Market saturation

But, brand wars aside, the single biggest threat to the market remains saturation. For it seems there are just too many products on the shelves. In the States they call this 'product clutter' and it is currently the cause of a strong anti-consumerism movement. In fact, product proliferation and widespread me-tooism mean that some Boots stores actually stock 75 different kinds of toothbrush and 240 types of shampoo. It would take you over 20 years to try them all, assuming you even wanted to! And that's just got to be crazy when you think that 80 to 90% of new brands fail within their first six months.

Assignments:

1) Without referring back to the article, can you remember in what context

following companies were mentioned?

1. Philip Norris/Marlboro

2. Nestle

3. Coca-Cola

4. Omega

5. Cadbury

6. Moet et Chandon

7. Calvin Klien

8. Boots

3) Look back at the article. Find the questions which mean:

1. has how reached a ridiculous level

2. to cut drastically

3. fiercely competitive

4. took 40c off

5. went bankrupt

6. major companies

7. total sales before costs are deducted

8. profit margin

9. pay a lot of money for

10.official value of an asset

11.extra income

12.severe measures

VIII. IF THE PRICE IS RIGHT…

Read and translate the article:

It may be true that everyone has their price, but the same can't be said of products. Products don't have a price -at least, not a fixed one. If they did, prices would not vary so much from country to country.

A personal computer wouldn't cost twice as much in the UK as it does in the States and you wouldn't need to take out a bank loan to buy a coffee in the Champs-Elysees. Of course, strictly speaking, the computer is tradeable and the coffee non-tradeable. For tradeable goods are exported all over the world, but non-tradeables have to be consumed where they are produced. And, since a refreshing cafe noir halfway up the Eiffel Tower can only be purchased in Paris, frankly, they can charge what they like for it. But, tradeable or not, as every salesperson knows, "The price of a thing is what it will bring." And when it comes to price, the buyer is his own worst enemy. Show me a high price and I'll show you too many customers prepared to pay over the odds.

The truth is, people pay the price they deserve. A massive 20% mark-up does not stop people buying 370 million cans of Coke a day. And with profit margins of up to a phenomenal 50%, Marlboro cigarettes can still gross nearly $40 billion a year and help make Philip Morris the most profitable company in the world.

In fact, product-pricing lies at the very heart of the marketing process itself. Its impact is felt in sales volume, in the product's contribution to overall profits and, above all, in the strategic position the product occupies in the marketplace. For a higher price will often raise a product's profile and a high product profile commands a higher price. Product profile is basically the difference between a Rolex and a Timex, a bottle of Chanel No.5 and a bottle of Boots No.7. So, of course, is price.

But it isn't as simple as that. Economic, as well as market, forces are at work. If they were not, we might expect international competition to equalize prices everywhere, but, in spite of all the talk of a single market, a borderless Europe and a common currency, prices remain alarmingly elastic. And what goes for a song in one country can cost a bomb in another.

For one thing, most commodities, particularly agricultural products, are usually heavily subsidized. So, in the absence of free trade, food will tend to be cheap in the USA, cheaper still in Central and South America, expensive in Europe and outrageously so in Japan. Trade barriers compound the problem. For, sadly, those who took part in I the Uruguay round of GATT could barely reach general agreement on where to have lunch.

So how do you put a price on things? An everyday supermarket item in one country might be a luxury item in another and cost considerably more. Scotch, for instance, is a mass market product in Aberdeen but understandably a niche market product in Abu Dhabi. No prizes for guessing where it's cheaper.

Then, of course, there are taxes. By imposing wildly different rates of tax on otherwise homogeneous commodities like petrol, governments distort prices even further. If you're driving through Europe you'd certainly do better to fill up in Luxembourg than in Italy. Tax is also the reason why a Jaguar car costs less in Brussels than in Britain, where it was built. So buy your car in Belgium, your fridge and other 'white goods' in the UK; stock up on medicines in France and on CDs in.Germany. That way you'll be sure to get the best deal. For where you spend your money is almost as important as what you spend it on, but neither is as important as the fact that you're prepared to spend it. In the words of film actor Gary Grant, "Money talks, they say. All it ever said to me was Goodbye."

Assignments:

1) Without referring back to the text, how much can you remember about:

1. computers

2. Coca-Cola

3. Marlboro cigarettes

4. Rolex and Chanel

5. food

7. GATT

8. Scotch whisky

9. Jaguar cars

10. fridges

11. CDs

2) Find the expressions in the text which mean:

1. absolute accurate

2. pay more for something than it's worth

3. money will get you anything

4) Find in the text:

· three words you want to use more often

· three word partnerships you need

· three longer expressions, with their equivalents in Russian

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