Learn something new every day
More Info... by email
A non-pricing strategy is a marketing strategy in which a company does not adjust its price to sway consumers but uses other methods to garner more sales. This normally comes down to advertising, and most companies employing this tactic will boldly say their product or service costs more because it offers better service or quality. The non-pricing strategy occurs in many markets but tends to be most common in an oligopolistic market, or one with few competitors. This strategy tends to justify higher costs, and it has been shown to be very effective if the product or service is good enough to satisfy consumers’ demands.
Most companies compete with a pricing strategy, which involves adjusting and changing the price to get more sales. This commonly is accomplished through discounts, coupons and similar measures, and the advertising typically will state that the product is one of the most affordable on the market. With a non-pricing strategy, price goes untouched, forcing companies to use other methods to attract consumers.
With price not being used, advertising usually is considered the pinnacle sales maker with a non-pricing strategy. Advertising usually is quite clever in this field, because the company typically cannot win on the price battlefield and, thus, needs strong advertising to get sales. Instead of focusing so much on price via advertising — though it may be brought up every now and then — the company will focus more on how its product is superior and why spending more on it will be a better investment.
There is nothing stopping a non-pricing strategy from being used in any market. At the same time, it most commonly is used when there are few competitors. When there are many competitors, it may be harder to win just on quality, especially if there are similar products selling for much less. If the company can distinguish itself from the many competitors with superior quality and advertising, then this makes the strategy even more viable in a large market.
The non-pricing strategy can be quite effective at garnering sales, because many consumers value quality over cost, especially if the product or service really delivers on quality. A company normally does not have to worry about its product costing more if its advertising and product are effective enough. If the product is inferior, then this strategy may be ineffective, because consumers generally expect a better product or service when they pay more money.
One of our editors will review your suggestion and make changes if warranted. Note that depending on the number of suggestions we receive, this can take anywhere from a few hours to a few days. Thank you for helping to improve wiseGEEK!