Price and cost

In an international setting, pricing across borders poses further problems for the pricing decision

Maker, particularly as to whether to homogenize prices across a geographical area or to set

Local prices which reflect local market sensitivity. The value or a good or service as perceived by the

Customer is for most firms their major, if not their only, source of competitive advantage; and price

Is one of the most important components of that value. Prices must be set with a focus on the

Customer, not on costs.

Vocabulary Notes to Text 5.7.1.4

To homogenize price — сделать цены однородными

Price sensitivity — чувствительность цены

To perceive — воспринимать

Competitive advantage — конкурентное преимущество

5.7.1.5. Read the text “Policy of Restraining Prices as Practice of Regulating Wages” for ten

minutes and answer the question: What does the practice of price freezing lead to?

Policy o f Restraining Prices as Practice o f Regulating Wages

A policy of restraining price or wage increases by regulated limits on the increases that are

Allowed. The persistent upward trend in prices during the post-war period led the Organization for

Economic Cooperation and Development to recommend incomes policy as a tool of economic