Price, product, promotion and place (4Ps): degree of competition

The idea

The degree of competition measures how many rivals a business faces and how strongly they compete. It ranges from a market with one dominant seller to one with many similar firms. Where competition is intense, customers can switch easily, so businesses often compete on price, improve product quality, promote heavily or widen distribution. Where competition is weak, a business may hold prices higher and spend less on promotion. For example, a town with several supermarkets may see price wars and loyalty schemes, while a sole pharmacy in a village faces little direct competition. Assessing the degree of competition helps a business decide how aggressively to use each element of the marketing mix.

What earns the marks

• Defines the degree of competition as the number and strength of rival businesses in a market.
• Explains how intense competition affects pricing, such as pressure to lower prices or offer discounts.
• Explains how competition affects product, promotion and place decisions, for example greater differentiation, heavier promotion or wider distribution.
• Applies the degree of competition to a given context, comparing a crowded market with one where a business has few rivals.
• Evaluates how far the degree of competition should drive marketing mix decisions compared with other factors such as costs or brand strength.

Common mistakes and how to put them right

• Confusing the degree of competition with the nature of the market.

  Put it right: Competition is one feature of the market, not the whole concept.

• Assuming more competition always means lower prices.

  Put it right: Firms may compete on quality, service or promotion instead of price.

• Ignoring the effect of competition on non-price elements.

  Put it right: Competition also shapes product features, promotional spend and place choices.

Exam tips

• State how many rivals exist and how similar their products are before explaining the effect on the 4Ps.
• Use comparative language such as more competitive or less competitive to show the strength of competition.
• Support evaluation by weighing competition against other influences, such as production costs or brand loyalty.