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that is hard to emulate or dislodge。 John Lewis； for example； has ‘never
knowingly undersold’ as its powerful message to consumers that they can
safely set price considerations to one side when they e to making their
choice。
Another strategy is to set out to own the word and turn it into an adjective。
Hoover with vacuum cleaners and FedEx with overnight delivery
are examples of this approach。
Product range
Being a single…product business is generally considered too dangerous a
position except for very small or start…up businesses。 The two options to
consider are：
Marketing 97
。 Depth of line： This is the situation when a pany has many products
within a particular category。 Washing powders and breakfast cereals
are classic examples of businesses that offer scores of products into the
same marketplace。 The benefit to the pany is that the same channels
of distribution and buyers are being used。 The weakness is that all
these products are subject to similar threats and dangers。 However
‘deep’ your beers and spirits range； for example； you will always face
the threat of higher taxes or the opprobrium of those who think you are
damaging people’s health。
。 Breadth of line： This is where a pany has a variety of products of
different types such as Marlboro with cigare。。es and fashion clothing；
or 3M with its extensive variety of adhesives extending out to the Post…
It Note。
Branding
This is considered the holy grail of the product/service aspect of the marketing
mix。 A brand enpasses not just what a product is or does but all
the elements such as logo； symbols； image； reputation and associations。
McDonald’s arches represent its brand as a weling beacon drawing
customers in。 Branding is an intangible way of differentiating a product in a
way that captures and retains markets through loyalty to that brand。 Coca…
Cola tastes li。。le different from a supermarket brand； but the promotion
that supports the brand confers on the consumer the chance to share the
a。。ractive lifestyle of those ‘cool’ people in the adverts。 Apple’s iPod is differentiated
from just any old MP3 player in much the same way。 Intel and Audi
are examples of branding designed to reassure consumers in unfamiliar
territory that a product will deliver。 Body Shop International exudes ethics
and concern for the environment； where other cosmetics concentrate on
how they will make the wearer look beautiful。
Building a brand takes time and a considerable advertising budget to
build。 But by creating brand value； that is； the price premium manded
by that product over its unbranded or less appealing petitors； a business
can end up with a valuable asset。 Superbrands （superbrands） has
a listing of the top brands by country； o。。en with a case study supporting
the top brands in any country。
Price
Seemingly the simplest of the marketing choices； it is o。。en the most agonizing
decision that MBAs are faced with。 The subject transcends almost
every area of a business。 The economists get the ball rolling with ideas
around the elasticity of demand。 Set too high a price and no one es
to the dance； too low and your budget for bouncers will go off the Richter
scale。 The accounts and production teams are concerned that sales will at
98 The Thirty…Day MBA
least be sufficient to reach break…even in reasonable time。 The strategists
are worried about the signals in terms of corporate positioning that prices
can send。 However profitable a certain price may be for the business； it
may just be so low that it devalues other products in your range。 Apple；
for example； has a position fairly and squarely at the innovator end of the
product adoption cycle。 Their customers expect to pay high prices for the
privilege of being the first users of a new product。 The iPod was positioned
above the Walkman in price terms； though as the market for pocket sound
devices was already mature there was scope to e into the market lower
down the price spectrum。
Skim vs penetrate
You need to decide between two generic pricing strategies before you can
fine…tune your plans。 Skimming involves se。。ing a price at the high end of
what you believe the market will bear。 This would be a strategy to pursue
if you have a very limited amount of product available for sale and would
rather ‘ration’ than disappoint customers。 It is also a way to target the
‘innovators’ in your market who are happy to pay a premium to be among
the first to have a new product。 To be successful with this strategy you
would need to be sure that petitors can’t just step in and soak up the
demand that you have created。
Penetration pricing is the mirror image； prices are set at the low end；
while being above your costs。 Prices are petitive； with the deliberate
intention of eliminating your customers’ need to shop around。 Slogans such
as ‘everyday low prices’ are used to emphasize this policy。 The aim here is
to grab as much of the market as you can before petitors arrive on the
scene and hopefully lock them out。 The danger here is that you need a lot
of volume either of product or hours sold before you can make a decent
profit。 This in turn means tying up more money for longer before you break
even。
Dragon Lock （the executive puzzle makers）； who were Cranfield enterprise
programme participants； adopted a skim strategy when they launched
their new product。 Their product was easy to copy and impossible to patent；
so they chose a low price as a strategy to discourage petitors and to
swallow up the market quickly。
Danger of low pricing
Aside from the obvious possible problems of the cash…flow implications
of stretching out the break…even horizon and quality/image issues； it is an
immutable law that raising prices is a whole lot more difficult than lowering
them。 It is less of a problem if the market as a whole is moving up； but
raising a price because you set it too low in the first place is a challenge to
say the least。
Marketing 99
Value pricing
Another consideration when se。。ing your prices is the value of the product
or service in the customer’s mind。 His or her opinion of price may have li。。le
or no relation to the cost； and he or she may be ignorant of the price charged
by the petition； especially if the product or service is a new one。 In fact；
many consumers perceive price as a reliable guide to the value they can
expect to receive。 The more you pay； the more you get。 With this in mind；
had Dyson launched its revolutionary vacuum cleaner； with its claims of
superior performance； at a price below that of its peers； then some potential
customers might have questioned those claims。 In its literature Dyson cites
as the inspiration for the new vacuum cleaner the inferior performance of
existing products in the same price band。 A product at six times the Dyson
price is the one whose performance Dyson seeks to emulate。 The image
created is that； although the price is at the high end of general run…of…themill
products； the performance is disproportionately greater。 The runaway
success of Dyson’s vacuum cleaner would tend to endorse this argument。
Real…time pricing
The stock market works by gathering information on supply and demand。
If more people want to buy a share than sell it； the price goes up until
supply and demand are matched。 If the information is perfect （that is；
every buyer and seller knows what is going on）； the price is optimized。 For
most businesses this is not a practical proposition。 Their customers expect
the same price every time for the same product or service – they have no
accurate idea what the demand is at any given moment。
However； for businesses selling on the internet； puter networks
have made it possible to see how much consumer demand exists for a
given product at any time。 Anyone with a point…of…sale till could do the
same； but the reports might e in weeks later。 This means that online
panies could change their prices hundreds of times each day； tailoring
them to certain circumstances or certain markets； and so improve
profits dramatically。 easyJet； a budget airline； does just