Question

When firms compete by offering unique product features rather than competing on price, ______ occurs.

Multiple choice question.
competitor allegiance
strategic intent
non-price competition
an oligopoly

Answer 1

In business, when firms offer unique product features instead of competing solely on price, this is known as non-price competition, which is typical in monopolistic competition and oligopoly market structures.

Step-by-step explanation:

When firms engage in competition by offering unique product features instead of primarily competing on price, this strategy is known as non-price competition. This kind of competition is prevalent in market structures like monopolistic competition and oligopoly. In monopolistic competition, many firms sell differentiated products that are distinct due to factors like product characteristics, location, intangible aspects, and consumer perceptions. Oligopolistic markets, on the other hand, are dominated by a few firms that compete strategically, which includes differentiating their products to maintain market share and barrier to entry.

For example, in the case of the soft drink industry, major brands such as Coca-Cola and Pepsi use extensive advertising and brand differentiation strategies to compete against each other rather than just competing on the basis of price. This ensures that each firm maintains a loyal customer base due to distinctive product characteristics and brand perception.

Answer 2

When firms focus on unique features instead of competing on price, this is known as non-price competition, which is common in monopolistic competition and oligopolistic markets.

Step-by-step explanation:

When firms compete by offering unique product features rather than competing on price, non-price competition occurs. This is a common strategy in markets characterized by monopolistic competition and can be a factor in oligopolistic markets as well. Firms compete by emphasizing differentiators like quality, features, service, or branding rather than just lowering prices. In this sense, non-price competition involves strategic decisions on advertising, product development, and brand management. For example, in an oligopoly, high barriers to entry allow dominant firms like Coca-Cola and Pepsi to focus on brand recognition and loyalty instead of price wars.