Status-quo pricing objectives

Managers who are satisfied with their current market share and profits some time adopt status-quo objectives - "don't rock-the-pricing-boat" objectives or even "avoid competition". This thinking is most common when the total market is not growing.

4 Most firms set specific pricing policies - to reach objectives. Specific pricing

policies are vital for any firm. Price policies usually lead to administered prices -consciously set prices. Instead of letting daily market forces decide their prices, most firms set their own prices.

5 Most price structures are built around a base price "list". Basic list prices are the prices that final customers or users are normally asked to pay for products. Starting with a list price a variety of discounts and allowances may be offered.

6 Discounts are reductions from list price that are given by a seller to a buyer who either gives up some marketing function or provides the function himself.

Allowances - like discounts - are given to final consumers, customers, or channel members for doing "something" or accepting less of "something".

9.4.1 Look through the text and find sentences with the English equivalents for the following Russian word-groups. Translate the sentences with these word-groups into Russian:

- конкретный уровень прибыли; (1)

- рост объема сбыта; (2)

- издержки фирмы; (3)

- проводить политику, основанную на установлении конкретной цены;(4)

- базисная прейскурантная цена. (5)

9.4.2 What does the word "returns" mean, judging by the context of paragraph 1?

9.4.3 Comment on the following phrase: "don't rock-the-pricing-boat" objectives? (3)

9.4.4 Find answers to the following questions:

What is pricing policy connected with? (1)

What is the difference between a target return objective and a profit maximization objective? (1)

Some managers think more about sales growth than profits. What is their objective? (2)

What is administered price? (4)

When are discounts and allowances given to buyers? (6)

9.4.5 Write the main points of text B in Russian

9.4.6 Work in pairs. (Exhibit 14 shows how the basic list price is set. Study it attentively and comment on the key factors that influence price setting. Let your fellow-student help you in this activity by giving some additional information to your commentaries)

Price objectives

Цели ценообразования

Price of other products Price flexibility

in the line Гибкость цен

Цена на другие товары

такого рода Discounts and allowances

Скидки и зачеты

Demand

Спрос Price setting

Legal environment

Costs Ценообразование Законная деловая сфера

Издержки

Competition Geographic pricing

Конкуренция Markup chain in channels terms

Ряд наценок в каналах Географический подход

распределения к ценообразованию

Exhibit 14 Price setting

9.5 Text C. Price Setting in the Real World. (Translate the text into Russian in written form using a dictionary)

Most retailers and wholesalers set prices by using a markup - a dollar amount added to the cost of products to get the selling price.

For example, suppose that a Revco drugstore buys a bottle of Prell shampoo for $1. To make a profit, the drugstore obviously must sell the shampoo for more that $1. If it adds 50 cents to cover operating expenses and provide a profit, we say that the store is marking up the item 50 cents.

Markups, however, usually are stated as percentages rather than dollar amounts. And this is where confusion sometimes arises.

Is a markup of 50 cents on a cost of $1 a markup of 50 percent? Or should the markup be figured as a percentage of the selling price - $1.50 - and therefore be 33 1/3 percent? A clear definition is necessary.

Unless otherwise stated*, markup (percent) means percentage of selling price that is added to the cost to get the selling price. So, the 50-cent markup on the $1.50 selling price is a markup of 33 1/3 percent.

Markups are related to selling price for convenience.

*Unless otherwise stated - кроме случаев, оговоренных особо.

9.5.1 Work in pairs. (Solve the problem and discuss the results with your fellow-student)

Suppose that a Revco drugstore buys a bottle of medicine for $1.5. To provide a profit and cover expenses the drugstore wants to sell the medicine for $2.20. What is the percentage of the markup?

9.5.2 Check if you remember the active vocabulary of the unit. Choose the Russian equivalents for the English ones

1 money's worth; 2 discount; 3 supply and demand; 4 marketplace; 5 objective; 6 pricing policy; 7 consumer preference; 8 quality guarantee; 9 allowance; 10 rough measure; 11 to charge; 12 list price; 13 pure; 14 profit; 15 costs.

1 ценовая политика; 2 назначать цену; 3 гарантия качества; 4 зачет (с учетом чего-либо); 5 прибыль; 6 сумма; 7 стоимость, выраженная в деньгах; 8 предложение и спрос; 9 себестоимость; 10 скидка; 11 параметр; 12 чистый; 13 цель; 14 приблизительный показатель; 15 издержки; 16 оценивать; 17 потребительское предпочтение; 18 рынок; 19 цена; 20 прейскурантная цена.

Unit

The Problem Area of the Unit: Grammar: