Media: Bargain basement (no price cuts): As the broadsheet war rages, the Guardian is succeeding with products from its think-tank

THE GUARDIAN has managed to escape the ravages of the price- cutting war while holding its cover price at 45p over the past year. Aided by a week- long serialisation of Marlon Brando's autobiography, it has declared average daily sales of 411,000 for September.

It has been assisted in its distinctive response to cut- throat competition for broadsheet readers by an innovative department whose influence within the paper is great but whose existence is little known about. A sub-basement that once housed the typesetters has been taken over by the Guardian's product development unit (PDU), a hybrid group with close ties both to the marketing director, David Brook, and the editorial departments.

It was set up by Tony Ageh, the former publishing manager of City Limits, who persuaded the Guardian's managing director, Jim Markwick, to take him on in 1990 when the magazine was about to close. There is an ex-City Limits cell within the paper, injecting a streetwise sharpness to the traditional cautious values of the Guardian.

'I was the product development unit,' Mr Ageh says. But he didn't stay single for long. It now employs about 30 people, all but Mr Ageh under 30.

(At first he declines to give his own age, then relents and says he is on the 'right side of 35'.) The unit, which Mr Ageh describes as 'a small combination of laboratory and factory', produces some 10 per cent of the Guardian's output, about 300 publications a year. Its most successful innovation is the Guide, the slim weekly listings package distributed on Saturday to readers within the M25 area. The Guide's first anniversary was celebrated in style last month with a party for advertisers: it is credited with adding some 12 per cent to Saturday sales in its circulation area and is being expanded to a larger southern- based readership.

Peter Preston, the Guardian's editor for 19 years, says: 'We believe in keeping changing, a continuous revolution.' The Guide, he adds, has been 'quite spectacular, a stroke of genius'. Advertisers are now designing their adverts to fit the unconventional size; once it was feared they would never advertise.

Mr Ageh says he does not like products that are like anything else. The Guide is the same width as the top of his television set, just as the latest edition of Impact (a thrice-annual youth supplement from the unit) is the exact size of his coffee table.

The PDU, which is talked about by traditional Guardian wordsmiths with a mixture of suspicion and grudging respect - 'they occasionally call us the Young Tory faggots', says Mr Ageh - is evermore multi-disciplined, crossing from design into production. It currently produces the distinctive G2 (tabloid second section) front pages; some of its staff write the irreverent Pass Notes (also in G2); and it has specialised in fast responses to big events, proving the value of thinking ahead, but from outside the treadmill of the daily news.

The PDU's first supplement was The Gulf War Crisis. It also anticipated the falls of Margaret Thatcher and Mikhail Gorbachev and had a product ready to go. 'We're a conduit, a bit of string that ties everything together,' Mr Ageh says.

He is pleased with the paper's extensive Saturday edition (main paper, review, guide, careers supplement and Outlook section), though he describes Outlook as 'off the pace' and promises that the PDU is working on it. The unit is designing yet another new section for the weekday paper as well as a new section for the Observer, and is redesigning the comment and analysis page, which is seen as lacking authority.

The buzzing PDU appears to have overshadowed the more profound strategic design advice given by David Hillman, partner in Pentagram, the design consultancy that has a long association with the paper, though Hillman continues to play a major part in the Guardian's evolution. Much influenced by European newspaper design, Mr Hillman was responsible for the dramatic (if not immediately successful) redesign in 1988, which freed the Guardian in one leap from its messy hot-metal past, and for the G2 redesign of two years ago, which turned the clumsy broadsheet second section into a nippy tabloid read. Mr Hillman designed the new Friday going-out section, which was also a key part of the September push.

Mr Preston says the growth of the specialist sections and the job advertising to support them, starting with the Society section 14 years ago, has been 'a long slow development. It is not something you can move in and do overnight.' 5In August, he says, the Guardian's share of recruitment advertising was more than 50 per cent.

'When I started there was very little recruitment advertising in papers like the Daily Mail or Guardian. It was a question of asking: which area is fruitful? Where can we move? Which editorial services can we give which will be interesting to the reader? You can't arrive from outer space and click your finger.'

The big question is: what is the next step for a paper keen to hold its price (Guardian Media Group reported halved annual profits last month) but hungry for new readers? Price-cutting appears to be ruled out. 'No good will come of it,' Mr Preston warns. 'We think and believe we can make our way without getting into this. One day this madness is going to have to end.'

The Brando serialisation, which cost nearly pounds 400,000 to buy and promote, was a specific stroke that delivered a strong start to the autumn, pushing the first-instalment Saturday sales over 500,000.

One solution for Mr Preston is to turn the entire paper into an up-market tabloid. He recalls the joyous moment two years ago when it was clear that G2 was going to work. He says Kelvin MacKenzie, then editor of the Sun, said to him shortly afterwards: 'Just do the whole thing tabloid, and you've stuffed the rest.'

Mr Hillman makes no bones about his long-standing desire to move to an up-market tabloid. 'That's my dream. But that would be a major step. There is a nervousness about how far you should push things.'

(Photograph omitted)