Marketing in a Non-Price Competitive Economy

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Marketing in a Non-Price Competitive Economy

• By Dr. Leonardo Garcia Jr., CPM
• Full Professor, De La Salle University-Manila
• Consultant, Association of Training Institutions
  for Foreign Trade in Asia and the Pacific
  (ATIFTAP)
• Business World Forum
• June 21, 2008

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The greater the difficulty, the more glory in
surmounting it.

• --Attributed to the Greek Philosopher Epicurus

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Issues and Concerns

• The world economies are experiencing a downfall
  due to rising inflation and lack of resources.
  In fact, the US economy is said to be in
  recession.
• Price of fuel is getting exorbitant.
• Food shortage is now getting more apparent with a
  limited supply of rice in the global scenario.

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Issues and Concerns

• Price is now becoming the norm in a competitive
  economy. Therefore, It is now getting more and
  more difficult to harp on non-price strategies
  since the consumers are tightening their budget.
• What then are your non-price strategies if you
  must compete?

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Non-price Competition

• Non-price competition is a marketing strategy
  where firms distinguish their products or
  services not on the basis of price but on
  attributes like designs, and workmanship.
• The firm can also distinguish its product
  offering through quality of service, extensive
  distribution, customer focus, or any other
  sustainable competitive advantage other than
  price.

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Non-Price Competition

• It can be contrasted with price competition,
  which is where a company tries to distinguish its
  product or service from competing products on the
  basis of low price.
• Typically involves promotional expenditures, such
  as advertising, selling staff, sales promotion,
  coupons, special order, or free gifts, marketing
  research, new product development, and brand
  management costs.

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Non-Price Competition

• Firms will engage in non-price competition, in
  spite of the additional costs involved, because
  it is usually more profitable than selling for a
  lower price, and avoids the risk of a price war.

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Advantages of Non-Price Competition

• 1. Enables companies to be unique and
  different from other competitors. Quality of
  product is in focus.
• 2. The design and distinguishing features of
  goods and services offered in the marketplace
  matches the demand and needs of the people in
  that area.

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Advantages of Non-Price Competition

• 3. The location of distribution for targeted
  customers is given importance. Goods reach
  buyers matching their own convenience and needs.
• 4. Convenience to the people. Customers can
  easily see and go to a place where goods and
  services are offered. Also means the ease in
  communicating and contacting them in times of
  need, e.g., hotline numbers.

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Advantages of Non-Price Competition

• 5. Offers innovation like on-line shopping.
  Good for people that just stop during meals and
  sleep.
• 6. Quality of service given by the employee.
  CRM is very operational and builds customer
  loyalty, very true in the case of hospitals,
  hotels, spa, parlors, even groceries and
  supermarkets.

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Advantages of Non-Price Competition

• 7. Above all is the quality of the product.
  Marketers think out of the box in order to
  entice customers to be interested in what they
  are offering instead of their competitors, e.g.,
  durable and useful.

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Requirements in Non-Price Competition

• Should conform to the standards set by regulatory
  commissions like the International Organization
  for Standardization or ISO standards.
• --ISO 9000 addresses quality management
• --ISO 14000 addresses environmental
  management

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Every organization has a corporate image,
whether it wants one or not. When properly
designed and managed, the corporate image will
accurately reflect the level of the
organizations commitment to quality, excellence,
and relationships.

• --Steven Howard
• Asias leading marketing consultant

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Most Admired CompaniesDLSU Survey, June 2008
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Most Service-Oriented CompaniesDLSU Survey, June
2008
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Most Quality-Oriented CompaniesDLSU Survey, June
2008
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Lessons learned from the most admired,
service-oriented, and quality-oriented companies
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Services Guidelines in a Non-Price Economy
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Services dominate the United States Economy since
2001GDP by Industry
Agriculture, Forestry, Mining, Construction 8
Finance, Insurance, Real Estate
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Manufacturing 14
Government (mostly services) 13
Wholesale and Retail Trade 16
Other Services 11
Transport, Utilities, Communications
8
SERVICES
Business Services 5
Health 6
Source Bureau of Economic Analysis, November 2002
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Implications of Service Processes Designing the
Service Factory

• People-processing services
• require customers to visit the
• service factory, so
• Think of facility as a stage for service
  performance
• Design process around customer
• Choose convenient location
• Create pleasing appearance, avoid unwanted
  noises, smells
• Consider customer needs--info, parking, food,
  toilets, etc.

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Implications of Service Processes Balancing
Demand and Capacity

• When capacity to serve is
• limited and demand varies
• widely, problems arise because
• service output cant be stored
• 1. If demand is high and exceeds supply,
  business may be lost
• 2. If demand is low, productive capacity is
  wasted
• Potential solutions
• Manage demand
• Manage capacity

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Implications of Service Processes Applying
Information Technology

• All services can benefit from IT,
• but mental-stimulus processing
• and information-processing
• services have the most to gain
• Remote delivery of information-based services
  anywhere, anytime
• New service features through websites, email, and
  internet (e.g., information, reservations)
• More opportunities for self-service
• New types of services

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Implications of Service Processes Including
People as Part of the Product

• Involvement in service
• delivery often entails
• contact with other people
• Managers should be concerned about employees
  appearance, social skills, technical skills
• Other customers may enhance or detract from
  service experience--need to manage customer
  behavior

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Elements of The Services Marketing Mix 7Ps
vs. the Traditional 4Ps

• Rethinking the original 4Ps
• Product elements
• Place and time
• Promotion and education
• Price and other user outlays
• Adding Three New Elements
• Physical environment
• Process
• People

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At the end of the day, the CUSTOMER is the King
in a non-price competitive economy!

• By Dr. Nards Garcia, CPM
• garcialr2003_at_yahoo.com
• Consultant, ATIFTAP
• Full Professor, DLSU-Manila

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References

• Brue, Stanley L., and McConnell, Campbell R.
  (2002). Economics-Principles and Problems and
  Policies (15th ed). Boston Irvin/McGraw Hill.
• Kotler, Philip and Kevin Lane Keller (2006).
  Marketing Management (12th ed). New Jersey
  Prentice Hall.
• Loveluck, Christopher and Jochen Wirtz (2007).
  Services Marketing, 6th ed. USA Pearson
  Prentice Hall.
• The quality you cant feel, John Seddon, The
  Observer, Sunday, Nov. 19, 2000.
• A Brief History of ISO 9000 Where did we go
  wrong? John Seddon, 2nd ed., Oak Tree Press.
  November 2000.
• http//tutor2u.net/economics/content/topics/compet
  ition/competion_importance.htm
• http//ww.iso.org/iso/iso_catalogue/management
  _standards/iso 9000_iso_14000.htm