by maintaining interest in it. Its task, by influencing demand and its elasticity, is to ensure control over price, avoiding price competition. For competition, the importance of advertising lies in its ability to 1) smooth out the degree of differences between products with real product differentiation and 2) enhance such differences with phantom (imaginary) differentiation. The impact of advertising on competition is assessed in different ways. Some, for example G. Bakker and J. Stiglitz, see her as an informant. Others, like N. Kaldor and J.K. Galbraith is a tool for manipulating consumer preferences. The point, however, is that competition turns even the informational component of advertising into a way of influencing the buyer.

What is important is not the fact of the impact of advertising, but its consequences for competition. Typically, the influence of advertising is studied in terms of its impact on market structure (concentration, freedom of entry, degree of product differentiation) and signaling about product quality. Empirical research shows that the impact of advertising depends on the specifics of the market (volume), the type of buyer (intermediate, final) and the type of product (sought or tested). In large markets where advertising expenditures promote economies of scale, aggressive advertising enhances the advantages of large firms and can create barriers to entry for new firms that would not be observed in small markets. Intermediate buyers are weakly exposed to advertising and here its influence on competition is small. For a test good, the quality of which is determined during consumption, advertising can serve as a signal of quality. In this case, while ensuring repeat sales, it can cause a narrowing of product diversity, increasing barriers to entry into the market and reducing the intensity of competition. It is impossible to unequivocally assess the impact of advertising on competition. Even a steady increase in advertising costs cannot change this conclusion, since their growth, on the one hand, indicates that rivals view advertising as a way to protect themselves from competition, and on the other hand, it also indicates an increase in the intensity of the struggle for competitive advantages.

The situation is different in markets where symbolic value is the main source of advantage. Satisfaction of physiological needs leads to an increase in the proportion of needs that are psychological in nature and therefore highly amenable to control through influence on the psyche. Advertising is becoming the most important way to manage demand. When price is not a determining factor for the buyer, the product acquires the properties of the “sought good.” But not because of the value of the product for the buyer, but because of the insignificant consequences for his budget of an erroneous choice. The buyer becomes prone to spontaneous, thoughtless purchases. With this type of consumer behavior, advertising ceases to be a signal of product quality, and ensuring repeat purchases is its main task. If the criterion for success in the struggle is not the use value, but its perception by the consumer, then the advantage is embodied not in price or quality, but in the image of the product, and the struggle unfolds around its “images”. Symbols are unstable. Therefore, the focus will be not on retention, but on attracting customers: the main thing is to ensure large volumes of initial sales without relying on repeat purchases.

Although symbolic value and advertising increase the intensity of competition among sellers, competition based on them brings Negative consequences for society. Firstly, it leads to the irrational use of the company's resources, focusing efforts on the creation of not genuine, but symbolic values that do not bring real benefits to consumers. Secondly, by increasing information asymmetry, it leads to a decrease in the efficiency of the market as an information system. Third, it reduces the effectiveness of competition as a mechanism for transferring knowledge, since it creates false focal points for both buyers and rivals, thereby distorting the transfer of knowledge. Finally, it leads to a decrease in social welfare due to a reduction in the total volume of utility due to the replacement of real values with imaginary ones in the consumer set. This allows us to assert that competition based on symbolic value, deliberately distorting information about the value of the product, is the most cynical method of realizing selfish interests.

It is generally accepted that the stability of non-price competition is due to the presence of product differentiation, which deprives rivals of the opportunity to transition to a price form of competition. However, as practice has shown, the sustainability of non-price competition is determined not by the presence of product differentiation, but by its type. The probability of changing the form of competition is high with horizontal and low with vertical differentiation of the product. With horizontal differentiation, the form of competition is unstable due to the fact that price remains an active tool for redistributing the market, since a rival can entice customers by offering a lower price. In the case of vertical differentiation, where the differences relate to the level of product quality, the segmentation of demand is more pronounced, which means the form of competition is more stable. In this case, a low price with a low quality product does not ensure that consumers switch to a higher quality product. But sellers of a high-quality product can use price as a tool to drive a low-quality product out of the market if this is not prevented by the level of difference in the costs of their production. At the same time, a market with horizontal differentiation is characterized by greater intensity of both price and non-price competition.

Competitive practice indicates a constantly repeating transition from price competition to non-price competition and back. This is the dialectic of the competitive process. Acting as incompatible and opposing parts of it, its price and non-price forms complement each other, thereby ensuring the flexibility of the competition mechanism and the continuity of the competitive process. But the competitive process is not a circular movement. Any non-price form that arises on the basis of price competition, transforming again into a price form, represents not a return to its previous state, but a transition to a qualitatively new state, which, embodying the previous principles, will differ in the conditions of its existence and methods of implementation. Remaining essentially unchanged, each form is reproduced on a new material basis with each new transition, marking a change in the conditions of supply and demand. At the same time, transitions to a non-price form of competition are leaps that reflect qualitative shifts in the competitive process. Price competition unfolds on the basis of a jump that has occurred and should be considered as a period of preparation for a new jump. Such periods are becoming shorter and shorter and the importance of price competition methods is gradually decreasing. But the situation can change radically if the ideology of consumerism1 is replaced by the ideology of “responsible” consumption, arising from an awareness of true consumer values and the need to limit consumption.

Schumpeter J. Capitalism, socialism and democracy. - M.: Economics, 1995. - P. 128.
The concept of symbolic or sign-value was proposed by J. Baudrillard to reflect changes in consumer behavioral guidelines, the role of which began to be played not by the real consumer properties of products, but by their imaginary ones, but which are perceived by the consumer as value. Therefore, the term perceptive value is often used as an analogue.
"Today's consumption - if the term has a different meaning from that which the vulgar economists give it - is precisely defined as the stage where commodities are produced as symbols, as symbolic values, and where (cultural) symbols are produced as commodities." (Baudrillard J. System of things. - M.: RUDOMINO, 2001).
“The institutions of modern advertising and trade... cannot be reconciled with the concept of independently formed desires, since their main function is the creation of desires, that is, the formation of needs that did not previously exist... needs can be provoked by advertising, reinforced by trade and formed by the careful actions of the persuasion mechanism " (Galbraith J.K. The Affluent Society. 2nd.ed. London: Hamilton, 1969. -PP. 150-152); Galbraith J.K. New industrial society. - M.: Progress, 1969. Chapter XVIII).
Shmalenzi R. Advertising and market structure. // Milestones of economic thought. T. 5. - St. Petersburg: Economic School, 2003. - P. 179-211.
4 J Milgrom P., Roberts J. Price and advertising signals of product quality. // Milestones of Economic Thought. T. 5. - St. Petersburg: Economic School, 2003. - P. 212-246.

From this article you will learn:

What are the differences between price and non-price competition?

What are the advantages and disadvantages of using non-price competition?

In what forms can non-price competition take place?

What methods of non-price competition are used in a modern market economy

From an early age, each of us finds ourselves in harsh circumstances of competition in various areas of life. Competition in the economy can definitely be called one of the toughest types of struggle. Both wealth and luck are at stake here. In entrepreneurship, there are two types of competition – price and non-price. More often than not, low cost actually wins. And yet, non-price product competition helps achieve greater success.

What is non-price competition

Competition is the struggle of individuals in various areas of the life process. First of all, this refers to the economic sphere. Figuratively speaking, competitors are the owners of nearby shops who are trying to get as many visitors as possible. But it's not just the number of buyers that matters. It is also important to sell your goods and services on the most profitable terms. Scientists believe that it is competition that spurs the modern world to develop at such a rapid speed. And at the same time, it is the basis of the instability of the world economy.

Exist two ways of economic rivalry: price and non-price. The difference between price and non-price methods of competition is quite serious:

Price competition- This is a type of fight against rivals by reducing the cost of goods. Most often, this method is used where demand is greater than supply. Another option is when customer competition is strong enough. This option is also used when there are prerequisites for pure competition (many manufacturers offer the same type of product). This way of competing with competitors cannot be called the most effective. After all, competitors can suddenly set prices at the same level, or even lower. In this case, both the subject himself and his competitors lose their earnings. Despite all the disadvantages, this option is nevertheless widely used, especially in cases where it is necessary to introduce products to a new market. Such measures should be taken very carefully. You need to know for sure that a decrease in cost will actually result in an increase in profits, and not losses.
Non-price competition involves more progressive and modern techniques. Among them are the differentiation of their products from similar products from competitors, the introduction of special characteristics, expanding the range, improving quality, increasing advertising costs and warranty service. The use of non-price competition methods generates conditional monetary stability. Another significant benefit is that competitors often fail to retaliate immediately, giving their rival an advantage. If innovations turn out to be successful, all expenses for non-price competition options not only pay off, but also serve as a source of income.

In order to successfully apply methods of non-price competition, companies and organizations must be aware of the latest developments in their market and continuously develop, which leads the country’s economy along the path of progress.
Non-price competition is a type of competitive rivalry tactic. Various methods are used here, with the exception of reducing the cost of goods and services. Non-price competition involves the use of more advanced methods of competing for buyers, such as creative advertising or improving the quality characteristics of a product. Improving quality comes in two ways: by working on the technical characteristics of the product or by increasing its flexibility according to customer wishes.
Non-price competition allows you to focus on the path of progress and increase sales without price fluctuations. Non-price competition indicates a higher quality level of interaction in the market.
There are a number situations where non-price competition is used:

The value cannot be reduced due to the limits set by the market controller.
A punitive agreement has been signed that does not allow for a reduction in value. The purpose of such a document is to stabilize a specific level of profitability.
The company has invested so much money in producing goods for a new market that reducing the cost makes no sense from an economic point of view.
The costs of distributing goods are high.
In the market, demand exceeds supply, which means: the client will buy products at any price.
The company relies on improving the quality characteristics of manufactured goods - by improving the technical properties of products (so-called product competition).

Non-price competition is typical for those industries where the quality of the product, its uniqueness, packaging, appearance, brand style, additional services, and non-market ways of influencing the buyer are of key importance. All these points are not directly related to cost, or even have nothing to do with it at all. During the 80-90s, the first positions in the list of non-price criteria included:

reduced energy consumption and low metal consumption;
minimal harm to the environment (or its absence);
the ability to hand over the product as a starting fee for a new one;
advertising;
high level of warranty service (as well as post-warranty service);
indicators of related offers.

Example non-price competition . At the start of global sales of its products in Russia, Sony encountered difficulties with regard to non-price competition. The problem was that, according to the company's current regulations, customers were only allowed to return broken products after five attempts to fix them. The law in our country, in turn, gives the client the right to return goods immediately after problems are identified. This condition is observed by all companies in the Russian Federation. To increase sales, Sony not only changed the warranty standards according to the local model, but also significantly reduced the warranty period, similar to the most popular models. As a result, the company strengthened its position in the non-price sphere of competitive rivalry.

What are the disadvantages and advantages of non-price competition?

Key Benefits non-price competition are as follows:

Price fights have a negative impact on all market participants. Bonuses go only to the buyer. Price competition can lead to monopoly and economic decline. The more powerful the company, the longer the period of time it can sell goods at a reduced cost. Medium and small companies will lose out in competition with leading brands.
Competent differentiation is a more productive way of competition than dumping. For the desired product, the client will pay the price set by the company.
If done correctly, non-price competition is less costly than price competition. A good advertising clip can be made for little money, the main thing is to find a creative and tempting idea. The same applies to product properties: even a minimal improvement in design can attract the attention of buyers.
With non-price competition, the company has a huge field for activity: it can gain superiority with the help of any successful find.

At the same time, there is also a number of disadvantages non-price competition:

The company is losing that group of buyers for whom cost comes first.
Dependence on the professionalism of managers and ordinary workers, because they must develop competent competition tactics and systematically monitor the compliance of the real state of affairs with plans.
Many firms use illegal methods of non-price competition (poaching personnel, manufacturing counterfeit products, industrial espionage).
We need cash injections, often permanent.
Large expenses for trade marketing, advertising and PR.
Specificity in positioning, thoughtfulness of actions, and correct tactical moves are required.

What types of non-price competition can be used and which ones should not be used?

There are different types of non-price competition:

legal;
semi-legal;
deterring competitors using government regulation and support.

Legal methods of competition suggest:

product rivalry. In the course of working on the existing assortment, a new product appears that has a new price;
competition to provide services. It is especially relevant for the machinery and equipment market. The service package includes the supply of promotional materials, the transfer of technical papers (which simplify the use of products), training of employees of the client company, maintenance during the warranty period (and after it).

Semi-legal forms competitive rivalry means:

economic espionage;
bribes to officials in the government apparatus and in rival companies;
conducting illegal transactions;
activities to restrict competition. Here the company has at hand an extensive arsenal of methods, the use of which can lead to the dictatorship of a monopolist company in the market. These include, for example, activities to impose intra-brand standards, promoting convenient conditions for selling rights to trademarks or patents.

The most common forms of non-price competition

The most common forms and methods of non-price competition are:

1. Product differentiation

The purpose of product differentiation is to offer the buyer products of different types, styles, brands. This, of course, gives the buyer serious bonuses, expanding the possibilities of choice. However, pessimists caution that product differentiation is not an absolute good. The rapid growth in the number of items of goods often leads to the fact that the buyer cannot make an informed choice, and the purchasing process takes a lot of time.

Product differentiation is a kind of reward for those negative phenomena that are characteristic of monopolistic competition.
Types of differentiation:

Product differentiation– production of goods of higher quality and attractive appearance than those of competitors. Regarding standardized products (petroleum products, metal), there is almost no possibility of product differentiation. In relation to fairly differentiated goods (electronics, motor vehicles), such tactics are a matter of course.
Service differentiation– is to provide a higher class service compared to competitors. This may include installation and after-sales service, speed and safety of deliveries, training and consultations for customers.
Personnel differentiation– the desire to ensure that the company’s employees do their job more productively than the employees of a competing company. Team members must have qualities such as friendliness, professionalism, and commitment.
Image differentiation consists of working on the appearance, style of the company and (or) its products in order to highlight their best aspects in comparison with competitors and (or) their offers.

2. Improvement of manufactured products and offered services

Another method of non-price competition is for competitors to improve the goods and services they offer. Improving the quality characteristics or user parameters of products leads to increased sales. Competitors who don't care about improving their product step aside. This path of competition leads to favorable consequences, the main one of which is customer satisfaction. In addition, other firms also begin to take steps to offset the temporary success of their rivals, and this contributes to scientific and technological progress.
Competing companies are looking for funds to improve their product or create a new position. All these measures make it possible to strengthen production and increase profits.
Some companies, instead of conducting fair competition, engage in imitation (imitative) activities. Most often, they stop at minor modernization of the product. We are talking about an external effect. Such companies pass off apparent changes in the product as real, and also introduce obsolescence into the improved product. This approach can lead to massive customer disappointment.

3. Advertising

According to foreign researchers, goods go from manufacturer to buyer along a path that can be illustrated by the formula:
product + distribution + scientific activity + resellers + transport + advertising = sale
So, advertising is an important element of the sales process and one of the key factors in the non-price competition market. She solves a series tasks:

provides the client with information about products;
increases demand for products and forces them to increase the pace of their production. There are often cases when a manufacturer, having a small income, through advertising in non-price competition increases the level of sales several times, which leads to receiving a large income;
increases competition;
enables the media to be independent, bringing them a certain profit.

Advertising reduces sales costs. Firstly, advertising promotes faster turnover of goods. Secondly, it ensures that goods are different from similar ones. This allows buyers to track the cost of products in different stores and thereby restrain the arbitrariness of sellers in setting markups. Products that are smartly advertised will pass through distribution channels with minimal markup.
These are used in advertising tools, such as: media, outdoor media (stands, showcases, signs, neon). Advertising through packaging occupies a special place.

4. Other methods of non-price competition

The group of non-price methods includes: providing a wide range of services (including employee training), free service, handing over a used product as an entry fee for a new one, supplying equipment on the terms of “finished products in hand.” Reduced metal consumption, absence of negative impact on the environment, reduced energy consumption and other similar parameters have become the main advantages of goods or services today.
Currently, many companies are conducting marketing research. They make it possible to find out the buyer’s desires and his opinion about various products. Possession of such information helps the manufacturer to design the market situation and reduce the likelihood of mistakes.

Methods of non-price competition: 3 main groups

Methods of non-price competition are divided into several groups.
First group– these are techniques aimed at achieving competitive advantage by improving various product parameters.
These include:

launch of new product items;
introduction of products that have new consumer characteristics, for example, higher quality, improved appearance, more attractive packaging (this process is called differentiation of consumer properties of goods).

Such techniques are used in cases where:

the company wants to improve the consumer characteristics of its products;
the company wants to increase the market segment of its products;
the company wants to become known through a wide range of manufactured products in a limited market sector;
the company is working on the timely introduction of new service conditions (sales and after-sales) in order to interest new groups of customers, force them to purchase products more often and pay at a time for a larger number of items (most often with the help of large discounts and promotions).

Second group- these are methods of stimulating the buyer to buy. Most often these are short-term promotions, sales, etc. Incentive goals in this case, there is an increase in the number of clients or an increase in the number of goods purchased by the same client.
Sales promotion tools for consumers are:

sweepstakes and lotteries, discounts, coupons, promotions;
trial samples (samples, testers, as well as tasting);
competitions and games;
sales;
various “label events”;
consumer clubs.

A sales agent is a link between the manufacturer and the buyer. It is necessary to stimulate a sales agent in order to create a bright image of the product, make it easily recognizable and widely known, and increase the number of positions in the distribution network. It is equally important to “stir up” the agent’s own interest in large sales volumes of a particular brand.

Sales promotion means For sales agents there are various bonuses and gifts, all kinds of compensation for advertising expenses, exhibitions and sales, prizes, trade booklets, souvenirs, etc.
For the company to be successful, it is necessary to constantly look for alternative ways to sell products, as well as index the amount of discounts in accordance with the current situation on the market.
Third group– it includes advertising techniques and public relations.

However, non-price competition works primarily through improving the quality characteristics of goods and production technology, modernization, patenting and branding, as well as competent “servicing” of sales. This type of competition is based on the desire to gain part of an industry market (or a significant segment of it) by producing new products or improving existing products.

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