Th3.4: Types of Non-Price Competition

Question 1

What does an oligopolistic market tend to have?

Answer 1

a lot of non-price competition due to the fact that prices are relatively stable - spend a long time and a lot of money on advertising and promotions

Question 2

What are the six types of non-price competition?

Answer 2

advertising 
loyalty cards
branding
quality
customer service
product development

Question 3

Advertising

Answer 3

creates an awareness of the company/product and can persuade a customer to purchase the product - advertising can increase sales and market share for a business which can increase profits in long run - can also make demand for product more inelastic

Question 4

Loyalty cards

Answer 4

these encourage repeat purchases by rewarding customers for their loyalty - also provide firms with lots of data on consumers’ buying habits, which the firm can use to increase sales

Question 5

Branding

Answer 5

a successful brand can help increase loyalty and repeat purchases for a business - people will trust the brand and its quality and so will keep buying it, making it easier to release new products

Question 6

Quality

Answer 6

a firm that is known for good quality may be able to charge higher prices and is likely to have strong brand loyalty. likely to have good reputation and benefit from positive recommendations

Question 7

Customer service

Answer 7

this will encourage loyalty amongst customers and give the business a more positive reputation

Question 8

Product development

Answer 8

a business that invests in product development will have a competitive advantage over rivals - if they’re the first firm to release a product they will see an increase in sales and this will help with branding

Question 9

What is the problem with these methods?

Answer 9

they are often expensive
only large firms will be able to do large scale advertising, research and development
there is no guarantee that it will be successful