4. The Second Postulate: Marketing produces competitive power by metaproducts

The value of a (hypothetic) generic product could be assumed to be based on substance and utility values. The outcome of its sales can be described by a price-demand diagram. For the generic product or commodity, the price elasticity (E = dQ/dP) is negative. We assume here that it follows a curve according to R = Q x P, a ”classic” price-demand curve.

Without affecting the substance or utility values, further marketing driven values can be added. (With the help of marketing communication, design/”styling”, through branding, etc.) This means that the product is moved to a higher value potential, it is excited to a new value level. The value of an intangible phase of the product, a metaproduct, has been added, according to the buyers’ perception.

In this instance, however, the added metavalue of the product is limited to the finite population that has had its valuation influenced by these marketing activities, and where they are socially accepted – its audience. We are now studying a functionally branded product.

In this new position, any attempt to describe the price-demand relations of the product will be affected partly by the fact that its metavalue is limited to its finite audience, partly by the socially motivated value-influencing dimension of the price. This is the main reason why the economical behaviour of branded products mostly is discussed in terms of empirically founded degrees of price elasticity.

Nothing indicates, consequently, that the sales of the excited product would follow a new ”classic” price-demand curve when its price is changed. Even a positive price elasticity is conceivable for the branded product.

In the illustration, the product in the position A has gained a pure volume premium and B a pure price premium over the original generic product.

The excited product differs from a comparable generic product by the value of its metaproduct. Its higher competitive power is demonstrated by higher transaction prices and/or quantities sold.