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Иностранные языки, филология и лингвистика

The price depends on different things such as credit terms delivery trade-in allowance guarantees quality and other forms of service which price can produce the biggest profit during a long period of time. It’s hardly possible to determine such a price. The price may be too high to produce a large volume or too low to cover costs.



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Lesson 13


All products and all services have prices. The price depends on different things, such as credit terms, delivery, trade-in allowance, guarantees, quality and other forms of service, which price can produce the biggest profit during a long period of time. It's hardly possible to determine such a price. The price may be too high to produce a large volume or too low to cover costs. No other area of marketing operations has been a subject to bad practice. Many businesses pursue unsound price policies for long periods of time and are not aware about it.

Prices can be determined in different ways. For example, the prices of meat, cotton and other agricultural prices can be decided in large central market where forces of supply and demand exist. This is pure price competition. The prices on industrial products (iron, steel, etc.) are usually decided by large companies. As a rule, the amount and price of goods sold to a large number of buyers is controlled by a few competing sellers. Prices also can be set by the government, usually for different public services – railroads, electricity, manufactured gas, bus services, etc.

If demand increases, prices rise, profits expand and new investment is attracted. But other factors may be involved as well. Prices are related to each other in different ways. Ultimately, everything is related in price, since the consumer can buy and must pay for everything out of the particular, limited amount of money.

Active Vocabulary

credit terms

кредитные условия

trade-in allowance

сумма денег, отданная за старую вещь и включенная в счёт покупки новой

to cover costs

покрывать затраты

to pursue unsound price policies

вести неразумную ценообразовательную политику

supply and demand

предложение и спрос

price competition

конкуренция в ценообразовании

to set prices

устанавливать цены

Comprehension Questions

  1.  Why is it difficult to determine the right price?
  2.  Why is the seller interested in the price that produces the highest volume of sales at the lowest unit cost?
  3.  Why do many businesses follow unsound pricing policies?
  4.  In what way are agricultural prices decided?
  5.  How are industrial products usually priced?
  6.  Why does the government usually set the prices for public utility services?
  7.  Why is it so important to know the levels of supply and demand when dealing with pricing?
  8.  Why is everything related by price?

Vocabulary Practice

Choose the necessary word and put it in the sentence.

  1.  It is very difficult … without sound price policy.
  1.  supply and demand
  1.  Of course we are interested in producing the … with the lowest unit costs.
  1.  volume of sales
  1.  I decided to buy a new car at this company because they offered the best … on my old model.
  1.  trade-in allowance
  1.  The ... of this store are very beneficial for a customer.
  1.  to compete
  1.  Their business will fail if they pursue unsound … .
  1.  price policies
  1.  The government usually … for public utility services.
  1.  credit terms
  1.  In pure competition the forces of … operate.
  1.  sets prices


Dick is introducing a new line of products and is talking to his friend Tom, a business consultant, about it.


It's the first time when I'm in business for myself.


Don't worry. The store has always been doing well. It has a great location and as far as your new line of merchandise …


That's what I wanted to talk to you about. Can you give some ideas how to charge the prices?


With pleasure. Generally, there are two types of pricing policies. There is price emphasis and price de-emphasis.


What's the difference?


The price emphasis policy emphasizes low prices. This encourages sales. But low price doesn't give extra services.


So, a really low price means no credit, home delivery, repair, installation and other services.


That's what I mean. But many people are interested only in the low price and not in the extra services.


Yes, and vice versa. The price that I set determines the number of sales. I must think thoroughly about it.


A good example of price emphasis is "loss leader" pricing. It means that you choose one item – let's say, in electric razor – at a price just above the cost. The customers will come to your shop to buy this loss leader item. But since they are inside they can decide to buy a few other things they need.


It sounds interesting. What other things can you tell?


There is also off-even pricing. Let's say, you sell a tape recorder for $69.95 instead of $70.00. Though it is in fact about the same, the low price can produce a favorable psychological effect.


What are the other ways to attract the customers?


First of all, remember that you are going to compete with well-known products, so you should start with especially low prices. It's important to advertise this. You should use newspaper ads, maybe a radio spot, maybe do a big window and floor display.


It makes sense.


And you can raise the price after your customers try a new brand, get to know it and like it. They will continue to buy it.


I see. And what is the price de-emphasis you mentioned before?


It concerns high quality expensive items. Price de-emphasis means that you don't call attention to the price at all.


I know, it concerns our fine jewelry department or designer fashions.


Yes. I see you are going to do very well.


Your suggestions seem to be very useful. Don't forget you have a discount on any shopping you do in my shop.


In such a case I'll be back tomorrow with my wife.

Active Vocabulary


место расположения

extra services

дополнительные услуги

installation services

услуги по установке

to charge prices

устанавливать, назначать цены

price emphasis

продажа товара за счёт низкой цены

price de-emphasis

попытка продажи товара не за счёт низкой цены, а за счёт других факторов

loss-leader item

товар, продаваемый по очень низкой цене, служащей для привлечения покупателей

off-even pricing

цена, не доходящая до круглой цифры и стимулирующая желание покупателя купить

favorable psychological effect

благоприятный психологический эффект

to start with especially low prices

начинать с особо низких цен

new brand

новая марка (товара)

high quality expensive item

высококачественный дорогостоящий продукт

Vocabulary Practice

Exercise 1. Change the sentences according to the model.

Model: The tape recorder is inexpensive. Your store sells the tape recorder.

The tape recorder that your store sells is inexpensive.

  1.  The dresses are fashionable. The store introduced the new dresses last week.
  2.  The store has many refrigerators. Dick owns the store.
  3.  The stereo is high-priced. My daughter wants the stereo.
  4.  The price determines the number of sales. A retailer sets the price.
  5.  Very often the people don't want extra services. Many supermarkets offer extra services.
  6.  Your shop should have loss-leader item. Loss-leader item will attract the customers.
  7.  Price de-emphasis works with high quality expensive items. Price de-emphasis means that you don't call attention to the price al all.
Exercise 2. Change the sentences according to the model.
Model: We won't introduce a new line of merchandise unless you suggest it.
We won't introduce a new line of merchandise if you don't suggest it.
  1.  Tape recorders are popular unless the price is too high.
  2.  The consumers will continue to buy unless they don't like the item.
  3.  The buyer can get installation services unless he doesn't want to pay for it.
  4.  The salesman will help you unless he is too busy.
  5.  People won't try a new product unless there is advertising.
  6.  Customers won't buy the new brand, unless the price is low.
  7.  They won't raise the price unless it is necessary.

Exercise 3. Answer the questions.

  1.  In what way were the prices charged in Ukraine?
  2.  What is your idea of the term market price?
  3.  What type of pricing policy works with the majority of consumer goods? (price-emphasis, price de-emphasis)
  4.  What is more preferable for you in pricing: low prices with no extra services or high prices with home delivery, repair and other services?
  5.  Why is it so important to have loss leader item in a shop?
  6.  What is off-even pricing made for?
  7.  How can your pricing policy help to compete with well-known products?

Exercise 4. Set your imagination free.

You are a journalist and you are to interview the minister of finance about the pricing policy in Ukraine. What questions would you ask him?

Grammar Exercises

Exercise 1. Make sentences interrogative and negative.

  1.  They must research supply and demand before they start to produce the new item.
  2.  The company has to cover the costs by all means.
  3.  The middlemen may set the new price.
  4.  They can pursue unsound price policies.
  5.  They must choose another location for their shop.

Exercise 2. Choose the necessary modal verb and put it in the sentence.

  1.  Off-even pricing ... undoubtedly produce favourable psychological effect on a consumer.
  2.  I spoke with the chief. Now you ... change the credit terms.
  3.  They are very talented specialists. I think they ... design the new line very quickly.
  4.  The situation has changed, so we ... start with especially low prices.
  5.  We ... choose price emphasis policy for this item.

Translate into English.

  1.  Этот магазин предоставляет покупателю выгодные кредитные условия.
  2.  Товар имеет низкую цену. Она покроет затраты.
  3.  Эта фирма ведёт неразумную ценообразовательную политику.
  4.  Прежде, чем выпускать товар, необходимо тщательно изучить спрос и предложение.
  5.  Государство устанавливает цены на ряд продуктов.
  6.  Магазин имеет превосходное место расположения.
  7.  Супермаркет предоставляет покупателю много дополнительных услуг: доставку товаров на дом,  кредит, установку и т.д.
  8.  Новая марка, несомненно, привлечёт покупателей.
  9.  Начинайте с низкой цены.
  10.  Продажа за счёт низкой цены действует при продаже товаров народного потребления.


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