Question

*Industrial economics*

Select a firm or industry (AMAZON) and use the theory of non-price competition to carry out an analysis of the strategic behaviour of that firm or industry. As part of the answer, consider the strengths and weaknesses of the theory used. ALSO, Analyse how firms in the industry(AMAZON) engage in non-price competition. *WORD COUNT - 650* *Include reference and citations*

Answer 1

Amazon.com is an American multinational technology company based in Seattle that focuses on e-commerce, cloud computing, digital streaming, and artificial intelligence. Amazon becomes popular on world market. It is considered one of the Big Four technology companies, along with Google, Apple, and Microsoft.[8][9][10] It has been referred to as "one of the most influential economic and cultural forces in the world" as well as the world's most valuable brand.

Amazon is known for its disruption of well-established industries through technological invention innovation and mass scale.It is the world's largest online marketplace, AI assistant provider, live-streaming platform and cloud computing platform as measured by revenue and market capitalization. Amazon is the largest Internet company by revenue in the world and also the second largest private employer in the United States[19] and one of the world's most valuable companies.

Amazon was founded by Jeff Bezos in Bellevue, Washington, on July 5, 1994. At first the company started as an online marketplace for books but expanded to sell electronics, software, video games, apparel, furniture, food, toys, and jewellery. In 2015, Amazon surpassed Walmart as the most valuable retailer in the United States by market capitalization. In 2017, Amazon acquired Whole Foods Market for US$13.4 billion, substantially increasing Amazon's footprint as a physical retailer In 2018, Bezos announced that its two-day delivery service, Amazon Prime, had surpassed 100 million subscribers worldwide.

Non price competition:

Non-price competition is defined as a marketing strategy in which one firm tries to distinguish its product or service from competing products on the basis of attributes like product design and workmanship. The firm can also distinguish its product offering through quality of service, extensive distribution, customer focus, or any sustainable competitive advantage other than price. 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.

Advantages or strengths of non-price competition :

* Always they use Better sales tactics, including social media posts, efficient forms of online advertising, and direct sales through the manufacturer.

       * Improved product quality.

* Different presentation of products for varied demographics. For example, sales may increase if the same product is presented differently for men, women and kids.

       * Superior brand perception. Brands provide guidance and clarity for choices made by firms,          consumers, investors and other stakeholders.

       * To bring variations firms keep on bringing new technologies which result in more smoothing of the functions and add variation in the product.

       * The emphasis is not on price and hence the main focus is on improving the quality and the services of the product.so customers get quality products.

* Large number of variants leads to many choices and options for the customers in the market.

       * There is no price war in the market hence it keeps and creates a proper discipline in the                           market which leads to smooth situation.

       * Consumers get more and more perks in terms of offers and discounts which attract people and thus lead to competition in the market.

Disadvantage of non-price competition:

The main drawback or weakness of non-price competition is that consumers are not likely to notice the changes straight away – which is not the case when prices are lowered.

Best way to non-price competition:

Direct mailing – a key method of retaining customers is through gaining access to their email address and then sending targeted promotions and news about new features/products. Some firms may give loyal customers the chance to get special deals or products not available to the mass market.

Amazon’s engagement activity in non-price competition:

Subsidised delivery. Amazon has been successful at pushing Prime Delivery accounts. This promises free next day delivery. Amazon is offering this delivery service as a loss leader. The cost of delivery is often very high than what a customer is actually paying. However, in the long-term, the convenience of Prime Delivery is changing shopping habits of the customers. Buying something on Amazon and having it arrive at your doorstep the next day, means customers are not wanting to go into town, park and shop at traditional stores. Amazon is steadily gaining more market power and market share by using non price competition and thereby they attracts more customers.

References:

* The Free Dictionary: Non-price Competition

* Time Magazine: New Coke

Citation:

George J. Stigler, 1968. "Price and Non-Price Competition," Journal of Political Economy, University of Chicago Press, vol. 76, pages 149-149.

Summary:

Non-price competition involves ways that firms seek to increase sales and attracts more customers through various methods other than price. Non-price competition can include quality of the product, unique selling point, superior location and companies also offers after-sales service. Firms like amazon 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.