Pearson Edexcel · A-Level · Economics B

    Course version: 9EB0 · Version from Sept 2015

    A) The impact of marketing on the demand curve: o product differentiation…

    Full specification wording

    Types of non-price competition: a) The impact of marketing on the demand curve: o product differentiation o advertising and other promotional methods o distribution methods

    Marketing strategies are forms of non-price competition designed to shift the demand curve to the right and make it more price inelastic.

    Checked against the Pearson Edexcel 9EB0 specification (opens in a new tab) on .

    • 3 key terms

    Study notes

    From the checked teaching notes for this specification point.

    The idea

    Marketing strategies are forms of non-price competition designed to shift the demand curve to the right and make it more price inelastic. Product differentiation, such as adding unique features to a smartphone, reduces substitutability, allowing firms to charge a premium. Advertising and promotional methods build brand loyalty and increase consumer awareness, directly stimulating demand. Distribution methods, like exclusive retail partnerships or direct-to-consumer online sales, enhance convenience and accessibility, further driving sales. By successfully employing these techniques, a firm can increase its market share and profitability without resorting to price cuts, which might otherwise trigger a damaging price war.

    What earns the marks

    • Identify that successful marketing campaigns shift the demand curve for a product to the right.
    • Explain that product differentiation makes the demand curve more price inelastic by reducing the availability of close substitutes.
    • Recognise that advertising and promotional methods increase consumer awareness and foster brand loyalty.
    • Understand that effective distribution methods increase product accessibility, thereby increasing overall consumer demand.

    Common mistakes and how to put them right

    • Assuming marketing only shifts the demand curve to the right.

      Put it right: Marketing also aims to change the slope of the demand curve, making it more price inelastic.

    • Confusing product differentiation with price competition.

      Put it right: Product differentiation is a non-price strategy that focuses on unique features or branding rather than lowering prices.

    • Believing distribution methods do not affect demand.

      Put it right: Distribution affects accessibility and convenience, which are key factors in consumer purchasing decisions and overall demand.

    Exam tips

    • Always link marketing strategies to both the position (shift) and the elasticity (slope) of the demand curve.
    • Use specific examples of product differentiation, such as unique design or superior customer service, to illustrate your points.
    • When evaluating promotional methods, consider the cost of advertising against the potential increase in revenue from higher demand.

    Try the lesson

    The start of the Types of non-price competition: a) The impact of marketing on the demand curve: o product differentiation o advertising and other promotional methods o distribution methods lesson, made from checked teaching notes for this specification point.

    Have a go first

    Which of the following is the most likely impact of a successful advertising campaign on a firm's demand curve?

    Listen

    Marketing strategies are forms of non-price competition designed to shift the demand curve to the right and make it more price inelastic. Product differentiation, such as adding unique features to a smartphone, reduces substitutability, allowing firms to charge a premium. Advertising and promotional methods build brand loyalty and increase consumer awareness, directly stimulating demand. Distribution methods, like exclusive retail partnerships or direct-to-consumer online sales, enhance convenience and accessibility, further driving sales. By successfully employing these techniques, a firm can increase its market share and profitability without resorting to price cuts, which might otherwise trigger a damaging price war. A strong answer earns marks for these points. Identify that successful marketing campaigns shift the demand curve for a product to the right. Explain that product differentiation makes the demand curve more price inelastic by reducing the availability of close substitutes. Recognise that advertising and promotional methods increase consumer awareness and foster brand loyalty. Understand that effective distribution methods increase product accessibility, thereby increasing overall consumer demand. A common slip: Assuming marketing only shifts the demand curve to the right. Instead, Marketing also aims to change the slope of the demand curve, making it more price inelastic. Exam tip: Always link marketing strategies to both the position (shift) and the elasticity (slope) of the demand curve.

    See it

    A top-down flowchart. A single node labelled Marketing strategies branches into three nodes: Product differentiation, Advertising and other promotional methods, and Distribution methods. Product differentiation leads to a node reading Reduces substitutability. Advertising and other promotional methods leads to a node reading Builds brand loyalty and increases consumer awareness. Distribution methods leads to a node reading Enhances convenience and accessibility. All three of these outcome nodes feed into one node reading Demand curve shifts right and becomes more price inelastic, which then leads to a final node reading Increased market share and profitability without price cuts.
    Shows how the three marketing strategies of product differentiation, advertising and promotion, and distribution methods each act on demand to shift the demand curve right and make it more price inelastic, raising market share and profitability without price cuts.

    Key words

    Say what each word means before you turn the card.

    Non-price competition

    Try answering aloud or in your head before turning the card.

    Product differentiation

    Try answering aloud or in your head before turning the card.

    Distribution methods

    Try answering aloud or in your head before turning the card.

    See every definition
    Non-price competition
    Marketing strategies designed to shift the demand curve to the right and make it more price inelastic.
    Product differentiation
    Adding unique features to a product to reduce substitutability, allowing firms to charge a premium.
    Distribution methods
    Methods such as exclusive retail partnerships or direct-to-consumer online sales that enhance convenience and accessibility, further driving sales.

    Label the diagram

    Some boxes have lost their names. Pick the right name for each number.

    The diagram again, with 3 boxes numbered instead of named. A top-down flowchart. A single node labelled Marketing strategies branches into three nodes: Product differentiation, Advertising and other promotional methods, and Distribution methods. Product differentiation leads to a node reading Reduces substitutability. Advertising and other promotional methods leads to a node reading Builds brand loyalty and increases consumer awareness. Distribution methods leads to a node reading Enhances convenience and accessibility. All three of these outcome nodes feed into one node reading Demand curve shifts right and becomes more price inelastic, which then leads to a final node reading Increased market share and profitability without price cuts.

    • 1Box 1

    • 2Box 2

    • 3Box 3

    0 of 3 labelled

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