This 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.
A major advantage of this is that a firm can build customer loyalty
toward its brand. If customers prefer a brand because of non-price factors, it is
more difficult for competitors to lure these customers away.
For this to work, a company must be able to distinguish its brand through unique product features, higher product quality, promotion, packaging, or excellent customer service.
Buyers must view the nonprice product features as important, and the features
must be difficult for competitors to imitate.
Even when competing on a nonprice basis, marketers must remain aware of competitors' prices and be prepared to price its brand near or slightly above that of competing brands.