Dialogue. Exercise 1. Put the necessary word in the sentence

Exercise 1. Put the necessary word in the sentence.

Vocabulary Practice

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?

1. It is very difficult … without sound price

policy. 1 supply and demand

2. Of course we are interested in producing the …

with the lowest unit costs 2 volume of sales

3. I decided to buy a new car at this company

because they offered the best … on my old

model. 3 trade-in allowance

4. The … of this store are very beneficial for a

customer. 4 compete

5. Their business will fail if they persue unsound 5 price policies

6. The government usually... for public utility

services. 6 credit terms

7. In pure competition the forces of … operate. 7 to set prices

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.

DickThat'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.

DickWhat's the difference?

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

DickSo, 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.

DickYes, 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 $69.95 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.

Nom 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 for­get 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.

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