When what the butler saw beats a bloody price battle

Sun readers up north will be eating a few fewer fish and chip suppers now that News International has yanked the price of its tabloid back up to 30p, signalling the beginning of the end of the winner-loses-a-million price war, writes Claire Beale.

The Daily Mirror, which started the show in the first place, went back up to 32p in the north back in June; News International, with its bigger financial muscle and riding on a crest of relatively impressive sales upturn, finally called a truce on Monday. Cat fighting prevails only in the Carlton Television region.

So, six months down the line, what has really been achieved? Most obviously, both papers have managed to offload rather a lot of pesky dosh; News International last week acknowledged that the price war had slashed operating revenues by 50% across the first three months of its financial year. And that equates to a rather large £21m-shaped hole. It's reasonable to assume that the Mirror suffered a similar financial fate during its price-cutting, and with shallower group pockets.

All this would be of little bigger-picture consequence if both companies had enjoyed real investment in their medium-term readership or brand credentials as a result of the outlay; by last month's bulk-free ABC figures, the Mirror's circulation was down 3.9% year on year and The Sun was up 4.65%. So, short-term, The Sun emerges triumphant. Longer term, the slump in broadsheet sales following their recent price hikes suggests the picture is a return to status quo decline.

Yet for once, this particular price war had some reasonably sensible-sounding marketing strategy behind it. Back in May, the Mirror was going all po-faced and wanted to give readers an excuse to sample its new, intelligent, news-driven approach. In this context, price cutting -- so often a blunt marketing tool -- was a fair weapon to employ and The Sun had little real choice but to respond. Picking over the bones of all the subsequent sales evidence -- and mindful that the Mirror editor, Piers Morgan, still manages to argue that The Sun is losing readers faster than the Mirror -- we're back to the familiar scenario: if consumers are fickle enough to respond to price-cutting, then it will cut both ways; price goes up, sales go down.

Unless, of course, in the meantime you've managed to persuade all those flighty samplers that your product's worth buying even without a price advantage. The Mirror's fate over the past few months proves there's still much work to be done on this score. That same paper's sales success over the past Paul Burrell-swamped week suggests that for tabloid readers, getting the product right is still about sensational gossip, not the hard news of Morgan's dreams. If the front page has a punch, readers will pay. And that's a damn sight more cost-effective than a price war.

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