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What are the differences between Price and non price competition

To increase the profits or revenue of any firm we choose price competition or non price competition. price competition is a competitive situation in which price is major means of differentiating the products
A product or service can be competing in the market by many ways. In price competition ,two products which are similar compared by the customer on their respective pricing, the customer mainly purchase the product on the basis of which is cheaper, they are other ways of competition but price comparison will effect.
Price competition is one of the marketing strategy which used by firms to increase profits and revenue of the firms. To compete efficiently firm must be match the price or it need to be beat the price. Firm must be lowest cost producer and it need to change price frequently ,in price competition even your competitor respond to your price your firm need to respond as quickly as possible when the competitor change the price . Customer will switch to brand which is low priced brand
Non price competition: Non price competition is a competition among different firms that they distinguish their products example: product features, style, delivery, promotions, advertising, selling staff etc.non pricing competition is mainly used by firms to distinguish their products, any firm can use non-price competition it is common for monopolistically competitive firms because firms which operates in monopolistically competitive market are price takers.
Non price competition is a marketing strategy to increase profits and firm revenue. Every firm try to distinguish their products by its quality or promotions or product features any other sustainable competitive advantage other than price, Can build customer loyalty towards the brand. The firm must promote the distinguishing features to create customer awareness.
MONOPOLISTIC MARKET The market structure of monopolistic competition is situated between those of perfect competition and monopoly
1)in monopolistic competition profits can be maximized when marginal revenue equals to marginal cost MR=MC.
2)there are many buyers and many sellers
3)the products being sold are differentiated or heterogeneous in character
4)there is free entry or exit of firms
5)the goal of the firm is to maximize the profits both in short run and long run short run comes under price competition and long run comes under non-price competition
6) product differentiation is high
7)completion on quality, price, marketing
OLIGOPOLISTIC MARKET Oligopoly market is an imperfectly competitive market structure in which few large firms dominates the market .oligopolistic market is non price competition because product different ion exists in it, firms have reason to compete on the basis of other factors besides the price
Characteristics of oligopoly market
1)few sellers
2)either a homogeneous or a differentiated product
3)different market entry
4)oligopolistic competition are price maker
5)in this few large firms one firm action influence others
the four market perfect competition,monopoly,monopolistic competition, oligopoly in which firms in perfect competition are price-taker ,whereas firms in other three markets are price makers
ELASTICITY The elasticity of demand is the measure of response of demand for a product to change in any of its determinants example price of the product, price of substitutes, price of complements, consumers income and consumers expectations regarding prices.
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
There are different types of elasticity of demand
1)price elasticity
2)cross elasticity
3)income elasticity
Price elasticity of demand: the price elasticity of demand is demand for the product or firm to change in its price ,elasticity of demand is the percentage change in the quantity demand of a firm or product as a result of certain percentage change in its price
Ep=percentage change in quantity of demand /percentage change in firm= %∆Q/%∆p
Price Elasticity
if it is more than 1 Elastic Demand – when price changes quantity of demand for product is also increased When
if it is less than 1 Inelastic Demand – when price decreases quantity of demand for the product is little increased when compared to previous revenue
Unitary Elastic – when price decreases quantity of demand for the products is equal as previous revenue.
Price elasticity for individual goods If the goods are luxuries elasticity will be higher, when substitutes are available consumer have choice and time to choose.
When ED>1 point is above mid-point, demand is elastic.
When ED=1 point is at Midpoint, demand is unit-elastic
When ED<1 point is below the midpoint, demand is inelastic
When elasticity of demand is price inelastic, whenever price decrease reduces total revenue.
When elasticity of demand is price elastic, whenever price decrease increases total revenue.
In unit elastic demand, whenever price decrease there is no change in the total revenue
Arc and point elasticity : when price elasticity of demand is measured between any two finite points on a demand curve it is called arc elasticity and elasticity measured at a point on the demand curve is called point elasticity
Cross Elasticity of demand: cross elasticity defines A change in the quantity of demanded for one product is created by a price change in a related product i.e substitute good and complimentary good represents cross elasticity of demand.
If two goods are substitutes for each other cross elasticity is high and if the two goods are totally different and unrelated , cross elasticity between them is zero.
When cross elasticity is positive between two goods then they are called substitutes .when cross elasticity is negative between two goods they are not complementary as this is found price change is very strong when income effects.
Income Elasticity of Demand: A small change in consumer income will lead to change in quantity of demand for the product.
As consumer income increases and income spend on the product is same as before elasticity for the product is one.
If the proportion spent on the product increases as income increases then the income elasticity for the product is greater then one
If the proportion spent on the product decreases as income increases then income elasticity for the product is less than one
Factors affecting elasticity demand 1) The fraction of income spend on the good
2) How narrowly defined the good is
3) How easy is to find out about substitutes
4) How much is available to adjust to price changes
5) nature of commodity
6)differed consumption
7) time factor
8) price level
9) joint demand
SHAMPOO USAGE I visited a local super market and focused on shampoos section where I found wide range of shampoos of different brands. There are few companies which produce many varieties of shampoos and conditioners which will be available at any store at a reasonable rate. In my paper I specified on the following company brands which are listed below
1) Hindustan unilever limited
> Dove
> Clear
> Clinic plus
> Sunsilk
2) Procter and gamble
> Head

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