Non-price competition is where true marketing professionals earn their money.
The quality of the product, its unique selling proposition whether it is the quality of the product or the reliability of service when conveyed simply and with a compelling pitch can set a product apart from its competition.
Some automobiles are marketed using non-price competition. BMW and Mercedes are virtually the same price. These two compete globally by highlighting style, luxury engineering and features. They rarely compete on price or specials, as these tactics would lessen the premium perception of the products.
Price competitive products sell products that often cannot be differentiated. Some examples of products in pure price competition markets may include agriculture products, fish, and beef. I think however even this generalization is changing…you pay more for a Chiquita banana, a Dole pineapple, Washington State apple…why? because marketers have tried to add value to these products using brand differentiation.
One example where both strategies are used to gain an advantage and where the non-price strategy can dominate is the diamond industry. I am working with the Diamond Trade Commission this year and it has been truly interesting.
Although the DTC can control diamond prices because they can control the amount of raw stones supplied each year and the firms that receive the stones, DTC is constantly looking for ways to add value to different grades of stones. Of course clarity and color will always have an affect on price, marketing is becoming the real determining factor.
This season previously less desireable “brown” stones have been repositioned as fashionable. New patented cuts making the stones more brilliant are commanding higher prices. One cut featured on “Sex in the City” pushed the patented new cut and it increased sales signifiantly. In conclusion although diamond prices are controlled by supply and grade they can also be marketed using non-price strategies.