Chapter 9 Targeting a Market 157 Copyright Goodheart-Willcox Co., Inc. Price or Nonprice Competition Price competition occurs when a lower price is the main reason for customers to buy from one business over another. The focus of businesses engaged in price competition is to make more sales by offering the lowest prices. For example, many gas stations compete through their pricing. Customers often make their fuel-buying decisions based on price alone. However, some consumers may think it is not worth driving around to find the lowest price. Although price is important, many compa- nies, especially smaller ones, cannot afford to compete using price alone. A competitive advan- tage based on factors other than price is called nonprice competition. Some businesses choose to provide notably better service or exclusive brands to beat their competition. For example, the depart- ment store Nordstrom is known for its excellent customer service, which is a great advantage for the retailer’s customers. Nonprice competition may also focus more on the features and benefits of a product, rather than the price. Features are facts about a product. Benefits are the traits of a product that serve as an advantage for the customer. A unique selling proposition (USP) is a statement that summarizes the special features or benefits of a product or business. Its purpose is to convince the customer that their product is the only one that can satisfy their needs. An example of a USP might be, “Our conditioning shampoo makes your hair shiny and manageable in half the time.” The feature is that the shampoo has a conditioner. The benefit is gaining shiny, manageable hair in half the time. The consumer knows right away why he or she should use the product. Nonprice features of a business may include extended hours, gift wrapping, or custom orders. The benefits of these services are that they save time and are convenient. LO 9.2-2 Market Analysis A market analysis is the process of gathering s information on the market in which a business is competing. A market analysis is completed as a part of the process of developing a marketing plan. However, it should be updated regularly so that a business can evaluate its sales, products, and promotions compared to current competi- tion in the market. By completing and evaluating a competitive analysis, a SWOT analysis, and an environmental scan, the business can better posi- tion itself in the marketplace. Competitive Analysis A marketing manager must know what the competition is offering and their pricing models, as well as product features and benefits. In other words, the marketing mix for the competition must be identified. A competitive analysis is a tool used s to compare the strengths and weaknesses of a product or company with its competitors. Just like sports teams study their competi- tion, it is important for businesses to analyze their competitors. This helps them learn the best way to compete with each one. Marketers first need to know what products competitors are selling and at what prices. They also need to determine the features and benefits of competing products and how they are sold. It is also important to monitor the promotions of the competition. In other words, marketers need to know the competition’s marketing mix to be able to compete with them. There are many ways to find information about competitors, including websites, competitor’s prod- ucts, trade shows, and the company’s sales team. • Websites. Competitor websites are a good source for information about their products and social media comments that discuss customer strategies. Jonathan Weiss/Shutterstock.com Nordstrom is known for its excellent customer service, which is an example of nonprice competition. Why would a marketing plan include strategies for nonprice competition?