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In your opinion are supermarkets more likely to compete using price or non-price competition?

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In your opinion are supermarkets more likely to compete using price or non-price competition? Non-price competition is when firms choose to compete in other ways apart from price. The kinked demand curve theory of oligopoly model assumes that a firm will reduce its price if a competitor starts a price war, but will leave price unchanged if a competitor raises its price. Firms can compete for market share and consumer demand in a number of ways. Price competition can involve discounted prices of products which will help to boost demand. On the other hand, non-price competition focuses on different strategies to increase market share such as marketing, loyalty cards, convenience or innovation. ...read more.


People therefore have an incentive to shop in that particular shop, and are more likely to choose one firm which offers most in return for loyalty over another. Firms have also begun to differentiate themselves by extending opening hours for example, which has appealed to those who work unusual working hours, e.g. Tesco's opens 24 hours in a lot of stores now. Another was firms are competing is by the introduction of online shopping and home delivery, which again makes it far more convenient and easier for working families who do not have the time to shop, or for those who find it difficult to leave the house, for example. Some supermarkets have also started to change the services or products it is that they offer. ...read more.


Another way firms are competing in this industry is using innovation. Most firms are trying to keep up with the latest innovations, for example, the self-service checkouts which allow a faster more convenient shopping experience for those who have limited time to shop. Therefore if some firms can offer speed of service better than others, it is likely to give them a competitive advantage over other firms. Overall, in my opinion, supermarkets are more likely to compete using non-price competition. This is because they are all able to offer more-or-less the same prices for goods, and so they cannot compete much in this way. Therefore they need some way of differentiating themselves from other firms; by diversifying what they offer, giving incentives to shop at their stores rather than others or simply establishing a strong brand image by advertising and marketing. ?? ?? ?? ?? Katie Bhagaloo Economics Unit 3 ...read more.

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