Non-price competition

Question 1

What are the two potential consequences of successful product differentiation?

Answer 1

• The demand curve will shift to the right, due to increased demand from consumers
• The demand curve might become price inelastic, especially if the firm manages to increase consumer loyalty

Question 2

Give 4 areas in which product differentiation can be achieved

Answer 2

• Branding
• Advertising
• Packaging
• Product placement

Question 3

What is the result of successful advertising?

Answer 3

It can shift the demand curve to the right - especially if it strengthens branding to a point that the demand curve becomes inelastic. This means firms can increase their market share

Question 4

How can distribution be used to create product differentiation?

Answer 4

Selling online can be attractive to some consumers, while others may prefer the retail environment

Question 5

What are the three primary factors that determine the marketing strategy that will be used?

Answer 5

• The nature of the product
• The target market
• The type of market the firm is in