Profits decline in the maturity stage, largely because of ...

[vHAUNG6011]

Profits decline in the maturity stage, largely because of increased competition.
 
 Indicate whether the statement is true or false

Question 2

Compare and contrast price and nonprice competition. Give examples of firms that compete on a price basis and on a nonprice basis.

[aidanmbrowne]

Answer to Question 1

True

Answer to Question 2

When engaging in price competition, a marketer emphasizes price as an issue and matches or beats competitors' prices. To compete effectively on a price basis, a firm should be the low-cost seller of the product. If all firms producing the same product charge the same price for it, the firm with the lowest costs is the most profitable. Firms that stress low price as a key marketing-mix element tend to market standardized products. A seller competing on price may change prices frequently, or at least must be willing and able to do so. Best Buy, for instance, had to be willing to adopt price-matching policies in order to compete with online competitors.
Nonprice competition occurs when a seller decides not to focus on price and instead emphasizes distinctive product features, service, product quality, promotion, packaging, or other factors to distinguish its product from competing brands. Thus, nonprice competition allows a company to increase its brand's unit sales through means other than changing the brand's price. Mars, for example, markets not only Snickers and M&M's but also has an upscale candy line called Ethel's Chocolate. With the tagline eat chocolate, not preservatives, Ethel's Chocolate competes on the basis of taste, attractive appearance, and hip packaging, and thus has little need to engage in price competition.