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
The greater the difficulty, the more glory in surmounting it. --Attributed to the Greek Philosopher Epicurus
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.
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?
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.
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.
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.
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.
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.
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.
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.
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”
“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 organization’s commitment to quality, excellence, and relationships.” --Steven Howard Asia’s leading marketing consultant
Lessons learned from the most admired, service-oriented, and quality-oriented companies
Services dominate the United States Economy since 2001:GDP by Industry Agriculture, Forestry, Mining, Construction 8% Finance, Insurance, Real Estate 20% 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
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.
Implications of Service Processes: Balancing Demand and Capacity When capacity to serve is limited and demand varies widely, problems arise because service output can’t 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
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
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
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
At the end of the day, the CUSTOMER is the King in a non-price competitive economy! By Dr. Nards Garcia, CPM email@example.com Consultant, ATIFTAP Full Professor, DLSU-Manila
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 can’t 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/competition/competion_importance.htm • http://ww.iso.org/iso/iso_catalogue/management _standards/iso 9000_iso_14000.htm