Page 116 - Marketing the Basics 2nd

108 Marketing: the Basics
part of their branding strategy, enabling them to charge a higher price than their competition. IBM takes this position often, not being on the ‘cutting edge’ of technology but close to it, offering very innovative products with high quality. Part of IBM’s offer to the market is that if you buy IBM you will get technology which is leading edge and works, unlike some of its competitors. HP is not dissimilar: when you buy an HP laser or ink jet printer it works. Big players like these can often use FUD, or fear, uncertainty and doubt, in their sales efforts. They will make the customer wonder about buying from a smaller firm. Will it be around in five years to support its product or will it be a technological orphan? Does the smaller firm have the potential to make its product a market standard? Otherwise, the customer will find it hard to hire people who know how to program for the system or run it. This is a key advantage of being a big player in an industry. The advantage of the little guy can be summarized in this one question, do you, Ms. Customer, want to be a number? Here at Our Small Firm you are important to us, you matter, and everyone of us, up to and including the president will return your calls and make sure you get everything you need. Will IBM or HP do that for you? Of course, big or small you try to take advantage of whatever strengths your size or position offers you.
SURVIVAL
Companies pursuing survival as their strategy signals to the market that their firm is in trouble. When companies employ this strategy, the price is set just above the variable cost of production, ensuring the firm will remain operational. Operating in survival mode for long is not sustainable since competitors will employ whatever strategies to wrestle the remaining market share from their struggling rival. In the topsy-turvy airline industry we see this happening on a regular basis. In 2005 there were three main airlines in Canada, industry behemoth Air Canada, low-cost carrier WestJet and third place rival Jetsgo. Jetsgo finally went bankrupt in May 2005 but not before it instigated a price war including $1 seat sales. Looking back, this was a sign of great desperation as they kept creditors at the door. Ultimately it failed, though many Canadian consumers took advantage of some great prices. Within a few weeks prices for air travel in Canada soared,