2.2.3 Types of non-price competition

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    THE IMPACT OF MARKETING ON THE DEMAND CURVE

    PRODUCT DIFFERENTIATION

    Firms can differentiate themselves from rivals through strong branding. Differentiation can also include packaging and product placements. Packaging can make products seem better than alternatives whilst product placements are likely to spread awareness of the product along with advertising. This then means that not only will sales revenue increase, shifting the demand curve to the right. This could also increase brand loyalty, making demand more price inelastic therefore the demand curve becomes steeper

    ADVERTISING AND OTHER PROMOTIONAL METHODS

    Advertising and marketing are both used to increase awareness of the product and influence customer preferences as a strong marketing campaign will make customers more inclined to buy certain products over others. It can result in the demand curve shifting

    towards the right. However, if this is ineffective, the firm suffers massive sunk costs which cannot be recovered.

     

    DISTRIBUTION METHODS

    These can be used to attract specific market segments e.g. expensive clothing will be sold in boutiques, supermarkets now sell online to attract busy people. This can be used to make demand more price inelastic. It allows firms to charge a higher price for their products, so they can maximise their revenue and profit. Alternatively, the firm can pass higher prices onto the consumer without losing their revenue. It results in an inelastic demand curve. Distribution methods are rapidly changing, especially in relation to the digital economy.

    DEVISING APPROPRIATE MARKETING APPROACHES

    This involves the marketing mix: “Develop the right product, charge the right price, sell in the right place and use the right promotion”. These four P’s (marketing mix) must meet the needs of the defined target group, all elements are linked and must support each other.

    • Prices the customer can afford
    • Products that the customer needs
    • Promotion to persuade the customer to buy
    • Distribution to a suitable place

     

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