Exercise 1. Put the necessary word in the sentence

1. It is very difficult... without sound I 1 supply and

price policy. I demand

2. Of course we are interested in I

producing the... with the lowest unit I 2 volume of sales

costs. I

3. I decided to buy a new car at I 3 trade-in

this company because they offered I allowance

the best... on my old model. I

4. The... of this store are very beneficial I 4 compete

for a customer. I

5. Their business will fail if they I 5 price policies

persue unsound... . I

6. The government usually... for public I 6 credit terms

82

utility services. I

7. In pure competition the forces I 7 to set prices

of … operate.

Dialogue

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

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

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

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

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

Dick What's the difference?

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

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

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

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

Tom A good example of price emphasis is "loss leader" pricing. It means that you choose one item - let's say an 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.

Dick It sounds interesting. What other things can you tell?

Tom There is also off-even pricing. Let's say you sell a tape recorder for $79.95 instead of $80.00. Though it is in fact about the same, the low price can produce a favorable psychological effect.

Dick What are the other ways to attract the customers?

Tom First of all, remember that you are going to compete with well-known products, so you should start with specially 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.

Dick It makes sense.

Tom 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.

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

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

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

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

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

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

Active Vocabulary

M o d e l: 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 at all.

location- место расположения

extra services- дополнительные услуги

installation services- услуги по установке

to charge prices- устанавливать, назначать цены

price emphasis- продажа товара за счет низкой цены

price de-emphasis- попытка продажи товара не за счет низкой цены, а за счет 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 дорогой продукт

Vocabulary Practice